Washington Mutual (WMI) - Attachments/Exhibits To The Final Report of The Examiner (Part 6/10)

Confidential
PRIVILEGED AND CONFIDENTIAL

Prepared at the Request of Counsel
St even Zel i n Qual i f i c at i ons
Restricted for Use in Connection with Plan Confirmation Only Highly Confidential - Attorneys' Eyes Only Information.
Restricted For Use in Connection with Plan Confirmation Only WMI-BX_701361066.00047
Return
Washi ngt on Mut ual , I nc .
47 Confidential
f Allegheny Health, Education & Research
Foundation
f Alliance Entertainment Corp.
f American Banknote Corp.
f Ames Department Stores, Inc.
f Anacomp, Inc.
f Audio Visual Services, Inc.
f Big V Supermarkets, Inc.
f Brown Jordan International, Inc.
f Marchon Eyewear, Inc.
f Medical Resources, Inc.
f Meridian Automotive Systems
f Mrs. Fields Famous Brands, LLC
f Musicland Stores Corporation
f Paragon Trade Brands, Inc.
f The Penn Traffic Company
f The Pullman Company
f Safelite Glass Corp.
f Channel Home Centers
f Coastal Physicians Group
f Continental Information Systems
f Dura Automotive Systems, Inc.
f FGIC Corp.
f Fruehauf Trailer Corporation
f Highland Hospitality
f Indesco Corporation
f Instrumentation Labs, Inc.
St even Zel i n Qual i f i c at i ons
Ot her Not abl e Publ i c l y Di sc l osed Assi gnment s
of St even Zel i n
Return
Confidential
Reor gani zed WMI Fi nanc i al Model Suppor t
Return
49 Confidential
WMMRC Over vi ew
f WMMRC is a mortgage reinsurance company incorporated in 2000 and domiciled in Hawaii
Company is regulated by the State of Hawaii Department of Insurance
f Company receives premium revenue from insurance on residential mortgage loans with private mortgage insurance (MI) in return
for taking risk on potential insurance claim losses
WMMRC has not written any new business since 9/25/08
f Consumer protections:
Customer is placed into a primary MI policy that best suits their needs and at a fair, competitive price
z Premiums are determined by MI companies and filed with each state, not WMMRC
Customer (within 30 days of loan funding) has the ability to opt out of the captive reinsurance arrangement, although
captive reinsurance treaties have no impact on the borrowers
WMMRC receives risk transference options that meet the US Department of Housing and Urban Developments Real Estate
Settlement Procedures Act guidelines on bona fide reinsurance arrangements
________________________________________________
Source: WMMRC management.
Reor gani zed WMI Fi nanc i al Model
Suppor t
Return
50 Confidential
WMMRC Over vi ew (Cont d)
f Company has basic reinsurance contract provisions with all six primary mortgage insurers: Genworth, MGIC, PMI, Radian, RMIC,
and UGRIC
The majority of reinsurance contracts are structured in 4% / 10%/ 40% manner whereby:
z WMMRC begins to pay claims after initial 4% of losses per each vintage year;
z WMMRC pays all losses on the next 10% risk layer; primary MI pays all losses after the 10% risk layer is exhausted;
z In return, WMMRC receives 40% of MI insurance premiums;
z Each annual book of business has a 10-year term
There are two quota share contracts (with Genworth and Radian) which are structured in a manner whereby:
z WMMRC begins to pay claims with the first dollar of losses
z It shares these losses 50% / 50% with the primary insurer
z WMMRC receives 50% of commissions
z Each book has a 10-year term
A few contracts (across all six MIs) are structured in a 5% / 5%/ 25% manner whereby:
z WMMRC begins to pay claims after initial 5% of losses per each vintage year
z WMMRC pays all losses on the next 5% risk layer; primary MI pays all losses after the 5% risk layer is exhausted;
z In return, WMMRC receives 25% of MI insurance premiums;
z Each annual book of business has a 10-year term
z These contract structures are prevalent in the 1999 2002 vintage years and the 2008 vintage year
________________________________________________
Suppor t
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51 Confidential
WMMRC Over vi ew (Cont d)
f Credit risk associated with reinsurance is mitigated by:
Holding a well-diversified national portfolio of insurance loans
Reducing counter-party credit risk by using all six MI companies
Diversifying risks across vintages (time dimension)
Maintaining a very high quality (AAA-rated) bond investment portfolio
f Key financial data points as of 12/31/09:
Assets: $472m
Reserve: $349m
Assets Held in Trust: $467m
Equity: $106m
f Key portfolio statistics as of 12/31/09:
Insured Loans: $16.6b
Insured Risk: $ 4.3b (Primary MI covers about 25% of the loan balance)
Original Risk Exposure: $ 1.6b (Represents WMMRCs 10% risk layer based on original loan balance)
Remaining Risk Exposure: $ 0.7b (Represents actual exposure taking into account loan paydowns and attachment points)
Operating Leverage: 3.6:1 (Industry average is 8:1)
________________________________________________
Suppor t
Return
52 Confidential
Fi nanc i al Model (Ex c l udi ng NOLs)
Det ai l ed Pr oj ec t i ons
Suppor t
($ in thousands)
________________________________________________
Note: Net Operating Cash Flow does not include G&A expense.
2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 - 2019
Assumed Premiums Written
Genworth $ 6,274 $ 5,261 $ 3,990 $ 3,157 $ 2,228 $ 1,511 $ 337 $ 19 $ $ 22,777
MGIC 3,349 2,671 2,024 1,530 1,083 607 415 31 11,710
Radian 6,312 5,388 4,532 3,419 2,557 1,756 1,500 113 25,576
PMI 11,320 9,445 6,764 4,397 2,748 1,759 430 25 36,888
UGRIC 7,726 6,315 4,466 3,041 1,724 1,051 355 23 24,700
RMIC 2,712 2,260 1,668 1,123 619 369 163 11 8,927
Total Assumed Premiums Written 37,694 31,341 23,444 16,667 10,960 7,053 3,202 221 130,580
Paid Losses
Genworth (19,497) (8,043) (3,606) (1,937) (264) (69) (29) (2) (33,447)
MGIC (19,338) (4,811) (3,184) (2,701) (297) (22) (11) (1) (30,365)
Radian (40,671) (12,319) (6,193) (1,557) (773) (375) (112) (8) (62,007)
PMI (46,704) (21,393) (10,111) (867) (63) (40) (22) (2) (79,202)
UGRIC (27,923) (15,941) (8,377) (3,505) (431) (16) (56,193)
RMIC (10,325) (7,777) (3,569) (2,218) (1,103) (355) (186) (15) (25,548)
Total Paid Losses (164,459) (70,285) (35,040) (12,786) (2,930) (877) (359) (27) (286,762)
Ceding Commissions
Genworth
MGIC (13) (11) (8) (6) (4) (2) (2) (0) (47)
Radian (1,043) (891) (749) (565) (423) (290) (248) (19) (4,227)
PMI (1,863) (1,554) (1,113) (724) (452) (290) (71) (4) (6,071)
UGRIC (996) (814) (576) (392) (222) (135) (46) (3) (3,184)
RMIC
Total Ceding Commissions (3,916) (3,270) (2,446) (1,687) (1,101) (718) (366) (26) (13,529)
Net Operating Cash Flow
Genworth (13,223) (2,782) 384 1,220 1,965 1,442 308 16 (10,670)
MGIC (16,002) (2,151) (1,168) (1,177) 781 582 403 30 (18,702)
Radian (35,403) (7,821) (2,410) 1,297 1,361 1,091 1,140 87 (40,657)
PMI (37,247) (13,503) (4,460) 2,806 2,233 1,430 338 19 (48,385)
UGRIC (21,193) (10,441) (4,487) (856) 1,071 899 309 20 (34,677)
RMIC (7,613) (5,517) (1,901) (1,095) (484) 15 (22) (3) (16,620)
Total Net Operating Cash Flow $ (130,681) $ (42,214) $ (14,041) $ 2,194 $ 6,928 $ 5,458 $ 2,476 $ 168 $ $ (169,711)
Return
53 Confidential
Di sc l osur e St at ement Fi nanc i al Model
Cash Fl ow St at ement
Suppor t
($ in thousands)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 - 2019
Cash Flows from Operating Activities
Net Income (Loss) $ (4,599) $ 10,892 $ 20,252 $ 20,033 $ 16,281 $ 13,758 $ 10,669 $ 10,268 $ (11,592) $ 85,962
Accrued Investment Income 382 111 24 (23) (41) (39) (32) (30) 911 1,264
Premiums Receivable 551 495 634 505 428 286 293 221 3,412
Losses and Loss Adjustment Expenses (106,066) (42,199) (25,942) (9,378) (1,629) (660) (323) (186,196)
Losses Payable (10,372) (3,569) (1,818) (1,858) (727) (121) (36) (27) (18,527)
Unearned Premiums (127) (110) (127) (116) (98) (80) (56) (106) (822)
Accrued Ceding Commissions Expense (55) (51) (65) (57) (43) (28) (27) (26) (353)
Accrued Interest on Notes Payable
Federal Income Tax Payable to Parent
Accounts Payable and Accrued Expenses 81 3 4 4 4 4 4 (139) (36)
Accrued Investment Expense 50 (6) (1) 1 2 2 2 2 (51)
Net Cash Provided by Operating Activities (120,154) (34,434) (7,039) 9,111 14,176 13,122 10,495 10,162 (10,732) (115,294)
Net Cash Provided by Investing Activities
Cash Flow from Financing Activities
Dividend of Unrestricted Cash (298,634) (298,634)
Proceeds from Issuance of Notes Payable to Parent 0 0
Net Cash Provided by Financing Activities (298,634) (298,634)
Net Change in Cash and Cash Equivalents (120,154) (34,434) (7,039) 9,111 14,176 13,122 10,495 10,162 (309,366) (413,928)
Beginning Cash and Investments Balance 413,928 293,774 259,340 252,301 261,412 275,588 288,710 299,204 309,366 413,928
Ending Cash and Investments Balance $ 293,774 $ 259,340 $ 252,301 $ 261,412 $ 275,588 $ 288,710 $ 299,204 $ 309,366 $ (0) $ (0)
Return
54 Confidential
Suppor t
I nc ome St at ement
($ in thousands)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2011-2019
Premiums Written $37,142 $30,846 $22,811 $16,162 $10,532 $6,767 $2,909 $0 $0 $127,167
Change in Unearned Premiums 127 110 127 116 98 80 56 106 - 822
Net Premiums Earned 37,270 30,955 22,938 16,278 10,630 6,847 2,965 106 - 127,989
Losses Paid 154,087 66,716 33,222 10,928 2,203 756 323 - - 268,235
Provision for Losses and IBNR (106,066) (42,199) (25,942) (9,378) (1,629) (660) (323) - - (186,196)
Ceding Commission 3,860 3,219 2,381 1,630 1,058 690 340 - - 13,176
Underwriting Expense 51,882 27,735 9,661 3,180 1,632 786 340 - - 95,215
Underwriting Income (Loss) (14,612) 3,220 13,277 13,098 8,998 6,061 2,625 106 - 32,774
General & Administrative Expenses (1,487) (1,532) (1,578) (1,625) (1,674) (1,724) (1,776) - - (11,397)
Interest Expense - - - - - - - - - -
Investment Income 11,501 9,205 8,553 8,560 8,956 9,421 9,820 10,161 1,727 77,904
Gain/(Loss) on Commutation - - - - - - - - (13,319) (13,319)
Income (Loss) Before Tax Provision (4,599) 10,892 20,252 20,033 16,281 13,758 10,669 10,268 (11,592) 85,962
Federal Income Tax Expense - - - - - - - - - -
Net Income (Loss) (4,599) $ 10,892 $ 20,252 $ 20,033 $ 16,281 $ 13,758 $ 10,669 $ 10,268 $ (11,592) $ 85,962 $
Return
55 Confidential
Suppor t
Bal anc e Sheet
($ in thousands)
Assumed
Emergence
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-10 - Dec-19
Cash and Investments $463,546 $ 413,928 $ 293,774 $ 259,340 $ 252,301 $ 261,412 $ 275,588 $ 288,710 $ 299,204 $ 309,366 $ (0) $ (413,928)
Accrued Interest 4,367 1,264 882 771 747 770 810 850 881 911 (1,264)
Reinsurance Premiums Receivable 4,015 3,412 2,861 2,366 1,732 1,227 800 514 221 (3,412)
Total Assets 471,928 $ $ 418,605 $ 297,517 $ 262,478 $ 254,780 $ 263,409 $ 277,198 $ 290,073 $ 300,306 $ 310,278 $ (0) $ (418,605)
Accrued Expenses 45 $ $ 36 $ 117 $ 120 $ 124 $ 127 $ 131 $ 135 $ 139 $ $ $ (36)
Accrued Investment Expenses - 50 44 42 43 46 48 50 51
Accrued Ceding Fees 467 353 297 246 181 124 80 52 26 (353)
Federal Income Tax Payable (Receivable) (46,249)
Allowance for Doubtful Accounts 46,249
Notes Payable 12,511 0 0
Interest Payable -
Unearned Premiums 1,002 822 695 585 457 341 243 163 106 (822)
Losses Payable 2,636 18,527 8,155 4,586 2,769 911 184 63 27 (18,527)
Loss Reserves and IBNR 255,859 186,196 80,130 37,931 11,990 2,611 983 323 0 0 0 (186,196)
Total Liabilities 272,521 205,933 89,444 43,512 15,562 4,158 1,666 784 348 51 0 (205,933)
Paid in Capital 69,880 82,968 82,968 82,968 82,968 82,968 82,968 82,968 82,968 82,968 82,968
Retained Earnings (Accumulated Deficit) 138,770 128,961 129,704 125,105 135,998 156,250 176,283 192,563 206,321 216,990 227,258 98,297
Net Income (Loss) - YTD (9,243) 743 (4,599) 10,892 20,252 20,033 16,281 13,758 10,669 10,268 (11,592) (12,335)
Cumulative Dividends Paid - (298,634) (298,634)
Total Stockholder's Equity 199,407 212,672 208,073 218,966 239,218 259,251 275,531 289,289 299,958 310,226 (0) (212,672)
Total Liabilities and Stockholder's Equity 471,928 $ $ 418,605 $ 297,517 $ 262,478 $ 254,780 $ 263,409 $ 277,198 $ 290,073 $ 300,306 $ 310,278 $ (0) $ (418,605)
Return
56 Confidential
WMMRC Cust omer s
Company Descripti on 2009 Revenue Mix Credi t Rating
Genworth Genworth Financial, Inc., provides insurance, wealth management, investment, and
financial solutions in the United States and internationally. The company operates
in three segments: Retirement and Protection, International, and U.S. Mortgage
Insurance. The Retirement and Protection segment offers various protection
products, including life, long-term care, Medicare supplement insurance, and
senior supplemental products, as well as care co-ordination services; and wealth
management and retirement income products. The International segment provides
mortgage insurance products in Canada, Australia, Mexico, and European
countries, as well as offers payment protection coverages. This segment also
provides various services, analytical tools, and technology that enable lenders to
manage risk. The U.S. Mortgage Insurance segment offers mortgage insurance
products principally insuring prime-based, individually underwritten residential
mortgage loans. Additionally, the company provides institutional products
consisting of funding agreements, funding agreements backing notes, and
guaranteed investment contracts; and corporate-owned life insurance products.
Retirement and
Protection: 62.4%
International: 28.2%
U.S. Mortgage Insurance:
9. 1%
Corporate and Other:
0. 2%
BBB
MGIC MGIC Investment Corporation provides private mortgage insurance to the home
mortgage lending industry in the United States. It provides primary insurance
coverage that provides mortgage default protection on individual loans and covers
unpaid loan principal, delinquent interest, and various expenses associated with the
default and subsequent foreclosure. The companys primary insurance is written on
first mortgage loans secured by owner occupied single-family homes, first liens
secured by non-owner occupied single-family homes, and on vacation or second
homes. MGIC Investments principal product, primary mortgage insurance is
written through the flow market channel, in which loans are insured in individual
and loan-by-loan transactions, as well as through the bulk market channel, in which
portfolios of loans are individually insured in single, bulk transactions. It also
provides various mortgage services for the mortgage finance industry, such as
contract underwriting, portfolio retention, and secondary marketing of mortgage-
related assets.
N/A CCC
Suppor t
________________________________________________
Source: Capital IQ.
Return
57 Confidential
WMMRC Cust omer s (Cont d)
Radian Radian Group Inc provides credit-related insurance coverage and financial services
in the United States and internationally. The company operates in three segments:
Mortgage Insurance, Financial Guaranty, and Financial Services. The Mortgage
Insurance segment offers credit protection for mortgage lenders and other financial
services companies on residential mortgage assets. This segment serves mortgage
originators, such as mortgage bankers, mortgage brokers, commercial banks,
savings institutions, and credit unions. The Financial Guaranty segment insures and
reinsures municipal bonds, structured finance transactions, and other credit-based
risks, as well as provides credit protection on various asset classes through
financial guarantees and credit default swaps. This segment serves financial
institutions that structure, underwrite, or trade securities issued in structured
finance obligations. The Financial Services segment specializes in credit card and
bankruptcy-plan consumer assets, as well as originates subprime credit card
receivables and has various other similar ventures related to consumer assets.
Mortgage Insurance:
69.2%
Financial Guaranty:
30.8%
Financial Service: 0.0%
CCC
PMI The PMI Group, Inc. provides residential mortgage insurance products that offer
loss protection to mortgage lenders and investors in the event of borrower default
in the United States. The company offers mortgage insurance products to meet the
capital and credit risk mitigation needs of its customers. Its products include
primary mortgage insurance through primary flow channel that provide the insured
with first-loss mortgage default protection on individual loans at specified coverage
percentages; and mortgage insurance to credit unions through its 50% joint venture
interest in CMG Mortgage Insurance Company. The PMI Groups customers
primarily include mortgage lenders, depository institutions, commercial banks, and
investors.
Mortgage Insurance:
92.7%
International Operations:
4. 8%
Corporate and Other:
2. 4%
CCC+
Suppor t
________________________________________________
Source: Capital IQ.
Return
58 Confidential
WMMRC Cust omer s (Cont d)
UGRIC United Guaranty Residential Insurance Company provides mortgage guaranty
insurance and reinsurance solutions. It offers direct insurance coverage insuring, on
an individual basis, loans secured by a first mortgage lien against real estate
consisting of one-family and four-family dwellings, as well as reinsurance of
business written by other mortgage guaranty insurers. United Guaranty Residential
Insurance Company operates as a subsidiary of National Union Fire Insurance
Company Of Pittsburgh, Pa.
N/A BBB
RMI Republic Mortgage Insurance Company provides mortgage insurance services. It
protects lenders from losses due to defaults on first mortgages for single-family
residential properties; offers pre-homeownership, structured finance, technology
solutions, market analysis, loan services, and mortgage training; and provides
lender services, including contract underwriting, real estate, and strategic advisory
services, as well as offers online services. It serves industrial and financial services
institutions. Republic Mortgage Insurance Company operates as a subsidiary of
Old Republic Mortgage Guaranty Group, Inc.
N/A BBB-
Suppor t
________________________________________________
Source: Capital IQ.
Return
Confidential
Compar abl e Company Anal ysi s
Return
60 Confidential
________________________________________________
Source: Capital IQ.
Note: As of 10/14/2010.
Note: Comparable company list excludes multi-national reinsurance businesses.
($ in millions, except per share amount)
Given the size of comparable companies and the nature of the operations, Blackstone did not rely on the
comparable company analysis as a primary determinant of Reorganized WMI value.
Current Price Price as a Multiple of: Gross Corporate
Market Share % of 52-Week GAAP EPS Book Tangible Div. ROE Debt / Cap TEV / Credit
Company Ticker Cap. Price High Low 2010E 2011E Value BV Yield 2009E (At Book) Revenue Rating
Distressed Insurers
PMI Group Inc. NYSE:PMI $ 678.5 $ 4.21 54.3% 232.6% NM NM 0.7x 0.7x % (64.5%) 38.1% 1.91x CCC+
Radian Group Inc. NYSE:RDN 1,184.5 8.91 47.7 NM NM NM 0.7 0.7 0.1 (49.3) 42.1 10.5 CCC
Genworth Financial Inc. NYSE:GNW 6,395.6 13.07 67.5 156.2 13.2 8.0 0.5 1.4 2.3 44.1 1.3 BBB
MGIC Investment Corp. NYSE:MTG 2,106.7 10.51 76.2 282.5 NM 21.6 1.1 1.1 (25.2) 34.2 2.4 CCC
MBIA Inc. NYSE:MBI 2,605.4 13.00 99.2 407.5 NM NM 1.0 1.2 (42.6) 86.5 7.1 BB-
Diversified Insurers
AFLAC Inc. NYSE:AFL $ 25,815.0 $ 54.83 96.9% 137.4% 10.0x 9.0x 2.6x 23.7x 2.0% 22.4% 21.2% 1.5x A-
Ameriprise Financial Inc. NYSE:AMP 12,612.7 50.24 98.9 147.2 12.4 10.1 1.2 1.2 1.4 10.4 49.5 1.1 A
Lincoln National Corp. NYSE:LNC 8,004.3 25.27 75.3 122.4 7.3 6.7 0.6 7.3 0.2 6.3 32.1 1.6 A-
MetLife, Inc. NYSE:MET 32,522.2 39.64 83.0 123.3 9.1 7.6 0.8 2.0 7.5 6.2 44.2 1.2 A-
Old Republic International Corp. NYSE:ORI 3,277.3 13.85 89.4 138.2 38.8 12.9 0.8 0.9 4.9 1.4 8.0 1.1 BBB+
Principal Financial Group Inc. NYSE:PFG 8,542.7 26.67 84.9 127.7 10.2 9.3 1.0 2.0 7.5 9.4 23.2 1.2 BBB+
Prudential Financial, Inc. NYSE:PRU 25,302.1 54.18 81.1 124.8 9.2 8.2 0.9 1.6 5.2 19.8 50.7 1.8 A
Torchmark Corp. NYSE:TMK 4,413.0 54.60 96.6 137.8 8.7 8.1 1.1 72.4 1.1 14.1 22.0 1.9 A
Unum Group NYSE:UNM 7,359.1 22.52 85.2 121.9 8.2 7.5 0.8 1.2 1.5 10.5 22.2 0.9 BBB-
Return
WM Confidential Limited Access
Privileged
and Confidential
I 71150
shington Mutual c
Board of Directors
Minutes
Date I
July 15 2008
WaMu Center
Boardroom
32nd floor
Seattle Washington
Attendance
Directors Present
Stephen
E Frank Chair
David n a an
Stephen 1 Chazen
Kerry
illi er
Thomas C
Leppert
Charles M Lillis
Phillip
Matthews
Directors sent None
Board Observer Present
Larry
Kellner
visor Present
Regina
T
Montoya
Margaret
Osmer McQuade
Michael
Murphy
Wm G Reed Jr
Orin C Smith
James Stever
Lee
Meyerson Partner at
Simpson
Thacher Bartlett LLP
Management
Present
Thomas
Casey
Daryl
D David
Cathy Doperalski
Barry Koch
Stewart M Landefeld
FDIC A en e
Steve Funaro Lead Examiner
OTS Attendees
Darrel
Dochow Director
John
McMurray
John Robinson
Stephen
J Rotella
Michael S Solender
Susan R
Taylor Secretary
Doe 183723
WMI_PC_08788123.00001 Restricted For Use in Connection with Plan Confirmation Only
HIGHLY CONFIDENTIAL
Return
Confidential Limited Access
Privileged
and Confidential
171 5
Edwin Chow Deputy
Director
Dale Blackburn
Assistant Director
Ben Franklin Examiner
i
n
Charge
John Bisset Operations
Lead Examiner
Robert Archibald Asset Quality
Lead Examiner
The materials for the Board
meeting
had been
posted
to
BoardVantage
and sent via
overnight
courier to the Directors on July
10tt
Updated
material for several of the
presentations was handed out at the meeting
The Board of Directors of
Washington Mutual
Inc I or the
Holding
Company met concurrently
with the Board of Directors of
Washington
Mutual Bank
or the
Bank on July 15 2008
Everyone
listed above was present i
n
person except
for Mr
Meyerson
who attended
by telephone
A
quorum
was
present
at the
beginning
of the meeting
Mr Frank called the
meeting
to order at 1220
pm
Executive Session
The Board met
i
n executive session for 40 minutes
prior
to
asking management
to
join
the meeting
The Board discussed several
topics during
executive session with
Mr
Killinger including
the environment regulatory
and
legislative issues personnel
issues
the
study performed by McKinsey operational issues loan performance and
liquidity
Messrs
Casey David
Lan efel
McMurray Robinson
Rotella and
Solender and s
Taylor
then
joined
the
meeting
Minutes from June 17 Strategic Planning Session Meetin
on a motion
duly
made and seconded following
submission of a
suggested
change
the minutes from the June 16 17 Strategic Planning
Session and the June
17 2008
meeting
were approved as modified
Review of Consolidated
Reports
Messrs
Casey
Rotella and illin er submitted
reports
on the
operations
and
prospects
of the
Holding Company
and its subsidiaries including
the
Bank on a
consolidated basis The reports provided
information on recent and
anticipated
financial results and economic sensitivities
including separately
information with
regard to tail
Banking
Card Services Home Loans and the Commercial
group
operations initiatives regulatory matters investor relations and media
analytics
The Chairs of the Audit Finance and Human Resources Committees submitted
reports
on behalf of their Committees
which had met jointly with respectively
the
Audit Finance
and an Resources Committees of the
Holding Companys
Board
of Directors Matters that were of
particular
relevance to the Association are
reflected
i
n these minutes
Doc 1 83723 2

HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
171508
Second Quarter 2008 Financial Results
Mr
Casey
directed the Boards attention to the materials
previously provided
regarding
the most recent
quarters
financial results He
reported on the
Holding
Companys
overall net loss of 33 billion for the
quarter
and reviewed some of te
factors
contributing
to the results including
the total second
quarter provision
of $59
billion and the
impact
of the beneficial conversion feature He discussed the
earnings announcement that would be released on
July
22 and
responded
to
numerous questions
from Directors He handed out a draft version of the
presentation
entitled Draft
July 22
2008 Second Quarter 2008
Earnings
Presentation and reviewed the materials with the Board reviewed
approximately
the first half of the draft
presentation
with the Board before r Frank
noted that
i
t was time for the examiners to
join
the meeting Among
other
topics
Mr
Casey
reviewed the information
expected
to be disclosed
regarding strategic
objectives
and actions for
2008
financial
performance trends and the environment
Messrs
Casey
and other members of
management responded to questions
regarding
credit losses the
provision
credit
management
and other issues
Meet with Regarding Examination Findings
Ms
Doperalski joined
the
meeting
at 13 with the OTS and IC attendees
listed above Mr
Meyerson joined
the
meeting by telephone
at this time as D Mr
Franklin distributed a Power Point
presentation
labeled
uMeeting
with Board of
Directors July 15 2008 Office of rift Supervision September 10 2007 June 30
2008 Comprehensive
Examinations of
Washington Mutual Inc Washington
Mutual
Bank and
Washington
Mutual Bank fs Over the next two hours
Mr Franklin
reported on the results of the examination taking
the Board
through his presentation
material and
responding
to
questions throughout
Mr Franklins presentation began with a review of the
scope
of the examination its
continuous nature and the
multiple subject
areas covered He noted that a
special
appraisal investigation
had been initiated earlier
i
n
2008
and was nearing
completion
Mr Franklin then
reported on the
primary areas of focus for the recent
examination noting
that several areas
asset quality
ALL level and
methodology
and
liquidity
were
being
focused on due to the current market environment
Mr Franklin reviewed the matters requiring
board attention
MRBAs as a result of
the recent examination noting
which items had
previously
been identified for board
attention Mr Franklin
responded
to a question
from r Frank
by confirming
the
progress already
made
i
n certain
areas
such as to enhancement of tALL
methodology
and the need for continued refinement
Mr Franklin then commenced a more detailed review of the examination results
starting
with asset
quality
which the OTS viewed as unsatisfactory Mr Franklin
reviewed trends
i
n asset
quality
and
practices across the Banks different loan
portfolios identifying
both weaknesses and
strengths
Mr Franklin and Mr Dochow
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WMI 71508
responded
to numerous questions
from the Board including questions regarding the
Banks
practices industry practices generally
and observations from
previous
examinations Mr Franklin
reported
on
progress
made
by management
to date
i
n
addressing
the identified issues and remaining items to be addressed Mr Franklin
concluded the discussion on asset quality by reporting
that the Banks
rating
for
asset quality was being
decreased to reflect increased risk
Mr Franklin then turned the Boards attention to
compliance
which the OTS viewed
as needing
further improvement
He focused on Bank
Secrecy Act BSA and
Antimoney
Laundering
Act
AML compliance
With
respect
to BSAAML
compliance
Mr Franklin
reported
that at the time of the examination the OTS believed that the
Bank had not
complied
with the Cease and Desist Order He
reported
that was
aware that
management
had submitted an aggressive new work plan to address the
issues that
management
was preparing response
tote draft
findings
memo and
added i
n
response
to a Directors
question
that he was optimistic
that the new work
plan
would lead to compliance
Mr Frank stressed the
importance
of
progress on
this issue and
urged
the OTS
representatives
to communicate with him
early
and
regularly regarding
their assessment of compliance i
n this area Mr Franklin noted
the
progress
made
i
n
compliance management generally
but
expressed concern
over the
continuing changes
tote
departments
structure and
leadership
He also
addressed other areas of
compliance
and
responded
to several
questions
from
Directors The Banks
compliance rating
was unchanged
Mr Franklin
reported
that
earnings were unsatisfactory
and that the
rating assigned
i
n
February was retained
I
n
response
to a Directors
question
Mr Dochow
acknowledged
the Banks success i
n
continuing core earnings
but indicated
uncertainty
about the future given the current environment
Mr Franklin reported that capital was satisfactory
based on current financial
projections
and commended
management
and the Board forte successful and
timely capital raising efforts while
acknowledging
that
uncertainty
about future credit
losses
posses a risk to
continuing capital adequacy
The Banks
capital rating was
decreased
Mr Franklin
reported
that while
liquidity was stressed and the current levels were
only marginally adequate
the OTS viewed the Banks
liquidity management
practices policies
and team as
strong
The
liquidity rating
remained
unchanged
Also
unchanged
were the ratings on sensitivity to market risk and the IT
composite
rating
r Franklin
noted that the
practices i
n both areas were effective and
satisfactory
Mr Franklin
reported
that the
management rating was decreased He noted that the
management rating
reflected a combination of all the other components and as a
result was
unsatisfactory
He reviewed the areas for
improvement
with the Board
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71508
as well as some of the
positive
actions
by
the Board and
management I
n
response
to a question
from r Bonderman Mr Franklin noted
managements
and the
Boards role
i
n
preventing
examination issues from
recurring
Mr Dochow then
responded
to a Directors
question
about interaction between the Board and
management
Discussion ensued
Mr Franklin summarized several
takeaways
for the Board to consider including
establishing
and
supporting an effective
enterprise
risk
management function
addressing compliance
deficiencies and
ensuring
that
expense
cuts do not weaken
controls He addressed the need for a new
comprehensive
business
plan
to refocus
the long term strategy After reviewing the takeaways he presented to the Board
the examination
ratings as of June 30 2008 shown
i
n
comparison to the
ratings
on
February 27 2008 and
January
2007 Mr Franklin then invited r Funaro to
follow
up
with the views of the IC
Mr Funaro outlined how the views of the FDIC were similar or different from those of
the OTS
I
n
particular
he
reported
that
given
the uncertain
timing
and
magnitude of
future credit losses the FDIC believed that credit losses could
greater
than
anticipated i
n which case more
capital
would be
necessary
He noted that further
rating agency downgrades were possible and identified several other areas of
concern After
enumerating
several
concerns
he noted that the FDIC was
waiting
to
receive the enforcement action
being developed by
the OTS
Mr Dochow then submitted his own perspective regarding
the Bank and its outlook
He highlighted some of the challenges i
n the marketplace and summarized those
areas of concern from the examination He indicated that the OTS would initiate
some sort of enforcement
action
the extent of which had not
yet
been determined
but would be shared with
management
within the next few
days
He indicated that
the OTS would not tolerate the Bank
continuing
with its current
composite
uniform
financial institution
rating
for the
longterm
and that
scrutiny by
the
regulators
would
continue at a high level
At 300
pm
Mr Frank asked
management to leave so tt the Board
might
continue
i
n executive session with the
representatives
from the OTS and FDIC All
members of
management except
for Mr
Killinger
then left the
meeting
Mr
Meyerson continued to participate by conference call Discussion with the
examiners then ensued
i
n executive session
Discussion
Meeting
with
Regulators Regardigg
the Examination
Findings
At
approximately 345 the
regulators
left the
meeting
and Messrs
Casey David
Landefeld McMurray Rotella Solender and Ms
Taylor rejoined
the
meeting
Mr
Meyerson again joined
the
meeting by telephone
after a break of a few minutes and
was asked to provide his observations He submitted his observations of the
regulators report noting the sense of
urgency conveyed
the
regulators expression
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171510
of the importance
of the Boards immediate involvement and the
strong message
that the OTS would not tolerate the current
composite rating
He addressed the
differences between the views
conveyed by the 01S and IC He and Mr
Solender discussed Mr Dochows comments
regarding an enforcement action and
outlined what the Board could
expect
the next steps
to be
The Board then
engaged i
n
an active discussion with
management regarding
the
substance of the
reports
from and the IC and what actions should be or
had
already been taken to address the
regulators concerns and
findings
The
Board discussed the need to urgently
address the enumerated issues and
considered whether a committee of the board could more
quickly
and
efficiently
oversee the areas of concern I
n
response
to a comment from Mr Stever Mr
Rotella stressed the importance of pulling together a management team that was
empowered
with
authority to address these issues and to track and
organize
progress I
n
response
to Directors comments Messrs Solender Meyerson
and
Casey
discussed whether an enforcement action would be
publicly
disclosed The
Directors discussed next
steps
for aressin the issues and for
communicating
with
the OTS directed management to resolve who should lead the exam re e i tion
effort and directed Mr
Meyerson to address the disclosure
question
Mr Rotella
then responded to a question
from r Lillis
regarding
the internal
employee
communications
regarding
resolution of some of the issues
Mr Frank then asked the Directors to consider whether
they were comfortable with
their
understanding
of the financial information
i
n the materials and which Mr
Casey
had started to review earlier
i
n the
meeting given
the time constraints and
noting
that much of
i
t had been
presented
at both the Audit and Finance Committee
meetings
earlier that day and the prior day
Mr Bonderman indicated that
i
n the
future he would like to see more
summary
information less detailed factual data
Mr Casey agreed provided a data
point
asked for earlier
i
n the
meeting
Mr
Frank then asked Mr Rotella to
present
his
operations update
Poject
Restart
Mr Rotella submitted the written material for
Project
Restart but did not
go through
the presentation
with the Board
Project SpringProject
SEAL
Mr Rotella asked the Board to refer to the updated version of the materials handed
out at the meeting concerning the plans
for branch sales and store closures
referred
to as Project Spring
and
Project SEAL respectively
Mr Rotella
presented
the
material noting
that a sale of branches was currently being negotiated
He
responded
to
questions
from the Board
regarding operating losses savings
and
alternatives considered
regarding
branches
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J 71508
Supplemental
Written Financial
Report
Mr Frank noted the Boards
receipt
of an additional written Financial
Report
with
regard
to the
Holding Companys
financial
performance i
n the second
quarter
of
2008
Informational
Reports
Mr Frank directed the Boards attention tote
following
three
reports
that had been
previously provided to the Board Investor Relations
port Regulatory
Matters
Report
and Media
Analytics Report
Messrs Koch and Robinson then entered the room and r Frank submitted report
on the
Compliance
Committee of the Bank to the Banks Board of Directors
Messrs Koch and Robinson left the
meeting
when the
report was concluded
Audit Commiftee
Repo
Mr Frank
reported on the
meeting
of the Audit Committee which had met
i
n
joint
session with the Audit Committee of WMB He
reported
that the Committee had
reviewed the
earnings press
release forte second
quarter
of 2008 earnings
driver
guidance
and the Controllers
Report
Mr Frank reviewed some of the issues
reviewed
by
the Committee including
the
impact
of the beneficial conversion
feature modifications to the allowance for loan losses and the decision to not
recognize goodwill impairment i
n the second
quarter
The Committee had
reviewed and
approved
tax services to be
provided by
Deloitte and had reviewed
Moss Adams report of the WaMu Savings Plan Mr Frank described a letter
provided by
Mr Schaub of Deloitte regarding
the results of the PCAOB review of
the
Holding Companys
audit He
reported on findings
and observations made
by
Audit Services and the results of
investigations by
the
Corporate
Fraud
Investigations department
He described a
report by
Mr
McMurray
to the Audit
Committee on enterprise risk management and noted some of the
key
risks
facing
the business He noted the
regulatory report submitted by Mr Robinson which was
consistent with the
report
from the examiners Mr Frank then described a report
submitted
by
Mr Landefeld
regarding enterprisewide compliance risk
and noted
the
progress
made
i
n the search for a new chief
compliance
officer He then
described r Solenders
report to the Audit Committee on
legal issues noting
trends
i
n
litigation
Report
of Finance Commiftee
Mr Smith submitted a
report
of the Finance Committee
meeting
which had met
i
n
joint
session with the Finance Committee of WMB Mr Smith
reported
that the
Finance Committee reviewed a deep dive report on credit which included
information on the
housing market
the
performance
of loans
i
n the Banks
portfolios
and information on cumulative losses overall The Committee also reviewed a deep
dive
report on capital
and
liquidity including a report that management believes the
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WMI 71508
capital position
to be
adequate
based on the stress conditions outlined
i
n the
long
range forecast although rating agency
and
regulatory agency scrutiny i
s
expected
to
continue Mr Smith noted that much of the information reviewed at the Finance
Committee
meeting
had also been raised earlier
during
the Board
meeting
WMI Approval
of Dividend
Mr Smith
reported
that the Finance Committee recommended
approval
of a
dividend on common stock of one cent
per
share and cash dividends on the Series
K and Series R preferred
stock
i
n the form
presented
The material submitted
included the
Holding Companys
available
liquidity
and
capital position giving
effect
to the dividends On a motion
duly
made and seconded the resolutions submitted
to authorize the dividend were unanimously adopted by
the Board as
presented
A
copy
of the resolutions adopted will be maintained as an appendix to these minutes
i
n the minute book
Update on Director Search
Mr
Leppert
directed the Boards attention to material that had been handed out
earlier which he had brought to the meeting
He
reported that SpencerStuart had
been engaged to conduct the search for director candidates and he described some
of the
analysis
undertaken
by
the firm to assess the current Boards
expertise
and
characteristics as compared
to the Boards of
peer
institutions described the
results of some of that
analysis
and then described the profiles developed for
targeting possible
candidates He then announced that a Governance Committee
meeting was scheduled for
midAugust so that the committee could discuss the
profiles
and candidates He asked the Board to
provide
him with feedback
Officer Elections
On a motion
duly
made and seconded the Board
unanimously approved
certain
officer elections promotions transfers terminations and other
changes
A
copy
of a
schedule of all such
changes
as submitted to the Board will be
appended
to these
minutes and will be
kept i
n the minute book
Mr Frank then asked all management to leave the
room except
for Messrs
Killinger
and David i
n order to convene
i
n executive session
Executive Session Resources Committee
The Board commenced an executive session Mr Stever submitted the
report
of the
Human Resources Committee
which met
i
n
joint
session with the Human
Resources Committee of WMB The Committee received a report
of the Plan
Investment Committee on pension
and
savings plans including a change
to the
limits
percentage
of new 401k
contributions that
may
be invested
i
n
Holding
Company
Stock The Committee heard a
report
from the Plan Administration
Committee on health plan changes for 2009 The Committee ratified and approved
various
changes
to the
language
of
change i
n control
agreements
with
employees
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WMI 71508
The Committee
approved
a
proposal
which allows the Chief Executive Officer to use
shares of the Holding Companys stock
i
n satisfaction of tax
withholding obligations
from former stock
option gain
deferral Mr Stever
reported that after
lengthy
discussion
regarding
the
proposed
Executive Stock Purchase
Program
the
Committee had
approved
the
Program
Mr Stever also
reported on discussions
regarding plans proposed
for retention of
key
executives
Approval of Stock Option Purchase Program
Mr Stever
reported
that the Human Resources Committee recommended
approval
of a stock
option purchase program
He described the terms of such a
program
using
the
presentation
material
previously provided to the Board labeled
Program
Summary
and then described the views of the Committee
Upon a motion
duly
unanimously adopted
the resolutions as presented
to the Board as a handout A
copy
of the resolutions as approved will be
kept
with
the minutes
i
n the minute book as an appendix
Messrs David and
Killinger
left the
meeting
after the
report
of the Human Resources
Committee
Executive Session without CEO
During
the final executive session the Board discussed the results of the
midyear
evaluation of the CEO conducted the previous evening
and discussed various
personnel
and human resources issues The Human Resources Committee
reconvened its meeting during
the executive session
The
meeting was adjourned
at
approximately
730
pm
Susan R
Taylor Secretary
Appendices
A Dividends
B Stock
Option
Purchase
Program
Doc 183723 9
HIGHLY CONFIDENTIAL
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APPENDIX A
WASHINGTON MUTUAL
INC
DECLARATION OF DIVIDENDS
Dividend Stock
RESOLVED
that a dividend of $001
per
share of common stock
i
s declared to
be payable on August 15 2008 to
tpersons
who are holders of record of the common
stock of the
Corporation
as of
July 31 2008
Dividend Series Preferred Stock
RESOLVED
that a dividend of 101112 per
share of Series K
preferred
stock
i
s declared to be
payable
on
September 15 2008 i
n cash to the
persons
who are
holders of record of the Series K
preferred
stock of the
Corporation
as of
September 1
2008
Dividend Series Preferred Stock
RESOLVED that a dividend of 19056
per
share of Series R preferred stock
i
s declared to be payable on September 15 2008 i
n cash to the
persons
who are
holders of record of the Series R
preferred
stock of the
Corporation as of
September 1
2008
General
RESOLVED that the officers of the
Corporation are hereby authorized to
prepare
and file all
required
notifications and
reports
with The New York Stock
Exchange or with such other
regulatory
authorities as such officers
may
deem to be
appropriate
to effectuate such dividends
RESOLVED FURTHER that this declaration of dividends shall not become
effective until the later of
A July 15 2008 or B
the date of
compliance
with all
applicable statutory
and
regulatory requirements
HIGHLY CONFIDENTIAL
Return
APPENDIX
RESOLUTIONS
ADOPTED BY
BOARD OF DIRECTORS
WASHINGTON MUTUAL INC
a Washington corporation
July 15 2008
APPROVAL OF STOCK OPTION
WHEREAS Washington Mutual Inc a
Washington corporation the
Corporation
has
granted
stock
options
to its
employees under the Washington
Mutual 1994 Stock Option Plan as amended and restated
the
1994
Plan
and under
the
Washington Mutual
Inc 2003 Amended and Restated
Equity
Incentive Plan
the
I
1
WHEREAS
many
of the stock
options granted
under the 1994 Plan and the EIP no
longer provide
the intended incentive to
eloyees
because of the decline
i
n market
price
of the
Corporations
common stock
WHEREAS
the Board of Directors of the
Corporation the Board
has considered
a proposed
Stock
Option
Purchase
Program pursuant to which the
Corporation
would
offer to
purchase
for cash certain
outstanding employee
stock
options
held
by eligible
employees as described and on the terms and conditions set forth
i
n an Offer to
Purchase the Offer which has been
presented
to and reviewed
by
the Board and
i
s
attached Exhibit A
the
Offer to
Purchase
WHEREAS
the Human Resources Committee of the Board has recommended
that the Board
approve
and
adopt
the Stock
Option Purchase
Program
and the Offer
with final
pricing
and other terms to be
approved by
the Human Resources Committee
based on a pricing period
to follow the release of the
Corporations Q2 2008
earnings
WHEREAS the Chief Financial Officer of the
Corporation
has informed the Board
that the
Corporations purchase
of stock options pursuant
to the Offer would not result
i
n
the
Corporations a inability
to
pay
its liabilities as
they
become due
i
n the usual course
of business or b
total assets
being less than the sum of its total liabilities
plus
the
amount that would be needed
i
f the
Corporation were to be dissolved at the time of the
Offer to
satisfy
the
preferential rights upon
dissolution of shareholders whose
preferential rights are superior to those of
option
holders
participating i
n the Offer and
therefore the
Corporation
would
satisfy
the
requirements
set forth
i
n
Washington
Revised ode Section 23B06400
HIGHLY CONFIDENTIAL
Return
WHEREAS
the Amended and Restated Articles of Incorporation of te
Corporation
does not
prohibit
the Corporation
from
purchasing
stock
options pursuant to
the Stock Option Purchase Program
and
WHEREAS the Board believes that the Stock
Option
Purchase
Program
and the
Offer are
i
n the best interests of the
Corporation
Now THEREFORE IT RESOLVED that the Stock
Option
Purchase
Program
and
the Offer be and
they hereby are adopted and approved substantially upon
the terms
and
subject
tote conditions set forth
i
n the Offer to Purchase but with final
pricing
and
other terms to be
approved by
the Human Resources Committee based on a pricing
period to follow the release of the
Corporations
02 2008
earnings
RESOLVED
FURTHER
that
subject
to final
approval
of
pricing
and other terms
by
the Human Resources Committee the Chief Executive Officer the Chief Human
Resources Officer the Chief Legal Officer and
any
all other officers of the
Corporation acting at the direction or under the
supervision
of
any
such officer acting
alone or together the
Authorized
Officers be and each of them
hereby individually
i
s
authorized and
empowered i
n the name and on behalf of the
Corporation to
implement
the Stock Option
Purchase
Program
and to effect and consummate the Offer
on the terms and conditions set forth
i
n the Offer to Purchase and
i
n such a manner as
such officers deem
necessary proper
and advisable and as a result
acquire
for cash
up
to all of the
eligible options
from eligible employees as set forth
i
n the Offer to
Purchase the commencement of the Offer
constituting
conclusive evidence of such
approval
and authorization and that the terms of the Offer are i
n accordance with this
resolution and constitute the
duly
authorized acts of the
Corporation
RESOLVED FURTHER that the Authorized leers be and each of them
hereby
i
s
authorized and
empowered i
Corporation to issue
whatever
press
releases and to
prepare execute distribute deliver and
file as
applicable
with the Securities and
Exchange
Commission
any
and all
public filings
pursuant to the Securities Exchange
Act of 1934 as amended
the Exchange Act
including
without limitation a Tender Offer Statement on Schedule TO and exhibits
supplements or amendments thereto
that such officer or officers
may
deem
necessary
appropriate or advisable the
publication
distribution andor
filing
thereof to constitute
conclusive evidence of such approval
and that the same are i
n accordance with this
resolution and constitute the
duly
Corporation
RESOLVED FURTHER that
subject
to final
approval
of
pricing
and other terms
by
the Human Resources Committee the Authorized leers be and each of them hereby
i
s
authorized and
empowered i
Corporation to execute
and deliver such
agreements
instruments and documents and to do or cause to be
done
any
and all acts and things as any
such officer shall determine to be
necessary
proper
or advisable to
implement
the Stock
Option
Purchase
Program
to effect and
consummate the Offer and the transactions
contemplated i
n the Offer to Purchase and
to fulfill the
Corporations obligations thereunder including without limitation delivering
Offerrelated documents and materials to eligible employees obtaining any
consents or
HIGHLY CONFIDENTIAL
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waivers from third
parties
before
consummating
the Offer engaging
service
providers i
n
connection with the
Program
and the Offer such
agreements
instruments and
documents to be
i
n such form and to contain such terms and conditions as shall be
approved by
the officer
executing
the
same
such officers execution and
delivery
of
such
agreement
instrument or document to constitute conclusive evidence of such
approval
and that the same are i
n accordance with this resolution and constitute the
duly
Corporation
RESOLVED
FURTHER
that the Authorized Officers
be and each of them
hereby
individually
i
s authorized and
empowered i
Corporation to take all action
necessary to comply
with
any
and all
applicable laws
i
n
respect
of the Stock
Option
Purchase
Program
and the Offer and to take such other
action as he or she
may
deem
necessary or appropriate i
n connection with the Stock
Option
Purchase
Program
and the Offer or to
carry
out the intent of the
foregoing
resolutions
RESOLVEDFURTHER that
subject
to final
approval
of
pricing
and other terms
by
the Human Resources Committee the Authorized Officers
be
and each of them
hereby
individually
i
s
authorized and
empowered i
Corporation
to exercise discretion
i
n
administering
and
implementing
the Stock
Option
Purchase
Program
and
effecting
the
Offer accept
for
purchase all eligible options
tendered
by eligible employees
under the Stock
Option
Purchase
Program and
pursuant
to the Offer and to
pay or cause to be
paid
all amounts owed to tendering
eligible employees
for the
purchase
of such
options
and
subject
to final
approval
of
pricing
and other terms
by
the Human Resources
Committee
the
purchase
of
eligible options under the Stock
Option
Purchase
Program
and
pursuant to the Offer
be
and
hereby are approved for
all
purposes including
for
purposes
of
satisfying
the available
exemptions
under Rule
16b3 of the
Exchange
Act
RESOLVED that the Authorized Officers be and each of them
hereby individually
i
s authorized directed and
empowered i
Corporation
to take all actions and do all
things necessary
and
appropriate
to effectuate the
preceding resolutions including making
execution and
delivery
of all
documents
exhibits agreements waivers papers undertakings
instruments and certificates filing
with the SEC such notices documents or other items paying
or
causing
to be
paid
all
costs and
expenses
incurred
by or on behalf of the Corporation i
n connection with the
transactions referred to
i
n these
resolutions including
without
limitation all fees related
to the Schedule TO and
any
and all
filings
with the SEC and
any
other
governmental
authorities andor
performing
such other
acts as each officer of the
Corporation may
from time to time deem
necessary
desirable or appropriate i
n order to
carry
out the
intent and
purpose
of the foregoing resolutions and
HIGHLY CONFIDENTIAL
Return
RESOLVED FURTHER that the acts and deeds heretofore done
by any
of the
officers of the Corporation
and
any employee or agent
of the
Corporation acting on
behalf of an officer to effect the
purpose
and intent of the
foregoing
resolutions be and
hereby are adopted ratified
confirmed and
approved i
n all
respects
HIGHLY CONFIDENTIAL
180833
Return
Offer Purchase
180833
HIGHLY CONFIDENTIAL
Ext1libit A
Return
From: Brouwer, Curt
To: Anderson, Jason
S
.
US Seattle)
Sent: 8/21/2008 6:54:23 PM
Subject: Per our discussion
Attachments: Discussion Materials 032608.pdf
As we discussed, only provide this document
t
o Jimuntil we have further discussionswith Todd tomorrow.
Curt <<...>>
Curt Brouwer
Washington Mutual
Senior Vice President, Corporate Tax
1301 Second Ave., WMC3201
Seattle, WA 98101
206.500.4155 direct 206.377.3018 fax
E-mail: curt.brouwer@wamu.net
IRS Circular 230 Disclosure: To Ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal
tax advice contained in this communication including any attachments) is not intended or written to be used, and cannot be
used, for the purpose of i) avoiding penalties under the Internal Revenue Code or ii) promoting, marketing or recommending
to another party any transaction or matter addressed herein.
CONFIDENTIALITY NOTICE: This message including any attachments) is confidential and may contain sensitive information. Do
not disseminate this information to parties who do not have the authorization to view this material. If you are not the
intended recipient of this information or an employee or agent responsible for delivering this message to the intended
recipient(s), please do not read, disseminate, distribute or copy this information.
I
f you have received this message in
error, please contact the sender immediately. Washington Mutual reserves the right tomonitor all e-mail. Electronic mail
sent through the Internet is not secure.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMI_PC_111210525.00001
Return
Project Olympic
Discussion Materials
26 March 2008
CONFIDENTIAL
Return
Summary
Project Olympic
1
Cerberus has significant interest
i
n a partnership with WaMu
Partnership will
b
e
a strategic and financial investment
Significant value created through synergies and revenue enhancement
opportunities; access
t
o other Cerberus portfolio companies
Material equity investment
b
y
Cerberus
Creation
o
f
SPV majority owned
b
y
Cerberus
t
o buy residuals from
securitization
o
f
higher-risk assets
WaMu acquisition
o
f
Chrysler Financial provides asset and earnings
diversification
a
s
well
a
s
substantial tangible equity capital
Cerberus team able
t
o move quickly
CONFIDENTIAL
Return
Advantages for WaMu
Project Olympic
2
Diversification
o
f
balance sheet and business
Mortgage loans fall from ~73%
o
f
loans
t
o ~57%
o
f
loans
o
n
a managed basis: adds auto, and
expands commercial and small business loans
Exclusive access
t
o
a
l
l
subvented automotive loans and leases through 9 year exclusivity
agreement with Chrysler
$
7
5
billion managed auto loan portfolio; $
4
0
billion on-balance- sheet portfolio
Improved diversification will improve valuation
i
n public market
Minimal auto lease residual risk (0.5%)
SPV accelerates problem asset disposition
Utilization
o
f
significant excess capital
a
t
Chrysler Financial
Chrysler Financial has tangible common equity
o
f
$7.4Bn( 1
)
resulting
i
n a tangible common
t
o
tangible assets ratio
o
f
17%
Value creation through synergies
Access
t
o 3.6 millioncustomers and over 3,000 dealerships (both Chrysler and non- Chrysler
dealers)
Ability
t
o create affinity branded credit card, deposit and other products
Potential cost saves from combining certain servicing functionality
Access
t
o new capital
Cerberus willing
t
o invest additional capital
i
n new company
Note
1
.
Preliminary. Audit complete subject
t
o final purchase accounting adjustment
CONFIDENTIAL
Return
Resulting Ownership( 1
)
WaMu ownership split between current WaMu
shareholders, Chrysler Holding and Cerberus
Proposed Structure
Project Olympic
3
Transaction Steps
WaMu issues shares
t
o Chrysler Holding
i
n exchange
for Chrysler Financial
Chrysler Financial sold
t
o WaMu
a
t
tangible book
value
Cerberus purchases $500 million
o
f
newly issued
WaMu equity
Daimler
Public
Shareholders
100%
Chrysler
Financial
TBV: $ 7.4Bn
Cerberus
20% 80%
$7.4Bn
Shares
WaMu
Public
Shareholders
Chrysler
Holding
Chrysler
Financial
WaMu
For illustrative purposes, we
have used WaMus current
market cap
o
f
$11.2 billion
based
o
n
3
/
25/
0
8
stock price
o
f
$12.70
t
o calculate pro
forma ownership
percentages
Cerberus willing
t
o work with
OTS on structuring
investment
SPV
WaMu writes-down
t
o
current value and
securitizes up
t
o $48 billion
o
f
higher-risk loans
Cerberus creates wholly
owned SPV
t
o buy
residuals interest
i
n the
trust and WaMu retains the
most senior tranches
$
0.5Bn
$
0.5Bn
shares
Note
1
.
Based
o
n market cap
a
t
3
/ 25/ 08
Chrysler
Holding
Cerberus
Pro Forma Ownership
Valuation
(
$ MM) %Ownership
Existing WaMu (Current Market Cap) $ 11,207
(
1
)
58.7%
ChryslerFinancial ( Tangible Book) 7,387 38.7%
New Raise ( Cerberus) 500 2.6%
Total $ 19,094 100.0%
Assuming Subsequent Distribution Cerberus 33.6%
o
f
Shares
b
y Chrysler Holding: Old Shareholders 58.7%
Daimler 7.7%
Total 100.0%
CONFIDENTIAL
Return
Retail Financing
48%
Operating Lease
28%
Dealership
Financing & Other
25%
Portfolio
b
y
Product
%
o
f
$
7
5
billion 12/ 31/
0
7
Chrysler Financial: A Leading Auto Lender
Project Olympic
4
Overview
Leading provider
o
f
financial services for dealers
and customers
o
f
the Chrysler, Dodge and Jeep
brands
$
7
5
billion managed portfolio ( Avg FICO: 705)
Over 2.7 million consumer loans and over
900,000 leases serviced (3.6 million total
customers) with avg. transaction size
o
f
~
$
25,000
Over 3,000 dealers serviced
4,150 employees
Broad presence across the Americas, with
operations
i
n the
U
.
S
.
,
Canada, Mexico,
Venezuela and Puerto Rico
Major products are retail loans, leases and
dealership finance plans
Includes Business Vehicle Finance (BVF)
business with $1.6 billion
o
f
assets which serves
small businesses
2008E pre-tax income
o
f
$459 million and
12/ 31/
0
7
tangible book value
o
f
$7.4 billion( 1
)
Estimated earning asset yield
o
f
8.4%( 2
)
U
.
S
.
83%
Canada
14%
Mexico
2%
Other 1%
Portfolio
b
y
Region
%
o
f
$75 billion 12/ 31/ 07
Notes
1
.
t
2
.
Assets are originated
a
t
fixed rate
CONFIDENTIAL
Return
Auto
17%
Card
8%
Mortgage
57%
Commercial
19%
Pro Forma 12/ 31/
0
7
Managed Loans
%
o
f
$335Bn
Provides Diversification and Capital Strength
Project Olympic
Notes
1
.
Excludes OCI from equity
2
.
Assumes 2008 provision
o
f
$13Bn
3
.
Pro forma for $500 million
o
f
new equity issued
t
o Cerberus
4
.
Based
o
n
a
ll
balance sheet loans plus securitized credit card portfolio 5
Card
10%
Mortgage
73%
Commercial
17%
WaMu 12/ 31/ 07 Managed Loans( 4
)
%
o
f
$260Bn
Mortgage assets decrease
from 73%
t
o 57%
Auto assets represent 22%
o
f
managed loans (5% included
i
n Commercial)
Significant capital creation
$6.0 billion
o
f
capital
created above current
WaMu tangible common
ratio
12/ 31/ 07A 12/ 31/ 08P Mid Case
(
2
)
PF + PF +
WaMu CF New Raise
(
3
)
WaMu New Raise
(
3
)
Tangible Equity / Tangible Assets(
1
)
6.6% 17.0% 8.0% 5.6% 7.2%
Tangible Common Equity / Tangible Assets 4.3% 17.0% 6.0% 3.1% 5.1%
Capital Above 5.50% TE/ TA
(
$ MM) 9,026 5,955
Capital Above 4.75% TC/ TA
(
$ MM) 4,453 1,218
Capital Created Above Current WaMu TC/ TA
(
$ MM) 5,970 6,822
CONFIDENTIAL
Return
Benefits
o
f
Asset Diversification
0.03
R
2
Correlation between Mortgages and Prime Auto
Project Olympic
6
0.00
2.00
4.00
6.00
8.00
Apr-
8
9 Dec-
9
0 Aug-92 Apr- 94 Dec-
9
5 Aug-
9
7 Apr-
9
9 Dec- 00 Aug- 02 Apr-04 Dec-
0
5 Dec- 07
Credit Card Mortgages Prime Auto
Historical Industry Charge- Offs
(%)
Sources Moodys, FDIC
5.10%
1.21%
0.49%
Net Charge-Offs
(%)
Credit Prime
Card Mortgages Auto
Current 5.10 0.49 1.21
1
-
Y
r
Avg. 4.67 0.26 0.79
5
-
Y
r
Avg. 5.54 0.13 0.87
10-
Y
r
Avg. 5.80 0.12 1.10
CONFIDENTIAL
Return
GAAP EPS Accretion/( Dilution)
$
2009E EPS (Mid-Case) 1.12 2009E EPS (Mid-Case) 1.12
With $4Bn Capital Raise @ $12.70 0 .83 Pro Forma with Chrysler ex Synergies
(
2
)
0.97
With $4Bn Capital Raise @ $10.00 0 .78 Pro Forma with Chrysler
w
/
Synergies
(
3
)
1.20
%Change
v
s
Standalone 7%
%Change @ $12.70 (26%) %Change
v
s Capital Raise @ $12.70 44%
v
Accretive
t
o
Earnings Relative
t
o
Equity Issuance
Project Olympic
7
~
$
570 millionpre-tax synergy
run-rate potential( 1
)
45-55% less dilutive
Notes
1
.
Based
o
n funding synergy
o
f
1.5%applied
t
o $38Bn debt. Share
o
f
ultimate funding synergies
i
s subject
t
o negotiations with Daimler
2
.
Assumes Chrysler Financial adjusted earnings and 5% net income growth from 08 plan. $12.70 per share issuance price (
3
/ 25/ 08 market price)
3
.
$ 570 million pre-tax synergies taxed
a
t
38%
CONFIDENTIAL
Return
Potential Synergies
Project Olympic
8
Potential
t
o cross- sell additional products (
e
.
g
.
,
deposits, mortgage)
3.6 million current Chrysler Financial customers
Opportunity
t
o increase ChryslerFinancials penetration rate with lower
cost
o
f
funds and broader product offering
Current US penetration rate
i
s 41%
o
f
Chrysler Automotive retail sales, while
universe
o
f
potential customers
i
s 92% (excluding 8% cash buyers)
This 51%penetration rate opportunity equates
t
o over 900,000 annual contract
originations and over $
2
5
billion
o
f
annual originations
Additional opportunities
i
n Canada, Mexico and Puerto Rico
Access
t
o a network
o
f
over 3,000 dealers (including over 2,500 US dealers,
390 Canadian dealers and 175 Mexican dealers)
Over 60%
o
f
dealers are multi-franchised; dealer count includes over 400 non-
Chrysler dealers
Access
t
Cerberus companies currently employ over 250,000 people and have millions
o
f
customers
On-going auto asset generation
t
o diversify WaMu origination platform
CONFIDENTIAL
Return
Current Capital Structure
Project Olympic
9
Chrysler Financial Funding
$Bn
Funding:
$5.8 Bank debt
(
$ 2Bn) L+400 and
(
$ 4Bn)
L
+
650
Existing term loans would need
t
o
b
e
refinanced
a
t
closing
$28.0 Bank conduit and ABS facilities
Chrysler Financial would continue
t
o draw down on these facilities until the close
o
f
a transaction
a
t
which point the facilities would term-out (facilities would liquidate
over
3
-
5 years
a
s
the assets liquidate, with
n
o
capacity for new originations)
- As the securitizations roll off, the Company would require new financing sources
t
o fund ongoing operations
- Average life
o
f
retail loans and leases
i
s 2.5- 3 years; average life
o
f
wholesale
loans
i
s 3 months
$7.4
(
1
)
Tangible equity
Note
1
.
t
CONFIDENTIAL
Return
Project Olympic
rITOTOMMOT W
Detailed Pro Forma Financials
CONFIDENTIAL
Return
Pro Forma Balance Sheet
12/ 31/ 07A 12/ 31/ 08P
Mid Case
$ MM WaMu CF New WaMu WaMu CF New WaMu
Goodwill &Other Intangibles 7,675 - 7,675 7,675 - 7,675
AFS securities 27,540 86 27,626 NA NA NA
Loans ( includes HFS) 249,789 39,987 289,776 239,268 NA NA
Other tangible assets 42,909 3,471 46,380 59,520 42,618 341,406
Total Assets 327,913 43,544 371,457 306,463 42,618 349,081
Deposits 181,926 - 181,926 189,855 - 189,855
Unsecured debt 38,958 5,796 44,754 31,938 5,248 37,186
Secured debt 63,852 28,000 91,852 52,346 25,354 77,700
Other Liabilities 14,674 2,361 17,035 8,052 4,344 12,396
Total Liabilities 299,410 36,157 335,567 282,191 34,946 317,137
Minority Interest 3,919 - 3,919 3,917 - 3,917
Preferred Equity 3,392 - 3,392 3,392 - 3,392
Common Equity 21,192 7,387 28,579 16,963 7,672 24,635
Liabilities and Equity 327,913 43,544 371,457 306,463 42,618 349,081
Key Ratios
$500MM New
Raise
$ 500MM New
Raise
Loans / Deposits
1.37x 1.59x
Deposits / Total Assets 55.5% 49.0% 62.0% 54.4%
Common Equity / Total Assets 6.5% 17.0% 7.7% 7.8% 5.5% 18.0% 7.1% 7.2%
Tangible Equity / Tangible Assets
(
1
)
6.6% 17.0% 7.9% 8.0% 5.6% 18.0% 7.1% 7.2%
Tangible Common Equity / Tangible Assets 4.3% 17.0% 5.8% 6.0% 3.1% 18.0% 5.0% 5.1%
Preferred as a %
o
f
Tangible Equity 35.1% 25.9% 25.5% 44.0% 0.0% 30.1% 29.5%
Detailed Pro FormaFinancials
Project Olympic
1
0
Additional common equity
provides capacity for
preferred
Note
1
.
CONFIDENTIAL
Return
2008E Pro Forma Income Statement
WaMu New WaMu
$MM (Mid Severity) CF Synergies
(
1
)
with Synergies
Net interest margin 8,829 8
8
7 570 10,286
Provisions 13,050 4
5
0 - 13,500
Gross margin ( 4,221) 4
3
7 570 (3,214)
Non- interest income 5,779 7
9
9 - 6,578
Non- interest expense 8,220 7
7
7 - 8,997
Income before taxes ( 6,662) 4
5
9 5
7
0 (5,633)
Minority interest 305 - - 305
Taxes ( 2,885) 174 217 (2,494)
Net income ( 4,082) 2
8
5 3
5
3 (3,444)
Plus: provisions 13,050 4
5
0 - 13,500
Plus: insurance losses - 77 - 77
Plus: taxes ( 2,885) 1
7
4 217 (2,494)
Plus: incremental NIM
o
n new capital raised 18 - - 18
Plus: incremental cost cutting savings - 29 - 29
Subtotal 6,101 1,015 5
7
0 7,686
Less: normalized provision ( 500) (310) - (810)
Less: preferred dividends ( 260) - - (260)
Adjusted earnings before taxes 5,341 7
0
5 570 6,616
Taxes 2,514
Adjusted net income 4,102
Pro Forma Income Statement
Project Olympic
1
1
Note
1
.
Based
o
n funding synergy
o
f
1.5%applied
t
o $38Bn debt. Share
o
f
i
s subject
t
CONFIDENTIAL
Return
Project Olympic
Chrysler
Financial Overview
CONFIDENTIAL
Return
Chrysler Financial Overview
Product Overview: Customer Financing and Leasing
Project Olympic
1
2
Retail Lease
Portfolio
(
$ bn) $34.4 $22.0
%
o
f
total 46.0% 29.4%
Origination volume
(
$ bn) $17.5 $10.5
3-year CAGR (8%) 19%
Penetration rate 28.5% 20.5%
Net chargeoff ratio (US) 1.30% 1.09%
Description Majority
o
f
portfolio
i
s conventional
financing with equal monthly payments up to
72 months
New and used motor vehicles
Subvented rates offered via Chrysler
Automotive marketing efforts
Fixed rate simple interest loans
Specialized offerings include: delayed
payment options, College Graduate Finance
Plan, Chrysler Financial Plus (balloon note
with buyback option), Farmer Payment Plan
and other niche programs
Conventional lease program
u
p
t
o 48 months
new Chrysler Automotive products only
Subvented payments offered via Chrysler
Financial marketing programs
Customer EOT options: return vehicle
(subject
t
o contractual charges), exercise
purchase option ( contract residual)
Customers may be offered lease extensions

o
n
lease- to-retail conversions for loss
mitigation purposes
Customer financing and leasing
Note: As
o
f
or for the year ended 12/ 31/ 07
Include balloon note financing
CONFIDENTIAL
Return
Product Overview: Dealer Financing
Project Olympic
1
3
Floor plan Capital loans and Real estate Dealer Rental Car ( DRAC)
Portfolio
(
$ bn) $13.7 $2.2 $ 0.1
%
o
f
total 18.4% 3.0% 0.1%
Penetration rate 74.6% NA NA
Description

Dealer inventory financing
new and used vehicles
for Chrysler Automotive and
non- Chrysler Automotive
dealers
Rates tied to sales volume

and total financing
relationship
Rates based on either LIBOR
or prime, depending on
dealer relationship size
Provides dealer with working

capital needs
Typical capital loan
i
s 60 months
level monthly principal payments
plus interest
Some revolving lines offered on an
interest only basis
Rate
i
s new floorplan rate +
additional margin
Typical real estate loans are fixed

rate, 20- year amortization with
rate / loan renewed
a
t
5
-
year
intervals (indexed to
5
-
year T-bills)
Financing for Dealer Rent- A-

Car program
Vehicles are normally used
a
s
service loaners
Some dealers use program
t
o
run local daily rental
companies
Various incentives may
include upfront allowances
and guaranteed depreciation
Dealer pays monthly
amortization payments,
interest and insurance
Dealer financing
Dealer financing
Note: As
o
f
CONFIDENTIAL
Return
Product Overview: Small Business and Fleet Financing
Project Olympic
1
4
Business Vehicle Finance (BVF) Fleet
Portfolio
(
$ bn) $1.6 $0.7
% of total 2.2% 0.9%
Origination volume
(
$ bn) $1.0 $0.8
3-year CAGR 84.0% NM
Description Retail and lease financing for small
t
o medium size businesses
Tailored terms and conditions
t
o
meet customer needs
Currently integrated with DC Truck

Financial
i
n Chicago for
underwriting, customer service and
collections
Two primary customer groups daily
rental companies and dealer in-house
lease companies
Chrysler Financial receives monthly
payments simple interest on daily
outstandings plus principal amortizations
on individual vehicles
Fleet companies manage all customer

contacts and collections
Small business and fleet financing services
Note: As
o
f
o
r
for the year ended 12/ 31/ 07
CONFIDENTIAL
Return
Portfolio Statistics
b
y
Country
Project Olympic
1
5
End
o
f
Period On- Balance Consumer Wholesale
Net Managed Sheet Penetration Penetration
Portfolio Portfolio Rate Rate
1
U
.
S
.
Consumer: Retail (new &
used), Lease $43,990 $28,217 48.1% 75.0%
Dealer: Floorplan, Capital

Loan, Real Estate, Dealer
Rental $13,117 $6,385
Small Business: Fleet
financing, Business Vehicle $2,156 $2,156
Canada Consumer: Retail (new &
used), Lease
2
$10,548 $175 81.8% 87.1%

Loan, Real Estate $2,297 $512

financing $207 $207
Mexico Consumer: Retail (new &
used), Lease $1,359 $1,359 48.6% 100.0%
Loan $513 $513
Puerto Rico Consumer: Retail (new &
used), Lease $252 $252 36.4% 55.5%
Loan $
3
3 $
3
3
Venezuela Consumer: Retail (new &
used), Lease $109 $109 9.9% 96.0%
Loan $
6
9 $
6
9
Total $74,650 $39,987 51.0% 77.0%
(
1
)
Based on Field Stocks ( units)
(
2
)
Includes Gold Key Leases held
a
t
OEM
12/ 31/
0
7
$MM
Portfolio
State
(
$ billion) Percent
Texas 3.3 12.9%
California 2.1 8.1%
Florida 1.4 5.5%
Pennsylvania 1.2 4.7%
Illinois 1.0 3.8%
Other 16.8 65.0%
Total 25.8 100.0%
Portfolio
State
(
$ billion) Percent
Michigan 5.3 33.5%
New York 1.8 11.7%
Ohio 1.2 7.8%
Florida 0.9 5.8%
Other 5.7 36.0%
Total 15.8 100.0%
Portfolio
State
(
$ billion) Percent
Texas 1.8 13.8%
California 1.0 7.6%
Florida 0.9 6.7%
Michigan 0.7 5.6%
New York 0.6 4.3%
Other 8.1 62.0%
Total 13.1 100.0%
US Retail Portfolio - Top 5 States (12/ 31/ 07)
US Lease Portfolio - Top 5 States (12/ 31/ 07)
US Dealer Portfolio - Top 5 States (12/ 31/ 07)
CONFIDENTIAL
Return
Project Olympic
Chrysler
Automotive Overview
CONFIDENTIAL
Return
12.6%
12.9% 13.2%
12.6%
13.1%
14.9%
16.0%
17.0%
19.9%
24.6% 24.9%
14.6%
24.0%
25.7%
28.1%
30.6%
33.7%
23.3%
4%
9%
14%
19%
24%
29%
34%
'
9
2 ' 93 ' 94 '
9
5 ' 96 '97 ' 98 ' 99 ' 00 ' 01 '
0
2 ' 03 '04 ' 05 ' 06 ' 07
* - Includes Jobs Bank
** - Only reflects 8,400 hourly workforce reduction due
t
o RTP II.
Salary
Manpower
Hourly
Manpower
Total
Manpower
(000 s Headcount)
45.2
53.6
61.0
21.5
19.1
19.1
' 06 Actual ' 07 Actual ' 08 PF
82.5 *
72.7 *
64.3
*
*
Chrysler Automotive Overview
Chrysler Automotive Strong Recent Performance
Project Olympic
1
6
Stability
i
n
U
.
S
.
geographic segment share since 92 relative
t
o significant declines
i
n other big Detroit competitors
Strong balance sheet with $9.7 billion unrestricted cash
Broad and diverse dealer base over 3,000 dealers
i
n the
U
.
S
.
Strong product line up supported by key new vehicle release 2008 minivan, 2009 Dodge Ram truck, 2009 Dodge
Journey
Well positioned
i
n growing international geographical segments
Rationalization
o
f
legacy cost base
GM
Ford
Chrysler
Rationalized cost base
U
.
S
.
Geographical Segment Total (1992 - 2007)
Performance Highlights
CONFIDENTIAL
Return
Project Olympic Chrysler Automotive Overview
1
7
2007 Actual
v
s
2008 Plan
Actual
2007
Plan
2008
2008 H/(
L
)
2007
Total Geographical Segment Share (%) 12.6 11.5 ( 1.1 pts)
SAAR (MM
o
f
units) 16.4 15.5 (0.9)
Worldwide Shipments (000s) 2,610 2,344 (266)
Net Revenue
(
$ Bn) 59.7 58.1 (1.6)
Fixed Cost
(
$ Bn) 14.5 12.9 (1.6)
EBITDA
(
$ Bn) 1.6 2.0
(
2
)
0.4
OpProfitDA
(
$ Bn) 2.2 2.9 0.7
Cash
(
$ Bn) 9.7 7.4 (2.3)
Estimated Dealer Inventory ( yr-end) 000s 438 325 (113)
CAPEX
(
$ Bn) 3.1 3.0 (0.1)
Notes
1
.
Preliminary and un-audited financial results
2
.
2008 business plan EBITDA
o
f
$ 2.0Bn
i
s unchanged fromthe original Investment Plan
(
1
)
CONFIDENTIAL
Return
FinCo / CarCo Relationship
Project Olympic
1
8
ChryslerAutomotive
(
Carco) provides subvention programs exclusively

through Chrysler Financial
(
Finco)
Carco makes
a
l
l
rate subvention payments (
i
n the case
o
f
below-market APR
incentives) upfront
t
o Finco, while residual subvention payments (
i
n the case
o
f
residual enhancements
o
f
leases) are made over the life
o
f
the lease
Payments are based upon a guaranteed 1.25% ROA for Finco and are discounted
back
a
t
Fincos marginal cost
o
f
funds
Finco carries minimal (0.5%) residual value exposure
When off- lease vehicles are remarketed, the first 1%
o
f
any gain/ loss (relative
t
o
original ALG estimate
a
t
lease inception)
i
s split 50/
5
0
between Carco and Finco
All losses
o
r
gains beyond the 1% threshold are assumed
b
y
Carco
FinCo benefits froma $1.5 billion cash collateral account which supports
a
l
l
unsecured exposures between Carco and Finco
Cash collateral account
i
s held
b
y
Carco and exists solely for the benefit
o
f
Finco
The main exposure this account supports
i
s the risk
o
f
a significant decline
i
n
residual values (since Finco
i
s relying
o
n
Carco for reimbursement
o
f
any residual
losses)
Even under stressed residual value assumptions, this $1.5 billion account
i
s
expected
t
o
b
e
sufficient
t
o cover
a
l
l
CONFIDENTIAL
Return
AMERICAN INTERNATIONAL COMPANIES0
'QAIU
Insurance Company
'QAmerican
Home Assurance Company
'Q American International South Insurance Company
'Q AIG
Casualty Company
'QGranite State Insurance Company
'Q
Illinois National Insurance Company
National Union Fire Insurance Co of Pittsburgh

Pao
'QNew Hampshire Insurance Company
each of the above being a capital stock company
EXECUTIVE AND ORGANIZATION LIABILITY INSURANCE POLICY
NOTICE COVERAGES A B AND C ARE CLAIMS MADE THE COVERAGE OF THIS POLICY IS
GENERALLY LIMITED TO LIABILITY FOR CLAIMS THAT ARE FIRST MADE AGAINST THE
INSUREDS AND CRISIS FIRST OCCURRING DURING THE POLICY PERIOD AND REPORTED IN
WRITING TO THE INSURER PURSUANT TO THE TERMS HEREIN PLEASE READ THIS POLICY
CAREFULLY AND REVIEW ITS COVERAGE WITH YOUR INSURANCE AGENT OR BROKER
NOTICE AMOUNTS INCURRED FOR LEGAL DEFENSE SHALL REDUCE THE LIMIT OF
LIABILITY AVAILABLE TO PAY JUDGMENTS OR SETTLEMENTS AND SHALL BE APPLIED
AGAINST THE RETENTION AMOUNT
NOTICE THE INSURER DOES NOT ASSUME ANY DUTY TO DEFEND THE INSURER MUST
ADVANCE DEFENSE COSTS EXCESS OF THE APPLICABLE RETENTION PURSUANT TO THE
TERMS HEREIN PRIOR TO THE FINAL DISPOSITION OF A CLAIM
NOTICE TERMS APPEARING IN BOLD FACE TYPE HAVE SPECIAL MEANING SEE CLAUSE 2
OF THE POLICY
POLICY NUMBER 7419806
REPLACEMENT OF POLICY NUMBER 6269324
DECLARATIONS
ITEMS
1 NAMED ENTITY WASHINGTON MUTUAL INC
herein Named Entity
1a MAILING ADDRESS INSURANCERISK MANAGEMENT DEPT
1301 2ND AVE WMC 1201
SEATTLE WA 98101
1b STATE OF INCORPORATIONFORMATION Washington
2 POLICY PERIOD From May 1 2007 To May 1 2008
1201 AM standard time at the address stated in Item 1a
3
POLICY AGGREGATE LIMIT OF LIABILITY
herein Limit of Liability
For all Loss in the aggregate under this policy
including Defense Costs
$25000000
4 RETENTION Not applicable to NonIndemnifiable Loss and certain Defense Costs
See Clause 6 for details
4a
Securities Claims $50000000 4t Employment
Practices
Claims $50000000
4c All other Claims $50000000
7144596
75010 200 BROAG1Ive Cnnv
1
HIGHLY CONFIDENTIAL
Return
r
ITEMS continued
5 CONTINUITY DATE herein Continuity Date
a Coverages A and B other than 5b Outside Entity The date on which
Outside Entity Executive Executive
coverage the Insured Person
coverage including Coverage C first served as an
Outside Entity
Executive of such
Outside Entity
5c Coverage
D NA
6 PREMIUM
$1000000
Premium for Certified Acts of Terrorism Coverage under Terrorism
Risk Insurance Act 2002 $9901 included in
policy premium
Any coverage provided for losses caused by an act of terrorism as
defined
by TRIA TRIA Losses may be partially reimbursed by the
United States under a formula established by TRIA as follows 90 of
TRIA Losses in excess of the insurer deductible mandated
by TRIA the
deductible to be based on a
percentage
of the insurers direct earned
premiums for the
year preceding the act of terrorism
A
copy
of the TRIA disclosure sent with the
original quote is
attached hereto
CRISISFUNDSM limit SM
Additional CRISISFUND
7a Crisis Loss $50000
7
9
for Delisting Crisis Loss $25 000
8 NAME AND
ADDRESS OF INSURER herein Insurer
National Union Fire Insurance
Company
of
Pittsburgh Pa
175 Water Street
New York NY 10038
This policy i
s issued only by the insurance
company
indicated in this Item 8
7144596
75010 2100 BR0Kive Cony
2
HIGHLY CONFIDENTIAL
Return
POLICYHOLDER DISCLOSURE STATEMENT
UNDER
TERRORISM RISK INSURANCE ACT OF 2002
You are hereby
notified that under the federal Terrorism Risk Insurance Act of
2002 the Act effective November 26 2002
you
now have a right to purchase insurance
coverage
for losses
arising out of an Act of Terrorism which
i
s defined in the Act as an
act certified by the Secretary of the Treasury i to be an act of terrorism ii to be a
violent act or an act that is
dangerous to A human life B property or C infrastructure
iii to have resulted in damage within the United States or outside of the United States
in case of an air carrier or vessel or the
premises
of a US mission and iv to have been
committed by an individual or individuals acting on behalf of
any foreign person or
foreign interest as part of an effort to coerce the civilian population of the United States
or to influence the policy or affect the conduct of the United States Government by
coercion You should read the Act for a complete description of its coverage The
Secretarys
decision to certify or not to certify an event as an Act of Terrorism and thus
covered by this law
i
s final and not subject to review There is a $50 billion dollar annual
cap on all losses resulting from Acts of Terrorism above which no coverage
will be
provided under this policy and under the Act unless Congress makes some other
determination
For
your information coverage provided by this policy for losses caused by an Act
of Terrorism may be partially reimbursed by the United States under a formula
established
by
the Act Under this formula the United States
pays
90 of terrorism
losses covered by this law exceeding a statutorily established deductible that must be
met by
the insurer and which deductible
i
s based on a percentage
of the insurers direct
earned premiums for the
year preceding the Act of Terrorism
COPY OF DISCLOSURE SENT WITH ORIGINAL QUOTE
Insured Name WASHINGTON MUTUAL INC
Policy Number 7419806
Policy Period Effective Date From May 1 2007 To May 1 2008
81285 103
Archive Copy
HIGHLY CONFIDENTIAL
Return
IN WITNESS WHEREOF the Insurer has caused this policy to be signed on the
Declarations
page by
its President a Secretary
and a duly
authorized
representative of the
insurer
eQ >k
6 SECRETARY
OG
PRESIDENT
AUTHORIZED REPRESENTATIVE
COUNTERSIGNATURE DATE
MARSH USA INC
1166 AVENUE OF THE AMERICAS
NEW YORK NY 100363712
7144596
COUNTERSIGNED AT
75010 200 BRCMWAive Cony
HIGHLY CONFIDENTIAL
Return
r
EXECUTIVE AND ORGANIZATION LIABILITY INSURANCE POLICY
In consideration of the
payment
of the premium and in reliance upon the Application and the
statements therein which form a part of this policy the Insurer
agrees as follows
1 INSURING AGREEMENTS
With respect to Coverage A B and C solely
with
respect to Claims first made
against an
Insured during the Policy Period or the Discovery Period if applicable and reported to
the Insurer
pursuant
to the terms of this
policy
and
subject to the other terms conditions
and limitations of this policy this policy affords the following coverage
COVERAGE A EXECUTIVE LIABILITY INSURANCE
This
policy shall pay
the Loss of
any Insured Person arising from a Claim made against
such Insured Person for
any Wrongful Act of such Insured Person except
when and to
the extent that an Organization has indemnified such Insured Person Coverage A shall
not apply to Loss arising from a Claim made
against
an Outside
Entity
Executive
COVERAGE B ORGANIZATION INSURANCE
i Organization Liability This policy shall
pay
the Loss of
any Organization arising
from a
Securities Claim made against such Organization for any Wrongful Act of such
Organization
ii Indemnification of an Insured Person This policy shall pay the Loss of an Organization
arising from a Claim made against an Insured Person
including an Outside Entity
Executive for any Wrongful Act of such Insured Person but only to the extent that
such
Organization
has indemnified such Insured Person
COVERAGE C OUTSIDE ENTITY EXECUTIVE LIABILITY INSURANCE
This
policy
shall
pay
the Loss of
any
Outside
Entity
Executive
arising
from a Claim
made against such Outside Entity Executive for
any Wrongful
Act of such Outside
Entity
Executive but
only excess of
any
indemnification
provided by an Outside Entity and
any
insurance
coverage
afforded to an Outside Entity or its Executives applicable to such
Claim except
when and to the extent that an Organization
has indemnified such Outside
Entity Executive
COVERAGE D CRISISFUNDSM INSURANCE
This policy shall
pay
the Crisis Loss including Delisting
Crisis Loss of an
Organization
solely with respect to a Crisis including a Delisting Crisis occurring during the
Policy Period or the Discovery Period if applicable and reported to the Insurer pursuant
to the terms of this policy up to the amount of the respective CrisisFund SM from first
dollar provided
that
payment
of
any
Crisis Loss under this
policy shall not waive any of
the Insurers rights under this policy or at law This
Coverage
D shall
apply regardless
of
whether a Claim
i
s ever made
against an Insured arising from such Crisis and i
n the case
where a Claim
i
s made regardless
of whether the amount i
s incurred
prior to or
subsequent to the making of the Claim
2 DEFINITIONS
a Application means each and every signed application any attachments to such
applications other materials submitted therewith or incorporated therein and
any other
documents submitted in connection with the underwriting of this policy or the
underwriting
of
any
other directors and officers or equivalent liability policy issued by
75011 2100 BRive Cony 1
HIGHLY CONFIDENTIAL
Return
the Insurer or
any
of its affiliates of which this
policy
is a renewal replacement or
which
i
t succeeds in time and any public documents filed by an Organization with
any
federal state local or foreign regulatory agency including but not limited to the
Securities and Exchange Commission SEC
b Claim means
1 a written demand for monetary non monetary or
injunctive relief
2 a civil criminal administrative regulatory or arbitration
proceeding
for
monetary
non monetary or injunctive relief which
i
s commenced by i service of a
complaint or similar
pleading ii return of an indictment information or similar
document in the case of a criminal proceeding or iii receipt or filing of a notice
of
charges or
3 a civil criminal administrative or regulatory investigation of an Insured Person
i once such Insured Person i
s identified in writing by such investigating authority
as a
person against whom a
proceeding
described in Definition b2 may be
commenced or
ii in the case of an investigation by the SEC or a similar state or foreign
government
authority after the service of a subpoena upon
such Insured Person
The term Claim shall include any Securities Claim and
any Employment Practices
Claim
c Crisis has the meaning as defined in Appendix B attached to this policy
d CrisisFund
SM
means
1 in the case of all Crisis Loss other than Delisting Crisis Loss the dollar amount
set forth in Item 7a of the Declarations and
2 in the case of Delisting Crisis Loss the dollar amount set forth in Item 7a of the
Declarations
plus
the additional dollar amount set forth in Item 7b of the
Declarations combined
e Crisis Loss has the meaning as defined in Appendix B attached to this
policy
Desisting Crisis Loss means a Crisis Loss
resulting solely
from a Delisting Crisis
as defined in
Appendix B
f Defense Costs means reasonable and
necessary fees costs and
expenses
consented
to by
the Insurer
including premiums
for
any appeal bond attachment bond or similar
bond arising out of a covered judgment but without
any obligation to apply for or
furnish
any
such bond resulting solely from the investigation adjustment defense
andor appeal of a Claim against an Insured but
excluding any compensation of any
Insured Person or any Employee of an Organization
g Employee means
any past present or future
employee other than an Executive of
an Organization whether such employee i
s in a supervisory co worker or subordinate
position or otherwise including any fulltime parttime seasonal and temporary
employee
h Employment Practices Claim means a Claim alleging any Employment Practices
Violation
i Employment Practices Violation means
any
actual or alleged
1 75011 200 BROKuff ive Cony 2
HIGHLY CONFIDENTIAL
Return
i
1 wrongful dismissal discharge or termination either actual or constructive of
employment
2 harassment
including
but not limited to sexual harassment
3 discrimination
4 retaliation
5 employment related misrepresentation
6 employment
related libel slander humiliation defamation or invasion of
privacy
7 wrongful failure to employ or promote
8 wrongful deprivation of career opportunity wrongful demotion or negligent
Employee evaluation
9 wrongful discipline
10 failure to grant tenure or
11 with
respect to any
of the
foregoing
items 1 through 10 of this definition
negligent hiring retention training or supervision infliction of emotional distress
failure to provide or enforce adequate or consistent
corporate policies and
procedures or violation of an individuals civil rights
but only i
f such act error or omission relates to an Executive of an Employee of or
an applicant for employment with an Organization or an Outside
Entity whether
committed directly indirectly intentionally or unintentionally I
n
addition with
respect
to any natural person customer or client Employment
Practices Violation shall
mean only actual or alleged discrimination sexual harassment or violation of an
individuals civil rights relating to such discrimination or sexual harassment whether
committed directly indirectly intentionally or unintentionally
j Executive means any
1 past present and future
duly
elected or appointed director officer trustee or
governor
of a corporation management
committee member of a joint venture and
member of the management
board of a limited liability company or equivalent
position
12 past present
and future
person
in a duly elected or appointed position in an entity
organized
and
operated
in a Foreign
Jurisdiction that
i
s
equivalent to an executive
position listed in Definition j11 or
3 past present and future General Counsel and Risk
Manager or equivalent position
of the Named Entity
1k Foreign
Jurisdiction means any jurisdiction other than the United States or any
of
its territories or possessions
1 Foreign Policy means the Insurers or any other company of American International
Group Incs AIG standard executive
managerial liability policy including
all
mandatory endorsements i
f
any approved by AIG to be sold within a Foreign
Jurisdiction that
provides coverage substantially
similar to the
coverage
afforded
under this policy I
f more than one such policy exists then Foreign Policy means the
standard
policy most recently registered
in the local
language
of the
Foreign
Jurisdiction or
i
f no such policy has been registered then the policy most recently
registered in that Foreign Jurisdiction The term Foreign Policy shall not include
any
partnership managerial pension trust or professional liability coverage
m Indemnifiable Loss means Loss for which an Organization has indemnified or
i
s
permitted or required to indemnify an Insured Person
pursuant to law or contract or
the charter bylaws operating agreement or similar documents of an Organization
76011 2100 BROXa ive Cony 3
HIGHLY CONFIDENTIAL
Return
n Insured means
any
1 Insured Person or
2 Organization
but
only
with
respect to a Securities Claim
o Insured Person means
any
1 Executive of an Organization
2 Employee of an Organization
or
3 Outside Entity Executive
p Loss means damages settlements judgments including prepost judgment
interest
on a covered judgment
Defense Costs and Crisis Loss however Loss other than
Defense Costs shall not include 11 civil or criminal fines or penalties 2 taxes 3
punitive or exemplary damages 4 the multiplied portion of multiplied damages 5
any
amounts for which an Insured is not financially liable or which are without legal
recourse to an Insured and 6 matters which may
be deemed uninsurable under the
law
pursuant to which this policy shall be construed
Notwithstanding the foregoing paragraph Loss shall
specifically
include subject to this
policys
other terms conditions and limitations including but not limited to exclusions
relating to profit or advantage deliberate fraud or deliberate criminal acts 11 civil
penalties
assessed against any
Insured Person pursuant to Section 2g 2B of the
Foreign Corrupt Practices Act 15 USC 78dd
2g2B
and 2 solely
with
respect to
Securities Claims punitive exemplary and multiplied damages Enforceability of this
paragraph shall be governed by such applicable
law that most favors
coverage
for
such penalties
and punitive exemplary and multiple damages
In the event of a Claim alleging that the price or consideration paid or proposed to be
paid for the acquisition or completion of the
acquisition
of all or substantially
all the
ownership
interest in or assets of an entity i
s inadequate Loss with respect to such
Claim shall not include any amount of any judgment or settlement
representing
the
amount by
which such
price
or consideration
i
s effectively increased provided
however that this paragraph shall not apply to Defense Costs or to any
NonIndemnifiable Loss in connection therewith
q Management
Control means 1 owning
interests representing more than 50 of
the voting appointment or designation power for the selection of a majority
of the
Board of Directors of a corporation the
management
committee members of a joint
venture or the members of the management
board of a limited
liability company or
2 having
the
right pursuant
to written contract or the by laws charter operating
agreement
or similar documents of an Organization to elect appoint or designate a
majority of the Board of Directors of a corporation the management committee of a
joint venture or the management board of a limited liability company
r No Liability means a final
judgment
of no liability obtained 1 prior to trial in favor
of each and
every
Insured named in the Claim by reason of a motion to dismiss or a
motion for summary judgment
after the exhaustion of all
appeals or 2 after trial and
after the exhaustion of all appeals in favor of each and
every
Insured named in the
Claim
I
n no event shall the term No
Liability apply to a Claim made
against an
Insured for which a settlement has occurred
s Non Indemnifiable Loss means Loss for which an Organization has neither
indemnified nor
i
s permitted or required to indemnify an Insured Person pursuant to
law or contract or the charter bylaws operating agreement or similar documents of an
Organization
75011 200 BRO ive Conv 4
HIGHLY CONFIDENTIAL
Return
t Organization means
1 the Named Entity
2 each Subsidiary and
3 in the event a bankruptcy proceeding shall be instituted by or against the
foregoing entities the
resulting
debtor in
possession or equivalent status outside
the United States i
f
any
u Outside
Entity means any 1 not for profit entity or 2 other entity listed as an
Outside Entity in an endorsement attached to this
policy
v Outside Entity Executive means any 1 Executive of an Organization who is or
was acting at the
specific written request or direction of an Organization as an
Executive of an Outside Entity or 2 any
other
person
listed as an Outside
Entity
Executive in an endorsement attached to this policy
w Policy Period means the period of time from the
inception date shown in Item 2 of
the Declarations to the earlier of the expiration date shown in such Item 2 or the
effective date of cancellation of this policy
x Pollutants
means but
i
s not limited to any solid liquid gaseous or thermal irritant
or contaminant including smoke vapor soot fumes acids alkalis chemicals and
Waste Waste includes but
i
s not limited to materials to be recycled reconditioned
or reclaimed
y Securities Claim means a Claim other than an administrative or
regulatory
proceeding against or investigation of an Organization
made
against any insured
1 alleging a violation of
any federal state local or foreign regulation rule or statute
regulating securities including but not limited to the
purchase or sale or offer or
solicitation of an offer to purchase or sell securities which is
a brought by any person or entity alleging arising out of based
upon or
attributable to the purchase or sale or offer or solicitation of an offer to
purchase or sell
any
securities of an Organization or
b brought by a security holder of an
Organization
with
respect
to such
security
holders interest in securities of such
Organization or
2 brought derivatively on the behalf of an Organization by a security holder of such
Organization
Notwithstanding the foregoing the term Securities Claim shall include an
administrative or regulatory proceeding against an Organization but only i
f and
only
during
the time that such
proceeding i
s also commenced and continuously maintained
against an insured Person
z Subsidiary means 1 any
for profit entity that
i
s not formed as a partnership of
which the Named Entity has Management Control Controlled Entity on or before
the inception of the Policy Period either
directly or indirectly through one or more
other Controlled Entities and 2 any notforprofit entity
under section 501c3 of
the Internal Revenue Code of 1986 as amended sponsored exclusively by an
Organization
aa Wrongful
Act means
1 any actual or alleged breach of duty neglect error misstatement misleading
statement omission or act or any
actual or alleged Employment Practices
Violation
75011 2100
BRQiveCony
5
HIGHLY CONFIDENTIAL
Return
i with
respect
to any Executive of an Organization by such Executive in his or
her capacity as such or any matter claimed against such Executive solely by
reason of his or her status as such
ii with
respect to any Employee of an Organization by such Employee i
n his or
her capacity as such but solely in
regard
to
any a Securities Claim or b
other Claim so long as such other Claim
i
s also made and continuously
maintained against an Executive of an Organization or
iii with respect to any Outside Entity Executive by such Outside Entity
Executive in his or her capacity as such or any
matter claimed against such
Outside Entity Executive solely by reason of his or her status as such or
2 with respect to an Organization any
actual or alleged breach of duty neglect
error misstatement misleading statement omission or act by
such
Organization
but solely in regard to a Securities Claim
3 WORLDWIDE EXTENSION
Where
legally permissible this policy shall
apply
to
any
Claim made
against any
Insured
anywhere in the world
In
regard to Claims
brought
and maintained
solely
in a Foreign Jurisdiction against an
Organization formed and operating in such
Foreign
Jurisdiction or an Insured Person
thereof for
Wrongful
Acts committed in such
Foreign Jurisdiction the Insurer shall apply
to such Claims those terms and conditions and related provisions of the
Foreign Policy
registered with the appropriate regulatory body i
n such Foreign Jurisdiction that are more
favorable to such Insured than the terms and conditions of this policy However this
paragraph shall apply only to Clauses 1 4 9 13 15 16 18 20 and 21 of this policy and
the
comparable provisions
of the
Foreign Policy
In addition this
paragraph shall not apply
to the non renewal or claims made and reported provisions of
any policy
All
premiums limits retentions Loss and other amounts under this
Policy are expressed
and payable in the
currency
of the United States of America
I
f
judgment i
s rendered
settlement i
s denominated or other elements of Loss are stated or incurred in a
currency
other than United States of America dollars payment
of covered Loss due under this
policy subject to the terms conditions and limitations of this policy will be made either
in such other
currency at the option of the Insurer and
i
f
agreeable to the Named Entity
or in United States of America dollars at the rate of exchange published in The Wall
Street Journal on the date the Insurers
obligation to pay
such Loss
i
s established or i
f
not published on such date the next publication date of The Wall Street Journal
4 EXCLUSIONS
The Insurer shall not be liable to make any payment for Loss in connection with
any
Claim made against an Insured
a arising out of based
upon or attributable to the
gaining
in fact of any profit or
advantage to which the Insured was not legally entitled
b arising out of based
upon
or attributable to
payments
to an Insured of
any
remuneration
without the
previous approval
of the stockholders or members of an
Organization
which
payment
without such
previous approval
shall be held to have
been illegal
c arising out of based upon or attributable to the committing in fact of
any
deliberate
criminal or deliberate fraudulent act by
the Insured
75011 200 BRGArive Coov 6
HIGHLY CONFIDENTIAL
Return
d alleging arising out of based
upon or attributable to the facts
alleged or to the same
or related
Wrongful
Acts alleged or contained in
any
Claim which has been reported
or in
any
circumstances of which notice has been
given under any policy
of which
this
policy i
s a renewal or replacement or which
i
t
may
succeed in time
e alleging arising out of based
upon
or attributable to as of the Continuity Date any
pending or prior 1 litigation or 2 administrative or regulatory proceeding or
investigation
of which an Insured had notice or alleging or derived from the same or
essentially the same facts as alleged
in such pending or prior litigation or
administrative
or regulatory proceeding or investigation
f with
respect
to
any
Outside Entity Executive for
any Wrongful Act occurring prior to
the Continuity
Date
i
f
any Insured as of such
Continuity Date knew or could have
reasonably foreseen that such Wrongful Act could lead to a Claim under this policy
g alleging arising
out of based
upon
or attributable to
any
actual or alleged act or
omission of an Insured Person
serving in his or her
capacity as an Executive or an
Employee
of
any entity that
i
s not an Organization or an Outside Entity or by reason
of his or her status as an Executive or an Employee
of such other
entity
h for bodily injury other than emotional distress or mental
anguish sickness disease or
death of
any person
or damage to or destruction of
any tangible property including
the loss of use thereof
i which
i
s
brought by or on behalf of an Organization or any
Insured Person other
than an Employee of an Organization or which
i
s brought by any security holder or
member of an Organization whether directly or derivatively unless such security
holders or members Claim is instigated and continued totally independent of and
totally
without the solicitation of or assistance of or active
participation of or
intervention of
any
Executive of an Organization or
any Organization provided
however this exclusion shall not apply to
1 any
Claim brought by an Insured Person in the form of a cross claim or
thirdparty
claim for contribution or indemnity
which
i
s
part of and results directly from
a Claim that
i
s covered by this policy
2 any Employment
Practices Claim
brought by an Insured Person other than an
Insured Person who
i
s or was a member of the Board of Directors or equivalent
governing body
of an Organization
3 in
any bankruptcy proceeding by or against an Organization any
Claim
brought by
the examiner trustee receiver liquidator or rehabilitator or
any assignee thereof
of such Organization i
f
any
4 any
Claim brought by any past Executive of an Organization who has not served
as a duly
elected or appointed director officer trustee governor management
committee member member of the management board General Counsel or Risk
Manager or equivalent position
of or consultant for an Organization
for at least
four 4 years prior to such Claim being first made against any person
or
5
any
Claim brought by an Executive of an Organization formed and operating in a
Foreign
Jurisdiction
against
such
Organization or any
Executive thereof provided
that such Claim
i
s brought and maintained outside the United States Canada or
any other common law
country including any
territories thereof
l
i
for any Wrongful Act arising out of the Insured Person
serving as an Executive of an
Outside Entity i
f such Claim is brought by the Outside Entity or by any
Executive
thereof or which
i
s brought by any security
holder of the Outside Entity whether
75011 200 BROL IJive Conv
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directly or derivatively
unless such
security holders Claim
i
s instigated and continued
totally independent of and totally without the solicitation of or assistance of or active
participation of or intervention of the Outside Entity any
Executive of the Outside
Entity or an Organization or any
Executive of an Organization
k alleging arising out of based upon or attributable to directly or indirectly i the
actual alleged or threatened discharge dispersal release or escape
of Pollutants or
ii any direction or request to test for monitor clean up remove contain treat
detoxify or neutralize Pollutants including
but not limited to a Claim
alleging damage
to an Organization or its securities holders provided however that this exclusion
shall not apply to Non Indemnifiable Loss other than Non Indemnifiable Loss
constituting Cleanup Costs
Cleanup Costs means
expenses including but not limited to legal and
professional
fees incurred in
testing for monitoring cleaning up removing containing treating
neutralizing detoxifying or assessing the effects of Pollutants
I for emotional distress of
any person or for
injury
from libel slander defamation or
disparagement or for injury from a violation of a persons right of privacy provided
however this exclusion shall not apply to an Employment Practices Claim and
m for violations of
any
of the responsibilities obligations or duties imposed upon
fiduciaries
by
the
Employee
Retirement Income
Security
Act of 1974 or amendments
thereto or
any
similar provisions of
any state local or foreign statutory or common
law
For the purpose of determining the applicability of the foregoing Exclusions 4a through
4c and Exclusion 4f 1 the facts pertaining to and
knowledge possessed by any
Insured shall not be imputed to any other Insured Person and 2 only facts pertaining to
and
knowledge possessed by any past present or future chairman of the board president
chief executive officer chief operating officer chief financial officer or General Counsel or
equivalent position
of an Organization
shall be
imputed to an Organization
This Clause 4 Exclusions shall not be applicable to Crisis Loss
5 LIMIT OF LIABILITY FOR ALL LOSSINCLUDING DEFENSE COSTS
The Limit of Liability stated in Item 3 of the Declarations
i
s the aggregate limit of the
Insurers liability for all Loss under Coverages A B C and D combined arising out of all
Claims first made
against
each and
every Insured and all Crisis Loss
occurring during
the Policy Period and the Discovery Period if applicable The Limit of Liability for the
Discovery Period and the CrisisFund
SM
shall be
part of and not in addition to the Limit
of Liability for the Policy Period Further a Claim which
i
s made subsequent to the
Policy
Period or Discovery
Period if applicable
which
pursuant to Clause 7b or 7c
i
s
considered made during the Policy Period or Discovery Period shall also be
subject to the
one aggregate Limit of Liability stated in Item 3 of the Declarations The limit of the
Insurers liability for Crisis Loss and Delisting Crisis Loss
arising
from all Crises
occurring during the Policy Period i
n the aggregate shall be the amounts set forth as the
CrisisFundSM The CrisisFundsM shall be the
aggregate limit of the Insurers liability for
all Crises under this policy regardless of the number of Crises
occurring during
the
Policy
Period
Defense Costs are not payable by the Insurer in addition to the Limit of Liability Defense Costs are
part
of Loss and as such are subject to the Limit of
Liability for Loss
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6 RETENTION CLAUSE
For each Claim the Insurer shall only be liable for the amount of Loss arising from a
Claim which
i
s in excess of the
applicable
Retention amounts stated in Items 4a 4b and
4c of the Declarations such Retention amounts to be borne by an Organization andor
the Insured Person and remain uninsured with regard to all Loss other than
NonIndemnifiable Loss The Retention amount specified in
i Item 4a applies to Defense Costs that arise out of a Securities Claim
ii Item 4b applies to Loss that arises out of an Employment Practices Claim and
iii Item 4c applies to Loss that arises out of any Claim other than a Securities Claim
or an Employment Practices Claim
A single Retention amount shall apply to Loss arising from all Claims
alleging
the same
Wrongful Act or related Wrongful
Acts
I
n the event a Claim
triggers more than one of the Retention amounts stated in Items 4a
4b and 4c of the Declarations then as to that Claim the highest of such Retention
amounts shall be deemed the Retention amount applicable to Loss to which a Retention
is applicable pursuant to the terms of this policy arising from such Claim
Further with respect to all Claims other than Employment Practices Claims no Retention
shall
apply to Loss
arising
from such Claims and the Insurer shall reimburse Defense
Costs otherwise covered hereunder and paid by the Insured in the event of 1 a
determination of No
Liability
of each and
every
Insured
against
whom the same Claim or
related Claims have been made or 2 a dismissal or a stipulation to dismiss each and
every
Insured
against
whom the same Claim or related Claims have been made without
prejudice and without the payment of
any
consideration by or on behalf of
any
Insured
However in the case of 2 above such reimbursement shall occur 90
days after the date
of dismissal or
stipulation
as long as such Claim
i
s not
brought or any
other Claim
which is subject to the same single retention by virtue of Clause 6 is not pending or
brought again
within that time and further
subject
to an
undertaking by
an
Organization
in a form acceptable to the Insurer that such reimbursement shall be paid back by such
Organization
to the Insurer in the event the Claim or any
other Claim which
i
s
subject to
the same single retention by virtue of Clause 6 i
s
brought after such 90day period
No Retention amount
i
s applicable to Crisis Loss or Non Indemnifiable Loss
7 NOTICECLAIM REPORTING PROVISIONS
Notice hereunder shall be
given
in
writing to the Insurer named in Item 8 of the
Declarations at the address indicated in Item 8 of the Declarations I
f
mailed the date of
mailing
shall constitute the date that such notice was given
and
proof of mailing shall be
sufficient proof of notice
a An Organization or an Insured shall as acondition precedent to the obligations of the
Insurer under this policy give written notice to the Insurer of a Claim made against
an Insured or a Crisis as soon as practicable i after the Named
Entitys
Risk
Manager or General Counsel or equivalent position first becomes aware of the Claim
or ii the Crisis
commences
but in all events no later than either
1 the end of the Policy Period or the Discovery Period if applicable or
2 within 30 days after the end of the Policy Period or the Discovery Period if
applicable as long as such Claim was first made
against an Insured within the
final 30 days of the Policy Period or the Discovery Period if applicable
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b I
f written notice of a Claim has been given to the Insurer pursuant to Clause 7a
above then a Claim which
i
s
subsequently
made
against an Insured and reported to
the Insurer
alleging arising out of based
upon
or attributable to the facts alleged in
the Claim for which such notice has been given or alleging any Wrongful
Act which
i
s the same as or related to
any Wrongful Act alleged in the Claim of which such
notice has been given shall be considered related to the first Claim and made at the
time such notice was given
c I
f
during the Policy
Period or during
the
Discovery
Period if applicable an
Organization or an Insured shall become aware of
any
circumstances which
may
reasonably be expected to give rise to a Claim
being
made
against an Insured and
shall
give
written notice to the Insurer of the circumstances the Wrongful Act
allegations anticipated
and the reasons for
anticipating
such a Claim with full
particulars as to dates persons
and entities involved then a Claim which
i
s
subsequently made against such Insured and
reported to the Insurer
alleging arising
out of based
upon or attributable to such circumstances or alleging any Wrongful Act
which
i
s the same as or related to any Wrongful Act alleged or contained in such
circumstances shall be considered made at the time such notice of such
circumstances was given
8 DEFENSE COSTS SETTLEMENTS JUDGMENTS INCLUDING THE ADVANCEMENT OF
DEFENSE COSTS
Under Coverages A B and C of this policy except as hereinafter stated the Insurer shall
advance excess of any applicable retention amount covered Defense Costs no later than
ninety 90 days
after the receipt by the Insurer of such defense bills Such advance
payments by the Insurer shall be repaid to the Insurer by each and every
Insured or
Organization severally according to their
respective interests in the event and to the
extent that
any
such Insured or Organization shall not be entitled under this policy to
payment of such Loss
The Insurer does not however under this policy assume any duty to defend The Insureds shall
defend and contest
any
Claim made against them The Insureds shall not admit or assume any liability
enter into any settlement agreement stipulate
to
any judgment or incur
any
Defense Costs without the
prior
written consent of the Insurer Only those settlements stipulated judgments and Defense Costs
which have been consented to
by
the Insurer shall be recoverable as Loss under the terms of this
policy The Insurers consent shall not be unreasonably withheld provided that the Insurer shall be
entitled to effectively
associate in the defense the prosecution and the negotiation of
any
settlement of
any
Claim that involves or appears reasonably likely to involve the Insurer
The Insurer shall have the right to effectively
associate with each and
every Organization
and Insured Person in the defense and prosecution of any Claim that involves or appears
reasonably likely to involve the Insurer including
but not limited to negotiating a
settlement Each and
every Organization and Insured Person shall give the Insurer full
cooperation and such information as
i
t may reasonably require
Notwithstanding any
of the foregoing i
f all Insured defendants are able to dispose of all
Claims which are subject to one retention amount inclusive of Defense Costs for an
amount not exceeding any applicable retention amount then the Insurers consent shall
not be required for such disposition
No
Organization i
s covered
i
n
any respect under Coverage A or Coverage C An
Organization is covered subject to the policys terms conditions and limitations only with
respect to 1 its indemnification of its Insured Persons under Coverage Bii as respects
a Claim against such Insured Persons and 2 under Coverage Bi for a Securities Claim
Accordingly
the Insurer has no obligation under this policy for covered Defense Costs
75011 200 BR iyi CnnV 10
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incurred by judgments against or settlements by an Organization arising out of a Claim
made
against
an
Organization
other than a covered Securities Claim or
any obligation to
pay Loss arising out of any legal liability that an Organization has to a claimant except as
respects
a covered Securities Claim
against
such
Organization
With respect to i Defense Costs jointly incurred by ii any joint settlement entered into
by andor iii any judgment
of
joint
and several
liability against any Organization and any
Insured in connection with
any
Claim other than a Securities Claim any
such
Organization
and
any
such Insured and the Insurer
agree to use their best efforts to determine a
fair and
proper
allocation of the amounts as between
any
such Organization any
such
Insured and the Insurer taking
into account the relative legal and financial
exposures and
the relative benefits obtained by any
such Insured and
any
such Organization In the
event that a determination as to the amount of Defense Costs to be advanced under the
policy cannot be agreed to then the Insurer shall advance Defense Costs excess of
any
applicable retention amount which the Insurer states to be fair and proper until a different
amount shall be agreed upon
or determined
pursuant
to the provisions of this policy and
applicable law
This Clause 8 shall not be applicable to Crisis Loss Nevertheless the Insurer does not
under this policy assume any duty to defend
9 PREAUTHORIZED SECURITIES DEFENSE ATTORNEYS
Affixed as Appendix A hereto and made a part of this policy is a list of Panel Counsel law
firms Panel Counsel Firms The list
provides
the Insureds with a choice of law firms
from which a selection of legal counsel shall be made to conduct the defense of
any
Securities Claim made
against
such Insureds
The Insureds shall select a Panel Counsel Firm to defend the Securities Claim made
against the Insureds in the jurisdiction in which the Securities Claim is
brought
In the
event the Claim
i
s
brought in a jurisdiction not included on the list the Insureds shall
select a Panel Counsel Firm in the listed
jurisdiction
which
i
s the nearest
geographic
jurisdiction to either where the Securities Claim is brought or where the corporate
headquarters
of the Named
Entity i
s located In such instance the Insureds also
may
with
the express prior written consent of the Insurer which consent shall not be unreasonably
withheld select a nonPanel Counsel Firm in the
jurisdiction
in which the Securities
Claim is brought to function as local counsel on the Claim to assist the Panel Counsel
Firm which will function as lead counsel in
conducting
the defense of the Securities
Claim
With the
express prior
written consent of the Insurer an Insured
may
select a Panel
Counsel Firm different from that selected by another Insured defendant i
f such selection
is
required
due to an actual conflict of interest or i
s otherwise reasonably justifiable The
list of Panel Counsel Firms may be amended from time to time by the Insurer However
no firm shall be removed from the specific list attached to this policy during the Policy
Period without the consent of the Named
Entity
10 DISCOVERY CLAUSE
Except as indicated below i
f the Named Entity shall cancel or the Named Entity or the
Insurer shall refuse to renew this policy the Named Entity shall have the right to a period
of either one two or three years following the effective date of such cancellation or
nonrenewal the Discovery Period upon payment
of the
respective
Additional Premium
Amount described below in which to give to the Insurer written notice pursuant to
Clause 7a and 7c of the policy of i Claims first made against an Insured and ii
circumstances of which an Organization or an Insured shall be come aware in either
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case during
said
Discovery
Period and
solely
with
respect to a Wrongful
Act
occurring
prior to the end of the Policy Period and otherwise covered by this policy
The Additional Premium Amount for 1 one year shall be no more than 75 of the Full
Annual Premium 2 two
years
shall be no more than 150 of the Full Annual Premium
and 3 three
years
shall be no more than 225 of the Full Annual Premium As used
herein Full Annual Premium means the
premium
level in effect
immediately prior to the
end of the Policy Period
Notwithstanding
the first
paragraph
of Clause 5 i
f the Named
Entity shall cancel or the
Insurer or the Named Entity shall refuse to renew this policy then the Named
Entity
shall also have the right to requestan
offer from the Insurer of a Discovery Period with
respect to Wrongful Acts occurring prior to the end of the
Policy Period with an
aggregate limit of liability applicable to Claims made against the Insured during such
Discovery
Period which
i
s in addition to and not
part of the
applicable
Limit of
Liability
set forth in Item 3 of the Declarations The Insurer shall quote such a Discovery Period
pursuant to such terms conditions exclusions and additional
premium
as
i
t deems
appropriate in its sole and absolute discretion
In the event of a Transaction as defined in Clause 12a the Named Entity shall have the
right to request an offer from the Insurer of a Discovery Period with respect to Wrongful
Acts occurring prior to the effective time of the Transaction The Insurer shall offer such
Discovery Period pursuant to such terms conditions exclusions and additional premium
as the Insurer
may reasonably decide In the event of a Transaction the
right to a
Discovery Period shall not otherwise exist except as indicated in this paragraph
The
Discovery
Period
i
s not cancelable and the additional
premium charged
shall be
fully
earned at inception This Clause 10 shall not apply to
any
cancellation resulting from
nonpayment of
premium
The
rights
contained in this Clause 10 shall terminate unless written
notice of election of a Discovery Period together with
any
additional premium due
i
s
received
by
the Insurer no later than
thirty 30 subsequent to the effective date of the
cancellation nonrenewal or Transaction
11 CANCELLATION CLAUSE
This policy may
be canceled by the Named Entity at
any
time only by mailing
written
prior notice to the Insurer or by surrender of this policy to the Insurer or its authorized
agent
This policy may only be canceled by or on behalf of the Insurer in the event of
non payment of premium by the Named Entity In the event of non payment of premium
by the Named Entity the Insurer
may
cancel this policy by delivering to the Named
Entity or by mailing to the Named
Entity by registered certified or other first class mail
at the Named Entitys address as shown in Item 1a of the Declarations written notice
stating when not less than 15 days thereafter the cancellation shall be effective The
mailing of such notice as aforesaid shall be sufficient
proof
of notice The
Policy Period
terminates at the date and hour specified in such notice or at the date and time of
surrender The Insurer shall have the
right to the
premium amount for the portion of the
Policy Period during which the policy was in effect
I
f
this policy shall be canceled by the Named Entity the Insurer shall retain the
customary short rate proportion of the premium herein
I
f the period of limitation relating
to the giving of notice as set forth in this Clause 11 is also set forth in any law controlling
the construction thereof then such
period
shall be deemed to be amended so as to be
equal to the minimum period of limitation set forth in the controlling law
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12 ORGANIZATIONAL CHANGES
a I
f
during
the Policy Period
1 the Named Entity shall consolidate with merge into or sell all or substantially all
of its assets to any other person or entity or group of persons or entities
acting i
n
concert or
2
any person
or entity or group
of
persons or entities
acting
in concert shall
acquire
Management
Control of the Named Entity
any of such events being a Transaction then this policy shall continue in full force
and effect as to Wrongful Acts occurring prior to the effective time of the
Transaction but there shall be no coverage
afforded by any provision
of this
policy
for
any
actual or alleged Wrongful Act occurring after the effective time of the
Transaction This policy may not be canceled after the effective time of the
Transaction and the entire premium for this policy shall be deemed earned as of such
time The Named Entity
shall also have the
right to an offer
by
the Insurer of a
Discovery Period described in the fourth paragraph of Clause 10 of this policy
b Subsidiary Additions Subsidiary also means any for profit entity that
i
s not formed as
a partnership
of which the Named Entity first had
Management
Control
during
the
Policy Period whether directly or indirectly through one or more other Subsidiaries
and
1 whose assets total less than 25 of the total consolidated assets of each and
every Organization as of the inception date of this policy or
2 whose assets total 25 or more than the total consolidated assets of each and
every Organization as of the inception
date of this policy
but such
entity shall be
a Subsidiary only i for a period of sixty 60 days from the date the Named
Entity first had Management Control of such entity or ii until the end of the
Policy Period which ever ends or occurs first hereinafter AutoSubsidiary
Period
provided that the Named Entity or any other Insured shall report such Subsidiary to
the Insurer in
writing prior to the end of the
Policy
Period
The Insurer shall extend
coverage
for
any Subsidiary
described in 12b2 above and
any
Insured Person thereof beyond its respective Auto Subsidiary Period
i
f during
such Auto Subsidiary Period the Named
Entity
shall have
provided
the Insurer with
full
particulars
of the new Subsidiary and agreed to
any
additional premium and
amendment of the provisions
of this
policy required by
the Insurer
relating to such
Subsidiary Further coverage
as shall be afforded to
any Subsidiary and
any
Insured
Person thereof is conditioned upon the Named
Entity paying
when due
any additional
premium required by the Insurer relating to such Subsidiary
c Insured Persons and Outside Entity Executives Coverage will automatically apply to all
new Insured Persons of and Outside Entity Executives of an Organization following
the inception date of this policy
d Other
Organizational Changes
In all events coverage as i
s afforded under this
policy
with
respect
to a Claim made against any Organization andor
any
Insured Person thereof
shall only apply
for
Wrongful
Acts committed or allegedly
committed after the
effective time such Organization became an Organization and such Insured Person
became an Insured Person and prior to the effective time that such Organization
ceases to be an Organization or such Insured Person ceases to be an Insured
Person An Organization ceases to be an Organization when the Named Entity no
longer maintains Management
Control of an Organization
either directly or indirectly
through one or more of its Subsidiaries
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13 SUBROGATION
In the event of
any payment
under this policy the Insurer shall be subrogated to the
extent of such payment to all of each and every Organizations and Insureds rights of
recovery thereof and each such
Organization
and Insured shall execute all
papers
required and shall do everything that
may
be
necessary
to secure such rights including the
execution of any and all documents necessary to enable the Insurer
effectively to bring
suit in the name of each such
Organization
and each such Insured In no event however
shall the Insurer exercise its rights of subrogation against an Insured under this policy
unless such Insured has been convicted of a deliberate criminal act or been determined
to have in fact committed a deliberate fraudulent act or been determined to have in fact
obtained any profit or advantage
to which such Insured was not legally entitled
14 OTHER INSURANCE AND INDEMNIFICATION
Such insurance as i
s
provided by this policy shall apply only as excess over any
other
valid and collectible insurance unless such other insurance
i
s written only as specific
excess insurance over the Limit of Liability
I
provided by this policy This policy shall
specifically be excess of any other valid and collectible insurance pursuant to which any
other insurer has a duty to defend a Claim for which this policy may
be obligated to
pay
Loss
In the event of a Claim made against an Outside
Entity Executive coverage as i
s afforded
by
this
policy
whether under Coverage Bii or Coverage C shall be specifically excess of
1 any indemnification provided by an Outside
Entity
and 2 any
insurance
coverage
afforded to an Outside Entity or its Executives applicable to such Claim Further in the
event such other Outside
Entity
insurance
i
s
provided by
the Insurer or any other
company
of American International Group Inc AEG or would be provided but for the
application of the retention amount exhaustion of the limit of liability or failure to submit
a notice of a claim as required
then the Insurers maximum aggregate Limit of
Liability
for all Loss under this policy as respects any such Claim shall be reduced by the amount
of the limit of liability as set forth on the Declarations of the other AIG insurance
provided
to such Outside Entity
15 NOTICE AND AUTHORITY
I
t
i
s agreed
that the Named Entity shall act on behalf of its Subsidiaries and each and
every
Insured with
respect
to the giving of notice of Claim the giving and receiving of
notice of cancellation the
payment
of premiums and the receiving of
any
return premiums
that
may
become due under th
i
s policy the receipt and acceptance of any endorsements
issued to form a part of this policy and the exercising or declining of
any right to a
Discovery Period
16 ASSIGNMENT
This policy
and
any and all
rights
hereunder are not
assignable
without the written
consent of the Insurer
17 ALTERNATIVE DISPUTE RESOLUTION PROCESS
I
t
i
s
hereby
understood and agreed that all disputes or differences which
may
arise under
or in connection with this policy whether arising before or after termination of this policy
including any
determination of the amount of Loss shall be submitted to the alternative
dispute
resolution ADR process
set forth in this clause
Either the Insurer or an Insured
may
elect the
type
of ADR
process
discussed below
provided however that such Insured shall have the right to reject the Insurers choice of
the type
of ADR
process at any
time
prior to its commencement i
n which case such
Insureds choice of ADR
process
shall control
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The Insurer and each and
every
Insured
agrees
that there shall be two choices of ADR
process 1 non binding mediation administered by the American Arbitration Association
i
n which the Insurer and
any
such Insured shall
try in good faith to settle the dispute by
mediation under or in accordance with its then
prevailing
Commercial Mediation Rules or
2 arbitration submitted to the American Arbitration Association in accordance with its
then prevailing Commercial Arbitration Rules in which the arbitration
panel
shall consist of
three disinterested individuals In either mediation or arbitration the mediator or arbitrators
shall have
knowledge
of the
legal corporate management or insurance issues relevant to
the matters in dispute The mediator or arbitrators shall also give due consideration to the
general principles
of the law of the state where the Named Entity i
s
incorporated in the
construction or interpretation of the provisions of this policy In the event of arbitration
the decision of the arbitrators shall be final and binding and provided to both parties and
the arbitrators award shall not include
attorneys
fees or other costs In the event of
mediation either
party
shall have the
right to commence a judicial proceeding provided
however that no such judicial proceeding shall be commenced until the mediation shall
have been terminated and at least 120 days shall have elapsed from the date of the
termination of the mediation In all events each
party
shall share
equally
the
expenses of
the ADR
process
Either choice of ADR
process may
be commenced in New York New York Atlanta
Georgia Chicago Illinois Denver Colorado or in the state indicated in Item 1a of the
Declarations as the
mailing
address for the Named
Entity
The Named
Entity shall act on
behalf of each and
every
Insured in deciding to proceed with an ADR
process
under this
clause
18 ACTION AGAINST INSURER
Except as provided in Clause 17 of the policy no action shall lie
against
the Insurer
unless as a condition precedent thereto there shall have been full compliance with all of
the terms of this policy or until the amount of the Insureds
obligation to pay
shall have
been
finally determined either by judgment against such Insured after actual trial or
by
written
agreement
of the Insured the claimant and the Insurer
Any person or organization or the
legal representative
thereof who has secured such
judgment or written agreement shall thereafter be entitled to recover under this policy to
the extent of the insurance afforded
by
this
policy
No
person or organization shall have
any right under this policy to join the Insurer as a
party
to
any
action against any
Insured
or
Organization to determine the Insureds
liability nor shall the Insurer be impleaded
by any Insured Person their spouse any Organization or
any legal representative of the
foregoing
19 BANKRUPTCY
Bankruptcy or insolvency of
any Organization or any
Insured Person shall not relieve the
Insurer of
any of its obligations hereunder
I
t
i
s further understood and
agreed
that the
coverage provided under this policy i
s
intended to protect and benefit the Insured Persons Further i
f a
liquidation or
reorganization proceeding i
s commenced
by the Named Entity andor
any
other
Organization whether voluntarily or involuntarily under Title 11 of the United States Code
as amended or any
similar
state local or foreign law collectively Bankruptcy Law
then in
regard
to a covered Claim under this
policy
the Insureds
hereby
a waive and release
any
automatic stay or injunction to the extent
i
t
may apply
in such
proceeding to the
proceeds
of this
policy
under such
Bankruptcy Law and
b agree
not to
oppose or object to
any
efforts
by
the Insurer or any Insured to obtain
relief from
any stay or injunction applicable to the proceeds of this
policy
as a result
of the commencement of such liquidation or reorganization proceeding
1 75011 200 BROffirAive Cony 15
HIGHLY CONFIDENTIAL
Return
N
20 SPOUSAL AND LEGAL REPRESENTATIVE EXTENSION
I
f
a Claim
against an Insured Person includes a Claim
against i the lawful
spouse of
such Insured Person or ii a
property
interest of such
spouse
and such Claim arises
from any actual or alleged Wrongful Act of such Insured Person this policy shall cover
Loss arising from the Claim made against that
spouse or the
property
of that
spouse to
the extent that such Loss does not arise from a Claim for any actual or alleged act error
or omission of such
spouse
This
policy
shall cover Loss
arising
from a Claim made
against the estates heirs or legal representatives of
any
deceased Insured Person and
the
legal representatives
of
any
Insured Person in the event of
incompetency insolvency
or bankruptcy who was an Insured Person at the time the Wrongful Acts
upon
which
such Claim
i
s based were committed
21 RENEWAL APPLICATION PROCEDURE
I
f this policy i
s a renewal of a replacement of or succeeds in time
any policy providing
similar
coverage
issued by the Insurer or any
of its affiliates then in
granting coverage
under this policy i
t
i
s agreed that the Insurer has relied upon the Application as being
accurate and
complete i
n
underwriting
this
policy
This Clause 21
together
with the
Application constitute the complete Application that
i
s the basis of this policy and form a
part hereof and
i
s material to the risk assumed
by
the Insurer No written renewal
application form need be completed by the Named Entity in order to receive a renewal
quote
from the Insurer although
the Insurer reserves the
right to require specific
information
upon
renewal
22 ORDER OF PAYMENTS
In the event of Loss arising from a covered Claim for which payment is due under the
provisions
of this
policy
then the Insurer shall in all events
a first pay
Loss for which
coverage
is provided under
Coverage
A and
Coverage C of
this policy then
b only after
payment
of Loss has been made
pursuant
to Clause 22a above with
respect to whatever
remaining amount of the Limit of
Liability i
s available after such
payment
at the written
request
of the chief executive officer of the Named
Entity
either pay or withhold
payment
of such other Loss for which coverage i
s provided
under Coverage Bii of this policy and then
c only after
payment
of Loss has been made
pursuant
to Clause 22a and Clause 22b
above with respect to whatever
remaining amount of the Limit of Liability i
s available
after such
payment
at the written
request
of the chief executive officer of the Named
Entity either pay or withhold payment of such other Loss for which
coverage i
s
provided under Coverages Bi and D of this policy
In the event the Insurer withholds
payment pursuant
to Clause 22b andor Clause 22c
above then the Insurer shall at such time and in such manner as shall be set forth in
written instructions of the chief executive officer of the Named
Entity
remit such
payment
to an Organization or directly to or on behalf of an Insured Person
The bankruptcy or insolvency of
Insured Person shall not relieve
the Insurer of any of its obligations to prioritize payment of covered Loss under this
policy pursuant to this Clause 22
23 HEADINGS
The descriptions in the headings of this policy are solely for convenience and form no
part of the terms and conditions of coverage
75011 200 BR01K ive Cony
16
HIGHLY CONFIDENTIAL
Return
APPENDIX A
SECURITIES CLAIMS PANEL COUNSEL LIST
ALASKA
Davis
Wright
Tremaine
David W Oesting
701 W
Eighth Avenue Suite 800 Anchorage AK 99501 3468 907257 5300
Class Action Approved
Foster Pepper Shefelman
Tim J Filer
1007 W Third Ave Ste 100 Anchorage AK 99501 907222 7100
CALIFORNIA
Bingham McCutchen LLP
David M Balabanian Dale E Barnes
3 Embarcadero Center San Francisco CA 94111 4153932626
Mary T Huser
1900
University Avenue East Palo Alto CA 94303 1212 650849 4914
Susan L Hoffman
355 South Grand Avenue Los Angeles
CA 90071 1560 213680 6416
Class Action
Approved
Cooley Godward Kronish LLP
Paul A Renne 4156932073John C Dwyer 6508435228
One Maritime Plaza 20th Floor San Francisco CA 94111 3580 415693 2000
William E Grauer 8585506050 Philip C Tencer 8585506068 Koji F Fukumura 18585506008
4401 Eastgate Mall San
Diego
CA 92121 1909 858550 6000
Stephen C Neal 6508435182 William S Freeman 65018435037 John C Dwyer 6508435228
3175 Hanover Street Palo Alto CA 94304 1130 650843 5000
Davis Wright Tremaine
Martin Fineman
One Embarcadero Center Suite 600 San Francisco CA 94111 3834 415276 6500
Class Action
Approved
DLA Piper Rudnick Gray Cary US LLP
Shirli Fabbri Weiss David Priebe
2000 University Avenue East Palo Alto CA 94303 650833 2000
Shirli Fabbri Weiss Robert Brownlie
4365 Executive Drive Suite 1100 San Diego CA 92121 858677 1400
Revised 707 Page 1
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APPENDIX A
Fenwick West LLP
Susan S Muck
Embarcadero Center West 275
Battery Street San Francisco CA 94111 415875 2300
Gibson Dunn Crutcher LLP
Dean J Kitchens 2132297413
333 S Grand Avenue Los
Angeles
CA 90071 3197 213229 7413
Wayne W Smith Meryl L Young
Jamboree Center 4 Park Plaza Suite 1400 Irvine CA 92614 8557 949451 3800
Heller Ehrman White McAuliffe
Douglas
M Schwab M Laurence
PopofskyMichael
J
Shepard
333 Bush Street San Francisco CA 94104 2878 415772 6000
Darryl
L Snider
JerryL
Marks
601 South
Figueroa Street 40th Floor Los
Angeles
CA 90017 5758 2136890200
Norman J Blears
275 Middlefield Road Menlo
Park CA 94025 3506 650324 7000
David E Kleinfeld
4350 La Jolla Village Drive 7th Floor San
Irell Manella LLP
David Siegel Daniel P Lefler
1800 Avenue of the Stars Suite
Katten Muchin Rosenman LLP
Bruce
Vanyo 13107884401
2029 Century Park East Suite
Diego CA 92122 1 246 858450 8400
900 Los
Angeles
CA 90067 4276 310277 1010
2600 Los Angeles CA 90067 3012 310788 4400
Latham Watkins
Paul H Dawes 6504632626John C
Tang 6503284600
135 Commonwealth Drive Menlo Park CA 94025 1105 650328 4600
Class Action
Approved
Miles N Ruthberg 2138918754Pamela S Palmer 2138918435Mark W Rappel 2138918156
Peter W Devereaux 2138918622Charles W Cox 2138918178Jamie L Wine 2134851234
633 West Fifth Street Suite 4000 Los Angeles CA 90071 213485 1234
Revised 707 Page 2
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APPENDIX A
Michael J Weaver 6192383012 Peter H Benzian 6192361234 Julia E Parry 6192361234
600 West Broadway Suite 1800 San Diego CA 92101 3375 619236 1234
Class Action
Approved
Paul H Dawes 6504632626Peter A Wald 41539580106Darius C
0gloza 4153910600James
K Lynch 4153958265 Michele F Kyrouz
505
Montgomery Street Suite 1900 San Francisco CA 94111 2562 415391 0600
Miles N
Rulberg 2138918754Peter W Devereaux 2138918622Pamela S Palmer
2138918435Jon D Anderson 7147558217Virginia S Grogan 714 7558206
650 Town Center Drive 20th Floor Costa Mesa CA 92626 714540 1235
Morrison Foerster LLP
Melvin R Goldman 4152687311 Paul T Friedman 415268 7444 Jordan D Eth 4152687176
Darryl
P Rains 6508135866
425 Market Street San Francisco CA 94105 415268 7000
Robert S Stern 2138925484 Mark R McDonald 2138925810
555 West 5th Street Suite 3500 Los Angeles CA 90013 213892 5200
Class Action
Approved
Munger Tolles Olson
John W Spiegel 2136839152 George M Garvey 213 6839153
355 South Grand Avenue 35th Floor Los
Angeles
CA 90071 1560 213683 9100
OMelveny Myers
LLP
Seth Aronson 2134307486AmyJ Longo 2134308351
400 South
Hope St 15th Floor Los
Angeles
CA 90071 2899 213430 6000
Michael G Yoder 9498237936Phillip R Kaplan
610 Newport Center 17th Floor Newport Beach CA 92660 9497609600
Class Action
Approved
Daniel H Bookin 4159848786Michael F Tubach
275 Battery Street San Francisco CA 94111 415984 8700
Orrick Herrington Sutcliffe LLP
W Reece Bader
1000 Marsh Road Menlo Park CA 94025 650614 7400
Class Action
Approved
William F Alderman Michael D
Torpey 4157735932James E Burns Jr 4157735935
Old Federal Reserve Bank Building 400 Sansome Street San Francisco CA 94111
415392 1122
Class Action
Approved
Revised 707 Page 3
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APPENDIX A
Paul Hastings Janofsky Walker LLP
Howard M Privette William F Sullivan John A
Reding
Peter M Stone Christopher H McGrath
515 South Flower Street Twenty Fifth Floor Los Angeles
CA 90071 213683 6000
Class Action
Approved
Shearman Sterling
Jeffrey S Facter 4156161205 Stephen D Hibbard 4156161174
555 California Street San Francisco CA 94104 415616 1100
Simpson
Thacher Bartlett
Chat Kronenberg Seth A Ribner
1999 Avenue of the Stars 29th Floor Los Angeles CA 90067 310407 7500
George M Newcombe James G Kreissman
3373 Hillview Avenue Palo Alto CA 94304 650251 5000
Skadden Arps Slate Meagher Flom LLP and Affiliates
James E Lyons 4159846470
Four Embarcadero Center San Francisco CA 94111 4159846400
Sullivan Cromwell
Robert A Sacks
1888
Century
Park East Los Angeles CA 90067 1725 310712 6600
Wilson Sonsini Goodrich Rosati
Boris Feldman Steven M Schatz Jerome Birn 6503204858Nicki Locker
6503204888Douglas
Clark 6503204824 Keith Eggleton 6503204893
650 Page
Mill Road Palo Alto CA 94304 1050 650493 9300
COLORADO
James E Nesland
380 Interlocken Crescent Suite 900 Broomfield CO 800218023 7205664000
George Curtis
1801 California Street Suite 4100 Denver CO 80202 303298 5700
Hogan
Hartson
Daniel F Shea
One Tabor Center 1200 Seventeenth St Suite 1500 Denver CO 80202 303899 7300
Revised 707 Page 4
may
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APPENDIX A
DELAWARE
Blank Rome LLP
Thomas P Preston Neal C
Belgam
Chase Manhattan Centre 1201 Market Street Suite 800 Wilmington DE 19801 302425 6473
Wolf Block Schorr and Solis Cohen LLP
Barry Klayman
Wilmington
Trust Center 1100 N Market Street Suite 1001 Wilmington
DE 19801
302777 5860
DISTRICT OF COLUMBIA
Arnold Porter
Scott B Schreiber 2029425672
555 Twelfth Street NW Washington DC 20004 1206 202942 5000
Cahill Gordon Reindel
Donald J Mulvihill
1990 K Street NW Suite 950 Washington DC 20006 202862 8900
David Clarke Jr 2028616300Robert J Machias 4105804209James D Mathias Mark Muedeking
2028613900Deborah R Meshulam 2028616470
1200 Nineteenth Street NW Washington DC 20036 2412 202861 3900
Class Action
Approved
Fulbright Jaworski LLP
Stephen
M McNabb
Market Square 801 Pennsylvania Ave NW Washington DC 20004 2623 202662 0200
F Joseph Warin John C Millian
1050 Connecticut Ave NW Washington DC 20036 5306 202955 8500
Greenberg Traurig
LLP
Joe R Reeder Alan Foster
800 Connecticut Avenue NW Suite 500 Washington DC 20006 202331 3100
Hogan
Hartson
Ty Cobb
555 Thirteenth Street NW Washington DC 20004 202637 5600
Revised 707 Page 5
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APPENDIX A
Latham Watkins
Laurie B Smilan 7034565220 Michele E Rose 7034565225 William R Baker Nl 2026371001
Everett C Kip Johnson Jr 2026372260 Christian Word 7034565226
555 Eleventh Street NW Suite 1000 Washington
DC 20004 1304 202637 2200
LeBoeuf Lamb Greene MacRae LLP
Ralph
C Ferrara 2029868020Lyle Roberts 2029868029
1875 Connecticut Avenue NW Suite 1200 Washington
DC 20009 5715 202986 8000
OMelveny Myers LLP
Jeffrey Kilduff 2023835383
1625 Eye Street NW Washington DC 20006 202383 5300
Shearman Sterling
Jonathan L Greenblatt 2025088070Thomas S Martin 2025088040
801 Pennsylvania Ave NW Washington
DC 20004 2604 1202508 8000
Sidley
Austin Brown Wood LLP
Thomas C Green 202 7368069 Mark D Hopson 202 7368188 Michael D Warden 202736x8080
1501 K Street NW Washington
DC 20005 202736 8000
Sullivan Cromwell
Daryl A LibowMargaret
K Pfeiffer
1701
Pennsylvania Avenue NW Washington DC 20006 5805 202956 7500
Williams Connolly LLP
John K Villa
725 Twelfth Street NW Washington DC 20005 202434 5000
Willkie Farr
Gallagher
Kevin B Clark 2023031105
1875 K Street NW Washington DC 20006 1238 202303 1000
WilmerHale
2445 M Street NW Washington
DC 20037 202663 6000
FLORIDA
Akerman Senterfitt Eidson PA
Brian P Miller 3059825626
SunTrust International Center 28th Floor Miami FL 33131 305374 5600
Revised 707 Page
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APPENDIX A
J Thomas Cardwell
Citrus Center 17th Floor 255 South Orange Ave Orlando FL 32801 407843 7860
Class Action
Approved
Carlton Fields
Steven J Brodie 3051539 7302 Nancy H Henry
4000 International Place 100 SE 2nd Street Suite 4000 Miami FL 33131 305530 0050
Class Action
Approved
Gary
L Sasso
One Progress Plaza 200 Central Avenue Suite 2300 St Petersburg
FL 33701 4352
727821 7000
Steven J Brodie 3055397302
4221 West Boy
Scout Boulevard 10th Floor Tampa
FL 33607 813223 7000
Greenberg Traurig LLP
Bradford D Kaufman
777 South Flagler Drive Suite 300 East West Palm Beach FL 33401 561650 7900
Class Action
Approved
Hilarie Bass Esq
1221 Brickell Avenue Miami FL 33131 3055790500
Holland Knight LLP
Tracy A Nichols George E Schulz Jr
50 North Laura Street Suite 3900 Jacksonville FL 32202 904353 2000
Class Action
Approved
Tracy A Nichols Mitchell Eliot Herr Gregory
A Baldwin Louise Bra
i
s
701 Brickell Avenue Suite 3000 Miami FL 33131 305374 8500
Tracy A Nichols Michael L
Chapman
100 North Tampa Street Suite 4100 Tampa FL 33602 8132278500
Robert R Feagin 111 Elizabeth L Bevington
315 South Calhoun Street Suite 600 Tallahassee FL 32301 850224 7000
Tracy A Nichols Scott Newman
625 North Flagler Drive Suite 700 West Palm Beach FL 33401 561833 2000
William Wilson
200 South Orange Avenue Suite 2600 Orlando FL 32801 407425 8500
Revised 707 Page
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APPENDIX A
McGuireWoods LLP
David M Wells
Stephen
D Busch 80417754378
Bank of America Tower 50 North Laura Street Jacksonville FL 32202 904798 3200
Class Action
Approved
Squire Sanders Dempsey LLP
Lewis F Murphy 3055772957 Wendy Leavitt 305J5772894
200 South
Biscayne Boulevard Suite 4000 Miami FL 33131 2398 305577 7000
White Case LLP
Charles C Kline Esq
Wachovia Financial Center 200 S Biscayne Blvd Suite 4900 Miami FL 33131 2352
305371 2700
GEORGIA
Alston Bird LLP
Peter 0 Bassett 40488173431 Todd R David 4048877357
One Atlantic Center 1201 West Peachtree Street Atlanta GA 30309 3424 404881 7000
King Spalding
M Robert Thornton Michael R Smith
1 180 Peachtree Street Atlanta GA 30309 404572 4600
J Allen Maines
600 Peachtree Street NE Twenty Fourth Floor Atlanta GA 30308 2222 404815 2400
Class Action
Approved
Smith Gambrell Russell LLP
John G
Despriet
Promenade
I
t Suite 3100 1230 Peachtree Rd NE Atlanta GA 30309 3592 404815 3730
Womble Carlyle Sandridge Rice
Robert R Ambler Jr 4048792424Nisbet S Kendrick 4048887488
One Atlantic Center 1201 West Peachtree Suite 3500 Atlanta GA 30309 404872 7000
ILLINOIS
Samuel B Isaacson Michael S Poulos
203 North LaSalle Street Suite 1900 Chicago I
L 60601 1293 312368 4000
Revised 707 Page 8
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APPENDIX A
Katten Muchin Rosenman LLP
David H KistenbrokerPamela G Smith Leah J Domitrovic Steven L BashwinerMary
Ellen
HennessyBonita
L Stone
525 W Monroe Street Suite 1600 Chicago
IL 60661 3693 312902 5200
Kirkland Ellis
Robert J Kopecky
200 East Randolph Drive Chicago IL 60601 312861 2000
Sidley Austin Brown Wood LLP
Hillie R
Sheppard Eugene
A Schoon Walter C Carlson
1 South Dearborn Street Chicago IL 60603 312853 7734
Sonnenschein Nath Rosenthal
Christopher 0 King
8000 Sears Tower Chicago
IL 60606 312876 8224
MARYLAN D
Mark Muedeking 4105803000
6225 Smith Avenue Baltimore MD 21209 410580 3000
MASSACHUSETTS
Bingham McCutchen LLP
Jordan D Hershman
150 Federal Street Boston MA 021 10 1726 617951 8000
Edwards Angell Palmer Dodge LLP
John D Hughes
101 Federal Street Boston MA 02110 1800 617951 3373
Foley Hoag LLP
Nicholas C Theodorou 6178321163 Lisa C Wood 6178321117
Seaport World Trade Center West 155 Seaport Boulevard Boston MA 02210 2600
617832 1000
Goodwin Procter LLP
Stephen D Poss Brian E Pastuszenski R Todd Cronan James S Dittmar Carl E
Metzger
Exchange Place 53 State Street Boston MA 02109 2881 617570 1000
Revised 707 Page 9
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APPENDIX A
Mintz Levin Cohn Ferris Glovsky and Popeo PC
Peter M Saparoff Patrick J Sharkey
One Financial Center Boston MA 02111 617542 6000
Ropes Gray
John D Donovan Jr
One International Place Boston MA 02110 2624 617951 7566
Thomas J
Dougherty
One Beacon Street Boston MA 02108 617573 4820
Class Action
Approved
WilmerHale
Jeffrey B Rudman William H Paine Andrea J Robinson
60 State Street Boston MA 02109 617526 6000
Class Action
Approved
MINNESOTA
Dorsey Whitney
LLP
Brian E Palmer Edward J Pluimer J Jackson l Peter W Carter
Roger
J
Magnuson
50 South Sixth Street Suite 1500 Minneapolis MN 55402 1498 612340 2600
Faegre Benson LLP
Robert L Schnell Thomas L Kimer
90 South Seventh Street Minneapolis MN 55402 3901 612336 3000
Class Action
Approved
Winthrop Weinstine PA
David P Pearson 6126046692 Thomas H
Boyd
Suite 3500 225 South 6th Street Minneapolis MN 55402 4629 612604 6400
Class Action
Approved
NEW YORK
Arnold Porter
Kent A Yalovwitz Scott B Schreiber 2029425672
399 Park Avenue New York NY 10022 4690 212715 1000
Blank Rome LLP
Robert J Mittman 2128855555
The
Chrysler Building
405
Lexington Avenue New York NY 10174 212885 5555
Revised 707 Page
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APPENDIX A
Cadwalader Wickersham Taft
Gregory A Markel Howard R Hawkins Jr Jonathan M Hoff
One World Financial Center New York NY 10281 212504 6000
Cahill Gordon Reindel
Charles A Gilman 2127013403David G Januszewski 2127013352Thomas J Kavaler
2127013406Jonathan D Thier 2127013992
Eighty Pine Street New York NY 10005 212701 3000
Class Action
Approved
Clifford Chance US LLP
James B Weidner John K Carroll Mark Holland
31 West 52nd Street New York NY 10019 6131 212878 8000
Cravath Swaine Moore
Evan R Chester Francis P Barron Julie A North Keith R Hummel Paul C Saunders l Peter T
Barbur Richard W Clary Robert H Baron Ronald S Rolfe
Rory
0 Millson Thomas G Rafferty
Worldwide Plaza 825 Eighth Avenue New York NY 10019 7475 212474 1000
Joseph G Finnerty 111 Keara M Gordon David E Nachman John J Clarke
1251 Avenue of the Americas New York NY 10020 1104 212835 6000
Fried Frank Harris Shriver Jacobson
William G McGuinness Alexander R Sussman Debra M Torres
Douglas
H Flaum l Gregg
L
Weiner John A Borek
One New York Plaza New York NY 10004 1980 212859 8000
Class Action
Approved
Fulbright Jaworski LLP
Robert D Owen Daniel R Murdock 2123183385Philip
M Smith 2123783329
666 Fifth Avenue New York NY 10103 3198 212318 3000
Wesley
G Howell Robert F Serio Mitchell A Karlan 2123573827
200 Park Avenue New York NY 10166 0193 212351 4000
Greenberg Traurig
LLP
Brian S Cousin 21280192001 Geoffrey Berman l Karen Bitar William Briendel Michael Burrows
Adam Cole Roger Kaplan Robert A Horowitz Ronald Lefton Jeffrey Mann Alan Mansfield
Stephen
Saxl Jeffrey Sklaroff Toby
Soli Kenneth A
Lapatine
200 Park Avenue New York NY 10022 212801 9200
Revised 707 Page
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APPENDIX A
Katten Mu chin Rosenman LLP
David H KistenbrokerRobert W Gottlieb Joel W Sternman
575 Madison Avenue New York NY 10022 2585 212940 8800
Kaye Scholer LLP
Fredric W Yerman 21218368663Phillip A Geraci 2128368659
425 Park Avenue New York NY 10022 212836 8663
Kramer Levin Naftalis Frankel LLP
GaryP
Naftalis Alan R Friedman Robert N Holtzman Jonathan M
Wagner
1177 Avenue of the Americas New York NY 10036 212715 9100
Mayer Brown Rowe Maw
Richard A SpehrSteven Wolowitz Joseph DeSimone
1675 Broadway New York NY 10019 212506 2500
Milbank Tweed Hadley McCloy
Michael L Hirschfeld Scott A Edelman
1 Chase Manhattan Plaza New York NY 10005 212530 5149
Class Action
Approved
Morrison Foerster LLP
Anthony M Radice 212468020 Jack C Auspitz 2124688046
1290 Avenue of the Americas New York NY 10104 2124688000
Class Action
Approved
BarrySherJames D Wareham
Park Avenue Tower 75 E 55th Street New York NY 10022 212318 6000
Class Action
Approved
Paul Weiss Rifkind Wharton Garrison
Daniel J BellerMartin Flumenbaum Claudia Hammerman Brad S Karp Daniel J KramerMark F
Pomerantz Richard A Rosen
1285 Avenue of the Americas New York NY 10019 6064 212373 3000
Proskauer Rose LLP
Gregg M Mashberg
1585
Broadway
New York NY 10036 8299 212969 3000
Schulte Roth Zabel LLP
Betty Santangelo Howard 0 Godnick Irwin J Sugarman Robert M Abrahams
919 Third Avenue New York NY 10022 212756 2000
Class Action
Approved
Revised 707 Page 12
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APPENDIX A
Shearman
Sterling
Jeremy
G
Epstein 2128484163Steven F Moto 2128487456Brian H Polovoy 2128484703
StuartJ Baskin 2128484974
599
Lexington Avenue New York NY 10022 2128488000
Sidley Austin Brown Wood LLP
Theodore N Miller 2138966646 l Barry W Rashkover I Steven M Bierman l Robert Pietrzak
787 Seventh Avenue New York NY 10019 212839 5300
Simpson Thacher Bartlett
Bruce D
Angiolillo
Michael J
Chepiga Paul C Cumin
Roy
L Reardon
425 Lexington Avenue New York NY 10017 212455 2000
Jonathan J Lerner
Four Times
Square
New York NY 10036 212735 2550
Stroock Stroock Lavan LLP
Laurence Greenwald Melvin A Brosterman Robert Lewin
180 Maiden Lane New York NY 10038 212806 5400
Class Action
Approved
Sullivan Cromwell
D Stuart Meiklejohn Gandolfo V DiBlasi John L Hardiman John L Warden Philip L Graham Jr
Richard H Klapper
125 Broad Street New York NY 10004 2498 212558 4000
Wachtell Lipton Rosen Katz
Paul Vzcarrondo 21214031208 Ted Mirvis
51 W 52nd Street 29th Floor New York NY 10019 212403 1000
Class Action
Approved
Weil Gotshal
Manges
LLP
Greg A DanilowIrwin H Warren Joseph Allerhand Jonathan D Polkes 2123108881
767 Fifth Avenue New York NY 10153 212310 8000
Willkie Farr Gallagher
Michael R Young Richard L Posen Stephen W Greiner
787 Seventh Avenue New York NY 10019 6099 2127288000
WilmerHale
Peter ngeland Robert B McCaw
520 Madison Ave New York NY 10022 212230 8800
Revised 707 Page 13
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APPENDIX A
OHIO
Jones Day
Reavis
Pogue
John M Newman Jr John W Edwards I
f
North Point 901 Lakeside Avenue Cleveland OH 44114 216586 3939
OREGON
Davis
Wright
Tremaine
John F McGrory
2300 First Interstate Tower 1300 SW Fifth Avenue Portland OR 97201 503241 2300
Foster Pepper Shefelman
Tim J Filer Roger
D Mellern
101 SW Main Street 15th Floor Portland OR 97204 3223 5032210607
Class Action
Approved
Lane Powell Spears Lubersky LLP
Milo Petranovich Robert E Maloney
601 SW Second Avenue Suite 2100 Portland OR 97204 503778 2100
Class Action
Approved
Stoel Rives LLP
Lois O Rosenbaum
900 SW 5th Avenue Suite 2600 Portland OR 97204 503224 3380
PENNSYLVANIA
Blank Rome LLP
Ian M ComiskyAlan J Hoffman
One Logan Square Philadelphia PA 19103 215569 5500
Buchanan Ingersoll Rooney PC
John R Leathers
One Oxford Centre 20th Floor 301 Grant Street Pittsburgh
PA 15219 8800 412562 8800
Dechert LLP
Jeffrey
G Well 21599425381 Seymour Kurland 2159942235
4000 Bell Atlantic Tower 1717 Arch Street Philadelphia PA 19103 2793 215994 4000
Pepper Hamilton LLP
Barbara W Mather Jon A
BaughmanLaurence
Z Shiekman 2159814347 M Duncan Grant
Robert L Hickok 2159814583Thomas E Zemaibs
3000 Two Logan Square Eighteenth
and Arch Streets Philadelphia
PA 19103 2799
215981 4000
Revised 707 Page 14
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APPENDIX A
Wolf Block Schorr and Solis Cohen LLP
Jerome J Shestack M Norman Goldberger Mark L Alderman
1650 Arch Street 22nd Floor Philadelphia
PA 19103 2097 215977 2058
Class Action
Approved
TEXAS
Akin Gump Strauss Hauer Feld LLP
Paul R Bessette 5124996250Edward S Koppman OrrinL Harrison 111
1700 Pacific Avenue Suite 4100 Dallas TX 75201 214969 2800
Paul R Bessette 5124996250
1111 Louisiana Street 44th Floor Houston TX 77002 5200 713220 5800
Beirne Maynard Parsons LLP
Jeffrey
R Parsons 7139607302
1300 Post Oak Boulevard Suite 2500 Houston TX 77056 3000 713623 0887
Class Action
Approved
Carrington Coleman Sloman Blumenthal LLP
Fletcher L
Yarbrough Bruce W Collins Tim Gavin
901 Main Street Suite 5500 Dallas TX 75202 214855 3000
Fuibright Jaworski LLP
Frank G Jones Robert S Harrell Gerard G Pecht
1301 McKinney Suite 5100 Houston TX 77010 713651 5151
Karl G Dial l Michael A Svirartzendruber
2200 Ross Avenue Suite 2800 Dallas TX 75201 214855 8000
King Spalding
Mark K Glasser
1100 Louisiana Suite 4000 Houston TX 77002 713751 3212
Locke Liddell Sapp LLP
Bradley W Foster 21474086641 CW
Flynn 214 7408654 John H McElhaney 214 7408458
2200 Ross Avenue Suite 2200 Dallas TX 75201 6776 214740 8000
Charles R Parker 7132261469
3400 JPMorgan
Chase Tower 600 Travis Houston TX 77002 713226 1200
Bradley
W Foster 2147408664CW Flynn 2147408654John H McElhaney 2147408458
100 Congress Avenue Suite 300 Austin TX 78701 4042 512305 4700
Revised 707 Page 15
may
have been
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APPENDIX A
Thompson Knight
LLP
Timothy
R McCormick
1700 Pacific Avenue Suite 3300 Dallas TX 75201 214969 1103
Timothy R McCormick
98 San Jacinto Boulevard Suite 1200 Austin TX 78701 512469 6100
Class Action
Approved
Timothy R McCormick
333
Clay Street Suite 3300 Houston TX 77002 713654 8111
Timothy R McCormick
Burnett Plaza Suite 1600 801 Cherry Street Unit 1 Fort Worth TX 76102 6881
817347 1700
Vinson Elkins LLP
Walter B Stuart N Scott Fletcher
First City Tower 1001 Fannin St Suite 2300 Houston TX 77002 6760 713758 2222
Well Gotshal Manges
LLP
Ralph
I Miller
100 Crescent Court Dallas TX 75201 214746 7700
Ralph
I Miller
700 Louisiana Suite 1600 Houston TX 77002 713546 5000
Class Action
Approved
VIRGINIA
Robert R Vieth Partner Michael Kllsch
One Freedom Square Reston Town Ctr 11951 Freedom Dr Reston VA 20190 5656
703456 8000
Greenberg Traurig LLP
John Scalia 703 749 1300
1750
Tysons Boulevard 12th Fl Tysons Corner VA 22102 703749 1300
Class Action
Approved
Latham Watkins
Laurie B Smilan 70345x5220 Michele E Rose 7034565225 Christian Word 7034565226
Two Freedom Square 11955 Freedom Drive Suite 500 Reston VA 20190 5651 703456 1000
McGuireWoods LLP
Stephen
D Busch 8047754378
One James Center 901 East Cary Street Richmond VA 23219 804775 1000
Revised 707 Page 16
may
have been
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APPENDIX A
Stephen D Busch 8047754378Charles McIntyre
1750 Tysons Boulevard Suite 1800 McLean VA 22102 703712 5000
WilmerHale
Charles E Davidow 2026636241
1600 Tysons Boulevard 10th Floor Tysons Corner VA 22102 703251 9700
Lyle Roberts Trevor Chaplick 7037343100
2 Fountain Square Reston Town Ct 11921 Freedom Drive Suite 600 Reston VA 20190 5634
703734 3100
Class Action
Approved
WASHINGTON
Davis
Wright
Tremaine
Stephen M Rummage Ladd B Leavens
2600
Century Square 1501 Fourth Avenue Seattle WA 98101 1688 2066223150
Stellman Keehnel
701 Fifth Avenue Suite 7000 Seattle WA 98104 206839 4800
Foster Pepper
Shefelman
Tim J Filer Roger
D Mellem
1111 Third Avenue Suite 3400 Seattle WA 98101 3299 206447 8998
Heller Ehrman White McAuliffe
George E Greer
701 Fifth Avenue Suite 6100 Seattle WA 98104 7098 206447 0900
Lane Powell Spears Lubersky LLP
James B Stoetzer 2062779511 Rudy A Englund LarryS Gangnes Christopher B Wells
1420 Fifth Avenue Suite 4100 Seattle WA 98101 2338 206223 7000
Perkins Coie LLP
Harry
H Schneider Jr Ronald L Berenstain
1201 Third Avenue Ste 4800 Seattle WA 98101 3099 206583 8888
Class Action
Approved
Barry M Kaplan
701 Fifth Avenue Suite 5100 Seattle WA 98104 206883 2500
Revised 707 Page
17
may
have been
added to the panel
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APPENDIX B
1 DEFINITIONS
a Crisismeans
1 a Delisting
Crisis or
2 one of the
following
events which in the good faith opinion of the Chief
Financial Officer of an Organization did cause or i
s reasonably likely to
cause a Material Effect on an Organizations Common Stock Price
i Negative earning or sales announcement
The
public
announcement of an Organizations past or future
earnings or sales which
i
s substantially
less favorable than
any
of
the following U an Organizations prior years earnings or sales
for the same period ii an Organizations prior public statements
or projections regarding earnings or sales for such period or iii
an outside securities analysts published estimate of an
Organizations
earnings or sales
ii Loss of a patent trademark or copyright or major customer or contract
The public
announcement of an unforeseen loss of i an
Organizations intellectual property rights
for a patent
trademark
or copyright
other than by expiration ii a major customer or
client of an Organization or iii a major contract with an
Organization
Product recall or delay
The public announcement of the recall of a major product
of an
Organization or the unforeseen delay in the production of a major
product of an Organization
iv
Mass tort
The public announcement or accusation that an Organization
has
caused the bodily injury sickness disease death or emotional
distress of a group of persons or damage to or destruction of
any
tangible group
of properties including the loss of use thereof
v Employee layoffs or loss of key executive officers
The public announcement of
layoffs
of
Employees
of an
Organization
The death or resignation of one or more key Executives of
the Named Entity
vi Elimination or suspension
of dividend
The public announcement of the elimination or
suspension
of a
regularly
scheduled dividend previously being paid by an
Organization
vii Writeoff of assets
The
public
announcement that an Organization intends to write off
a material amount of its assets
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viii
Debt
restructuring or default
The
public announcement that an Organization has defaulted or
intends to default on its debt or intends to engage
in a debt
restructuring
ix Bankruptcy
x
The public announcement that an Organization intends to file for
bankruptcy protection or that a third party is seeking to file for
involuntary bankruptcy on behalf of an Organization or that
bankruptcy proceedings
are imminent whether voluntary or
involuntary
Governmental or regulatory litigation
The public announcement of the commencement or threat of
commencement of litigation or governmental or regulatory
proceedings against an Organization
xi Unsolicited takeover bid
An unsolicited written offer or bid by any person
or entity other
than an Insured or any affiliate of any Insured whether
publicly
announced or privately made to an Executive of an Organization
to effect a Transaction as defined in Clause 12a of the
policy
of
the Named
Entity
A Crisis shall first commence when an Organization or any
of its Executives
shall first become aware of such Crisis A Crisis shall conclude once a Crisis
Firm advises an Organization that such Crisis no longer
exists or when the
CrisisFundSM has been exhausted
b Crisis Firm means any public
relations firm crisis
management
firm or law
firm as listed in section III of this Appendix B Any Crisis Firm may be hired
by an Organization to perform Crisis Services without further
approval by
the
Insurer
c Crisis Loss means the following amounts incurred
during
the pendency of a
Crisis for which an Organization i
s legally liable
1 the reasonable and
necessary
fees and
expenses
incurred by a Crisis
Firm in the performance of Crisis Services for an Organization
2 the reasonable and necessary fees and expenses incurred in the
printing
advertising or mailing
of materials and
3 travel costs incurred
by
Executives employees or agents of an
Organization or of the Crisis Firm arising
from or in connection with
the Crisis
d Crisis Services means those services performed by a Crisis Firm in
advising
an Insured or any Employee
of an Organization on minimizing potential
harm
to an Organization
from the Crisis including but not limited to maintaining
and restoring investor confidence in an Organization
and
solely
with
respect
to Delisting
Crisis Loss any legal services performed by a Crisis Firm in
responding to a Delisting Crisis
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e Delisting Crisis means written notice to an Organization that such
Organizations
securities will be or have been delisted from an
Exchange
f Exchange means NASDAQ the American Stock
Exchange
the New York
Stock Exchange and the Singapore Exchange
g
Material Effect on an Organizations Common Stock Price means within a
period of 24 hours that the price per share of an Organizations common
stock shall decrease
by
the
greater
of $200 or 15 net of the percentage
change in the Standard Poors Composite Index
111 EXCLUSIONS
The term Crisis shall not include any event relating to
i any
Claim which has been reported or any circumstances of which
notice has been
given
under
any policy of which this policy i
s a renewal
or replacement or which
i
t may succeed in time
ii the actual alleged or threatened discharge dispersal release or escape
of Pollutants or any
direction or request to test for monitor clean
up
remove contain treat detoxify or neutralize Pollutants provided
however the
foregoing
shall not apply i
f the policy contains
any
provision
or endorsement modifying or deleting in part or in whole
exclusion k of the policy or
iii the hazardous properties of nuclear materials provided however the
foregoing shall not apply to any
Crisis
arising
from the
ownership of
operation of construction of management
of planning of maintenance
of or investment in any nuclear facility
Ill PRE APPROVED CRISIS FIRMS
a For all Crisis including a Delisting Crisis Crisis Firms means
relations firm listed in 1 7 below
1 ABERNATHY MACGREGOR
4
SCANLO N
501 Madison Avenue
New York NY 10022
212 371 5999
Contact James T MacGregor
2 BURSON MARSTELLER 5
230 Park Avenue South
New York NY 10003 1566
212 614 5236
Contact Michael Claes
3 PATTON BOGGS LLP
2550 M Street NW
Washington DC 20037
202 457 6000
Contact Thomas H Boggs
6
KEKST AND COMPANY
437 Madison Avenue
New York NY 10022
212 593 2655
Contact Andrew Baer
any public
ROBINSON LERER MONTGOMERY
75 Rockefeller Plaza 6
th
floor
New York NY 10019
212 484 7721
Contact Michael Gross
SARD VERBINNEN CO
630 Third Avenue
New York NY 10017
212 687 8080
Contact Paul Verbinnen or George
Sard
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7 SITRICK COMPANY
2029
Century
Park East
Suite 1750
Los Angeles
CA 90067
310 788 2850
Contact Michael Sitrick
b Solely for Delisting Crisis Crisis Firms shall also include any Panel
Counsel Firm as defined in Clause 9 approved to handle Securities Claims
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ENDORSEMENT 1
This endorsement effective 1201 am May 1 2007 forms a part
of
policy
number 7419806
issued to WASHINGTON MUTUAL INC
by
Company
of Pittsburgh Pa
WASHINGTON AMENDATORY ENDORSEMENT
Wherever used in this endorsement 1 Insurer means the insurance company which
issued this
policy
and 2 named Insured First Named Insured and Insured mean the
Named Corporation Named Organization Named Sponsor Named Insured Named Entity
or Insured stated in the declarations page
The following i
s added and supersedes any provision to the contrary
A CANCELLATION
1 The Insured
may
cancel this policy by mailing or delivering to the Insurer
written notice of cancellation or by surrender of the policy prior to or on the
effective date of such cancellation
2 The Insurer
may
cancel this policy by mailing or delivering to the Insured and
the Insureds
representative
in charge of the subject of the insurance i
f
applicable written notice of cancellation including the actual reason for the
cancellation to the last mailing address known to the Insurer at least
a 10 days before the effective date of cancellation
i
f the Insurer cancels
for
nonpayment
of
premium
or
b 45 days before the effective date of cancellation i
f the Insurer cancels
for
any
other reason
3 Like notice of cancellation will also be mailed to
any mortgage holder pledgee
or other person
shown in this
policy
with an interest in
any
loss which
may
occur thereunder at their last mailing address known to the Insurer
4 Notice of cancellation will state the effective date of cancellation The policy
period will end on that date
5
I
f notice
i
s mailed proof of mailing
will be sufficient proof of notice
6
I
f the policy i
s cancelled we will send the first Named Insured any premium
refund due
I
f the Insurer cancels the refund will be pro rata I
f the first
Named Insured cancels the refund will be at least 90 of the
pro
rata refund
The cancellation will be effective even
i
f we have not made or offered a
refund
B NONRENEWAL
1 The Insurer may elect not to renew this
policy by mailing or delivering
written
notice of nonrenewal to the First Named Insured and the First Named
Insureds representative in charge of the subject of the insurance at their
respective
last
mailing
addresses known to the Insurer The notice of
nonrenewal shall state the actual reason for nonrenewal The Insurer will also
mail to any mortgage
holder or other
person
shown in this policy with an
interest in
any
loss which
may
occur thereunder at their last mailing address
END 001
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ENDORSEMENT 1 continued
known to the Insurer written notice of nonrenewal The Insurer will mail or
deliver these notices at least 45 days before the
a Expiration of the policy or
b Anniversary date of this policy i
f this policy has been written for a term
of more than one year
Otherwise the Insurer will renew this
policy
unless
a The Insured fails to pay
the renewal
premium
after the Insurer has
expressed willingness
to renew and has sent a statement of the renewal
premium to the Insured and the Insureds
representative i
n
charge
of the
subject
of insurance at least 20 days before the expiration date
b Other equivalent coverage
has been
procured by the Insured prior to the
expiration
date of the policy or
c The contract
i
s evidenced by a written binder containing a clearly stated
expiration date which has
expired according to its terms
ALL OTHER TERMS CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED
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ENDORSEMENT 2
of
policy number 7419806
by
Company
of Pittsburgh Pa
STATE AMENDATORY INCONSISTENT
In consideration of the premium charged i
t
i
s hereby understood and agreed
that in the
event that there
i
s an inconsistency between a state amendatory attached to this policy
and any term or condition of this policy then
i
t
i
s understood and agreed that where
permitted by law the Insurer shall apply those terms and conditions of either the
amendatory or the policy
which are more favorable to the Insured
END 002
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ENDORSEMENT 3
This endorsement effective 1201 am May 1 2007 forms a
part
of
policy
number 7419806
by National Union Fire Insurance
Company
of
Pittsburgh
Pa
SEVERABILITY OF APPLICATION ENDORSEMENT
I
n consideration of the
premium charged i
t
i
s hereby understood and agreed that the
following Clause
i
s added to the
policy at the end thereof
SEVERABILITY
In granting coverage
under this policy i
t
i
s
agreed that the Insurer has relied
upon
the statements warranties and representations contained in the Application as
being accurate and complete All such
statements warranties and representations
are the basis for this policy and are material to the risk assumed
by the Insurer and
are to be considered as incorporated into this
policy
The Insureds
agree
that
i
n the event that the
particulars
and statements contained
in the Application are not accurate and complete then this
Policy shall be void ab
initio with
respect to any of the following Insureds
1 any Insured Person who knew as of the
inception date of the Policy
Period the facts that were not
accurately
and
completely disclosed
i
n
the Application
2 an Organization under Clause 1
Insuring Agreements COVERAGE
Bii to the extent
i
t indemnifies
any
Insured Person referenced
i
n 1
above and
3 an Organization under Clause 1 Insuring Agreement COVERAGE
Bi i
f
any past or present chief executive officer chief
operating
officer chief financial officer of an Organization
knew as of the
inception date of the Policy Period the facts that were not accurately
and
completely disclosed
i
n the Application
whether or not such Insured Person knew that such facts were not accurately and
completely disclosed in the Application
No knowledge possessed by an Insured Person will be imputed to
any
other Insured
Person
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ENDORSEMENT 4
This endorsement effective 1201 am May 1 2007
forms a part
of
Company
of Pittsburgh Pa
PROFESSIONAL EO EXCLUSION
SHAREHOLDER CARVEOUT DEFENSE COSTS CARVEBACK
I
n consideration of the premium charged i
t
i
s
hereby
understood and
agreed
that
solely
with
respect to services rendered by the Organization for a fee the Insurer shall not be
liable to make
any payment for Loss in connection with
any
Claim made against any
Insured alleging arising out of based
Organizations or any
Insureds performance of or failure to perform professional services or any acts errors
or omissions relating thereto
Notwithstanding the foregoing i
t
i
s further understood and agreed that this endorsement
shall not apply to any Securities Claim provided that such Securities Claim
i
s instigated
and continued
totally independent of and
totally
without the solicitation of or assistance
of or active
participation of or intervention of the
Organization or any Insured
This exclusion shall not apply to covered Defense Costs incurred
i
n connection with a
Claim
alleging a Wrongful
Act
ALL TERMS CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED
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ENDORSEMENT 5
part
of
by
Company
of
Pittsburgh Pa
NUCLEAR ENERGY LIABILITY EXCLUSION ENDORSEMENT
premium charged i
t is
hereby understood and agreed that the
Insurer shall not be liable to make
any
Claim
made
against any
Insured
A alleging arising out of based
upon
attributable to or i
n
any way involving directly
or indirectly the Hazardous
Properties
of Nuclear Material including but not
limited to
1 Nuclear Material located at
any
Nuclear Facility owned by or operated by or
on behalf of the
Organization or discharged or dispersed therefrom or
2 Nuclear Material contained in
spent
fuel or waste which was or
i
s at
any
time
possessed handled used processed stored transported or disposed of
by or
on behalf of the
Organization or
3 the
furnishing by an Insured or the Organization of services materials parts
or equipment in connection with the
planning construction maintenance
operation or use of any Nuclear Facility or
4 Claims for damage or other injury to the Organization or its shareholders
which
allege
arise from are based
upon are attributed to or in any way
involve directly or indirectly the Hazardous Properties of Nuclear Material
B 1 which
i
s insured under a nuclear
energy liability policy issued by Nuclear
Energy Liability Insurance Association Mutual Atomic Energy Liability
underwriters or Nuclear Insurance Association of Canada or would be insured
under any such policy but for its termination or exhaustion of its limit of
liability or
2 with
respect
to which a any person or organization is required to maintain
financial protection pursuant to the Atomic Energy Act of 1954 or
any
law
amendatory thereof or b the Insured is or had this policy not been issued
would be entitled to indemnity from the United States of America or any
agency thereof under
any agreement entered into by the United States of
America or
any agency thereof with
any person or organization
As used
i
n this endorsement
Hazardous Properties include radioactive toxic or explosive properties
Nuclear
facility means
a any
nuclear reactor
b any equipment
or device
designed or used for
1 separating the isotopes of uranium or plutonium
END 005
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2 processing or utilizing spent fuel or
3 handling processing or packaging wastes
c any equipment or device used for the processing fabricating or alloying of
special nuclear material
i
f at any time the total amount of such material in the
custody of the Insured at the premises where such equipment or device
i
s
located consists of or contains more than 25
grams
of plutonium or uranium
233 or any combination thereof or more than 250
grams
of uranium 235 and
d any structure basin excavation premises or place prepared or used for the
storage
or disposal of waste
and includes the site on which
any
of the
foregoing i
s located all operations conducted on such site and all premises
used for such operations
Nuclear Material means source material special nuclear material or byproduct material
Nuclear Reactor means any apparatus designed or used to sustain nuclear fission in a
self supporting chain reaction or to contain a critical mass of fissionable material
Source Material Special Nuclear Material and Byproduct Material have the
meanings given them in the Atomic Energy Act of 1954 or in
any
law amendatory thereof
Spent Fuel means any
fuel element or fuel
component
solid or liquid which has been
used or exposed to radiation in a nuclear reactor
Waste means
any
waste material 1 containing by product material and 2 resulting
from the operation by any person or organization
of
any
Nuclear Facility included within
the definition of nuclear facility under paragraph a or b thereof
END 005
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ENDORSEMENT 6
This endorsement effective 1201 am
May 1 2007 forms a part of
by
National Union Fire Insurance Company of Pittsburgh Pa
PRIOR ACTS COVERAGESCHEDULED ENTITIES
I
charged i
t
i
s hereby understood and agreed that the term
Subsidiary i
s amended to include the entityies listed below
ENTITYIES
Columbia Federal Savings Bank and
Shoreline Savings Bank and their
Subsidiaries
Old Stone Bank and Subsidiaries
Frontier Federal Savings Association
And Subsidiaries
Williamsburg Federal Savings Bank
And Subsidiaries
Vancouver Federal
Savings
Bank
And Subsidiaries
Crossland Savings
FSB
And Subsidiaries
Sound Savings and Loan Association
And Subsidiaries
World Savings and Loan Association
And Subsidiaries
Great Northwest Bank
And Subsidiaries
Pioneer Savings Bank
And Subsidiaries
Pacific First Bank A Federal
Savings
Bank
And Subsidiaries
DIME BANCORP INC
And Subsidiaries
Far West Federal Savings Bank
And Subsidiaries
Summit
Savings
Bank
And Subsidiaries
Olympic Bank A Federal
Savings
Bank
And Subsidiaries
Enterprise
Bank
And Subsidiaries
Western Bank
And Subsidiaries
ACQUISITION CREATION DATE
April 29 1988
June 1
1990
June 30 1990
September 14 1990
July 31 1991
November 8 1991
January 1 1992
March 6 1992
April 1 1992
March 1 1993
April 9 1993
August 4 1993
April 15 1994
November 14 1994
April 28 1995
August 31 1995
January 31 1996
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ENDORSEMENT 6 ICnntlnllPd
This endorsement effective 1201 am May 1 2007 forms a part of
by
Company of Pittsburgh Pa
Utah Federal
Savings
Bank
And Subsidiaries
United Western Financial
Group
And Subsidiaries
Industrial Bank
And Subsidiaries
Long Beach Financial Corporation
And Subsidiaries
Alta Residential Mortgage Trust
And Subsidiaries
Mortgage Operations of The PNC
Financial Services Group
And Subsidiaries
Bank United
Corp
And Subsidiaries
Dime
Bancorp Inc
And Subsidiaries
November 30 1996
January 15 1997
December 31 1998
October 1 1999
February 1 2000
January 31 2001
February 9 2001
August 4 1993
I
t
i
s further understood and agreed that solely with
respects
to the Entities listed above
coverage as
i
s afforded under this policy shall
apply
for
Wrongful Acts committed or
allegedly committed on before and after the effective time such
Entity became a
Subsidiary and prior to the effective time that such
Subsidiary ceases to be a Subsidiary
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ENDORSEMENT 6 Continued
of
Company
of Pittsburgh Pa
A Subsidiary ceases to be a Subsidiary when the Named
Entity no longer
maintains
Management
Control of the Subsidiary either directly or indirectly through one or more of
its Subsidiaries
ALL OTHER TERMS CONDITIONS AND EXCLUSIONS OF THIS POLICY SHALL REMAIN
UNCHANGED
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ENDORSEMENT 7
part
of
policy
number 7419806
by
RUNOFF COVERAGE FOR SCHEDULED ENTITIES
t
i
s hereby understood and agreed that with
respect to the following entities
Entity Runoff expiration date
American Savings Bank FA
and its subsidiaries December 20 2001
HF Ahmanson Co
and its subsidiaries October 1 2004
Great Western Financial
Corp
and its subsidiaries
July 1 2003
Providian Financial
Corporation
and its subsidiaries October 1 2011
This policy shall provide primary Directors and Officers
coverage
for claims
arising
from
prior acts after the expiration of the
respective
runoff
policies i
n
place
for each of these
entities as indicated above However i
f National Union Fire Insurance
Company of
Pittsburgh
PA
i
s not the
primary
Directors and Officers carrier for Washington Mutual at
the time of the expiration of each of the
policies
listed above then this endorsement shall
be null and void
ALL OTHER TERMS CONDITIONS AND EXCLUSIONS OF THIS POLICY SHALL REMAIN
UNCHANGED
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ENDORSEMENT 8
of
by
CRISIS PLUS
t
i
s hereby understood and
agreed
that the policy
i
s hereby amended as follows
1 CRISISFUNDSM AMENDED
1 Solely for the purposes of a Financial Statement Crisis Appendix B
i
s hereby
amended as follows
i Definition a Crisis shall also mean
3 a Financial Statement Crisis
ii Clause
I
I
I
PREAPPROVED CRISIS FIRMS i
s
hereby amended by
adding the following at the end thereof
c Solely for Financial Statement Crisis Crisis Firmsmeans
any Panel Counsel Firm as defined
i
n Clause 9 approved to
handle Securities Claims andor
any public accounting
firm
iii Definition d Crisis Services
i
s hereby deleted
i
n its entirety and
replaced by the following
Crisis Services means
any legal or accounting services performed
by a Crisis Firms in investigating and responding to a Financial
Statement Crisis
iv The following additional definitions are hereby added
Financial Statement Crisis means the written public announcement
by an
Organization
of the need or potential need for a restatements
of an Organizations previously publicly filed financial statements
provided however that Financial Statement Crisis shall not include
any
announcements
regarding restatements resulting i
n whole or i
n
part from a change i
n
any rule law or statute relating to financial
reporting including but not limited to
any change i
n
Generally
Accepted Accounting Principles provided that
payment
of
any
Crisis
Loss under this policy shall not waive
any
of the Insurers
rights under
this
policy or at law
BROive CopVEND 8
HIGHLY CONFIDENTIAL
Return
of
policy
number 7419806
by
Financial Statement Crisis Loss means a Crisis Loss resulting solely
from a Financial Statement Crisis
2 Definition d CrisisFundSM
i
s hereby deleted
i
n its entirety and replaced by
the following
d CrisisFundSM means
1
i
n the case of all Crisis Loss other than Delisting
Crisis Loss
and Financial Statement Crisis Loss the dollar amount set
forth
i
n Item 7a of the Declarations and
2 in the case of Delisting Crisis Loss the dollar amount set forth
in Item 7a of the Declarations less any
Crisis Loss paid plus
the additional dollar amount set forth
i
n Item 7b of the
Declarations combined
3 i
n the case of Financial Statement Crisis Loss the dollar
amount set forth in Item 7a of the Declarations less any
Crisis Loss
paid plus the additional dollar amount set forth in
Item 7c of the Declarations
3 Item 7 of the Declarations
i
s
hereby
amended to include the
following
additional Item 7c
7c Additional CRISISFUNDSM
for Financial Statement
Crisis
Loss$50000
ALL OTHER TERMS
CONDITIONS AND LIMITATIONS REMAIN UNCHANGED
BR pfMive COPYEND 8
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 9
of
Company
of Pittsburgh Pa
CAPTIVE INSURANCE COMPANY COVERAGE
t
i
s
hereby
understood and
agreed
that the
Insurer shall not be liable to make
any payments
for Loss
i
n connection with
any
Claim
made
against any
Insured
alleging arising out of based
ownership management maintenance operation andor control
by
the
Organization
of
any
captive insurance
company or entity including
but not limited to a Claim
alleging
the
insolvency or bankruptcy of the Organization as a result of such ownership management
maintenance operation andor control
Notwithstanding the above this exclusion shall not apply to the captive insurance
companies listed below hereinafter Captives
CAPTIVE INSURANCE COMPANIES
1 Marion Insurance
Company Inc and
2 WM
Mortgage Reinsurance Company Inc
I
t
i
s further understood and agreed that
i
n regard to the Captives listed above the Insurer
shall not be liable to make any payment for Indemnifiable Loss
i
n connection with any
Claim made against the Insureds alleging arising out of based upon or attributable to
any
third
party
business
performed by or contracted into by a Captive
BRO54
ve
COPYEND 9
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 10
This endorsement effective 1201 dm May 1 2007 forms a part
of
policy
number 7419806
Company
of Pittsburgh Pa
AMEND CLAUSE 6 RETENTION
t
i
agreed
that the first
sentence of the first paragraph of Clause 6 RETENTION
i
s deleted
i
n its
entirety
and
replaced with the following
For each Claim the Insurer shall only be liable for the amount of Loss
arising
from a
Claim which
i
s in excess of the applicable Retention amounts stated
i
n Items 4a
4b and 4c of the Declarations such Retention amounts to be borne by an
Organization andor the Insured Person and remain uninsured with the exception of
the Side A Excess DIC
Policy as defined below with regard to all Loss other
than NonIndemnifiable Loss
The Insurer shall recognize that any Indemnifiable Loss that i
s
paid by the following policy
or those policies specifically designated as excess over i
t or any renewal or replacement
thereof shall contribute to and shall reduce the Retention amount applicable to such
covered Indemnifiable Loss as stated
i
n Item 4 of the Declarations
Insurer Insured Policy No Policy Period
XL
Specialty Washington Mutual Inc ELU09768507 0501200705012008
Insurance
Company
the Side A Excess DIC
Policy
As a precondition to such
recognition of the erosion of the Retention amount the Named
Entity shall provide the Insurer with written proof to the Insurers satisfaction that
payment
of such Indemnifiable Loss has been made under the Side A Excess DIC Policy
or those policies specifically designated as excess over i
t or any renewal or replacement
thereof
BROFive CopYEND 10
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 11
policy
number 7419806
by National Union Fire Insurance Company of Pittsburgh Pa
CLAUSE 7a12 AMENDATORY
t
i
agreed
that Clause
7a2
i
s hereby deleted
i
n its entirety and replaced with the
following
2 within 60 days after the end of the
Policy
Period or the
Discovery Period if
applicable as long as such Claim was first made
against an Insured within
the final 90 days of the Policy Period or the Discovery Period if applicable
BRof ive Cop VEND 11
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 12
of
AMEND CLAUSE 8 DEFENSE COSTS
t
i
s hereby understood and agreed that
i
n Clause
8 DEFENSE COSTS SETTLEMENTS JUDGMENTS INCLUDING THE ADVANCEMENT OF
DEFENSE COSTS the sixth paragraph i
s deleted in its entirety and replaced with the
following
With
respect
to i Defense Costs
jointly
incurred
by ii any joint
settlement
entered into by andor iii any judgment of joint and several liability against any
Organization and any Insured in connection with any Claim other than a Securities
Claim any such Organization and any such Insured and the Insurer agree to use
their best efforts to determine a fair and proper allocation of the amounts as
between any such Organization any such Insured and the Insurer
I
n the event that
a determination as to the amount of Defense Costs to be advanced under the policy
cannot be agreed to then the Insurer shall advance Defense Costs excess of any
applicable retention amount which the Insurer states to be fair and proper until a
different amount shall be
agreed upon or determined
pursuant to the
provisions
of
this policy and applicable
law
ALL OTHER
TERMS
CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED
BR4fhive CopVEND 12
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 13
May 1 2007 forms a part
of
AMEND CLAUSE 10 DISCOVERY
premium charged i
t
i
agreed
that Clause
10 DISCOVERY CLAUSE shall be deleted
i
n its entirety and replaced with the
following
10 DISCOVERY CLAUSE
Except as indicated below i
f the Named Entity shall cancel or the Named
Entity or the Insurer shall refuse to renew this policy the Named Entity shall
have the
right
to a period
of one year following the effective date of such
cancellation or nonrenewal the Discovery Period
upon payment of the respective
Additional Premium Amount described below
i
n which to give to the Insurer
written notice
pursuant
to Clause 7a and 7c of the policy of i Claims first made
against an Insured and ii circumstances of which an Organization or an Insured
shall become aware i
n either case during
said
Discovery Period and solely with
respect to a Wrongful Act occurring prior to the end of the
Policy Period and
otherwise covered by this policy
The Additional Premium Amount for one year
shall be no more than 175 of the
Full Annual Premium As used herein Full Annual Premium means the premium
level i
n effect immediately prior to the end of the
Policy Period
Notwithstanding the first paragraph of Clause 5 i
f the Named
Entity shall cancel or
the Insurer or the Named
Entity
shall refuse to renew this policy then the Named
Entity shall also have the right to request an offer from the Insurer of a Discovery
Period with respect to
Wrongful
Acts
occurring prior to the end of the Policy
Period with an
aggregate
limit of liability applicable to Claims made against the
Insured during such Discovery Period which
i
s
i
n addition to and not part of the
applicable Limit of Liability set forth in Item 3 of the Declarations The Insurer shall
quote such a Discovery Period
pursuant
to such terms conditions exclusions and
additional premium as
i
t deems appropriate i
n its sole and absolute discretion
In the event of a Transaction as defined
i
n Clause 12a the Named Entity shall
have the right to request an offer from the Insurer of a Discovery Period with
respect
to
Wrongful Acts occurring prior to the effective time of the Transaction
The Insurer shall offer such Discovery Period
pursuant to such terms conditions
exclusions and additional premium as the Insurer
may reasonably decide In the
event of a Transaction the right to a Discovery Period shall not otherwise exist
except as indicated i
n this paragraph
BROftkive Cop VEND 13
HIGHLY CONFIDENTIAL
Return
May 1 2007 forms a part of
Company
of
Pittsburgh Pa
The Discovery Period
i
s not cancelable and the additional premium charged
shall be
fully earned at inception This Clause 10 shall not apply to any cancellation
resulting
from nonpayment of
premium The rights contained
i
n this Clause 10 shall
terminate unless written notice of election of a Discovery Period together with
any
additional premium due
i
s received
by the Insurer no later than thirty 30 days
subsequent to the effective date of the cancellation nonrenewal or Transaction
ALL OTHER TERMS CONDITIONS AND EXCLUSIONS SHALL REMAIN UNCHANGED
BR091 Mive Cop VEND 13
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 14
policy
number 7419806
AMEND CLAUSE 12 AUTOMATIC SUBSIDIARY COVERAGE
I
t
i
s hereby understood and agreed that Clause
12 ORGANIZATIONAL CHANGES shall be deleted and replaced with the following
12 ORGANIZATIONAL CHANGES
a
I
f
during the Policy Period
1 the Named
Entity shall consolidate
with merge into or sell all or
substantially
all of its assets to any
other
person or entity or
group
of
persons or entities
acting i
n concert or
2 any person or entity or
group
of persons or entities acting in concert
shall acquire Management Control of the Named Entity
any of such events being a Transaction then this policy shall continue in
full force and effect as to Wrongful Acts occurring prior to the effective time
of the Transaction but there shall be no
coverage
afforded by any provision
of this policy for any actual or alleged Wrongful Act occurring after the
effective time of the Transaction This policy may
not be canceled after the
effective time of the Transaction and the entire premium for this policy shall
be deemed earned as of such time The Named Entity shall also have the
right to an offer
by the Insurer of a Discovery Period described
i
n the fourth
paragraph of Clause 10 of this policy
b Subsidiary Additions Subsidiary also means
any forprofit entity of which
the Named Entity first had Management Control during the Policy Period
whether directly or indirectly through one or more other Subsidiaries and
1 whose assets total $15 Billion or less or
2 whose assets total more than $15 Billion but such entity shall
be a Subsidiary only i for a period of
sixty 60 days from the date
the Named Entity first had
Management
Control of such entity or ii
until the end of the Policy Period which ever ends or occurs first
hereinafter AutoSubsidiary Period The Named Entity shall
report
such Subsidiary to the Insurer i
n
writing prior to the end of the
Policy Period
BR091%MiVe CopVEND 14
HIGHLY CONFIDENTIAL
Return
of
by
Company of Pittsburgh Pa
The insurer shall extend coverage for any Subsidiary described
i
n 12b2
above and any Insured Person thereof beyond its respective
AutoSubsidiary Period
i
f during such AutoSubsidiary Period the Named
Entity shall have provided the Insurer with full particulars of the new
Subsidiary and agreed to any additional premium and amendment of the
provisions of this policy required by the Insurer relating to such Subsidiary
Further coverage as shall be afforded to any Subsidiary and
any
Insured
Person thereof
i
s conditioned
upon
the Named
Entity paying when due
any
additional premium required by
the Insurer
relating to such Subsidiary
c Insured Persons and Outside
Entity
Executives
Coverage
will
automatically
apply to all new Insured Persons of and Outside Entity Executives of an
Organization following the inception date of this policy
d Other Organizational Changes I
n all events coverage as i
s afforded under
this policy with respect to a Claim made
against any Organization andor any
Insured Person thereof shall only apply
for
Wrongful
Acts committed or
allegedly committed after the effective time such
Organization became an
Organization and such Insured Person became an Insured Person and prior
to the effective time that such Organization ceases to be an Organization or
such Insured Person ceases to be an Insured Person An
Organization ceases
to be an Organization when the Named
Entity no longer maintains
Management Control of an Organization either
directly or indirectly through
one or more of its Subsidiaries
However solely with respect to a Subsidiary that became a
Subsidiary on or
prior to May 1 2003 coverage
as
i
s afforded under this policy with
respect
to a Claim made against such Subsidiary shall apply for
Wrongful
Acts
committed or allegedly committed before on or after the effective time such
Subsidiary became a Subsidiary and prior to the effective time that such
Subsidiary ceases to be a Subsidiary provided that
1 at the time such Subsidiary became a Subsidiary the assets of the
Subsidiary did not exceed ten
percent 10 of the total consolidated
assets of the Named Entity and
2 the Subsidiary has achieved a net
profit as determined
i
n accordance
with Generally Accepted Accounting Principles
for the
Subsidiarys
two most recent fiscal
years
and
BROMive CopVEND 14
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 14
Continued
by
Company
of Pittsburgh Pa
3 there has occurred not fact circumstance situation transaction or
event which has been the
subject
of
any notice given by the
Subsidiary
under
any policy
of directors officers and corporate
liability
insurance
An Organization ceases to be an Organization
when the Named Entity no longer
maintains Management Control of the
Organization
either directly or indirectly
through one or more of its Subsidiaries
BRptive Cop
VEND 14
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 15
of
policy
number 7419806
Company
of
Pittsburgh
Pa
AMEND CLAUSE 13 SUBROGATION
I
t
i
s hereby understood and agreed that Clause
13 Subrogation i
s deleted
i
n its entirety and replaced by the following
In the event of
any payment under this policy the Insurer shall be subrogated to the
extent of such payment to all of each and
every Organizations
and Insureds
rights
of
recovery thereof and each such Organization and Insured shall execute all
papers required and shall do everything that may be necessary to secure such
rights
including the execution of any and all documents necessary to enable the Insurer
effectively to bring suit in the name of each such
Organization
and each such
Insured In no event however shall the Insurer exercise its
rights
of
subrogation
against an Insured under this
policy
unless such Insured has been convicted of
any
deliberate criminal or deliberate fraudulent act by
the Insured
i
f
any
final
adjudication establishes that such deliberate criminal or deliberate fraudulent act
was committed or to the gaining
of
any profit or advantage
to which
nay
final
adjudication
establishes the Insured was not
legally
entitled
gq piF
ive CopVEND 15
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 16
of
Company
of
Pittsburgh
Pa
REMOVE CLAUSE 17 ADR
I
t
i
s
hereby understood and agreed that Clause
17 Alternative Dispute Resolution Process i
s deleted i
n its entirety
BROMive CopyEND 16
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 17
part
of
AMEND CLAUSE 19 BANKRUPTCY
t
i
s hereby understood and agreed that Clause 19
Bankruptcy i
s deleted
i
n its entirety and replaced with the following
19
Bankruptcy
Bankruptcy or insolvency
of
Insured Person shall not relieve
the Insurer of any of its obligations hereunder
I
t
i
s further understood and agreed that the coverage provided under this policy i
s
intended to protect and benefit the Insured Persons Further
i
f a liquidation or
reorganization proceeding i
s commenced by the Named Entity andor any other
Organization whether voluntarily or involuntarily under Title 11 of the United
States Code as amended or any similar state local or foreign law collectively
Bankruptcy Law then i
n
regard to a covered Claim under this policy the
Insureds and the Insurer
hereby agree
not to oppose or object to any
efforts
by any
Insured Persons to obtain relief from
any stay or injunction applicable to the
proceeds
of this
policy as a result of the commencement of such
liquidation or
reorganization proceeding
BRCM
ve Cop VEND 17
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 18
of
AMEND CLAUSE 22 ORDER OF PAYMENTS
I
premium charged i
t
i
s
hereby
understood and
agreed
that Clause
22 Order of
Payments i
s deleted
i
n its
entirety
and
replaced
with the
following
22 ORDER OF PAYMENTS
In the event of Loss
arising
from a covered Claim for which
payment i
s due under
the provisions of this policy then the Insurer shall
i
n all events
a first pay
Loss for which
coverage i
s provided under Coverage A first to
independent directors then to all other insured
persons
and Coverage C of
this policy then
b only after payment of Loss has been made pursuant to Clause 22a above
with respect to whatever remaining amount of the Limit of Liability i
s
available after such payment at the written request
of a majority
of the
Board of Directors of the Named Entity either
pay
or withhold payment of
such other Loss for which
coverage i
s provided under Coverage Bii of this
policy and then
c only after payment of Loss has been made pursuant to Clause 22a and
Clause 22b above with
respect to whatever
remaining amount of the Limit
of Liability i
s available after such payment at the written request of a
majority of the Board of Directors of the Named
Entity
either
pay or
withhold payment of such other Loss for which
coverage i
s
provided under
Coverages Bi and D of this policy
In the event the Insurer withholds payment pursuant to Clause 22b andor Clause
22c above then the Insurer shall at such time and
i
n such manner as shall be set
forth
i
n written instructions of the of a majority
of the Board of Directors of the
Named Entity remit such payment to an Organization or directly to or on behalf of
an Insured Person
The
bankruptcy or insolvency
of
Insured Person shall not
relieve the Insurer of
any
of its
obligations to prioritize payment
of covered Loss
under this policy pursuant to this Clause 22
BROFive Cop
VEND 18
Zx C4
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 19
of
policy
number 7419806
by
Company
of Pittsburgh Pa
AMEND DEFINITION Z SUBSIDIARY
I
t i
s
hereby
understood and
agreed
that the
policy
i
s amended by deleting Clause 2 DEFINITIONS paragraph z Subsidiary in its
entirety
and replacing i
t with following
z Subsidiary means 1 any forprofit entity
limited
partnership general partnership
or joint venture and any other organization
listed
by endorsement including
but not
limited to 1301 Second Avenue LLC and Silver Granite Investment Corporation as
long as the Named
Entity
has
Management
Control Controlled Entity on or
before the inception of the Policy Period either directly or indirectly through one or
more other Controlled Entities and 2 any notforprofit entity sponsored
exclusively by an
Organization
BROkSk ve CopVEND 19
UT ORIZED REPR EN ATIV A E
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 20
of
by
Company
of
Pittsburgh
Pa
AMEND DEFINITION OF APPLICATION
t
i
s
hereby understood and agreed that Section
2 DEFINITIONS a shall be deleted and replaced with the following
a Application means each and
every signed application any
attachments to such
applications
other materials submitted therewith or incorporated
therein and
any
other documents submitted
i
underwriting
of this
policy or the
underwriting
of
any
other directors and officers or equivalent liability policy
issued
by
the Insurer or any
of its affiliates of which this
policy i
s a renewal replacement
or which
i
t succeeds
i
n time and
any public documents filed by an Organization
within the last Twelve 12 months prior to the
inception
date of this
policy
with
the Securities and Exchange Commission SEC or any federal state local or
foreign regulatory agency including
but not limited to the Organizations Annual
Reports 1 OKs 1 OQs 8Ks and
proxy
statements
BROW vFpve COPyEND 20
M

4
UT ORIZED REPR EN ATIV A E
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 21
by
Company
of
Pittsburgh
Pa
AMEND DEFINITION OF EXECUTIVE
t
i
s
hereby understood and agreed that Section
2 DEFINITIONS j shall be deleted and replaced with the following
j Executive means
any
1 past present and future duly elected or appointed director officer trustee or
governor
of a corporation management committee member of a joint
venture and member of the management board of a limited liability company
or equivalent position
2 past present
and future
person i
n a duly
elected or appointed position i
n an
entity organized
and
operated i
n a Foreign
Jurisdiction that
i
s
equivalent to
an executive
position
listed in Definition
j1
3
past present
and future General Counsel and Risk
Manager or equivalent
position of the
Organization or
4 Executive as defined in
j1 3 above or any Employee
of an Organization
serving as a past present or future member of
any
internal committee
established by and for an Organization including
but not limited to any
Organizations audit committee as that committee
i
s described in the
Securities and
Exchange
Commission Release No 3442266Audit
Committee Disclosure Rule
BR0911ve CopyEND 21
I
x
6


HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 22
of
policy
number 7419806
Company
of
Pittsburgh
Pa
CONDUCT EXCLUSIONS
FINAL ADJUDICATION
t
i
s
hereby
understood and
agreed
that
i
n Clause
4 EXCLUSIONS paragraphs a b and c are deleted
i
n their
entirety
and replaced with
the following
a arising
out of based
upon or attributable to the gaining of
any profit or
advantage
to which
any
final
adjudication
establishes the Insured was not
legally entitled
b arising
out of based
upon or attributable to payments to an Insured of
any
remuneration without the previous approval of the stockholders or members
of an
Organization
once
any
such unapproved payments shall be established
by any
final adjudication to have been illegal
c arising
out of based
upon
or attributable to the committing of any deliberate
criminal or deliberate fraudulent act by the Insured
i
f any final adjudication
establishes that such deliberate criminal or deliberate fraudulent act was
committed
BRDtive CopYEND 22
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 23
of
by National Union Fire Insurance Company
of
Pittsburgh
Pa
SECURITIES CLAIM DEFINITION AMENDED
SECURITIES CLAIM DEFINITION AMENDED
I
premium charged i
t
i
DEFINITIONS shall be amended
by deleting paragraph y definition of Securities Claim
thereof in its entirety
and
replacing i
t with the following
y Securities Claimmeans a Claim other than an investigation of an Organization
made
against any
Insured
1 alleging
a violation of
any law rule or regulation whether statutory or common
law including but not limited to the purchase or sale or offer or solicitation of an
offer to purchase or sell securities which is
a brought by any person
or entity alleging arising out of based
upon or
attributable to the purchase or sale or offer or solicitation of an offer to
purchase or sell
any
securities of an Organization or
b brought by a security holder of an Organization
with
respect to such
security
holders interest in securities of such Organization or
2 brought derivatively on the behalf of an Organization by a security holder of
such Organization relating to a Securities Claim as defined in
subparagraph 1
above
Notwithstanding the foregoing
the term Securities Claim shall not include
any
Claim brought by any Executive or Employee
of an Organization alleging arising
out
of based upon or attributable to the loss of or failure to receive or obtain the
benefit of stock stock warrants stock
options or other securities of an
Organization
BRO dive CopyEND 23
11x
64
UT ORIZED REPR EN ATIV E A
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 24
part
of
policy
number 7419806
AMEND DEFINITION OF DEFENSE COSTS
I
t
i
DEFINITIONS f Defense Costs of the policy i
s hereby deleted
i
n its entirety and
replaced with the following
Defense Costs means reasonable and
necessary fees costs and
expenses
consented
consent will not be unreasonably withheld to by the Insurer including premiums for
any
appeal bond attachment bond or similar bond arising out of a covered judgment but
without any obligation to apply for or furnish any such bond resulting solely from the
investigation adjustment defense andor appeal of a Claim against an Insured but
excluding any compensation of any Insured Person or any Employee of an Organization
BRQfl1Ve CopyEND 24
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 25
policy
number 7419806
by National Union Fire Insurance Company of Pittsburgh
Pa
AMEND DEFINTION OF LOSS
I
t
i
s hereby understood and agreed that Section
2 DEFINITIONS q shall be deleted and replaced with the following
p Loss means damages settlements judgments including prepostjudgment
interest on a covered judgment Defense Costs and Crisis Loss however
Loss other than Defense Costs shall not include 1 civil or criminal fines or
penalties 2 taxes 3 punitive or exemplary damages 4 the multiplied
portion of multiplied damages 5 any amounts for which an Insured
i
s not
financially liable or which are without legal recourse to an Insured and 6
matters which may be deemed uninsurable under the law pursuant to which this
policy shall be construed
Notwithstanding the foregoing paragraph Loss shall specifically
include 1 civil
penalties assessed against any Insured Person pursuant to Section
2g 2 C of
the
Foreign Corrupt
Practices Act 15 USG 78dd2
g 2 Cand 2 punitive
exemplary
and
multiplied damages imposed upon an Insured
Enforceability
of this
paragraph
shall be
governed by
such
applicable
law that most favors
coverage
for
such penalties
and
punitive exemplary
and
multiple damages
In the event of a Claim alleging that the price or consideration paid or proposed to
be paid for the acquisition or completion of the acquisition of all or substantially all
the
ownership
interest
i
n or assets of an entity i
s inadequate Loss with
respect to
such Claim shall not include
any
amount of
any judgment or settlement
representing
the amount by
which such
price or consideration
i
s effectively increased provided
however that this
paragraph
shall not apply to Defense Costs or to any
NonIndemnifiable Loss
i
n connection therewith
BROftive COPYEND 25
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 26
of
EXCLUSION
j
AMENDATORY ENDORSEMENT ADD 1v1 CARVEOUTS
t
i
s hereby understood and agreed that in Clause
4 EXCLUSIONS paragraph j i
s deleted in its entirety and replaced with the following
j for
any Wrongful
Act arising out of the Insured Person serving as an
Executive of an Outside Entity i
f such Claim
i
s brought by the Outside Entity
or by any
Executive thereof or which
i
s brought by any security holder of
the Outside Entity whether directly or derivatively unless such security
holders Claim
i
s instigated and continued totally independent of and totally
without the solicitation of or assistance of or active
participation of or
intervention of the Outside
Entity any
Executive of the Outside
Entity or an
Organization or any
Executive of an Organization provided however this
exclusion shall not apply to
1 any
Claim brought by any
Executive of the Outside Entity i
n the form
of a crossclaim or thirdparty claim or other claim for contribution or
indemnity which results directly from a Claim that
i
s covered by this
policy
2 any Employment Practices Claim brought by an Insured Person
3 i
n
any bankruptcy proceeding by or against an Outside Entity any
Claim brought by the examiner trustee receiver creditors
committee liquidator or rehabilitator or any assignee thereof of such
Outside Entity i
f
any
4 any
Claim brought by any past Executive of an Organization who has not
served as a duly elected or appointed director officer trustee governor
management committee member member of the management board
General Counsel or Risk Manager or equivalent position of or consultant
for an Organization for at least two 2 years prior to such Claim being
first made against any person or
5 any
Claim
brought by an Executive of an Outside
Entity
formed and
operating i
n a Foreign
Jurisdiction
against any
Outside
Entity
Executive of such Outside
Entity provided
that such Claim
i
s
brought
and maintained outside the United States Canada or any
other
common law
country including any
territories thereof
6 any
Securities Claim provided that such Securities Claim
i
s
instigated
and continued
totally
without the solicitation
of or assistance of or active
participation of or intervention of any
Organization or
any
Executive of an Organization provided however
solely
with
respect to this subsection 6
BR p1F1ive CopyEND 26
HIGHLY CONFIDENTIAL
Return
of
by
a an Executives engaging i
n
any protected activity specified i
n 18
USC 1514Aa whistleblower protection pursuant to the
SarbanesOxley Act of 2002 or
n
any
other whistleblower protection pursuant to
any
similar state
local or foreign securities laws shall not be deemed to trigger this
exclusion
Notwithstanding the forgoing exception this exclusion j shall apply where the
actions of any Executive includes the filing of any proceeding or voluntarily
testifying voluntarily participating i
n or voluntarily assisting other than de minimis
assistance in the filing or prosecution
of
any proceeding against an Insured
relating
to any violation of any rule or regulation
of the Securities and Exchange
Commission
or any similar provision
of
any federal state local or foreign
rule or law
relating to
fraud against shareholders other than such actions i
n connection with a proceeding
that
i
s
brought by the Securities and
Exchange Commission any
similar state local
or foreign regulatory body
that
regulates securities or any state local or foreign
law
enforcement
authority
BROftSkive COPVEND 26
AU7 ORIZED REPR EN ATIVE
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 27
of
policy
number 7419806
Company
of
Pittsburgh
Pa
Amend Exclusion i
I
t
i
s
hereby understood and agreed that Clause 4
i EXCLUSIONS
i
s deleted
i
i which
i
s
brought by or on behalf of an Organization or any
Insured Person other
than an Employee of an Organization or which i
s
brought by any security
holder or
member of an Organization whether directly or derivatively
unless such
security
holders or members Claim i
s
instigated
and continued
totally without the solicitation of or assistance of or active
participation of or
intervention of any
Executive of an Organization or any Organization provided
however this exclusion shall not
apply
to
1 any Claim brought by an Insured Person
i
n the form of a crossclaim or
thirdparty
claim for contribution or indemnity
which
i
s part of and results
directly from a Claim that
i
s covered by this policy
2 any Employment Practices Claim
brought by an Insured Person
3 i
n
any bankruptcy proceeding by or against
an
Organization any
Claim
brought by
the examiner trustee receiver liquidator creditors committee or
rehabilitator or any assignee thereof of such
Organization i
f
any
4 any
Claim
brought by any past
Executive of an
Organization
who has not
served as a duly elected or appointed director officer trustee governor
management
committee member member of the
management board
General Counsel or Risk
Manager or equivalent position of or consultant for
an Organization
for at least two 2 years prior to such Claim being first
made
against any person or
5 any
Claim
brought by an Executive of an Organization
formed and operating
i
n a Foreign
Jurisdiction
against
such Organization or any
Executive thereof
provided
that such Claim
i
s brought and maintained outside the United
States Canada or any
other common law country including any
territories
thereof
6 any
Securities Claim provided that such Securities Claim
i
s instigated and
continued totally independent of and totally without the solicitation of or
assistance of or active participation of or intervention of any Organization
or
any
Executive of an Organization provided however solely with respect
to this subsection 6
BRoftFive CopVEND 27
HIGHLY CONFIDENTIAL
Return
of
by
a an Executives engaging i
n
n 18
USC 1514Aa whistle blower protection pursuant to the
SarbanesOxley Act of 2002 or
n
any other whistle blower protection pursuant to
any
similar state
local or foreign securities laws shall not be deemed to trigger this
exclusion
Notwithstanding
the
forgoing exception this exclusion i shall apply where the
actions of
any Executive includes the filing of any proceeding or voluntarily
testifying voluntarily participating i
n or voluntarily assisting other than de minimis
assistance i
n the
filing or prosecution
of
any proceeding against an Insured relating
to
any
violation of
any
rule or regulation
of the Securities and Exchange
Commission
or any
similar provision of
any federal state local or foreign rule or law relating to
fraud
against shareholders other than such actions
i
n connection with a proceeding
that
i
s
brought by the Securities and
Exchange Commission any
similar state local
or
foreign regulatory body
that
regulates securities or any state local or foreign
law
enforcement
authority
BROFkive CopyEND 27
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 28
policy
number 7419806
by
Company
of Pittsburgh Pa
ERISA EXCLUSION AMENDED TO APPLY
SOLELY TO COMPANY BENEFIT PLANS
t
i
Exclusion m i
s amended to read as follows
m for violations of
any
of the responsibilities obligations or duties imposed
upon fiduciaries by the Employee Retirement Income Security Act of 1974 or
amendments thereto or any
similar provisions of
any state local or foreign
statutory or common law ERISA with respect to any benefit plans
sponsored solely or jointly by the Organization
I
t
i
s further understood and agreed that the Insurer shall not be liable to make any
payment
for Loss in connection with
any
Insured for violations
of any of the responsibilities obligations or duties imposed upon fiduciaries by the ERISA
with
respect
to
any
benefit plan not sponsored solely or jointly by the Organization
1 for discrimination based upon local state or federal law statutory or common
including
but not limited to ERISA
2 for failure to fund the a benefit plan in accordance with ERISA or the plan
instrument or the failure to collect contributions owed to the
plan
3 for
plan benefits or that
portion
of
any
settlement or award in an amount
equal to such plan benefits
4 alleging arising out of based upon or attributable to any failure or omission
on the
part
of
any Insureds to effect and maintain insurance or bonding
for
plan property assets or obligations
5 for
any Wrongful
Act
i
f as of
May 1 2007 the Insureds as of
such date knew or could have reasonably foreseen that such Wrongful Act
could lead to a Claim
Furthermore coverage as i
s afforded by virtue of this endorsement shall be specifically
excess of any insurance in force including but not limited to any insurance
i
n force for
ERISA claims suits or demands including but not limited to
any
administrative or
regulatory proceedings or investigations
Further i
f said other insurance in force as respects any
such
coverage i
s provided by the
Insurer or any member company of American International Group Inc AIG or would be
provided
but for the
application
of the retention amount the exhaustion of the limit of
liability or the failure to submit a claim then the Limit of Liability for all Loss by virtue
of this endorsement with
respect to any
such claims suits or demands
including
but not
limited to
any
administrative or regulatory proceedings or investigations shall be reduced
by
the limit of
liability as set forth on the Declarations of such other AIG member
END 028
BRAive
Copy
HIGHLY CONFIDENTIAL
Return
companys insurance provided to such claims suits or demands
including
but not limited
to any
administrative or regulatory proceedings or investigations
END 028
BRO ive Copy
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 29
of
by
EXCEPTION TO POLLUTION EXCLUSION FOR SHAREHOLDER CLAIMS
t
i
Exclusion 1k of the
policy
shall not apply to Indemnifiable Loss
arising
from a Securities
Claim other than Indemnifiable Loss constituting Cleanup Costs as defined in Exclusion
k provided that such Securities Claim i
s
instigated and continued totally independent
of and totally without the solicitation of or assistance of or active participation of or
intervention of any Insured or the Organization
DEFINITIONS
For the
purpose
of this endorsement the following definitions are hereby added to the
policy
1 Cleanup
means to test for monitor clean
up remove contain treat neutralize
detoxify or assess the effects of Pollutants
2 Continuity Date
meansMay 1 2007
3 Environmental Audit means the
process by which a site
i
s reviewed to determine
the
presence
of Pollutants in the land the atmosphere or any watercourse or body
of water including ground
water and surface water through the use of i
investigative and other reports ii a physical inspection of the site iii interviews
with persons at the site and otherwise iv a review of the
regulatory history
and a
review of the prior use of the site Any audit which would fall into the category of
a Phase I Audit as that term i
s
commonly used in the industry shall be
automatically
considered an Environmental Audit for the
purposes
of this policy
4 Governmental Authority means any federal state or local authority agency or
body in the United States of America its territories or possessions or any political
subdivision thereof including any sovereign nation within the geographical confines
of the United States of America other than the Securities and
Exchange
Commission Commodities Futures Trading Commission or
any
other authority which
regulates securities or commodities markets
5 Pollution Condition means the actual alleged
or threatened
discharge dispersal
release or
escape
of Pollutants into or
upon
or the presence of Pollutants in or
upon
the land the
atmosphere or any watercourse or body
of water
6 Potentially
Liable
Party
means a
person
or entity legally liable for Cleanup
andor Cleanup Costs
EXCLUSIONS
As
respects
the
coverage provided by
this endorsement the Insurer shall also not be
liable to make
any
Claim made against an
Insured
1 arising as a result of liability of others for a Pollution Condition assumed by the
Organization or any
Insured under
any
oral or written contract or agreement
unless such liability would attach to the Insured in the absence of such contract or
agreement
END 029
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HIGHLY CONFIDENTIAL
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2
alleging arising
out of based
upon
or attributable to 1 asbestos or
asbestoscontaining
materials or 2 acid rain conditions
3 alleging arising out of based
upon
attributable to or in
any way involving directly
or indirectly
a any Wrongful Act occurring or Pollution Condition existing prior to the
Continuity
Date
i
f as of the Continuity Date the Organization an Insured or
any Employee of the
Organization
with
managerial responsibilities
over
environmental affairs control or compliance knew or could reasonably have
foreseen that such Pollution Condition or
Wrongful
Act could
give
rise to a
Claim under this policy
b any
Pollution Condition at or originating
from a site
any part
of which on or
before the Continuity Date was listed on the United States Environmental
Protection
Agencys Comprehensive
Environment
Response Compensation
and
Liability Information System or final or proposed National Priorities List or
any
similar
system or list maintained
by a Governmental
Authority
c any
Pollution Condition at or
originating
from a site
any part of which on or
before the Continuity Date was the subject of a direction request or claim
by any
Governmental Authority or
any
other
person
or entity to investigate a
Pollution Condition or for
Cleanup Costs
d any
Pollution Condition at or originating
from a site
any part
of which on or
before the Continuity Date was the subject of a notification to the
Organization or any
Executive or Employee
thereof
by a Governmental
Authority or
any
other
person
or entity that the Organization or
any
Insured
i
s or may
be a Potentially Liable Party
4 for
Cleanup
of Pollutants or to recover Cleanup Costs or for
injury
from oral or
written publication of a libel or slander or of other defamatory or disparaging
material or of material that violates a persons right
of
privacy
5 arising out of based
committing
in fact
by the
Organization an Organization or
any Employee of the
Organization
with
managerial responsibilities over environmental affairs control or compliance
of
any
intentional knowing willful or deliberate noncompliance with
any statute
regulation ordinance administrative
complaint
notice of violation notice letter
executive order or instruction of
any
Governmental Authority
upon or attributable to any Pollution Condition at or
originating
from a site the
Organization acquired
whether
by
direct
purchase or by
exercising control over after October 17 1986 and prior to the Continuity Date i
f
prior
to such
acquisition
lease or commencement of exercise of control no
Environmental Audit of such site was performed by or on behalf of the
Organization or
upon or attributable to
any
Pollution Condition at or
originating from a site the Organization acquired whether by direct purchase or by
purchase of the
controlling
stock of another
Organization leased or commenced
exercising control over after the Continuity Date
i
f as of the date of acquisition
lease or commencement of exercise of control the Organization an Insured or any
Employee of the Organization with managerial responsibilities over environmental
affairs control or compliance knew or should have known of the existence of a
Pollution Condition
existing
with
respect to such site provided however that this
END 029
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HIGHLY CONFIDENTIAL
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exclusion shall not apply in the event the Insurer has added such site to this
policy by
written endorsement
END 029
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HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 30
of
Company
of
Pittsburgh
Pa
SPOUSAL LIABILITY EXTENSION
t i
s
hereby understood and agreed
that
notwithstanding any
other provision of this policy including any endorsement attached
hereto whether such endorsement precedes or follows this endorsement in time or
sequence
such
coverage
as
i
s afforded by this policy pursuant to Clause 20 SPOUSAL
AND LEGAL REPRESENTATIVE EXTENSION to the lawful
spouse
of
any
Insured Person
under this
policy
shall also be extended to the legally recognized
domestic
partner
of such
Insured Person
BRO h
ve
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UTAORIZED REPR EN ATIV E A
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 31
of
by
Company
of Pittsburgh Pa
AMEND PRIOR NOTICE EXCLUSION
t
i
s
hereby understood and agreed that
Exclusion d i
s deleted i
alleging arising out of based upon or attributable to the facts
alleged or to the
same or related
Wrongful
Acts
alleged or contained
i
n
any
Claim which has been
reported or in
any circumstances of which notice has been
given
under the
prior
Directors and Officers
policy
of which this
policy i
s a renewal or replacement or
which
i
t
may
succeed
i
n time
BROFkive CopyEND 31
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 32
Company
of
Pittsburgh
Pa
EXCESS BENEFIT EXTENSION
t
i
DEFINITIONS Definition of Loss
i
s
hereby amended by adding the following to the end
thereof
Loss shall also include
i any Excess Benefits penalty assessed
i
n the amount of 10
by the
Internal Revenue Service IRS against any Insureds for
managements
involvement in the award of an Excess Benefit and the Defense Costs
attributable thereto Loss shall specifically exclude 1 any
25 penalty
assessed by the IRS
against
an Insured deemed to have received an Excess
Benefit 2 Defense Costs incurred to defend
any
Insured
i
f
i
t has been
i
n
fact determined that such individual received an Excess Benefit and 3 any
200 penalty assessed by the IRS for failure to correct the award of an
Excess Benefit In all events the assessment by the IRS of a 200 penalty
against any
Insured shall void ab initio all
coverage
afforded pursuant to this
paragraph and
ii
any Selfdealing penalty assessed in the amount of 25 by the Internal
Revenue Service IRS against any
Insureds for managements
involvement
i
n an act of Selfdealing and the Defense Costs attributable
thereto Loss shall specifically exclude 1 any 5 penalty assessed by the
IRS against an Insured deemed to have participated i
n the act of
Selfdealing 2 Defense Costs incurred to defend any Insured
i
f
i
t has been
i
n fact determined that such individual participated i
n the act of Selfdealing
3 any 200 penalty assessed by the IRS on the individual for failure to
correct the Selfdealing act and 4 any 50 penalty assessed by the IRS
on the management for its refusal to
agree
to part or all of the corrective
measures with respect to correcting the Selfdealing act In all events the
assessment by
the IRS of a 50 andor a 200
penalty against any
Insured
shall void ab initio all
coverage
afforded
pursuant to this
paragraph
For
purposes
of this endorsement the
following
definitions shall
apply
1 Excess Benefits means an excess benefit as defined
i
n the Taxpayer Bill of
Rights Act 2 26 USC 4958
2 Selfdealing means an act as defined i
n 26 USC 4941
BROftcpve COPYEND 32
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 33
of
INVESTIGATION COSTS
FOR DERIVATIVE DEMANDS
I
t
i
s
hereby understood and agreed as follows
1 Clause 1 INSURING AGREEMENTS
i
s amended to add the following new insuring
agreement
COVERAGE E INVESTIGATION COSTS FOR DERIVATIVE DEMANDS
This policy shall
pay
the
Investigation
Costs of the
Organization arising from an
Investigation
in
response to a Derivative Demand first made upon the
Organization during the Policy Period or the Discovery Period if applicable and
reported to the Insurer
pursuant to the terms of this policy
2 Clause 5 LIMIT OF LIABILITY FOR ALL LOSSINCLUDING DEFENSE COSTS i
s
amended to add the following
The maximum limit of the Insurers liability for Investigation Costs arising from all
Investigations
combined
occurring during
the
Policy
Period or the
Discovery
Period if applicable in the aggregate shall be
$250000
This limit shall
be the maximum limit of the Insurer under this
policy regardless
of the number of
such Investigations occurring during the Policy Period or the Discovery Period if
applicable or the number of Executives subject to such Investigations Provided
however that the Investigation Costs limit shall be part of and not in addition to
the Limit of Liability stated in the Declarations of this policy which shall in all
events be the maximum
liability
of the Insurer for all Loss under this
policy
3 There shall be no Retention amount applicable to Investigation Costs and the
Insurer shall
pay
such Loss from first dollar subject to the other terms conditions
and limitations of this endorsement and this policy
4
I
t shall be the
duty
of the
Organization
and not the duty of the Insurer to conduct
investigate and evaluate
any Investigation against its own Executives provided
that the Insurer shall be entitled to effectively associate in the
Investigation and in
the evaluation and negotiation of
any
settlement of
any
such
Investigation
5 Nothing i
n this endorsement shall be construed to afford
coverage
under this policy
for
any
Claim
brought by
the
Organization against one or more of its own
Executives other than
Investigation
Costs incurred in a covered
Investigation
Payment of any Investigation Costs under this policy shall not waive any of the
Insurers rights under this policy or at law
6 The Organization shall be entitled to payment of its covered Investigation Costs
90 days after 1 i
t has made its final decision not to bring a civil proceeding in a
court of law
against any
of its Executives and ii such decision has been
communicated to the Complaining Shareholders Such payment shall be
subject to
an undertaking by
the
Organization
in a form
acceptable to the Insurer that the
Organization shall return to the Insurer such
payment
in the event any
0American International Group Inc All
rights
reserved
END 033
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HIGHLY CONFIDENTIAL
Return
Organization
or
Complaining
Shareholders brings a Claim alleging arising out of
based upon or attributable to any Wrongful Acts which were the subject
of the
Derivative Demand
7 Solely for the
coverage
extended by this endorsement under Coverage E the
following shall apply
Claim shall also mean any
Derivative Demand
Complaining
Shareholder means any
shareholder or shareholders other than
any
Insured that makes a Derivative Demand
Derivative Demand means a written demand by shareholders upon the board of
directors or equivalent management body
of an Organization asking i
t to
bring on
behalf of the Organization a civil proceeding in a court of law against any
Executive of the
Organization
for a Wrongful
Act of such Executive in order to
obtain relief from damages arising out of such Wrongful Acts
Investigation means the
investigation by
the
Organization or on behalf of the
Organization by its board of directors or the equivalent management body or
any
committee of the board of directors or the
equivalent management body as to
whether or not the Organization should bring the civil proceeding demanded in the
Derivative Demand
Investigation
Costs means reasonable and
necessary costs charges
fees and
expenses including but not limited to attorneys fees and experts fees but not
including any settlement judgment or damages
and not including any regular or
overtime
wages
salaries or fees of the Executives or Employees of the
Organization incurred by the Organization or its board of directors or the
equivalent management body or any
committee of the board of directors or the
equivalent management body incurred solely in connection with an Investigation
Loss shall also mean Investigation Costs
American International Group Inc All rights reserved
END 033
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ENDORSEMENT 34
by
Company
of Pittsburgh Pa
FINANCIAL INSOLVENCY ADDED
I
premium charged i
t
i
agreed
that Clause 2
Definitions are amended by addition of the following to the end thereof
Financial Insolvency means the i appointment by any
state or federal official
agency or court of a receiver conservator liquidator trustee rehabilitator or similar
official to take control of supervise manage or liquidate an Organization or ii the
Organization becoming a debtorinpossession pursuant to the United States
bankruptcy law and as to both i or ii the equivalent status outside the United
States
I
t
i
s further understood and agreed that Clause 13 SUBROGATION
i
s
hereby
amended
by
addition of the following to the end thereof
I
n the event that the Insurer shall for
any reason pay
Indemnifiable Loss on behalf of
an Insured Person or NonIndemnifiable Loss due to Financial Insolvency
the Insurer
shall have the contractual right hereunder to recover from the
Organization
the
amount of such Loss equal to the amount of the Retention not satisfied
by the
Organization and shall be subrogated to the rights
of the Insured Persons hereunder
I
t
i
s further understood and agreed that the definition of NonIndemnifiable Loss
i
s deleted
and replaced with the following
NonIndemnifiable Loss means Loss for which an Organization
has neither indemnified nor
i
s permitted or required to indemnify an Insured Person
pursuant to law or contract or the
charter bylaws operating agreement or similar documents of an Organization or i
s unable
to indemnify an Insured Person due to Financial Insolvency
ALIT ORIZED REPR EN ATIVE
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HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 35
by
Company
of Pittsburgh Pa
EXTRADITION COVERAGE
22000 Version
t
i
s understood
permitted by law
and agreed that where
1 Claim also means any
a
b
official request for Extradition of any Insured Person or
the execution of a warrant for the arrest of an Insured Person where such
execution
i
s an element of Extradition
2 Defense Costs also means reasonable and necessary fees costs and
expenses
incurred
through legal counsel and consented to by the Insurer resulting from an
Insured Person lawfully
a opposing challenging resisting or defending against any request
for or any
effort to obtain the Extradition of that Insured Person or
b appealing any
order or other grant of Extradition of that Insured Person
3 Extradition means any
formal
process by
which an Insured Person located in
any
country i
s surrendered to
any
other country for trial or otherwise to answer
any
criminal accusation
4 Clause 9 does not apply to Defense Costs
solely relating to Extradition even i
f the
underlying Wrongful
Acts relate to a Securities Claim
X
e
4
0 2006 American International Group Inc All rights reserved
END 035
91490 806
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Return
ENDORSEMENT 36
by
Company
of Pittsburgh Pa
OUTSIDE ENTITY ENDORSEMENT
t
i
s
hereby
understood and agreed that each of
the following entities shall be deemed an Outside Entity
OUTSIDE ENTITY
1 Any notforprofit organization
2 Federal Home Loan Bank of Seattle
3 Fannie Mae National Advisory Council
4 Thrift Institutions Advisory Council of the Federal Reserve Board of
Governors
5 Mutual Travel Keystroke
6 Star Automated Switch Network
7 Integration Financial Network LLC
8 Wavelink
9 Federal Home Loan Bank of San Francisco
10 Simpson Resource Company
11 SAFECO Corporation
12 Visa
BR09 Mive CopyEND 36
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 37
of
by
Company
of
Pittsburgh
Pa
Nonrescindable Coverage
t
i
s
hereby understood and agreed that the
following clause shall be added to the policy
24 NONRESCINDABLE
Solely with respect to any NonIndemnifiable Loss of
any Executive the Insurer
shall not be entitled under
any
circumstances to rescind this
policy
BRof Mive CopyEND 37
114 61
HIGHLY CONFIDENTIAL
Return
ENDORSEMENT 38
of
policy
number 7419806
by
Company
of Pittsburgh Pa
THIS ENDORSEMENT CHANGES THE POLICY PLEASE READ IT CAREFULLY
COVERAGE TERRITORY ENDORSEMENT
Payment of loss under this policy shall only be made in full compliance
with all United
States of America economic or trade sanction laws or regulations including but not
limited to sanctions laws and regulations administered and enforced by the US Treasury
Departments
Office of
Foreign
Assets Control OFAC
END 038
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Return
ENDORSEMENT 39
FORMS INDEX ENDORSEMENT
The contents of the Policy i
s comprised of the following forms
EDITION
FORM NUMBER DATE FORM TITLE
forms a part of
75010 0200 D00200 Admitted Dec
81285 0103 Tria Dec Disclosure Form
75011 0200 D00200 Admitted Policy
APPMAN 0707 SECURITIES CLAIM PANEL COUNSEL LIST Please see wwwbriefbasecom
for the current list of panel counsel firms
75013
78804
89382
MNSCPT
MNSCPT
83550
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
MNSCPT
0200
10103
05105
1103
APPENDIX B CRISISFUND
WASHINGTON CANCELLATIONNONRENEWAL ENDORSEMENT
STATE AMENDATORY INCONSISTENT
SEVERABILITY OF APPLICATION ENDORSEMENT
PROFESSIONAL EO EXCLUSION
NUCLEAR ENERGY LIABILITY EXCLUSION ENDORSEMENT
PRIOR ACTS COVERAGESCHEDULED ENTITIES
RUNOFF COVERAGE FOR SCHEDULED ENTITIES
CRISIS PLUS
CAPTIVE INSURANCE COMPANY COVERAGE
AMEND CLAUSE 6 RETENTION
CLAUSE 7a2 AMENDATORY
AMEND CLAUSE 8 DEFENSE COSTS
AMEND CLAUSE 10 DISCOVERY
AMEND CLAUSE 12 AUTOMATIC SUBSIDIARY COVERAGE
AMEND CLAUSE 13 SUBROGATION
REMOVE CLAUSE 17 ADR
AMEND CLAUSE 19 BANKRUPTCY
AMEND CLAUSE 22 ORDER OF PAYMENTS
Archive
Copy
78859 1001 BROKER
END 039
Page 1 of 3
HIGHLY CONFIDENTIAL
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ENDORSEMENT 39
policy
number 7419806
by
Company
of
Pittsburgh
Pa
The contents of the Policy
is
comprised
of the
following
forms
EDITION
forms a part of
MNSCPT AMEND DEFINITION Z SUBSIDIARY
MNSCPT AMEND DEFINITION OF APPLICATION
MNSCPT AMEND DEFINITION OF EXECUTIVE
MNSCPT CONDUCT EXCLUSIONS
MNSCPT SECURITIES CLAIM DEFINITION AMENDED
MNSCPT AMEND DEFINITION OF DEFENSE COSTS
MNSCPT AMEND DEFINTION OF LOSS
MNSCPT EXCLUSION j AMENDATORY ENDORSEMENT ADD 1v1 CARVEOUTS
MNSCPT Amend Exclusion
1
89405 0605 ERISA EXCLUSION AMENDED TO APPLY SOLELY TO COMPANY BENEFIT PLANS
89421 0605 POLLUTION EXCLUSION EXCEPTION FOR SECURITIES CLAIMS
MNSCPT SPOUSAL LIABILITY EXTENSION
MNSCPT AMEND PRIOR NOTICE EXCLUSION
MNSCPT EXCESS BENEFIT EXTENSION
89386 03107 INVESTIGATION COSTS FOR DERIVATIVE DEMANDS
MNSCPT FINANCIAL INSOLVENCY ADDED
91490 0806 EXTRADITION COVERAGE ENDORSEMENT
MNSCPT OUTSIDE ENTITY ENDORSEMENT
MNSCPT Nonrescindable Coverage
89644 0705 COVERAGE TERRITORY ENDORSEMENT OFAC
78859 1001 Forms Index Endorsement
APPMAN 0503 WASHINGTON DEREGULATION DISCLAIMER
Archive Copy
78859 1001 BROKER
END 039
Page
2 of 3
HIGHLY CONFIDENTIAL
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ENDORSEMENT 39
by
Company
of Pittsburgh Pa
The contents of the Policy i
s
comprised
of the following forms
EDITION
forms a part
of
Archive Copy
END 039
78859 10101
BROKER Page
3 of 3
HIGHLY CONFIDENTIAL
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NOTICE TO INSUREDS
WASHINGTON DISCLAIMER
Large
Commercial Property Casualty Account
Washington
Statutes 28424120
This following notice i
s
being provided
in
compliance
with
Washington
Law
THE RATES AND RATING PLANS FOR THIS POLICY HAVE NOT BEEN FILED WITH OR
APPROVED BY THE WASHINGTON OFFICE OF THE INSURANCE COMMISSIONER
A PREMIUM OR RATE MAY BE QUOTED THAT IS NOT SUBJECT TO THE RATE FILING
REQUIREMENTS OF THE WASHINGTON OFFICE OF THE INSURANCE COMMISSIONER
WA
Large
Commercial PIC Account Disclaimer Page 1 of 1
Revised 5120cArch1ve
Copy
HIGHLY CONFIDENTIAL
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0
Policy
Number ELU10438008
Renewal of Number NA
MANAGEMENT LIABILITY AND
COMPANY REIMBURSEMENT
INSURANCE POLICY DECLARATIONS
i
s
Greenwich Insurance Company
XL
Specialty
Insurance Company
Members of the XL America Companies
Executive Offices
70 Seaview Avenue
Stamford CT 069026040
Telephone
8779532636
THIS IS A CLAIMS MADE POLICY EXCEPT AS OTHERWISE PROVIDED HEREIN THIS POLICY ONLY APPLIES TO
CLAIMS FIRST MADE DURING THE POLICY PERIOD OR IF APPLICABLE THE OPTIONAL EXTENSION PERIOD
THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL BE REDUCED AND MAY BE
EXHAUSTED BY THE PAYMENT OF DEFENSE EXPENSES THIS POLICY PROVIDES FOR THE INSURER TO
DEFEND ANY CLAIM MADE AGAINST AN INSURED EXCEPT UNDER THOSE CERTAIN SPECIFIED
CIRCUMSTANCES WHERE THE INSURED CHOOSES TO PROVIDE ITS OWN DEFENSE PLEASE READ AND
REVIEW THE POLICY CAREFULLY
Item 1 Name and Mailing
Address of Parent Company
Washington Mutual Inc
1301 Second Avenue
WMC1201
Seattle WA 98101
Item 2 Policy
Period From May 01 2008 To May 01 2009
At 1201 AM Standard Time at your Mailing Address Shown Above
Item 3 Limit of
Liability
$25000000 Aggregate
each Policy Period including
Defense Expenses
Item 4 Retentions
$0 each Insured Person under INSURING AGREEMENT 1 A
$50000000 each Claim under INSURING AGREEMENT I B
$50000000 each Claim under INSURING AGREEMENT I C
Item 5 Optional
Extension Period
Length of Optional
Extension Period
Either one year
or two years
after the end of the Policy Period at the election of the Parent Company
Premiumfor Optional
Extension Period One Year $778750000
Two Years NIA
Three Years NA
Item 6 Pending and Prior Litigation
Date NA
Item 7 Notices
required
to be given
to the Insurer must be addressed to
Executive
Liability
Underwriters
One Constitution Plaza 161h Floor
Hartford CT 06103
Toll Free Telephone
8779532636
JUN 0 3 2008
Marsh Seattle Finpro Dept
Valerie Surprenant
DO 70 00 11 01
Page 1 of 2
HIGHLY CONFIDENTIAL
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MANAGEMENT LIAbfTY AND COMPANY
REIMBURSEMENT0JLICY
DECLARATIONS
Item 8 Premium
Taxes Surcharges or Fees $000
Total Policy
Premium $445000000
Item 9 Policy Forms and Endorsements Attached at Issuance
DO 71 00 09 99 XL 82 00 07 07 XL 80 24 03 03 DO 85 12 08 00 DO 83 95 11 04 DO 83 133 12 06
D0801421001 D080980202 Manuscript
8389 05 09 D0801760602 Manuscript 8388 05 08
Manuscript
8390 05 08 Manuscript
838505 08 D0804360807 D0804220707
Manuscript
8387 05 08 D083050300 D0802860804 D0804260807 XL 83 07 01 00
Manuscript
1034 02 04 D0804720508
D083330801 Manuscript
8386 05 08 Manuscript
1102 05 04
D0 80 473 05 08 D0 80 02 03 00 D0804740508 D0 80 431 08 07 D0 80 323 08 05
Countersigned
By
Date
Authorized Representative
THESE DECLARATIONS AND THE POLICY WITH THE ENDORSEMENTS ATTACHMENTS AND THE APPLICATION SHALL
CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE INSURER AND THE INSURED RELATING TO THIS INSURANCE
In Witness Whereof the Insurer has caused this Policy
to be executed
by
its authorized officers but
this Policy will not be valid unless countersigned
on the Declarations
page i
f
required by law by a duly
authorized representative
of the Insurer
Nicholas M Brown Jr
Theresa M Morgan
President
Secretary
Nicholas M Brown Jr
Theresa M Morgan
President
Secretary
XL Specialty
Insurance Company
DO70001101
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HIGHLY CONFIDENTIAL
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0
POLICYHOLDER
DISCLOSUR
NOTICE OF TERRORISM
INSURANCE COVERAGE
Coverage
for acts of terrorism is already
included in
your
current policy
You are hereby
notified that under the Terrorism Risk Insurance Program
Reauthorization Extension Act
of 2007 the definition of act of terrorism has changed
As defined in Section 1021
of
the Act The term act of terrorism means any
act that
i
s certified by the Secretary of the
Treasury
in concurrence
with the Secretary
of the State and the Attorney General of the
United Statesto be an act of terrorism
to be a violent act or an act that is
dangerous
to
human life property
or infrastructure to have resulted in damage
within the United
States or outside the United States in the case of certain air carriers or vessels or the
premises
of a United States mission and to have been committed by an individual or
individuals as part
of an effort to coerce the civilian population
of the United States or to
influence the policy
or affect the conduct of the United States Government by
coercion
Under your existing coverage any
losses caused by
certified acts of terrorism
may
be
partially
reimbursed by
the United States under a formula established by
federal law
Under this formula the United States generally
reimburses 85 of covered terrorism
losses exceeding the statutorily
established deductible paid by
the insurance company
providing
the coverage
However your policy may
contain other exclusions that
may
affect your coverage
The Terrorism Risk Insurance Program
Reauthorization Extension
Act contains a $100 billion cap
that limits US Government reimbursement as well as
insurers liability for losses resulting
from certified acts of terrorism when the amount of
such losses exceeds $100 billion in any one calendar year I
f the aggregate
insured losses
for all insurers exceed $100 billion your coverage may
be reduced
The portion
of
your
annual premium
that
i
s attributable to coverage
for acts of terrorism
is $ waived Any premium
waiver is only
valid for the current Policy
Period
I ACKNOWLEDGE
THAT I HAVE BEEN NOTIFIED THAT UNDER THE TERRORISM RISK
INSURANCE PROGRAM REAUTHORIZATION
EXTENSION ACT OF 2007 ANY LOSSES
CAUSED BY CERTIFIED ACTS OF TERRORISM UNDER MY POLICY COVERAGE WILL BE
PARTIALLY REIMBURSED BY THE UNITED STATES AND I HAVE BEEN NOTIFIED OF THE
AMOUNT OF MY PREMIUM ATTRIBUTABLE TO SUCH COVERAGE
Name of Insurer XL Specialty Insurance Company
Policy
Number ELU10438008
Signature
of Insured
Print Name and Title
Date
HIGHLY CONFIDENTIAL
Return
IN WITNESS ENDORSEMENT
XL SPECIALTY INSURANCE COMPANY
ADMINISTRATIVE OFFICE SEAVIEW HOUSE
70 SEAVIEW AVENUE
STAMFORD CT 069026040
STATUTORY HOME OFFICE 1201 NORTH MARKET STREET
SUITE 501
WILMINGTON DE 19801
I
t
i
s
hereby agreed
and understood that the
following I
n Witness Clause supercedes any
and all other
In Witness clauses
i
n this policy
All other provisions
remain unchanged
IN WITNESS WHEREOF
the
Company
has caused this
policy
to be executed and attested and i
f
required by
state law this
policy
shall not be valid unless countersigned by a duly
authorized
representative
of the Company
John R Glancy
President
Kenneth P Meagher
Secretary
IL MP 9104 0406 XLS
HIGHLY CONFIDENTIAL
Return
US TREASURY
DEPARTMENTS
OFFICE OF FOREIGN ASSETS CONTROL
OFAC
No coverage i
s provided by
this Policyholder
Notice nor can i
t be construed to replace any provisions
of your policy
You should read
your policy
and review your
Declarations page
for complete
information on the coverages you
are provided
This Policyholder
Notice provides
information concerning possible impact
on your
insurance
coverage
due to directives issued by
OFAC Please read this Policyholder
Notice carefully
OFAC administers
and enforces sanctions policy
based on Presidential declarations of national
emergency
OFAC has identified and listed numerous
Foreign agents
Front organizations
Terrorists
Terrorist organizations
Narcotics
traffickers
as Specially Designated
Nationals and Blocked Persons This list can be found on the United
States Treasurys
web site httpwwwtreasgovofac
I
n accordance with OFAC regulations i
f
i
t i
s determined that you
or any
other insured or any person
or entity claiming
the benefits of this insurance has violated US sanctions law or i
s a Specially
Designated
National and Blocked Person as identified by OFAC this insurance will be considered a
blocked or frozen contract and all provisions
of this insurance will be immediately subject
to OFAC
When an insurance policy i
s considered to be such a blocked or frozen contract neither payments
nor premium
refunds may
be made without authorization from OFAC Other limitations on the
premiums
and payments
also apply
HIGHLY CONFIDENTIAL
Return
PRIVACY POLICY
The XL America Inc insurance group We or Our Group respects
the
privacy
of all personal
information
Thus the information We collect from our customers or potential customers i
s treated with the
highest degree of
privacy
We have developed
a Privacy Policy for Our Group
that
1
ensures the security of your information and
2 complies
with state and federal privacy
laws
The term personal
information includes all information we obtain about a customer and maintain i
n our files All
persons
with access to personal
information are required
to follow this policy
Our Privacy
Promise
Your
privacy rights are important
to us Analysis of your private
information allows us to
provide
to
you
excellent
service and products
Your trust
i
n us depends upon
the security
and
integrity
of our records Thus
We
promise
to
1
Follow strict security standards This will protect any
information
you
share with us or that we receive about
you
2 Verify
and exchange
data
regarding your
credit and financial status only
for the
purposes
of underwriting
policy
administration or risk management
We will obtain only reputable references and services
3
Collect and use the least amount of information necessary
to
a advise
you
and deliver excellent service and products
and
b conduct our business
4
Train our employees
to securely
handle
private
information We will
only permit authorized employees
to
have access to such information
5
Not disclose data about you
or
your
business to
any organization
outside Our Group or to third party
providers
unless
a we disclose to you our intent to do
so or
b we are required
to do so by
law
6
Not disclose medical information unless
a you give us written consent to do so or
b We disclose for any exception provided i
n the law
7 Attempt
to keep our records complete
and exact
8
Advise you
how and where to access your
account unless prohibited by law
9
Advise
you
how to correct errors or make changes to your
account
10 Inspect
our procedures
to ensure your privacy
Collection and Sources of Information
We collect only the personal
information needed
to1
determine suitability
for a product
or service
2 manage
the product
or service
and
3 advise customers about our products
and services
The information we collect comes from the following sources
Submission I
n the
application you provide your name address phone number email address and
other types
of private
information
Quotes We collect information to determine
1 your eligibility
for an insurance
product
and
2 your coverage
cost
The data we collect will
vary
with the
type
of insurance you
seek
Transactions We maintain records of all transactions with Our Group
and our third
party providers
Our records include
HIGHLY CONFIDENTIAL
Return
1 your coverage choices
2 premiums billing
and payment records
3 claims history
and
4
other data related to
your
account
Claims We maintain records on
any
claims that are made under
your policies
The
investigation
of a
claim involves collection of a broad
range
of information
I
t also involves
many issues some of which do
not directly
involve you
We will share with
you
facts that we collect about your claim unless
prohibited
by
law The process
of claim investigation
also involves advice opinions
and comments from
many
people
These
may
include
attorneys
and experts
This will help us determine how best to handle your
claim To protect
the legal and privileged aspects
of opinions and advice we will not disclose this
information to
you
Credit and Financial Reports
We
may
receive your
credit history This i
s to
support
information
you
provided during
the submission and quote processes
This history
will
help
to underwrite
your coverage
Retention and Correction of Personal Information
We retain personal
information only
as long as required by law or as required by our business methods
I
f we
become aware that any
information may
be incorrect we will make reasonable effort to correct
i
t
Storage of Personal Information
Safeguards
are i
n
place
to protect
data and
paper
files containing personal information
SharinglDisciosina of Personal Information
We do not share personal
information with a third party outside of Our Group for marketing purposes
This
i
s true
unless such sharing i
s permitted by law Information may
be shared with a third
party
for
necessary servicing
of
the product I
t
may
also be disclosed for other business reasons as permitted by law
We do not share personal
data outside of Our
Group
for servicing or joint marketing reasons We will
only
disclose such data when a contract containing
nondisclosure language has been
signed by
us and the third
party
Unless a consumer consents we do not disclose consumer credit
report type information outside of Our Group
Consumer credit report type
information means such
things
as net worth credit worthiness hobbies
piloting
boating etc solvency
etc
We also do not disclose outside of Our
Group personal information for use i
n marketing We
may
share
information within Our Group regarding our experience
and
dealings
with the customer
We
may
disclose private
information about a customer as allowed or otherwise required by
law The law allows
us to share a customers financial data within Our Group for marketing purposes
The law does not allow
customers to limit or prevent
such disclosures
We
may
also disclose personal
information about you or your
business to
your independent agent or broker
an independent
claim
adjuster investigator attorney or expert
persons
or groups
that conduct scientific studies This includes actuaries and accountants
a medical care facility or professional
to
verify coverage
for a covered
person
an insurance support group
another insurer i
f to
prevent fraud
another insurer to properly
underwrite a risk
insurance regulators
governmental
authorities pursuant
to law
an authority i
n response
to a valid administrative or judicial
order This includes a warrant or
subpoena
a party
for the following purposes regarding a book of business sale transfer merger or consolidation
This applies
whether the transaction i
s
proposed or complete
HIGHLY CONFIDENTIAL
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a professional peer
review group
This includes reviewing
the service or conduct of medical care facilities
or personnel
a covered person
for providing
the status of a transaction or
any
of the following
a lienholder mortgagee assignee lessor or other person
of record having a legal
interest i
n the policy
Policy
for Personal Information Relating to Nonpublic
Personal Health Information
We do not disclose nonpublic personal
health information about a customer unless consent i
s obtained from that
customer However
such consent shall not be prohibited
limited or sought
for certain insurance functions This
includes but i
s not limited to
a claims administration
b fraud prevention
c underwriting policy placement
or issuance loss control or auditing
Access to Your Information
The following persons
will have access to personal
information we collect
employees
of Our Group
and third party service providers
Information will
only
be collected as i
s needed
i
n
transactions with you
Violation of the Privac Policy
Any person violating
this Policy
will be
subject
to discipline
This
may
include termination
For questions regarding
this privacy statement please contact your
broker
HIGHLY CONFIDENTIAL
Return
iii
travel costs incurred by any director officer
member of the Board of Managers
employee
or agent
of the Company or the
Emergency Firm
i
n connection with an Emergency
and incurred during
the pendency of of within 90
days
immediately prior
to and
i
n anticipation of an Emergency
for which the Company i
s
legally
liable
f Emergency
Services means those services performed by an Emergency
Firm i
n
advising the Company
or a director officer or employee
of the Company on minimizing
potential
harm to the Company
from an Emergency including
but not limited to
maintaining and restoring
investor confidence i
n the Company Additionally solely with
respect
to a Delisting Emergency Emergency
Services will include any legal
services
performed by an Emergency
Firm i
n responding to such Delisting Emergency
4
The term Loss as defined i
n Section I
I Definitions M of the Policy
shall include Emergency
Loss
5
6
7
The maximum aggregate
limit of liability
for all Emergency
Loss resulting
from all
Emergencies
occurring during the Policy
Period shall be $50000 Emergency Sublimit which amount
i
s part
of and not i
n addition to the maximum aggregate
Limit of Liability of the Insurer under this Policy
as set forth
i
Additionally
with respect only
to Delisting Emergencies occurring during
the Policy Period solely
i
n the event that the Emergency
Sublimit
i
s exhausted by
the payment
of
Emergency Loss an
additional limit of liability
of $25000 shall be available for all Emergency
Loss resulting
from all
Delisting Emergencies occurring during the Policy
Period which amount i
s
part
of and not
i
n
addition to the maximum aggregate
Limit of
Liability
of the Insurer under this Policy as set forth
i
n
Item 3 of the Declarations
As a condition precedent
to
any right
to
payment
under this Policy with respect
to
any Emergency
the Insured shall give
written notice to the Insurer of an Emergency as soon as practicable
after
the Emergency commences but
i
n no event later than the Policy Period or the Optional
Extension
Period i
f applicable
All notices must be sent by
certified mail or the
equivalent
to the address set
forth i
n Item 7 of the Declarations Attention Claim Department
All other terms
conditions and limitations of this Policy
shall remain unchanged
DO 80 98 02 02
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3 of 3
HIGHLY CONFIDENTIAL
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Endorsement No 8 Effective May 01
2008
Named Insured Washington Mutual inc 1201 AM Standard Time
Manuscript 8389 05 08
Policy
No ELU10438008 insurer XL Specialty
Insurance
Company
AMEND LOSS DEFINITION ENDORSEMENT
I
n consideration of the premium charged
Section
I
I Definition M of the Policy i
s amended to read
i
n its
entirety as
follows
`Loss means damages settlements judgments including prepost judgment interest on a covered judgment
Defense Expenses
and Emergency Loss however Loss other than Defense Expenses shall not include
1
civil or criminal fines or penalties
2 taxes
3 punitive
or exemplary damages
4
the multiplied portion
of
any multiplied damages award
5 any
amounts for which an Insured
i
s not financially
liable or which are without legal recourse to an
Insured and
6
matters which
may
be deemed uninsurable under the law
pursuant
to which this
Policy
shall be
construed
Notwithstanding the foregoing approach
Loss shall specially include
a
civil penalties assessed against any
Insured Person pursuant to Section 2g2C
of the
Foreign
Corrupt
Practices Act 15 USG 78dd2g2C
and
b punitive exemplary
and multiplied damages imposed upon an Insured
Enforceability of these subparagraphs a and b
shall be
governed by such applicable law that most favors
coverage
for such penalties
and
punitive exemplary
and multiple damages
I
n the event of a Claim alleging
that the
price
or consideration paid or proposed
to be
paid
for the
acquisition or
completion of the acquisition
of all or substantially
all the ownership interest i
n or assets of an entity i
s
inadequate
Loss with
respect
to such Claim shall not include any
amount of
any judgment or settlement
representing
the amount by which such price or consideration
i
s effectively increased provided that this
paragraph
shall not apply
to Defense Expenses or to
any
Loss i
n connection with
any
Claim to which
Insuring
Agreement A applies
All other terms conditions and limitations of this Policy
Manuscript
8389 05 08 Page 1 of 1
HIGHLY CONFIDENTIAL
Return
Endorsement No 9
0 Effective May
01108
00 80 176 06 02
Named Insured Washington
Mutual Inc 1201 AM Standard Time
Policy
No EL1J10438008
Insurer XL Specialty
Insurance Company
AMEND DEFINITION
OF SECURITIES CLAIM
ENDORSEMENT
I
n consideration
of the premium charged
Section 1
1
Definitions Q
of the Policy i
s amended to read i
n its entirety
as follows
Q
Securities
Claim means a Claim other than an administrative or regulatory proceeding against or
investigation
of a Company
made against any
Insured
1
for a violation of
any federal state local regulation
statute or rule regulating securities
including
but not limited to the purchase
or sale of or offer to purchase or sell securities
which is
a brought by any person
or entity
based
upon arising
out of directly or indirectly
resulting from i
n consequence of or
i
n any way involving the purchase
or sale of
or offer to
purchase
or sell securities of the Company or
b brought by
a security
holder of a Company with respect
to such security
holders
interest i
n securities of such Company or
2 brought derivatively on behalf of the Company by a security holder of such Company
Notwithstanding
the foregoing
the term Securities Claim shall include an
administrative or
regulatory
proceeding against
a Company
but only i
f and only during
the time that such proceeding i
s also
commenced and continuously
maintained
against
an Insured Person
DO 80 176 06 02
Page 1 of 1
HIGHLY CONFIDENTIAL
Return
Endorsement No 10
0
Effective May 01
20010
Manuscript
8388 05 08
Named Insured Washington Mutual Inc 1201 AM Standard Time
Policy
No ELU10438008
Insurance Company
GENERAL EO EXCLUSION
In consideration of the premium charged
1
No coverage
will be available under this Policy for Loss from Claims based upon arising
out of directly or
indirectly resulting from i
n
consequence of or i
n
any way involving any
actual or alleged act error omission
misstatement misleading
statement or breach of duty i
n connection with the rendering of or actual or alleged
failure to render any
services for others for a fee or commission or on any
other compensated basis by any
person or entity
otherwise entitled to
coverage
under this
Policy
2 Paragraph 1 above i
s not intended however nor shall
i
t be construed to apply
to
a
Loss resulting
from
any
Securities Claim brought by a security holder of the
Company
or from a
derivative action brought by or on behalf of or
i
n the name or right of the Company i
f such Securities
Claim or derivative action
i
s brought and maintained independently of and without the solicitation
assistance participation or intervention of any
Insured or
b
Defense Expenses
which the Insurer
i
s liable to pay on behalf of the Insured Persons under
insuring
Agreement A
of the Policy
All other terms
Manuscript
8388 05 08 Page
1 of 1
HIGHLY CONFIDENTIAL
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0
0
Endorsement No 11
Mutual Inc
Policy
No ELU10438008
Effective May 01 2008
1201 AM Standard Time
Insurer XL
Specialty
Insurance Company
PRIOR ACTS COVERAGE
SCHEDULED
ENTITIES
ENDORSEMENT
I
n consideration of the premium
charged i
t i
s
hereby
understood and agreed
that the term Subsidiary as defined i
n
Section I
I Definitions of the Policy i
s amended to include the entities set forth below
Entities
Columbia Federal Savings
Bank and Shoreline
Savings
Bank and their Subsidiaries
Old Stone Bank and Subsidiaries
Frontier Federal Savings
Association and
Subsidiaries
Williamsburg
Federal Savings
Bank and
Subsidiaries
Vancouver
Federal Savings
Bank and
Subsidiaries
Crossland Savings
FSB and Subsidiaries
Sound Savings
and Loan Association and
Subsidiaries
World Savings
and Loan Association and
Subsidiaries
Great Northwest Bank and Subsidiaries
Pioneer Savings
Bank and Subsidiaries
Pacific First Bank A Federal Savings
Bank and
Subsidiaries
DIME BANCORP INC and Subsidiaries
Far West Federal Savings
Bank and
Subsidiaries
Summit Savings
Olympic
Bank A Federal Savings
Bank and
Subsidiaries
Enterprises
Western Bank and Subsidiaries
Manuscript
8390 05 08
AcquisitionCreation
Date
April 29
1988
June 01 1990
June 30 1990
September 14
1990
July 31 1991
November 08 1991
January 01 1992
March 06 1992
April 01 1992
March 01 1993
April 09 1993
August 04 1993
April 15
1994
November 14 1994
April 28 1995
August 31 1995
January 31 1996
Page 1 of 2
HIGHLY CONFIDENTIAL
Return
Utah Federal Savings
Bank and
Subsies
United Western Financial Group
and
Subsidiaries
Industrial Bank and Subsidiaries
Long
Beach Financial Corporation
and
Subsidiaries
Alta Residential Mortgage
Trust and
Subsidiaries
Mortgage Operations
of The PNC Financial
Services Group
and Subsidiaries
Bank United Corp
and Subsidiaries
November 30 1996
January 15 1997
December 31
1998
October 01 1999
February 01
2000
January 31 2001
February 09 2001
i
i
t
i
s further understood and agreed
that solely
with
respect
to the entities set forth above the
coverage
afforded
by
this
Policy
shall apply
to Wrongful
Acts committed or allegedly
committed a on
before and after the
AcquisitionCreation
Date set for above and b prior
to the effective date that such Subsidiary ceases to be a Subsidiary
All other terms
Manuscript
8390 05 08
Page
2 of 2
HIGHLY CONFIDENTIAL
Return
0
0
Manuscript
8385 05 08
Endorsement No 12
Policy No ELU10438008
Insurance Company
RUNOFF
COVERAGE FOR SCHEDULED
ENTITIES
ENDORSEMENT
I
t
i
s hereby
understood and agreed
that with respect
to the entities set forth
below upon
the expiration
date of each entitys respective
runoff
policy as set forth
opposite
such entitys name this
Policy
shall provide primary
directors and officers coverage
for
any
Claim arising
from
any Wrongful
Act committed
prior
to the prior
acts date set forth with such entity
Entit
American Savings
Bank FA
HF Ahmanson Co and its
subsidiaries
Great Western Financial Corp
Providian Financial Corporation
Runoff Expiration Date Prior Acts Date
December 20 2001 December 20 1995
October 01 2004
October 01 1998
July 01 2003 July 01 1997
October 01 2011
October 01 2005
Provided that
i
f XL
Specialty
Insurance Company i
s not the
primary
directors and officers insurance carrier for the
Parent Company
at the time of the
expiration
of each policy listed above then this Endorsement shall be null and void
All other terms conditions and limitations of this Policy shall remain unchanged
Page
1 of 1
HIGHLY CONFIDENTIAL
Return
DO 80 436 08 07
Endorsement No 13
Effective
May 01
2008
Policy
No ELU10438008
Insurance Company
AMEND
NOTICE OF CLAIM ENDORSEMENT
in consideration of the premium
charged
Section V1 General Conditions A1 of the Policy i
s amended to read i
n its
entirety
as follows
1
As a condition precedent
to any right
to payment
under this Policy
with
respect
to any Claimthe Insured shall
give
written notice to the Insurer of any
Claim as soon as practicable
after i
t
i
s first made and the General
Counsel and Risk Manager of the Parent Company
first becomes aware of such Claim but i
n no event later
than Sixty 60 days
after the expiration
of the
Policy
Period
All other terms
DO 80 436 08 07
Page
1 of 1
HIGHLY CONFIDENTIAL
Return
D0 80 422 07 07
Endorsement No 14
Policy
No ELU10438008
Insurance Company
AMEND SECTION VI
A2
ENDORSEMENT
I
Section VI General Conditions A2
of the Policy i
s amended to read
i
n its
entirety
as follows
2 I
f during
the Policy Period the Insured shall become aware of
any
circumstances which
may reasonably be
expected
to give
rise to a Claim being
made
against
an Insured and shall give
written notice to the Insurer of
the circumstances the Wrongful Act Company Wrongful
Act or Employment
Practices Wrongful Act
allegations
anticipated
and the reasons for
anticipating
such a Claim with full particulars as to dates persons
and entities involved then a Claim which
i
s subsequently
made against
such Insured and reported to the
Insurer alleging arising
out of based upon or attributable to such circumstances or alleging any Wrongful Act
Company Wrongful
Act or Employment
Practices Wrongful
Act which i
s the same or related to any Wrongful
Act Company Wrongful
Act or Employment
Practices Wrongful
Act alleged or contained
i
n such
circumstances
shall be considered made at the time such notice of such circumstances was given
D 80 422 07 07
Page 1 of 1
HIGHLY CONFIDENTIAL
Return
Endorsement No 15
Policy
No ELU10438008
Insurance Company
PRIORITY OF PAYMENTS ENDORSEMENT
I
t
i
s understood and agreed that i
f Loss including
Defense Expenses
shall
be payable
under more than one of the Insuring Agreements
of this Policy then the Insurer shall to the maximum
extent practicable
and subject
at all times to the Insurers maximumaggregate
Limit of Liability as set forth
i
n Item 3 of
the Declarations pay
such Loss as follows
1
first the Insurer shall pay
that Loss i
f
any
which the Insurer may
be liable to
pay on behalf of the Insured
Persons under Insuring Agreement A
2
second the Insurer shall
pay
that Loss i
f
any
which the Insurer
may
be liable to pay on behalf of the
Company under Insuring Agreement B
and
3
third the Insurer shall make such other payments
which the Insurer
may
be liable to make under Insuring
Agreement Cor otherwise
I
n the event the Insurer withholds payment pursuant
to paragraphs 2 andor 3
above at the written request of the
chief executive officer of the Parent Company then the Insurer shall at such time and
i
n such manner as shall be set
forth i
n such written instructions of the chief executive officer of the Parent Company
remit such payment to a
Company
or directly
to or on behalf of an Insured Person
The bankruptcy
or insolvency
of
any Company or any
Insured Person shall not relieve the Insurer of any
of its
obligations
to prioritize payment
of covered Loss under this
Policy pursuant
to this Endorsement
Manuscript
8387 05 08
Page 1 of 1
HIGHLY CONFIDENTIAL
Return
Endorsement No 16
0
Effective May
0
0008
DO 83 05 03 00
Insurance Company
ERISA EXCLUSION
In consideration of the premium charged
Section
I
I
I Exclusions C i
s deleted and replaced by the following
C
based
upon arising
out of directly or indirectly resulting from i
n
consequence of or
i
n
any way
involving any
actual or alleged
violation of the Employee
Retirement Income Security
Act of 1974
ERISA
as amended or any regulation promulgated
thereunder or any similar federal state or
local law or regulation i
n connection with
any pension profit sharing or employee
benefit
program
established
i
n whole or i
n
part
for the benefit of the directors officers or employees of the
Company
DO83050300
Page1
of1
HIGHLY CONFIDENTIAL
Return
Endorsement
No 17
Effective May
0108
DO 80 286 08 04
Mutual Inc
Insurer
A M Standard
Specialty
Insurance Company
Policy
No ELU10438008
DOMESTIC
PARTNER
ENDORSEMENT
I
n consideration
Section
1
1 Definition J5
of the Policy
shall include the domestic
partner
of
any person
set forth i
n Section 1
1
Definition J1 J4
but only
to the extent the domestic partner i
s
a party
to any
Claim solely i
n their capacity
as a domestic partner
to such
persons
and only
for the
purposes
of
any
Claim seeking damages
recoverable from community property property jointly
held by any
such person
and
domestic partner
or property
transferred from any
such person
to the domestic partner
All other terms
DO 80 286 08 04
Page
1 of I
HIGHLY CONFIDENTIAL
Return
DO 80 426 08 07
Endorsement No 18
Mutual Inc
Insurer
1201 AM Standard
d Specialty
Insurance Company
Policy
No ELU10438008
EXTRADITION
COSTS
ENDORSEMENT
I
1
For the purposes
of this endorsement the follow terms shall have the meanings
set forth below
a
Extradition Proceeding
means an extradition proceeding
commenced against any
Insured Person
pursuant
to the United Kingdom
Extradition Act 2003 or the equivalent i
n
any jurisdiction Extradition
Act
which shall be deemed first commenced upon receipt by an Insured Person of a formal notice of
an intention to bring
such proceeding
b
Extradition
Costs means only
such Defense Expenses constituting
i
costs incurred i
n appealing an order for extradition pursuant
to an Extradition Act whether
i
n
connection with such proceeding
or a separate proceeding
and
ii
the reasonable premium
for
any appeal bail
attachment or similar bond or financial
instrument incurred by or on behalf of such Insured Person by reason of an Extradition
Proceeding provided
that the Insurer shall have no obligation
to apply
for or provide any
collateral for any
such bond or financial instrument
2
The term Claimas defined i
n Section
I
I Definitions of the Policy will include any
provided
that no coverage
shall be available under this Policy for any
Loss other than Extradition Costs
incurred i
n connection with
any
3
The maximum aggregate
limit of liability of the Insurer under this Policy
for all Extradition Proceedings i
s
$25000000
which amount i
s
part
of and not
i
n addition to the maximum aggregate
Limit of
Liability
of this
Policy as set forth
i
All other terms
DO 80 426 08 07
Page 1 of 1
HIGHLY CONFIDENTIAL
Return
Endorsement No 19
Effective May
008
XL 83 07 01 00
Named Insured Washington Mutual
Inc 1201 AM Standard Time
Policy
No ELU10438008
Insurance Company
SPECIFIED
CLAIMS EXCLUSION
In consideration of the premium charged no coverage
will be available under this Policy
for Loss including
Defense Expenses i
n connection with
any proceeding
set forth below or i
n connection with
any
Claim based on
arising out of directly
or indirectly resulting from i
n consequence of or i
n
such proceeding
or any fact
circumstance or situation underlying or alleged
therein
1 South Ferry
LP 2 v Killinger
et a No CV041599C WD Wa Filed Jul 19 2004 the
South
Ferry
Action
2 Lee Family
Investments by and through
its Trustee WB Lee v Kilinger at a No CV052121 C
WD
Wa
Filed Nov 29 2005 the
Lee Family Action
3 Koesterer v Washington Mutual Inc eta No 07CIV9801 SDNY
Filed Nov 5 2007
4 Abrams v Washington
Mutual Inc at al No 07CIV9806 SDNY
Filed Nov 5 2007
5 Nelson v Washington Mutual Inc at a No C071809 WD
Wa Filed Nov 7 2007
6 Garber v Washington Mutual Inc
et al No SD NY Filed Dec 20 2007
7 Sneva v Killinger
at al No C071826 WD
Wa Filed Nov 13 2007
8 Harrison v Killinger et al
No C071827 WD
Wa Filed Nov 13 2007
9 Catholic Medical Mission v Killinger at al No 072365486S EA Wa Super
Ct Filed Nov 16 2007
10 Slater v Killinger
et a No C080005 WD Wa Filed Jan 3 2008
11 Procida v Killinger
et al No 08Civ0565 SDNY
Filed Jan 18 2008
12 Ryan v Killinger
at a C080095 WD
Wa Filed Jan 18 2008
13 Breene v Killinger
et aL No 072410422SEA Wa Super
Ct Filed Dec 28 2007
14 Gibb v Killinger
at a No 072410449SEA Wa Super Ct Filed Dec 28 2007
15 Spears
v Washington Mutual Inc eta
No C0800868HRL ND
Cal Filed Feb 8 2008
16 ADELE BRODY Derivatively on Behalf of WASHINGTON MUTUAL INC Plaintiff vs FIRST AMERICAN
CORPORATION
FIRST AMERICAN EAPPRAISEIT KERRY K KILLINGER THOMAS W CASEY DEBORA D
HORVATH STEPHEN J ROTELLA
JAMES B CORCORAN DARYL D DAVID AFLRED R BROOKS
DAVID
C SCHNEIDER TODD H BAKER FAY L CHAPMAN JOHN F WOODS RONALD J CATHCART
PHILLIP D
MATTHEWS ANNE V FARRELL
WILLIAM G REED JR MICHAEL K MURPHY
JAMES H STEVER
STEPHEN E FRANK MARY E PUGH MARGARET OSMER MCQUADE
CHARLES M LILLIS ORINC
SMITH
THOMAS C LEPPERT and REGINA T MONTOYA Defendants and WASHINGTON MUTUAL INC a
Washington Corporation
XL 83 07 01 00
Page
1 of 2
HIGHLY CONFIDENTIAL
Return
17 ALAN HENRY as Trustee of the Alan Henry Family Trust Derivatively on Behalf of WASHINGTON
MUTUAL INC
Plaintiff vs KERRY K KILLINGER
STEPHEN ROTELLA
THOMAS W CASEY
JAMES
B CORCORAN
JOHN F WOODS ANNE V FARRELL
STEPHEN E FRANK THOMAS C LEPPERT
CHARLES M LILLIS PHILLIP D MATTHEWS REGINA T MONTOYA
MICHAEL K MURPHY MARY
E PUGH
WILLIAM G REED JR ORIN C SMITH JAMES H STEVER WILLIS B WOOD JR and
DAVID C SCHNEIDER Defendants and
18 GOOD HILL PARTNERS LP ON BEHALF OF GOOD HILL MASTER FUND LP Plaintiff against
WM
ASSET
HOLDINGS CORP CI 2007 WM2
WM ASSET HOLDINGS CO 2007 WM2 LLC WM ASSET
HOLDINGS CORP WAMU ASSET ACCEPTANCE CORP
WAMU CAPITAL CORP WASHINGTON
MUTUAL BANK
and WASHINGTON MUTUAL INC
19
PLAINTIFF JOSEPH PROCIDAS MOTION TO CONSOLIDATE RELATED ACTIONS TO APPOINT
LEAD DERIVATIVE PLAINTIFF AND DESIGNATE LEAD COUNSEL
20 RS BASSMAN Derivatively on Behalf of FREDDIE MAC aka Federal Home Loan Mortgage
Corporation
and its shareholders Plaintiff v RICHARD F SYRON PATRICIA L COOK
ANTHONY S
PISZEL
EUGENE M McQUADE RICHARD KARL GOELTZ STEPHEN A ROSS
SHAUN F
OMALLEY
ROBERT R GLAUBER BARBARA T ALEXANDER WILLIAM M LEWIS JR
JEFFREY M
PEEK
GEOFFREY T BOISI RONALD F POE WASHINGTON MUTUAL INC
PRICEWATERHOUSECOOPERS
LLP KERRY K KILLINGER et al
21
MICHAEL BLOMQUIST
MICHAEL SCOTT PROPERTIES INC Plaintiffs vs WASHINGTON
MUTUAL a Washington corporation
KERRY K KILLINGER
JOSEPH W SAUNDERS et al
XL 83070100
Page 2of2
HIGHLY CONFIDENTIAL
Return
Manuscript
1034 02 04
Endorsement No 20
Effective May 01
2008
Policy
No ELU10438008
Insurance Company
INSURING
AGREEMENT A
ENDORSEMENT
I
n consideration
of the premium charged solely with respect
to Claims made under Section I Insuring Agreements A
of the Policy
the Insurer may
not void andor rescind this Policy
All other terms
Manuscript
1034 02 04
Page
1 of 1
HIGHLY CONFIDENTIAL
Return
D 80 472 05 08
Endorsement
No 21
Effective May 01
2008
Time ard
Mutual Inc
i
01 AM Stand
No ELU10438008
Specialty Company
BANKRUPTCY
ENDORSEMENT
in consideration of the
premium
charged i
t
i
s understood and agreed
that the bankruptcy or insolvency of any
Company or any
insured Person shall not relieve the Insurer of
any
of its
obligations
hereunder
I
t
i
s further understood and agreed
that the coverage provided
under this Policy i
s intended to protect
and benefit the
Insured Persons Further i
f a liquidation or reorganization proceeding i
s commenced by the Parent Company
andor
any
other Company whether voluntary
or involuntary
under Title 11 of the United States Code as amended
or
any
similar state
local or foreign
law collectively Bankruptcy Law then i
n regard
to a covered Claim under this Policy
the insureds and the insurer hereby agree
not to
oppose
or object
to
any
efforts
by any
insured Person to obtain relief
from any stay or injunction applicable
to the proceeds of this Policy as a result of the commencement of such
liquidation
or reorganization
proceeding
All other terms
conditions and limitations of this Policy shall remain unchanged
DO 80 472 05 08
Page
1 of 1
HIGHLY CONFIDENTIAL
Return
Endorsement
No 22
Effective May
0008
DO 83 33 08 01
Time
Named
Insured Washington Mutual
Inc
j
sure X
AM Standard
Insurance Company
Policy
No ELU10438008
Specialty
AMEND
EXCLUSION F
ENDORSEMENT
In consideration of the premiumcharged
Section
I
I
I Exclusions F
of the Policy i
s amended to read
i
n its entirety
as follows
F
brought
about or contributed to i
n fact by any
1
intentionally dishonest
fraudulent or criminal act or omission or
any
willful violation of any
statute rule or law or
2 profit or remuneration gained by any
Insured to which such Insured i
s not legally entitled
as
determined by
a final adjudication
All other terms conditions
and limitations of this Policy
DO 83330801
Pagel
oft
HIGHLY CONFIDENTIAL
Return
Manuscript
8386 05 08
Endorsement No 23
ITime Named Insured Washington
Mutual Inc
201 A M Standard
nsurance Company
Policy
No ELU10438008
AMEND
CONDITION IVA
ENDORSEMENT
I
n consideration
of the premium
charged Section IV Limit of Liability
Indemnification and Retentions A of the Policy
i
s amended to read i
n its entirety as follows
A
The insurer
shall
pay
the amount of Loss
i
n excess of the applicable
Retentions set forth
i
n item 4 of the
Declarations up
to the Limit of Liability
set forth i
n Item 3 of the Declarations The Retentions
set forth
i
n Item
4 of the Declarations
shall be borne by the Company
andor the Insured Person and remain uninsured with
the exception
of the Side A Excess DIC Policy as defined below
The Insurer shall recognize
that
any
Loss i
n connection with
any
Claim to which Insuring Agreement B
applies
that
i
s paid by
the following policy or those policies specifically designated
as excess over i
t or any
renewal or replacement
thereof shall contribute to and shall reduce the Retention Amount applicable
to such
covered Loss as stated i
Insurer
Insured
Policy No Policy
Period
Columbia Casualty Washington
Mutual Inc 287127641 May 01 2008 to
Company
May 01 2009
collectively
all such policies
the Side A Excess DIC Policy
As a precondition
to such recognition
of the erosion of the Retention amount the Parent Company
shall
provide
the Insurer with written proof
to the Insurers satisfaction
that payment
of such Loss has been made
under the Side A Excess DIG Policy
All other terms
Manuscript
8386 05 08
Page
1 of 1
HIGHLY CONFIDENTIAL
Return
Manuscript
1102 05 04
Endorsement
No 24
Effective May 01
2008
Named Insured Washington Mutual inc
Policy
No ELU10438008
Insurance Company
CLARIFICATION
ENDORSEMENT
n the event that there
i
s an inconsistency
between a state amendatory
attached to this Policy
and any
term or condition of this Policy then i
t
i
s understood and agreed that where permitted
by law
the Insurer shall apply
those terms and conditions of either the state amendatory
or the Policy
which are more
favorable to the Insured
All other terms
Manuscript
1102 05 04
Page
1 of 1
HIGHLY CONFIDENTIAL
Return
DO 80 473 05 08
Endorsement
No 25
Mutual Inc
In1201
AM
surer
Standard
Specialty
Insurance Company
Policy
No ELU10438008
AMEND
CONDITION G2
ENDORSEMENT
I
n consideration of the premiumcharged
Section VI General Conditions G2
of the Policy i
s amended to read i
n its
entirety as follows
2
In the event of any payment
under this Policy the Insurer shall be subrogated
to the extent of such payment
to
all of each and
every
Companys
and Insured Persons rights
of recovery thereof
and each such Company
and Insured Person shall execute all papers required
and shall do everything
that
may
be
necessary
to secure
such rights including
the execution of
any
and all documents necessary
to enable the Insurer to effectively
bring
suit
i
n the name of each such Company
and each such Insured Person Solely
with respect
to
any
payment by
the Insurer i
n connection with
any
Claim to which Insuring Agreement A applies i
n no event
however shall the Insurer exercise its rights
of subrogation against
an Insured Person under this Policy unless
such insured Person has been convicted of
any
deliberate criminal or deliberate fraudulent act by
such Insured
i
f
any
final adjudication
establishes that such deliberate criminal or deliberate fraudulent act was committed or
to the gaining
of any profit or advantage to which
any
final adjudication
establishes that the Insured Person
was not legally
entitled thereto
DO 80 473 05 08
Page 1 of 1
HIGHLY CONFIDENTIAL
Return
Endorsement
No 26
Effective May
01108
d W hin ton Mutual Inc
s g
D0 80 02 03 00
Named Insure a
Policy
No ELU10438008
Insurance Company
AMEND
DEFINITION
OF INSURED PERSON
I
n consideration
the term Insured Person shall include those individuals holding
the
following positions
for the Company
Risk Manager
General
Counsel
Trustees
All other terms
conditions and limitations of this policy
DO 80 02 03 00
Page
1 of 1
HIGHLY CONFIDENTIAL
Return
DO 80 474 05 08
Endorsement No 27
Mutual Inc
Insurer
1201 AM Standard
dy
ITime
nsurance Company
OUTSIDE
ENTITY
ENDORSEMENT
I
1
The term Non Profit Entity
as defined i
n Section
1
1 Definitions of the Policy i
s amended to include the
following entityies Specified
ODL Entityies
1 Any
notforprofit organization
2 Federal Home Loan Bank of Seattle
3 Fannie Mae National Advisory
Council
4 Thrift Institutions Advisory
Council of the Federal Reserve Board of Governors
5 Mutual Travel Keystroke
6 Star Automated Switch Network
7 Integration
Financial Network LLC
8 Wavelink
9 Federal Home Loan Bank of San Francisco
10 Simpson
Resource Company
11 SAFECO Corporation
12 Visa
2 I
f
any
Insured gives
rise to coverage
both under this Policy
and under
any
other
policyies
for management liability
and
company
reimbursement directors and officers liability or other similar
insurance
available to
any Specified
ODL Entity
and issued by the Insurer or an affiliated
company
of the
Insurer collectively
the Insurer
the maximum aggregate
limit of liability
under all such other policies
for all
Loss including
Defense Expenses i
n respect
of such Claim shall not exceed the largest single
available limit
of liability
under either such policies including this Policy
3 Nothing i
n this Endorsement i
s intended nor shall i
t be construed to obligate
or require
the Insurer to pay
Loss including
Defense Expenses
under this Policy i
n respect
of such Claim i
n
any
amount exceeding
the
available Limit of Liability
under this Policy
All other terms
DO 80 474 05 08
Page
1 of I
HIGHLY CONFIDENTIAL
Return
DO 80 431 08 07
Endorsement
No 28
Effective May 01
2008
Mutual Inc
1201 AM Standard
Specialty
Insurance Company
Policy
No ELU10438008
SPECIFIC REQUEST
ENDORSEMENT
i
n consideration
of the premium
charged
1
Section 1
1
Definition J3
and 4
of the Policy are amended to read i
n their entirety as follows
3
an
individual identified i
n
J1
above who at the specific request
of Company i
s serving as a
director officer trustee regent
or governor
of a NonProfit Entity
4 any
individual identified i
n J1
above who at the specific request
of the Company i
s serving i
n an
elected or appointed position having fiduciary supervisory
or managerial
duties and responsibilities
comparable
to those of an Insured Person of the Company regardless
of the name or title by
which
such position i
s designated
of a Joint Venture or
2
Section I
I Definition S2
and 3
of the Policy are amended to read i
n their entirety as follows
2
Insured Person of the Company who
at the specific request
of the Company i
s serving as a director
officer trustee regent or governor
3
Insured Person of the Company who at the specific request
of the Company i
s
serving i
n an elected
or appointed position having fiduciary supervisory
or managerial
duties and responsibilities
comparable
to those of an
Insured Person of the Company regardless
of the name or title by which
such position i
s designated
of a Joint Venture
DO 80 431 08 07
Page 1 of t
HIGHLY CONFIDENTIAL
Return
Endorsement No 29
Effective May
008
DO 80 323 08 05
Policy
No ELU10438008
Insurance Company
AMEND
REPRESENTATION
ENDORSEMENT
In consideration
of the premiumcharged
Section VI General Conditions I
of the
Policy i
s amended to read
i
n its
entirety
as follows
I
The Insured represents
that the statements and particulars
contained i
n the
Application
as well as
any prior application
submitted to the Insurer are true accurate and complete and agree
that this
Policy i
s issued i
n reliance on the truth of that representation
and that such particulars and
statements which are deemed to be incorporated
into and constitute a part of this Policy
form the
basis of this Policy
No knowledge or information possessed by any
Insured Person will be
imputed
to
any
other Insured Person With respect
to Claims made under Insuring Agreement C
only no knowledge
or information possessed by any
Insured other than General Counsel and
Risk Manager
of the Company
will be imputed to the Company I
n the event that
any
of the
particulars
or statements i
n the Application are untrue
this Policy will be void with respect to
any
Insured who knew of such untruth
All other terms
DO 80 323 08 05
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9
0
Endorsement No 30 Effective
May 01 2008
Named Insured
Washington Mutual Inc 1201 AM Standard Time
Policy No ELU10438008 Insurer XL
Specialty
Insurance Company
DELETE AN ENDORSEMENT
I
n consideration of the premium charged Endorsement Nos 4 and 15 are deleted
All other terms conditions and limitations of this policy shall remain unchanged
XL 80060400
Xt 80 06 04 00 Page
1 of 1
HIGHLY CONFIDENTIAL
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DO 83 95 11 04
Endorsement No 31 Effective May 01 2008
Named Insured Washington Mutual
Inc 1201 AM Standard Time
Policy
No ELU10438008 Insurer XL
Specialty Insurance Company
AMEND INSURED V INSURED EXCLUSION
I
n consideration of the premium charged Section I
I
I
Exclusions
G
of the
Policy i
s amended to read
i
n its entirety as
follows
G by on behalf of or at the direction of the
Company
or Insured Person except and to the extent such Claim
i i
s
brought by a security
holder of the Company who when such Claim
i
s made and maintained
i
s
acting independently of and without the active solicitation assistance participation or intervention of
an Insured Person or the Company
ii i
s
brought by
the Bankruptcy Trustee or Examiner of the Company or
any assignee of such Trustee or
Examiner any Receiver Conservator Rehabilitator or Liquidator or comparable authority of the
Company
iii i
s
i
n the form of a crossclaim third party claim or other claim for contribution or indemnity by an
Insured Person which
i
s
part
of or results
directly
from a Claim which
i
s not otherwise excluded by the
terms of this Policy
iv i
s an Employment Practices Claim
v i
s brought and maintained i
n a noncommon law jurisdiction outside the United States of America
including
its territories and
possessions
vi i
s brought
and maintained
by an Insured Person
a
who has not served as a director officer member of the Board of
Managers or employee of
the Company for at least Two 2 years prior to the date such Claim
i
s first made and
b
who
i
s acting independently of and without the solicitation assistance participation or
intervention of an Insured Person or the
Company or
i
s
brought by an employee
of the Company pursuant to
any
federal or state whistleblower
protection
statute or
any
rule or regulation promulgated thereunder
All other terms conditions and limitations of this
Policy
shall remain
unchanged
DO 83 95 11 04 Page 1 of 1
HIGHLY CONFIDENTIAL
Return
Manuscript
8387 06 08
Endorsement No 32 Effective May 01 2008
Policy
No ELU10438008 Insurer XL Specialty
Insurance Company
PRIORITY OF PAYMENTS ENDORSEMENT
I
t
i
that
i
f Loss including Defense Expenses shall
be payable under more than one of the Insuring Agreements
of this
Policy
then the Insurer shall to the maximum
extent practicable
and subject
at all times to the Insurers maximumaggregate
Limit of
Liability as set forth
i
n Item 3 of
the Declarations pay
such Loss as follows
1 first the Insurer shall
pay
that Loss i
f
any
which the Insurer
may
be liable to
pay
on behalf of the Insured
Persons under Insuring Agreement A
2 second the Insurer shall
pay
that Loss i
f
any
which the Insurer may
be liable to
pay on behalf of the
Company under Insuring Agreement B
and
3 third the Insurer shall make such other
payments
which the Insurer
may
be liable to make under
Insuring
Agreement Cor otherwise
I
n the event the Insurer withholds payment pursuant to paragraphs 2
andor 3 above then the Insurer shall at such
time and
i
n such manner as shall be set forth i
n such written instructions of a majority of the Board of Directors of the
Parent Company remit such payment to a Company or directly
to or on behalf of an Insured Person
The bankruptcy or insolvency
of
any Company
or
any
Insured Person shall not relieve the insurer of
any
of its
obligations to prioritize payment
of covered Loss under this
Policy pursuant to this Endorsement
All other terms
conditions and limitations of this
Policy
Manuscript
8387 06 08
Page 1 of 1
HIGHLY CONFIDENTIAL
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MANAGEMENT LIABILITY
DO 71 00 09 99
MANAGEMENT LIABILITY AND COMPANY REIMBURSEMENT
INSURANCE COVERAGE FORM
THIS IS A CLAIMS MADE POLICY WITH DEFENSE EXPENSES INCLUDED IN THE LIMIT OF LIABILITY PLEASE
READ AND REVIEW THE POLICY CAREFULLY
In consideration of the payment
of the premium and in reliance on all statements made and information
furnished to Executive Liability Underwriters the Underwriting Manager
for the Insurer identified in the
Declarations hereinafter the Insurer including the Application
and subject to all of the terms conditions and
limitations of all of the provisions of this Policy
the Insurer
the Insured Persons and the Company agree
as
follows
A
The Insurer shall
pay
on behalf of the Insured Persons Loss resulting
from a Claim first made against the
Insured Persons during
the Policy Period or i
f
applicable
the Optional Extension Period for a Wrongful
Act
or Employment
Practices Wrongful Act except for Loss which the Company i
s permitted or required to pay
on behalf of the Insured Persons as indemnification
B The Insurer shall
pay
on behalf of the Company Loss which the
Company i
s required or permitted to pay as
indemnification to
any
of the Insured Persons resulting from a Claim first made against the Insured Persons
during
the Policy
Period or i
f applicable the Optional
Extension Period for a Wrongful
Act or Employment
C
The Insurer shall pay on behalf of the Company Loss resulting solely from
any
Securities Claim first made
against the Company during the Policy Period or i
f applicable the Optional
Extension Period for a Company
Wrongful Act
II DEFINITIONS
A Application
means
1
the application
attached to and forming part of this Policy
and
2 any
materials submitted therewith which shall be retained on file by the Insurer and shall be deemed
to be physically attached to this
Policy
B Change
In Control means
1 the
merger
or acquisition of the Parent Company
or of all or substantially
all of its assets by another
entity
such that the Parent
Company i
s not the surviving entity
2
the acquisition by any person entity or affiliated group
of
persons
or entities of the right to vote
select
or appoint
more than fifty percent 50
of the directors of the Parent
Company
or
3
the
appointment
of a Receiver Conservator Liquidator Trustee Rehabilitator or
any comparable
authority
with
respect
to the Parent Company
C Claimmeans
1 j a written demand for monetary or nonmonetary relief
2 any civil proceeding
in a court of law or equity or arbitration
1O 71 00 09 99 Page
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HIGHLY CONFIDENTIAL
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DO 71 00 09 99
3 any
criminal proceeding which i
s commenced by the return of an indictment and
4 a formal civil criminal administrative regulatory proceeding
or formal investigation of an Insured
Person or the Company but
with respect
to the Company only
for a Company Wrongful Act which
i
s commenced by the filing or issuance of a notice of charges
formal investigative
order or similar
document identifying i
n writing
such Insured Person or the Company as a person
or entity against
whom a proceeding
as described i
n C2 or 3
above may
be commenced including any proceeding
before the Equal Employment Opportunity
Commission or any
similar federal state or local
governmental body having jurisdiction over any Employment
Practices Wrongful
Act
D
Company means
the Parent Company and any Subsidiary
created or acquired on or before the Inception
Date set forth i
n ITEM 2 of the Declarations or during
the Policy
Period subject
to GENERAL CONDITIONS
VI D
E Company
Wrongful
Act means any
actual or alleged act error
omission misstatement misleading
statement or breach of duty by the Company i
n connection
with a Securities Claim
F
Defense Expenses
means reasonable legal
fees and expenses
incurred i
n the defense of any
Claim
including the premium
for an appeal bond attachment bond or similar bond but will not include applying
for or
furnishing
such bond Defense Expenses
will not include the Companys
overhead expenses
or any salaries
wages
fees or benefits of its directors officers or employees
G Employment
Practices Wrongful Act means any
actual or alleged
wrongful
termination of employment
whether actual or constructive
employment
discrimination of
any
kind including violation of
any
federal state or local law involving
employment
or discrimination in employment
which would deprive or potentially deprive any person
of
employment opportunities or otherwise adversely affect his or her status as an employee
because of
such persons race color religion age sex national origin disability pregnancy
or other protected
status
sexual or other harassment
i
n the workplace
or
wrongful deprivation
of career opportunity employment
related misrepresentations retaliatory
treatment against
an employee
of the Company
failure to promote
demotion wrongful discipline or
evaluation or refusal to hire
H
Employment
Practices
Claim means a Claim alleging an Employment
Practices Wrongful
Act
I
insured means the Insured Persons and the Company
J
Insured Person means
1 any past present
or future director or officer or member of the Board of Managers
of the Company
and those persons serving i
n a functionally equivalent
role for the Parent Company or any Subsidiary
operating
or incorporated outside the United States
2 any past present
or future employee of the Company to the extent any
Claim
i
s a Securities Claim
3
an individual identified i
n
J1
above who at the specific
written request
of the Company i
s serving
as a director officer trustee regent or governor
4 any
individual identified in J1
above who at the specific
written request
of the Company i
s
serving
i
n an elected or appointed position having fiduciary supervisory or managerial duties and
responsibilities
comparable
of the name or
title by
which such position i
s designated
of a Joint Venture or
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HIGHLY CONFIDENTIAL
Return
DO 71 00 09 99
5 the lawful spouse
of
any person
set forth
i
n the above provisions
of this definition but only to the extent
the
spouse i
s a party to any
Claim
solely i
n their capacity as a spouse
of such
persons
and
only
for the
purposes
of
any
Claim seeking damages
recoverable from marital community property property jointly
held
by any
such
person
and spouse or property
transferred from any such person to the
spouse
In the event of the death incapacity or bankruptcy of an individual identified in
J1 2 3 4 or
5 above
any
Claim against the estate heirs legal representatives
or assigns of such individual for a Wrongful
Act or
Employment
Practices Wrongful Act of such individual will be deemed to be a Claim against such individual
K
Interrelated Wrongful
Acts means
any Wrongful Act Company Wrongful Act or Employment Practices
Wrongful
Act based on arising out of directly or indirectly resulting from i
n
consequence of or i
n
any way
involving any
of the same or related facts series of related facts circumstances situations transactions or
events
L Joint Venture means
any corporation partnership joint venture association or other entity
other than a
Subsidiary during any
time
i
n which the Parent Company
either
directly
or through one or more
Subsidiarys
1
M
owns or controls at least
thirty
three
percent 33 but not more than
fifty percent 50 i
n the
aggregate
of the outstanding securities or other interests representing
the
right
to vote for the election
or appointment
of those
persons
of such an entity occupying
elected or
appointed positions having
fiduciary supervisory or managerial
duties and responsibilities comparable
to those of an Insured
Person of the Company regardless
of the name or title
by
s designated of a
Joint Venture or
2 has the
right by contract ownership of securities or otherwise to elect appoint or designate at least
thirty three 33
of those persons described i
n
L1
above
Loss means damages judgments
settlements or other amounts including punitive or exemplary damages
where insurable by law and Defense Expenses in excess of the Retention that the Insured
i
s legally obligated
to
pay
Loss will not include
the multiplied portion
of
any damage award
fines penalties or taxes imposed by law or
matters which are uninsurable under the law
pursuant
to which this Policy i
s construed
NOTE With respect
to
judgments
in which punitive damages are awarded the
coverage provided by this
Policy shall apply
to the broadest extent permitted by law
I
f based on the written opinion of counsel for the
Insured punitive damages are insurable under applicable law the Insurer will not dispute the written opinion of
counsel for the Insured
N NonProfit Entity means a corporation or organization
other than the Company
which
i
s
exempt
from
taxation under Section
501c3 4 and 10 of the Internal Revenue Code as amended or
any
rule or
regulation promulgated
thereunder
0
P
Parent Company means the
entity
named
i
n ITEM 1 of the Declarations
Policy Period means the period
from the Inception Date to the Expiration
Date set forth
i
n ITEM 2 of the
Declarations or to any earlier cancellation date
D 71 00 09 99 Page 3 of 11
HIGHLY CONFIDENTIAL
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DO 71 00 09 99
Q
Securities Claimmeans a Claimmade against an Insured for
1 any
actual or alleged violation of the Securities Act of 1933 as amended
the Securities Exchange Act
of 1934 as amended any
similar federal or state statute or any
rules or regulations promulgated
thereunder or
2 any
actual or alleged act error
omission misstatement misleading
statement or breach of duty arising
from or in connection with the purchase or sale of or offer to purchase
or sell
any
securities issued
by
the Company
whether such purchase
sale or offer involves a transaction with the Company or
occurs
in the open
market
R
Subsidiary
means any entity during any
time in which the Parent Company owns directly or through one or
more Subsidiarys more than fifty percent 50
of the outstanding
securities representing
the right to vote
for the election of such entitys
directors
S
Wrongful
Act means any
actual or alleged act error omission
misstatement misleading statement neglect
or breach of duty by any
Insured Person while acting i
n his or her capacity
as an
1
Insured Person of the Company
or a person serving i
role for the Parent
Company
or any Subsidiary
2
Insured Person
of the Company
who at the specific
written request
of the Company i
s
serving as a
director officer trustee regent
or governor
of a NonProfit Entity or
3
Insured Person of the Company
who at the specific
written request
of the Company i
s serving in an
elected or appointed position having fiduciary supervisory
or managerial duties and responsibilities
comparable
by
which
such position i
s designated
of a Joint Venture
Ill
EXCLUSIONS
The Insurer shall not be liable to make
any payment
for Loss i
n connection with any
Claim made against an Insured
Person or with respect
to INSURING AGREEMENT C
the Company
A
for any
actual or alleged bodily injury sickness mental anguish
emotional distress libel slander oral or
written publication
of defamatory or disparaging
material disease or death of
any person
or damage
or
destruction
of
any tangible property including
loss of use thereof however
this EXCLUSION A
will not apply
to
any
allegations
of libel slander defamation mental anguish or emotional distress i
f and
only
to the extent
that such allegations
are made as part
of an Employment
Practices Claim for an Employment
Practices
Wrongful
Act
B
for any
actual alleged
or threatened discharge dispersal
release escape seepage transportation
emission
treatment
removal or disposal of pollutants
contaminants or waste of any
kind including
but not limited to
nuclear material or nuclear waste or any
actual or alleged
direction request
or voluntary
decision to test for
abate monitor clean up recycle remove recondition
reclaim contain treat detoxify or neutralize pollutants
contaminants or waste of
any
kind including
but not limited to nuclear material or nuclear waste With respect
to a Claim made under INSURING AGREEMENT A only
this EXCLUSION B
will not apply to a Claim
unless a court of competent jurisdiction specifically
determines the Company i
s not permitted to indemnify the
Insured Person
NOTE EXCLUSIONS A
and
B
above will not apply
with respect
to a Securities Claim brought by a
security
holder of the Company
or a derivative action brought by or on behalf of or i
n the name or right of the
Company
and brought
and maintained independently
of and without the solicitation assistance participation
or intervention of an Insured
DO 71 00 09 99
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HIGHLY CONFIDENTIAL
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DO 71 00 09 99
C based
upon arising out of directly or indirectly resulting from in consequence of or
i
n
actual or alleged violation of the
Employee
Retirement Income Security Act of 1974 ERISA as amended or
any regulations promulgated thereunder or
any
similar law federal state or local law or regulation
D based
upon arising
out of directly or indirectly resulting from
i
n
consequence of or i
n
fact circumstance situation transaction event or Wrongful Act Company Wrongful Act or Employment
underlying or alleged i
n
any prior andor pending litigation or administrative or
regulatory proceeding
or arbitration which was brought prior to the Pending and Prior Litigation Date set forth in
ITEM 6 of the Declarations
E
based
upon arising out of directly or indirectly resulting from in
consequence of or i
n
fact circumstance situation transaction event or Wrongful Act Company Wrongful Act or
Employment
Practices Wrongful Act which before the
Inception Date of this Policy was the
subject
of
any notice given
under
any
other Management Liability policy Directors and Officers liability policy or similar
policy
F brought about or contributed to
i
n fact
by any
1 intentionally dishonest fraudulent or criminal act or omission or any willful violation of
any statute rule
or law or
2 profit or remuneration
gained by any
Insured to which such Insured i
as determined by a final adjudication i
n the
underlying
action or i
n a separate action or
proceeding
G by on behalf of or at the direction of the
Company except
and to the extent such Claim
1 i
s brought derivatively by a security
holder of the Company who when such Claim
i
s made and
maintained i
s
acting independently of and without the solicitation assistance participation or
intervention of an Insured Person or the
Company or
2 i
s brought by the Bankruptcy Trustee or Examiner of the
Company or
any assignee
of such Trustee or
Examiner or
any Receiver Conservator Rehabilitator or Liquidator or
comparable authority of the
Company
H by on behalf of at the direction of or i
n the name or right of
any
NonProfit Entity or Joint Venture
against
an Insured Person for a Wrongful Act or Employment Practices
Wrongful Act while acting i
n his or her
capacity as a director officer trustee regent or governor
of such or persons occupying elected or appointed
positions having fiduciary supervisory or
managerial
duties and
responsibilities comparable to those of an
Insured Person of the
Company regardless
by
which such
position i
s designated or
I based
upon arising out of directly or indirectly resulting from i
n
consequence of or i
n
any way involving an
Insured Person
acting i
n their capacity as a Insured Person of
any entity
other than the Company Non
Profit Entity or Joint Venture
No conduct of any Insured Person will be imputed to
any
other Insured to determine the application of
any
of the
above EXCLUSIONS
IV LIMIT OF
LIABILITY INDEMNIFICATION AND RETENTIONS
A
The Insurer shall
pay
the amount of Loss
i
n excess of the applicable Retentions
set forth
i
n ITEM 4 of the
Declarations
up to the Limit of Liability set forth in ITEM 3 of the Declarations
B The amount set forth
i
n ITEM 3
o
f
the Declarations shall be the maximum
aggregate Limit of
Liability of the
Insurer under this
Policy Payment of Loss including Defense Expenses by the Insurer shall reduce the Limit
of
Liability
DO71000999
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C
With respect
to the Companys
indemnification of its Insured Persons the certificate of incorporation charter
bylaws
articles of association or other organizational
documents of the Parent Company
each Subsidiary
and each NonProfit Entity or Joint Venture will be deemed to provide
indemnification to the Insured
Persons to the fullest extent permitted by
law
D
The Retention applicable
to INSURING AGREEMENT B
shall apply
to any
Loss as to which indemnification
by
the Company
NonProfit Entity or Joint Venture i
s legally permissible
whether or not actual
indemnification i
s made unless such
indemnification i
s not made by
the Company
NonProfit Entity or Joint
Venture solely by reason
of its financial insolvency I
n the event of financial insolvency
the Retentions
applicable
to INSURING
AGREEMENT A
shall apply
E I
f different
retentions are applicable
to different parts of any
Loss the applicable
Retentions
will be
applied
separately
to each part
of such Loss and the sum of such Retentions
will not exceed the
largest applicable
Retention set forth in ITEM 4 of the Declarations
F
Notwithstanding
the foregoing solely
with respect
to a
Securities Claim no Retention shall apply
to such
Claim and the Insurer
will reimburse those Defense Expenses
incurred by
the Insured i
f
1
the Securities Claim i
s dismissed or there i
s a stipulation
to dismiss the Securities Claim with or
without prejudice
and without the payment
of any monetary
consideration by
the Insured
2
there
i
s a final judgment
of no liability obtained prior to or during trial i
n favor of the Insured by reason
of a motion to dismiss or a motion for summaryjudgment
after the exhaustion of all appeals
or
3
there i
s a final judgment
of no liability
obtained after trial i
n favor of the Insured after the exhaustion
of all appeals
Any
reimbursement
in the case
of
F1 2 or 3
above will only
occur i
f ninety 90 days
after the date of
dismissal stipulation
final judgment
of no liability i
s obtained and only i
f
a
the same Securities Claim or a Securities Claim containing
Interrelated Wrongful Acts i
s
not brought again
within that time and
b
the Insured provides
the Insurer with an Undertaking i
n a form acceptable
to the Insurer that
such reimbursement of the applicable Retentions
will be paid
back to the Insurer
i
n the event
the Securities Claim or a Securities Claim containing
Interrelated Wrongful Acts i
s
brought
after the ninety 90 day period
V DEFENSE
SETTLEMENT
AND ALLOCATION OF LOSS
A I
t shall be the duty
of the Insured and not the duty of the Insurer to defend any
Claim under this Policy
B
No Insured may
incur any
Defense Expenses
or admit liability for make any
settlement offer with
respect to
or settle any
Claim without the Insurers consent such consent not to be unreasonably withheld
C Upon
the written request
of an Insured the Insurer will advance Defense Expenses
on a current basis i
n
excess of the applicable
Retention i
f any
before the disposition
of the Claim for which this policy provides
coverage
As a condition of the advancement of Defense Expenses
the Insurer may require
a written
undertaking i
n a form satisfactory to the Insurer which will guarantee
the repayment
of
any
Loss including
Defense Expenses
paid
to or on behalf of the Insured
i
f
i
t i
s
finally
determined that the Loss incurred
i
s not
covered under this
PolicyD
I
f both Loss covered by this Policy and Loss not covered by this Policy are incurred either because a Claim
made against
the Insured contains both covered and uncovered matters or because a Claim i
s made against
both the Insured and others including
the Company
for Claims other than Securities Claims not insured
Page
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DO71000999
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DO 71 00 09 99
E
under this Policy
the Insured and the insurer will use their best efforts to determine a fair and
appropriate
allocation of Loss between that
portion
of Loss that i
s covered under this Policy
and that
portion
of Loss that
i
s not covered under this Policy Additionally
the Insured and the Insurer
agree
that
i
n determining a fair and
appropriate allocation of Loss the parties will take into account the relative legal
and financial
exposures of
and relative benefits obtained i
n connection with the defense andor settlement of the Claim by the Insured
and others
In the event that an agreement
cannot be reached between the insurer and the Insured as to an allocation of
Loss as described
i
n D above then the Insurer shall advance that portion
of Loss which the Insured and
the Insurer
agree i
s not i
n
dispute until a final amount
i
s agreed upon or determined
pursuant
to the
provisions
of this
Policy
and applicable law
VI GENERAL CONDITIONS
A
NOTICE
1 As a condition precedent to
any right to payment
under this Policy with respect to
any Claim the
Insured shall
give
written notice to the Insurer of any
Claim as soon as practicable after
i
t
i
s first
made
2 I
f during the Policy Period the Insured first becomes aware of a specific Wrongful Act Company
Wrongful
Act or Employment Practices Wrongful
Act and
i
f during the Policy Period the Insured
a provides
the Insurer with written notice of the specific Wrongful Act Company Wrongful Act
or Employment Practices Wrongful Act the
consequences
which have resulted or may
result therefrom including but not limited to actual or potential damages
the identities of the
potential claimants the circumstances by
which the Insured first became aware of such
Wrongful Act Company Wrongful
Act or Employment
Practices Wrongful Act and
3
b requests coverage
under this Policy for any subsequently resulting Claim for such Wrongful
Act Company Wrongful
Act or Employment Practices Wrongful Act
then any
Claim subsequently made arising out of such Wrongful Act Company Wrongful Act or
Employment
Practices
Wrongful
Act will be treated as i
f
i
t had been first made
during
the
Policy
Period
All notices under GENERAL CONDITIONS A1
and
2
must be sent by certified mail or the
equivalent
to the address set forth
i
n ITEM 7 of the Declarations Attention Claim Department
B INTERRELATED CLAIMS
All Claims
arising
from the same Interrelated
Wrongful
Acts shall be deemed to constitute a single
Claim
and shall be deemed to have been made at the earliest of the time at which the earliest such Claim
i
s made or
deemed to have been made
pursuant to GENERAL CONDITIONS A1
above or GENERAL CONDITIONS
A2 i
f applicable
C
OTHER INSURANCE AND SERVICE IN CONNECTION WITH NONPROFIT ENTITIES AND JOINT
VENTURES
1
All Loss payable under this Policy will be specifically excess of and will not contribute with
any
other
insurance including but not limited to
any
insurance under which there
i
s a duty
to defend unless such
other insurance
i
s
specifically
excess of this Policy
This Policy will not be subject to the terms of
any
other insurance policy
D0 71 00 09 99 Page
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HIGHLY CONFIDENTIAL
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DO 71 00 09 99
D
2
All coverage
under this Policy
for Loss from Claims made against
the Insured Persons while
acting
i
n their capacity
of a NonProfit Entity or
persons
occupying
elected or appointed positions having fiduciary supervisory or managerial duties and
responsibilities
comparable to those of the Insured Persons of the Company regardless
of the name
or title by
s designated
of a Joint Venture will be specifically excess of and will
not contribute with any other insurance or indemnification available to such Insured Person from such
NonProfit Entity or Joint Venture by reason of their service as such
MERGERS AND ACQUISITIONS CHANGES
IN EXPOSURE OR CONTROL
1 I
f
during the Policy Period
the Company acquires any assets acquires
a Subsidiary or acquires
any entity by merger
consolidation or otherwise or assumes any liability
of another entity coverage
shall be provided
for
any
Loss involving
a Claim for a Wrongful
Act Company Wrongful Act or
Employment
Practices Wrongful
Act occurring after the consummation of the transaction
2 I
f however by reason of the transaction or series of transactions
described
i
n D1 above
the
entity
assets Subsidiary
or liabilities so acquired or so assumed exceed thirty
five percent 35
of
the total assets or liabilities of the Company as represented i
n the Companys
most recent audited
consolidated
financial statements coverage
under this Policy shall be provided
for a period
of ninety
90 days
for any
Loss involving
a Claim for a Wrongful Act Company Wrongful Act or
Employment
Practices Wrongful
Act that occurred after the transaction has been consummated
Coverage
beyond the ninety 90 day period
will be provided only i
f
a
the Insurer receives written notice containing
full details of the transactions and
b
the Insurer at its sole discretion agrees
to provide such additional coverage upon
such terms
conditions limitations and additional premium
that i
t deems appropriate
3
With respect
to the acquisition assumption merger
consolidation or otherwise of
any entity asset
Subsidiary
or liability as described i
n
D1
and 2 above there will be no coverage
available under
this Policy
for Claims made against
the acquired
assumed merged
or consolidated entity asset
Subsidiary liability or Insured Person for a Wrongful Act Company Wrongful
Act or Employment
Practices Wrongful Act committed
any
time during which such entity asset liability
or Subsidiary i
s
not an Insured
4 I
f
during
the Policy Period any entity ceases to be a Subsidiary
the coverage provided
under this
Policy
shall continue to apply
to the Insured Persons who because of their service with such
Subsidiary
were covered under this Policy but only
with respect
to a Claim for a Wrongful Act
Company
Wrongful
Act or Employment
Practices Wrongful
Act that occurred or allegedly
occurred
prior
to the time such Subsidiary
ceased to be a Subsidiary
of the Company
5 I
f during the Policy Period there i
s a Change In Control the coverage provided under this Policy
shall continue
to apply but only
with respect
to a Claim against an Insured for a Wrongful Act
Company
Wrongful
Act or Employment
Practices Wrongful
Act committed or allegedly
committed
up
to the time of the Change
In Control and
a coverage
will cease with respect
to
any
Claim for a Wrongful Act Company Wrongful
Act or
Employment
Practices Wrongful Act committed subsequent
to the Change
In Control and
b
the entire premium
for the Policy
will be deemed to be fully earned immediately upon
the
consummation of a Change
In Control
Page 8 of 11
DO71000999
HIGHLY CONFIDENTIAL
Return
0
DO 71 00 09 99
E
CANCELLATION AND RENEWAL OF COVERAGE
1 Except
for the nonpayment
of
premium as set forth in E2 below the Parent
Company
has the
exclusive right to cancel this Policy
Cancellation
may
be effected
by mailing
to the Insurer written
notice when such cancellation shall be effective provided the date of cancellation
i
s not later than the
Expiration
Date set forth i
n ITEM 2 of the Declarations I
n such event the Insurer shall retain the
customary
short rate portion
of the earned premium Return or tender of the unearned premium i
s not
a condition of cancellation
2
The Insurer may only
cancel this Policy for nonpayment
of
premium
The Insurer will provide not less
than twenty 20 days
written notice stating the reason for cancellation and when the Policy will be
canceled Notice of cancellation will be sent to the Parent Company
and the
agent
of record for the
Insured i
f
applicable
3 The Insurer
i
s under no obligation to renew this Policy upon
its expiration
Once the Insurer chooses to
nonrenew this Policy
the Insurer will deliver or mail to the Parent Company written notice stating
such at least sixty 60 days
before the Expiration Date set forth
i
F
OPTIONAL EXTENSION PERIOD
1 I
f either the Parent Company or the Insurer does not renew this Policy
the Parent Company shall
have the right upon payment
of an additional premium set forth i
n ITEM 5 of the Declarations to an
extension of the
coverage provided by this Policy
with
respect only to
any
Claim first made
during
the
period
of time set forth
i
n ITEM 5 of the Declarations after the Policy Expiration Date but only
with
respect to a Wrongful Act Company Wrongful Act or Employment Practices Wrongful Act
occurring prior
to the
Policy Expiration
Date
2
As a condition precedent to the right to purchase the Optional
Extension Period the total premium for
this Policy must have been
paid
in full The right of the Parent Company
to
purchase
the Optional
Extension Period will be immediately
terminated
i
f the Insurer does not receive written notice
by
the
Parent Company advising i
t wishes to purchase
the Optional Extension Period together
with full
payment
of the
premium
for the Optional
Extension Period within thirty 30 days
after the
Policy
Expiration
Date
3 I
f the Parent Company
elects to purchase the Optional
Extension Period as set forth
i
n F1 and 2
above the entire premium
for the Optional Extension Period will be deemed to be fully earned at the
Inception Date for the
Optional
Extension Period
4
The purchase of the Optional
Extension Period will not i
n
any way
increase the Limit Of Liability set
forth in ITEM 3 of the Declarations and the Limit of Liability with respect
to Claims made
during
the
Optional Extension Period shall be part of and not i
n addition to the Limit of Liability for all Claims
made during the Policy
Period
G ASSISTANCE COOPERATION AND SUBROGATION
1 The Insured agrees
to
provide
the Insurer with all information assistance and cooperation
that the
Insurer may reasonably request
and further agree
that
they
will do nothing which in
any way
increases
the Insurers exposure
under this Policy or
i
n
any way prejudices
the Insurers potential or actual rights
of
recovery
2 I
n the event of any payment
under this Policy the Insurer shall be subrogated
to all of the
potential
or
actual rights
of
recovery
of the Insured The Insured shall execute all
papers required
and will do
everything necessary
to secure such rights including
but not limited to the execution of such
documents as are necessary
to enable the Insurer to effectively bring suit
i
n their name and will
provide all other assistance and cooperation which the Insurer
may reasonably require
DO 71 00 09 99 Page
9 of 11
HIGHLY CONFIDENTIAL
Return
DO 71 00 09 99
H
EXHAUSTION
I
f the Insurers Limit of
i
i
s exhausted by the payment of Loss
the premium as set forth i
n ITEM 8 of the Declarations will be fully earned all obligations of the Insurer under
this Policy
will be completely
fulfilled and exhausted and the Insurer will have no further obligations of
any
kind
whatsoever under
this
Policy
1
J
REPRESENTATION CLAUSE
The Insured represents that the statements and particulars
contained
i
n the Application as well as
any prior
application
submitted to the Insurer are true accurate and complete
and
agree
that this
Policy i
s issued in
reliance on the truth of that
representation
and that such particulars
and statements which are deemed to be
incorporated
into and constitute a part
of this Policy are material to the risk assumed and form the basis of this
Policy No knowledge or information possessed by any
Insured will be imputed to
any
other Insured except
for material facts or information known to the persons who signed the Application I
n the event that
any
of
the particulars or statements i
n the Application are untrue this Policy will be void with respect to any Insured
who knew of such untruth or to whom such knowledge i
s
imputed
ACTION AGAINST THE INSURER ASSIGNMENT AND CHANGES TO THE POLICY
1
No action may
be taken
against
the Insurer unless as a condition precedent thereto
a
b
there has been full compliance with all of the terms and conditions of this Policy
and
the amount of the
obligation
of the Insured has been finally determined either by judgment
against
the Insured after actual trial or by written agreement
of the Insured the claimant and
the Insurer
2 Nothing
contained herein shall give any person or entity any right
to
join
the Insurer as a
party
to
any
Claim against
the Insurer to determine their liability nor may
the Insured
implead
the Insurer in
any
Claim
3 Assignment
of interest under this
Policy
shall not bind the Insurer unless its consent i
s endorsed
hereon
4
Notice to
any agent or knowledge possessed by any agent or other
person acting on behalf of the
Insurer will not cause a waiver or change i
n
any part of this Policy
or prevent
the Insurer from
asserting
any right
under the terms
conditions and limitations of this
Policy
The terms conditions and limitations
may only
be waived or changed by
written endorsement
K
AUTHORIZATION AND NOTICES
I
t
i
that the Parent Company
will act on behalf of the
Company
and the Insured
Persons with respect
to
the payment of the premiums
the receiving of
any
return premiums
that
may
become due under this Policy
the giving o
f
all notices to the Insurer as provided
herein and
the receiving of all notices from the Insurer
D07100 09 99
Page
10 of 11
HIGHLY CONFIDENTIAL
Return
DO 71 00 09 99
L
ENTIRE AGREEMENT
The Insured
agrees
that the Declarations Policy including the endorsements attachments and the
Application
shall constitute the entire agreement
between the Insurer or any
of its agents and the Insured
relating to this insurance
D 7100 09 99
Page
11 of 11
HIGHLY CONFIDENTIAL
(L) ENTIRE AGREEMENT
0071000999
The Insured agrees that the Declarations, Policy, including the endorsements, attachments and the
Application shall constitute the entire agreement between the Insurer or any of its agents and the Insured
relating to this insurance.
DO 71 0009 99 Page 11 of 11
Return
HIGHLY CONFIDENTIAL
Scottsdale Indemnity Company
A STOCK COMPANY
HomoOae Nationwide Plaza Columbus, Ohio 43215
Administrative Officil: 8877 North Gainey Center Drive Scottsdale, Arizona 85258
1-800-423-7675
EXCESS INSURANCE POLICY
UNLESS OTHERWISE PROVIDED IN THE FOLLOWED POLICY, THIS POLICY APPLIES ONLY TO CLAIMS FIRST
MADE AGAINST TI IE INSURED DURING THE POLICY PERIOD OR EXTENDED REPORTING PERIOD. THE LIMIT OF
LIABILITY SHALL 131:1i REDUCED BY PAYMENT OF DEFENSE COSTS.
DECLARATIONS
Item 1Named; :1-11N!:.:r-:11TD, .Policy No.:H)000039
Insured & " , , IA:Ri Agent No.:01 _
Mailing,T'LE,'!'ii-101
IRenewal No.: :,IF; :./
Address:
1
Item 2Aggregate Limit of Liability: $0,0 0 0, '2 1 10all Claims (inclusive of Defense Costs)
Item 3Policy Period:
05/ 01/ 7' '.i. " to05/ 01/ 200912:01 A.M. local time at Named Insured's Mailing Address
,
Item 4Followed Policy:
Issuing Insure'. ,:'.''''
Limit of Liability : -,,,
.rcPolicy No.:287127641
Deductible(s)/ Retention(s): N/A
|â5Schedule of Underlying Policies:
Dechictible(a)1
IssuincLInsurer Policy No.Limits of LiabilityRetbsntion(s)
Primary
..:ELU1O1:'-$25,000,000$0/ " . ; ,nn0,000/
Policy: $50, occ, 000
Underlying Excess Policies:
Issuina InsurerPOilGi No.Lroits of LiabilityAttachment
1 sI Excess,70RMLIT1-358(12-07)
2' d Excess
3 th Excess
4 1h Excess
oh
s.,Excess
6 th Excess
7 th Excess
,,, ___.
Ei th Excess
Item 6Premium: $Terrorism Premium: $Total Premium: $
_
m 7Endorsements Effective at Inception:
SEE SC.i-IE,L 05 FORMS AND ENDORSEMENTS
Item 8Notices to Company
Notice of Claim to:Other Notices to:
.., .- -; [; ; ', 1., 'I ' 11TYCOMPANY' ' v' II', " -CO:.!PANY
'; 7 , 7 D R-.)_:LaSUITE33A7 ; A. :_, T, T, D.., _...: : !'F.''_33A
Nu'..!'1._, _')07 NEWYORK,NY10001
,
These Declarat ons/ Policy, together with the Application and any written endorsements attached thereto,
shall constitute the contract between the Insured Persons and the Company.
XMLON (8-07)
Restricted For Use in Connection with Plan Confirmation Only WMI PC 000701359829.00001
a5258
"-"""-""----""" """"""""""""-"---""- ""-""-" """--""-"-"--""-""""""""-""""-"-----
1
Return
REDACTED
REDACTED REDACTED
ADDITIONAL FORMS
7
Iii 0
I ; 1 P01
I: 1 .4.1 :1 1 1 3
1 ,; 1 1 In,.:.e r 1 7 i.
LCi
..
81
92 C i
HIGHLY C ONFIDENTIAL
Policytlo:
1't11(...! I lideilltItlit\i/ &n1-1pIy
W . D1113 .-. OF FORIVIS AND ENIDOW -3 E1V0. -:NITS
N1 01 1 ,1 ')
Effective Date0E,
1 2:01 A,M,, :il:ii.jard 1 Inc i
Named Insur,-1
TM('
Agent No.
31 407
INSUREDa
Restri cted For Use i n C onnecti on wi th Plan C onfi rmati on Only W MI PC 0007013 59829. 00002
H
Return

0
HIGHLY CONFIDENTIAL
Scow,c ale Indemnity Company
i u n i e Of f i Ge :
Ci le Nati on wi de ri aza Colu mbu s, Ohi o 43215
Oi ti r; e :
3877 North Gai n e y Ce n tc; r Dri ve Scottsdale , Ari zon p
1- 80 0 - 423- 76 75
A STOCK COMPANY
In Wi tn e ss Whe re of , the Compan y has cau se d thi s poli cy to be e xe cu te d an d at _ e d.
Se cre tary
Pre si de n t
The i n f ormati on con tai n e d he re i n re place s an y si mi lar i n f ormati on con tai n e d e lse whe re i n !ti n poi i cy,
ri - covp6
NSIJREL)
Re stri cte d For Use i n Con n e cti on wi th Plan Con f i rmati on On ly
WMI PC 0 0 0 70 1359829.0 0 0 0 3
H
In
in
Return
HIGHLY CONFIDENTIAL
Scotidale.npany
A Stoi;lc InsiiraConip;iiiy.Conipany
I-:XCESS INSURANCE POLICY
UNLESS OTHERVVISE PROVIDED IN THE FOLLOWED POLICY, THIS POLICY APPLIES ONLY TO CLAIMS FIRST
MADE AGAINST Till: INSUi T;L:D DURING THE POLICY PERIOD OR EXTENDED REPORTING PERIOD. THE LIMIT OF
LIARILITY lALL 13E REDUCED AND MAY BE EXHAHSHED BY PAYMENT OF DEFENSE COSTS.
imnsideratieiltile payment of ni p preinilini aridreknit-1J upon the statements ie the Application, which is made at:Art
henJefrtivi subject to I Po Conlarafinen, ',onus :aid tondilsais or this Policy, hJ iici-imoney indicated in th,,
8"n^ o"the Company)the Insured agreefollows:
I. INSURING AGREEMENT
Tno Companyprovide the Insureds: with insurance coverage excess of the Underlying Policies. This Policy is sub-
ject to thaline representations J-it, itre contained in the applications for the Underlying Policies and, en
j j i pt with
respect to the premium, the of liability and as otherwise provided be.rein, the insurance coverage pftivirILJd hy this
Policy J:inall ;ipply in accordance with the same terms, definitions, conditions, exclusions and limitations as are contnined
in the Followed Policy and, to the extent coverage is further limited or restricted thereby, in any other of the Underlying
Policies. dills Policy shall not grant broader coverage than the most restrietive of the Underlying Policies.
U. DEFINITIONS
Application means all signed applications and any information submitted therewith for this poUuy.
B. Claim has the same meaning in this Policy as in the Followed Policy.
C. Insured means any persons or entities entitled to coverage under the Followed Policy.
D. Named Insured means the entity named in Item 1. of the Declarations.
E. Policy Period means the period from the ni J, ..tive date to the expiration date of this Py as set forth in Iteof
the Declarations, or any earlier termination &Jt,e,
F. Followed Policy means the policy, as constituted at its inception, named in Item 4. of the Declarations.
G. Underlying Policies mean all policies, as constituted at their inception, listed in Item 5. of the Declarations,
H. Underlying Limits means an amount equal to the total of all aggregate limits of liability for all Underlying Policies,
plus the uninsured retention or deductible applicable to the primary policy named in Item 5. of the Declarations.
N. LIMIT OF LIABILITY
The amount stated in Item 2. of the Declarations shall be the maximum amount payable by the Company under this Pol-
icy with respect to all Claims first made during the Policy Period.
N. REDUCTION OR EXHAUSTION OF UNDERLYING LIMITS
A. In the event the Underlying Limits are partially reduced by reason of actual payment by the insurers of the Underly-
ing Policies, then subject to the Limit of Liability this Policy shall continue to apply as excess over the reduced
Underlying Limits.
B. In theit the Underlying Limits we wholly exhausted by reason of actual payment by the insurers of the Under-
Pnlirins (and the Insured has pid the full amount of any applicable deductible or uninsured retention under
the l''-.)110,!! n HPolicy), then subject to the Limit of Liability this Policy shall continue to apply as primary insurance;
Xr,(8 07)
Page 1 of 2
-INSURED
H
INSURANCE POLICY
I.
II. DEFINITIONS
A,
Policy.
in 3.
F.
G.
LIMIT OF LIABiliTY
IV, OF UNDERLYING
in
Return
HIGHLY CONFIDENTIAL
providedthat this Policy shall only pay ex-i of such applicable deductible or, pmn8on. which shall be
applied to ary L;!),14uf,:ot Claim in the same manner ns f;pecified in the Followed Policy.
C. This Policy shall oniy pay in the event of the reduction or istien of the Underlying Policies by reason of actual
payment by the insurers of the Underlying Limits as cie;criiied atave and shall not drop down for any other reason,
including but not limited to existence of any sub-limit in any li!iderlying Policy or the uncollectibility (in whole or in
i:, :irt) cf. any of the Underlying Limits; provided, however, this Policy will recognize erosion of any of the Underlying
dne to the existence of a sub-limit.
The Insureds expressly retain the risk of any gap in coverage or uncollectibility and the Company does not in any
way insure or assume such risk.
V. CONDITIONS OF COVERAGE
A. As a condition precedent to this Policy's coverage, the Insureds agree to maintain the Underlying Policies in full
effect with solvent insurers during the Policy Period except for any reduction or exhaustion of the Underlying Limits
y reason of actual payments thereunder. If the Underlying Policies are not so maintained, the Company shall
rot he liable under this Policy to a greater extent than it would have been had such Underlying Policies been
maintained:
B.; a condition precedent to this Policy's coverage, the Insureds shall notify the Company in writing of any of the fol-
lowing events as soon as practicable thereafter, with full particulars:
(1) the reduction or exhaustion of any of the Underlying Limits;
(2) the cancellation or termination of, or failure to maintain in full effect, any of the Underlying Policies;
(3) any change to any of the Underlying Policies; or
(4) i Le insurer of any of the Underlying Policies becoming subject to a receivership, li ui ation, dissolution, re-
1or similar proceeding or being ti-lkeit over by any regulatory authority.
C. It du, ,rj the Policy Period or any discovery or extended reporting period, any terms of any of the Underlying Pol-
icies are changed in any manner, this Policy shall not ho subject to such change unless the Company consents to
such change by written endorsement to this Policy. Unless the Company so consents to such change, the Com-
pany shall not be liable to a greater extent than it would have been absent such change to any of the Underlying
Policies.
XMI-P-1(8-07)Page 2 of 2
Restricted For Use in Connection with Plan Confirmation Only
WMI PC 000701359829.00005
C""PC,,,,P or in
v.
notify in the
(1) Limits;
the Underlying
Underlying Pollcias; or
re
2
in
Return
Agent No.:
N115928555
358 - 0734
14- MG- 08- A9106
500090A027908
C009436/001
287127641
BONN 713043/01/200
AS . IEHICAN INS :iPANCE
DOX G21669994005
' L IT E
7 - qEXCES S :
Oii) iNS URANCE
2- .1100027001- 00
.::.t4PANY
9T H
L L OYDL ;
D. AS S URANCE
L imits of L iabilityAttachment
$25,000,000 $25,000,000
$25,000,000 $50,000,000
$25,000,000 $75,000,000
$30,000,000 $100,000,000
$15,000,000 $130,000,000
$20,000,000 $145,000,000
$25,000,000 $105,000,000
$20,000,000 $190,000,000
$10,000,000 $210,000,000
$20, 000, 000 $220,000,000
Named
Issuing lii!- offor iulicy Ntiint)(?r
463
HI GHLY CO NFI DE NTI A L
tt:Atate inde in ity Company
:ICI IEDULE OF UNULIV_YING POLICIES
Policy No:: T I 0000 9
; )ate:
83, S lanci; Ard T ime
911- 353(12- 07)INS URM)
Restricted For Use in Connection with Plan Confirmation O nly WMI PC 000701359829.00006
ul

H
UNDERLYING
Return
nY
r . N1) 0i
NO. Scotts(ndemnity
HIGHLY CONFIDENTIAL
Al r i i . ci i ce i o :ti i o
i - C:1,1Mt; AFAlfi OF
FOLli:Y NUMIIFit
i:Npeesi :mr r i r 1:IFFE- CliVli CAlF
I r 2:,) 1 A. fi t STANDP;. 031. ,,:Fi
NAr i d- 0 H" n :!11,EU) AGENT NO.
XMIOB0003. 9 05/01/2008 N AS IIIIIC_I' ON MUTUAL
'INC. 31407
[HXCI. ESS POLICY - FOLLOWED POLICY ENDORSEMENT
(DIFFERENCE IN CONDITIONS)
In consi der ati on of the pr emi i i i i i pi :i d, i t i s her eby under stood and agr eed that:
I. Secti on I. INSURING AGREEMENT i s deleted i n i ts enti r ety and r eplaced wi th the followi ng:
INSURING AGREEMENT
The Company shall pr ovi de the Insur eds wi th i nsur ance cover age excess of all the Under lyi ng Pol-
i ci es. Thi s Poli cy i s subject to the same r epr esentati ons as ar e contai ned i n the appli cati ons for the
Under lyi ng Poli ci es and, except wi th r espect to the pr emi um, the Li mi t of Li abi li ty and as other -
, ,i sc o-nvi ded her , . i i i , the i nsur ance cover age pr ovi ded by thi s Poli cy shall apply i n accor dance wi th
ter ns, I . :11 , i i ti ons. condi ti ons, exclusi ons and li mi tati ons as ar e contni ned i n the Followed
Poli cy and, to the tent cover age i s fur ther li mi ted or r estr i cted ther eby, i n any other of the Under -
lyi ng Poli ci es excess of the Followed Poli cy. Thi s Poli cy shall not gr ant br oader cover age than the
Followed Poli cy or the most r estr i cti ve of any Under lyi ng Poli ci es that ar e excess of the Followed
Poli cy.
II. Secti on IV. REDUCTION OR EXHAUSTION OF UNDERLYING LIMITS i s deleted i n i ts enti r ety and r e-
placed wi th the followi ng:
A. It i s expr essly agr eed that li abi li ty for any . I attach to the Company only after :
(1) the amount of the Under lyi ng Li mi ts i s pai d, whether by the i nsur er s of the Under lyi ng Poli ci es
or by the Insur ed(s) ho the extent that any i nsur er of any of the Under lyi ng Poli ci es has not
pai d the full amount of such i nsur er ' s li abi li ty due to that i nsur er ' s fi nanci al i nsolvency: or
(2) the Followed Poli cy and ali Under lyi ng Poli ci es excess of the Followed Poli cy ar e exhausted
pr i or to the occur r ence of (1) above due to di ffer ence i n condi ti ons that r equi r e the Fol-
lowed Poli cy and such Under lyi ng Poli ci es ex , v[ mm Followed Poli cy to pay loss cover ed
under the Followed Poli cy.
The Company shall then be li able to pay only up to the Li mi t of Li abi li ty set for th i n Item 2. of the
Declar ati ons, whi ch shall be the i ni i xi i nti m amount payable by the Company under thi s Poli cy wi th
r espect to all Clai ms fi r st mauodo,vq the Poli cy Per i od.
B. In the event the Under lyi ng Li mi ts ;/v) r . o-ti ally r educed by nai ason of actual payment by thc i nsur er s
of the Under lyi ng Poli ci es, then si i li jeet to the Li mi t of Li abi li ty thi s Poli cy shall conti nue to apply
as excess over the r educed Ur n ler lyi ng Li mi ts.
C. In the event the Under lyi ng L i mi t-, ar e wholly exhausted by r er i -,on of actual payment by the i nsur -
er s of the Under lyi ng Pol,ci es:he Insur ed has pai d thei i nount of any appli cable deducti -
ble or uni nsur ed r etenti on u: ti ,e Followed Poli cy) , to the Li mi t of Li abi li ty thi s
Poli cy shall conti nue to apply as pr i mar y i nsur ance i n accor dar n -e wi th the ter ms ar i d condi ti ons of
the Followed Poli cy and to the ter ms, condi ti ons and exclusi ons of thi s Poli cy; pr ovi ded always
VAI- 57 (1- 08)
1 of 2
' )
Restr i cted For Use i n Connecti on wi th Plan Confi r mati on Only
WMI PC 000701359829. 00007
AGENT NO
I
In
to Company
in
Return
HIGHLY CONFIDENTIAL
dullPolii:v;:;!,If 1LIlRefmitton, which shall be ap
pto,a t o any kIit Claim in Wi11inannorHiocifiod in the Followed Policy,
If itio Primary Policy GOI 4 6i)6L;vIit.; grant of'rage that is !,l)ject tosublimit of liaoility,
(boo covou: -.cie under this Policy shall not lopy Io any claim which is subject to such sublimit of
I, this l',31ioy iill recognize erosion of any of the Underlying Policies, including the
Followed Policy, due to the existence of a sublimit.
Section V, CONDITIONS OF COVERAGE, Section A.doloted in its entirety and replaced ' t4th the
following:
A. i!;;) condition precedent to this Policy's covorsoo, Iho insurods agree to mile-11:w
Policies full nitnutClU111 19 the Policy Period is,,capt. for any reduction or oxlini.;zion of IC' Under-
lying Limits y reason of actual oayments theraunder. provilid, however, if Inc: Followed Policy
cuma-vios to afford coverage a:!qardle!:.:s of the maintenance of other Underlying
ill also continue to afford nay If the Underlying Policies arc not so maintainet, f.?./,1:ord
by the Followed Policy the Company shaii not Hi liable under this Policy to a groHter
:itontit would have been had such Underlying Policies been maintained.
All other terms and conditions of this Policy remain unchanged.
It:i0121ZED REPRESENTATIVEDATE
(NOWP:!.,:e2of2
H
conditions this
I
in
Return
HIGHLY CONFIDENTIAL
Sco daIndemnity Company
E N F I
N O.
4 Fr ACHED 10 ANID
FORMING A PART OF
POLICY NDMBER
:NDoRSEMENT EFFECTIVE DATE
(1' ..,01 A M. STANDARD TIME)
NAMED INSURED AGENT NO.
XNT0800039 05/01/2003 : 11 '::: ' : ' CTI: MUTUAL
'11NC , 31407
THIS ENDORSEMENT CHANGES THE POLICY, PLEASE READ IT CAREFULLY.
EX CESS POLICY - EX HAUSTION/ RFDUCTION OF UNDERLYING LIMITS
.n consider ation of the pr emium paid, it is her eby under stood and agr eed that Section IV. REDUCTION
OR EX HAUSTION OF UNDERLYING LIMITS, Section C. is deleted in its entir ety and r eplaced with the
following:
C. This Policy shall only pay cover ed loss in the event of the r eduction or exhaustion of the Under lying
Policies by r eason of actual payment by the insur er s of the Under lying Limits for cover ed loss; pr o-
vided, however , if the Insur ed shall pay any cover ed loss, then the Company agr ees to r ecognize that
the Under lying Limits ar e r educed or exhausted to the extent of such payments by the Insur ed. In no
way shall such payment by the Insur ed constitute a waiver of any ter ms, conditions or exclusions of the
Under lying Policies or this Policy. This Policy shall not dr op down for any other r eason. including but
not limited to the existence of any sublimit in any Under lying Policy or the uncollectibility (in whole or in
par t) of any of the Under lying Limits; pr ovided, however , this policy will r ecognize er osion of any of the
Under lying Policies due to the existence of a sublimit.
The Insur eds expr essly r etain the r isk of any gap in cover age or uncollectibility and the Company does not
in any way insur e or assume such r isk.
All other ter ms and conditions of this Policy r emain unchanged.
;REPRESENTAIIVkD ATE
X(.11-58(1-08)
P co 1of I
Restr icted For Use in Connection with Plan Confir mation Only WMI PC 000701359829.00009
INSURED AGENT
c.
in not
other terms and Policy unchanged.
in
Return
EiqD01
NO coatIttLeTrit irnnity Cortipany
HIGHLY CONFIDENTIAL
,i 1 AUiL( ' P7' D
I
EDLICY NUmiiii R
i `JIP,ICi +.11 'ì iITH C. I NI' DATE
il2 01 ,', `,1`:TANDAHDTV1E)
tt.m.u.i) INSURED AGENT No .
Xt410800039 i t ' 008 .:-:: ili NLit tt. t .;:ttan..:,TiEIC . 31407
THIS ENDOSI M r.: NT CHANGES THE POLICY PLEASE READ IT CAREFULLY.
EXCESS POLICY - PRIOR OR PENDING LITIGATION EXCLUSION
In cum :Ado ratio n nl the inemiurn paid, it is he_, , i:iby undo rslo riLl no d .-4rurfil that the Co mpany shall no t be
liable to pay any ..-.1ino lint fro m any Claim nL:..,ide a.cjairist ;iny Insured kirind upo n, arising o ut o f, o r in any
way !elated to (1) Any o r pending litigatio n, !Haim, mid,scii o r pinceeding Against any Insured as
o f the Prio r o r Peneiri ILLi-Lito n Date stated belo w o r (2) any art, o inisLo n, cilcuinstance o r situatio n
underlying o r alleged in negatio n, claim, demand, suit o r pro ceeding o r any substantially similar act,
CII-CLIGIStailrite, o r situatio n,
Prio r o r Pending Litigatio n Date:04101/20nr,
All o ther terms and co nditio ns o f this Po licy remain unchanged.
AUTHORIZED REPRECRE rATIt is DA I Ei
Pi q ;',, 1 Of 1
Restricted Fo r Use in Co nnectio n with Plan Co nfirmatio n OnlyWMI PC 000701359829.00010
other terms
in
o
Return
Privileged
and Confidential
BOARD OF DIRECTORS MINUTES
the Company
held its
February
meeting
on
Tuesday February 21 2006
i
n
Seattle Washington
Present were Farrell Frank
Killinger Leppert Lillis Matthews Murphy Osmer McQuade Pugh Reed Smith Stever
and
Wood Mr
Killinger presided
Also
present were Casey Chapman David Horvath Kido
Porter Rotella Saunders Schneider and
Lynch secretary
Messrs
Leppert
and Saunders
attended
by means of a conference
telephone
that enabled all
participants
to hear one
another The Board of the
Company
met
i
n
joint
session with the Board of Directors of
Washington Mutual Bank which
i
s the primary banking institution subsidiary
of the
Company
Approval
of
Januay 17 2006 Meeting Minutes
Mr
Killinger
submitted the minutes of the
January 17 2006
meeting
On motion duly
approved
the minutes
Financial Updates
Mr Casey reported that net income
i
n
January
2006 was greater
than
planned
as a
result of favorable
developments i
n the Card Services
group
The economic environment was
adverse as the
spread
between the interest rate on the ten
year
interest rate
swaps
and the
three month London InterBank Offer Rate became smaller
i
n
January
The net interest
margin
shrank
i
n
January The cost of hedging mortgage servicing rights
S
s
continues to be
high and gain on the sale of loans
i
s
relatively
low Customer interest
i
n
adjustable
rate
mortgage
loans ARMS has declined as a result of the small difference between short term
and long term rates Offsetting these factors the Card Services
group produced
results that
were significantly greater
than
planned i
n
January i
n
part as a result of a securitization
Mr
Casey
submitted a written
report
on six
key
factors affecting 2006 earnings average
asset
growth
retail
banking
fee
growth
the net interest margin I noninterest income
credit
provisioning
and noninterest
expense
He noted that the annualized run rate of
growth i
n
retail banking fees
i
n
January was greater than the
plan
for 2006 He discussed
prospects
for a
reduction
i
n the NIM and i
n noninterest income
I
n
response
to a
question by
Mr
Lillis
Mr
Casey reported on the
Companys average
or normalized NI M
and Mr
Killinger provided
information with regard to high points of the NIM
i
n the past
The results of
managing
MS Rs
i
n
January
were worse than planned reflecting high hedging expenses
Total assets were less
than planned for the month Mr Casey
noted the
possibility
of
repurchasing
shares of the
Companys stock He also reported
that
aggregate deposit
balances were less than
planned
Income for the month was increased
by
the
receipt
of a $134 million
judgment
for the HF
Ahmanson I Home
Savings
Goodwill lawsuit
Mr Rotella noted that all secured lending businesses are under
pressure
He
emphasized the importance of maintaining strong
controls on lending at this time
Mr Kido
reported on the Retail Banking and Financial Services
group
The
growth i
n
the total number of retail and business checking accounts was greater
than planned for
January
As a result of a shortfall
i
n the growth
of time
deposits
and certain other accounts
however deposit growth i
n
January was not as great
as planned First lien home
equity
loan
originations
and second lien home
equity
loan originations also were less than
planned
Growth
i
n the number of retail
banking
households served was greater
than
planned
as a result of an
increase
i
n the number of checking accounts
131168
1 WM Confidential Limited Access
APPROVED BY THE BOARD OF DIRECTORS APRIL 18 2006
HIGHLY CONFIDENTIAL
Return
The net interest income of Retail Banking and Financial Services for
January
2006 was
more than million
greater than planned
Noninterest income was less than
planned
and
noninterest
expense was greater
than
planned
Net income after tax was greater than planned
Mr Kido reported that the new u Free Checking product would be launched on
March 13 He also noted initiatives to coordinate with the Card Services
group
to introduce
credit cards
i
n all retail
banking
and financial services stores
by
the end of
April
Mr Rotella
reported
on a
pilot program
to
preapprove
credit cards at the time deposit accounts are
opened He assured the Board that crosssales will be tracked carefully I
n
response
to a
question by Mr Frank Mr Kido reported on financial modeling
for the
monthly analysis
of new
checking accounts and Mr Rotella indicated that the
planning
has been conservative including
analysis
of a worstcase scenario Mr Kido submitted an estimate of the percentage growth i
n
fee income expected as a result of the addition of the new account to Retail
Bankings array
of
products At Mr Killingers request
Mr Rotella described
plans
for the introduction of the new
account including advertising
and executive visits to retail
banking
and financial services
stores
I
n
response
to
questions by
Messers Frank Lillis and Matthews
Mr
Killinger
and r
Rotella
reported
on the features and marketing title of the new account
Mr Rotella submitted a report on improvement i
n account and household
growth i
n the
geographic
market that had been the
subject
of a special report
to the Board
i
n
September
2005 Subsequent reports
to the Board will
aggregate
information on new markets Mr Rotella
noted that new stores are contributing a majority of account growth
Mr Kido noted that the
innovative practices developed i
n the test market had been
adopted i
n other markets
I
n
response
to a question by
Mr Smith Mr Kido identified factors that are important
to success
i
n
attracting new households and accounts
Mr Saunders
reported
on the results of the Card Services
group i
n
January The
group
built on its momentum from the fourth quarter of 2005 and
i
s
substantially ahead of the plan
for
income
i
n
January Net credit losses were lower than planned
for the month New accounts
were substantially more numerous than
planned
due to continued
strong performance i
n the
retail channel and other factors Net income was more than $111 million greater than planned
resulting i
n an operating efficiency ratio of 255 percent
The number of
employees i
n the
group
was greater than planned
due to
delays i
n the relocation of backoffice facilities and the
sale of branch facilities
Mr Schneider
reported
on the Home Loans
group
The environment continues to be
challenging
as the relatively flat yield curve induces customers to seek
hybrid
and fixed rate
loans The cost
per
loan funded was greater than planned
due to a smaller number of funded
loans The
group
has taken several actions to reduce costs including the elimination of
temporary help
and
reducing
the number of loan fulfillment centers The
integration
of
Long
Beach
Mortgage Company into the Home Loans
group i
s
expected
to result
i
n further savings
MS Rs continue to be
very expensive
to
hedge
With regard to early payment
default
repurchase reserves at
Long
each
Mortgage Company however Mr Schneider reported
that
reserves are aropriate I
n
response
to a
question by Mr Matthews Mr
Casey
commented
on the prospects
for the first
quarter
of 2006 Mr Rotella noted the effect of
repurchases
and
restructuring by Long each Mortgage Company Mr Schneider reported
that
mortgage
banking competitors
are encountering difficulties and Mr
Killinger
noted the challenging
environment for the Home Loans
group
Mr Rotella reported that the Commercial
groups multifamily loan originations i
n
January
2006 were
greater
than
any preceding January although they were less than the
aggressive
plan
The amount of
multifamily
loans and securities on the balance sheet at the end of
131168
HIGHLY CONFIDENTIAL
Return
WIVI Confidential Limited Access
Privileged
and Confidential
January based on a sub segment view was close to the planned level Commercial Mortgage
Lending which offers a standardized
process
with relatively low fees for smaller commercial
real estate loans also had
substantially greater originations i
n
January
2006 than
i
n December
2005 Net interest income was less than planned primarily due to a shortfall
i
n net interest
spreads i
n
multifamily lending and commercial real estate lending
Written Financial
Report
r Killinger
also submitted Mr
Caseys
written Financial
Report
with
regard
to the
Companys
financial
performance i
n the month of
January
2006 This written
report
included
the following sections Management Comment Comparison of January 2006 to December
2005 Financial Highlights including Interest Income Interest Expense Net Income
Profitability
Asset
Quality Capital Adequacy
and
Key
Business
Indicators
Consolidated
Statements of Financial Condition and Net Interest
Spread
and
Margin
R2g2rt
on Cost Reduction Initiatives
Mr Rotella noted the
importance
of reductions
i
n sts Ms Horvath and Mr Porter
submitted a report on initiatives for this
purpose
Mr Porter
specified
the current forecasted
expense
run rate He noted the
challenging
interest rate environment the anticipated effect of
restructuring
and issues related to the
complexity
of certain businesses Ms Horvath
submitted an action
plan
for
reducing
costs
i
n this
environment including a new process
for
hiring employees
who do not serve customers
directly
restrictions on the use of consultants
reductions
i
n
signing
limits on expense approvals prioritization
of current
projects
to eliminate
projects with a lower payback the alignment of operational excellence resources to the
highest
value projects
and the use of alternative sources I
n
response
to a question by
Mr Stever Ms
Horvath noted issues
relating
to customer
facing positions and back office positions Mr Casey
noted that the
response
differs according to business unit and Mr Rotella noted the
importance of preserving the effectiveness of Retail Banking
stores
I
n
response
to a question
by
Mr Lillis Mr
Casey reported on personnel
costs as a percentage
of
personnel
cost
reductions and Mr
Killinger
noted the
importance
of
reducing
low
priority programs
with low
estimated
payoffs
Mr Porter reported on next steps including assigning
the
highest priorities
to
projects
that are expected to provide the greatest benefit i
n 2006 He noted the
importance
of
preserving significant revenue opportunities Progress
will be monitored against objectives
Ms Horvath and Messrs Porter and Rotella then left the meeting
Voice of the Customer
Rego
Mr
Killinger
submitted Mr RostasVoice of the Customer Report
The
report
described
the results of initiatives to
improve
customer
loyalty
and reduce the number of customer
complaints I
n
response
to a question by Mr Stever
Messers David and
Killinger reported on
changes i
n the targets under the Leadership
Bonus
Program
for customer satisfaction
i
n the
Home Loans group
and the Commercial
group
as a result of the transfer of Long Beach
Mortgage
to the former
group
from the latter
group
Economic
CommenjM
Mr
Killinger
submitted Mr Longbrakes
economic outlook
commentary
for
February
The written commentary included a summary
of recent
developments analysis
and
projection
of trends
131168
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Investor Relations
R2port
Mr
Killinger
submitted the Investor Relations
report
He also
reported on receipt
of a
letter from a
large
institutional investor
I
n
response
to a question by Mr Reed Mr Killinger
assured the Board that the information to be provided to this investor
i
n
response
to this letter
would be the same as
i
s available to all investors
I
n
response
to a question by
Mr Matthews
Mr
differing approaches
of various investment
analysts
and Mr
Killinger
commented
i
n
changes i
n the
composition
of the ranks of analysts on the sell side
I
n
response
to a question by Mr Frank Mr Casey reported on developments relating to analysts
I
n
response
to a question by Mr Lillis Mr Reed and Mr
Casey
commented on the
percentage
of the Companys
stock held
by
institutional investors
I
n
response
to a question by
Mr
Matthews Mr Casey reported that certain shareholders tend to be long term investors
RegulatoEy
Mr
Killinger
submitted Mr Robinsons
report on regulatory
matters The report included
information about matters requiring oard attention and the current examination
Audit Committee
Rep2rt
Mr Frank
reported
on the
meeting
of the Companys Audit Committee The Committee
met
i
n
joint session with the Audit Committeeof WMB
The Committee reviewed a report on compliance
with Section 404 of the
Sarbanesxley Act The Chief Financial Officer assured the Committee that
appropriate
remedial
measures will be taken to
rectify
deficiencies
I
n addition the Home Loans Group President
updated
the Committee on the need
t
o
repurchase
certain loans that had been sold by Long
Beach Mortgage Company
Mr Frank reported that the Committee had reviewed a report
from the Division
Executive for
Corporate
Tax about reconciliation of accounts and related issues At this point i
n
Mr Franks
report
to the Board i
n
response
to a question by Ms Pugh Mr Casey reported to
the Board with regard to work to reconcile the accounts
I
n
response
to a question byMr Lillis
Mr Casey identified the
years
that
may
be subject to reconciliation
I
n
response
to a
question
by Mr Frank Mr
Casey
assured the Board that conservative estimates were used for loan fees
and
accounting
Mr Frank resumed his
report
on the Audit Committee meeting
The Committee
reviewed the
management report and attestation
process required by
the Federal Deposit
Insurance
Corporation Improvement
Act of 1991
F ICIAfor depository institutions WMB
and the
Companys
smaller federal
savings
bank subsidiary are
i
n
compliance
The FDICIA
process
has been
merged
with the management report
and attestation
process required by
the
similar and more recent Sarbanes xley
Act for the
Company
The Committee reviewed audit and non audit services provided by the independent
auditor The Controller described the
proposed
fees for the 2006 audit which are estimated to
be
essentially unchanged
from the
previous year
The audit engagement partner
discussed
expectations
with
regard
to anticipated assistance from Internal Audit Subsequently the
Committee reviewed the Independent
Auditors
qualifications
to serve i
n 2006 Thereafter
i
n
an executive session the Committee approved
the selection of the Independent Auditor
131168
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Identification of
i
t Committee Financial e
The Audit Committee also reviewed information with regard to the expertise of its
members and recommended a Board determination of Mr Franks
qualifications
to serve as an
Audit Committeefinancial
expert
Mr Frank recused himself from voting with regard to this
determination On motion duly made and seconded the Board determined that Mr Frank
satisfies the requirements for an audit committee financial expert
under rules established by
the Securities and
Exchange
Commission
Audit CommitteeReview Actions on Reports
The Committee reviewed the Controllers report on proposed changes i
n the
policy on
audit and non audit services to
comply
with recent federal rules The Committee
approved
these changes
The Controller also
reported on critical
accounting policies
to be included
i
n the
annual
report
These included
policies relating
to fair value measurement the allowance for
loan and lease losses accounting
for derivatives and hedge accounting
The Committee approved certain statements to be included i
n
the
proxy
statement for
the 2006 annual meeting These statements included the description
of fees for the services of
Deloitte Touche LLP the statement relating
to the ratification of the selection of the
independent auditor and the draft report of the Audit Committee
i
n the
proxy
statement
The Committee reviewed a report from the General Counsel with
regard
to the
hiring
of
former employees
of
D
eloitte All such
hirings were
i
n
plian
with the
policy
The
independent
auditor submitted draft
reports
on the financial statements to the
Committee including determinations under Section 404 of the Sar anes xley
Act The final
reports will be issued on March 8th No material weaknesses are expected
f Auc Committee Charter
Mr Frank reported that the Committee considered and recommended Board
approval
of
an amended version of the Committees charter The amendments
provided
for
delegation
of
responsibility
to a member of the Committee and clarified
responsibilities
with
respect
to the
annual evaluation and succession
planning subject
to such changes as the Governance
Committee
may
recommend On motion duly made and seconded the Board
approved
the
charter amendments
Audit Committee Action Board Correspondence i
s
Mr Frank
reported
that the Committee had performed its annual review of the
policy
regarding
the
handling
of correspondence addressed to the Board of Directors
Exercising
its
delegated authority
under the terms of this policy the Committee
adapted
certain amendments
to the policy
Changes in Code of Ethics for Senior Financial Officers
Mr Frank reported that the Audit Committee had reviewed and recommended that the Board
approve changes
to the Code of Ethics for Senior Financial Officers including a transfer of
authority
for the annual review of the Code to the Committee On motion duly
made and seconded the
Board approved
the
changes
131168
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Other
i
t Committee Matters
Mr Frank
reported
that the Committee had reviewed and
approved
the 2006 Service
Plan for the Internal Audit
Department
The Committee also reviewed Internal Audits
approach
for audits of foreign outsourcing
and reviewed an
update
on the renewal of directors and
officers liability
insurance Mr Frank advised that
coverage
would be
approximately
the same
The Committeealso held an executive session with
management
The Home Loans
Group
President
reported on improvements i
n controls for certain
lending operations
The Committee met
i
n executive sessions with the independent auditor and the internal
auditor Subsequently i
n another executive session the Committee approved the appointment
of Deloitte and Touche LLP as the independent auditor as noted above
Governance Committee o
Mr Reed
reported on the
meeting
of the
companys
Governance Committee The
Committee met
i
n
joint
session with the Governance Committee of B
Amendment of Committee Charters
Mr Reed
reported
that the Governance Committee recommended
changes A i
n its
charter to
clarify
matters
relating
to
oversight
of the
strategic planning process
Directors
resignations
and
compensation
and B i
n its charter and the charters of the Audit Committee
Corporate Development Committee Corporate Relations Committee Finance Committee and
Human Resources Committee to clarify responsibilities with respect
to the annual evaluation
and succession planning On motion duly made and seconded the Board
approved
these
changes i
n the charters as recommended
by
the Committee
Changes in Corporate
Governance Guidelines
Mr Reed
reported
that the Governance Committee had reviewed and recommended
Board
approval
of certain
changes i
n the
Corporate
Governance Guidelines and a change i
n
the Guidelines for
Determining
Director
Independence as set forth
i
n
Appendix A On motion
duly
made and seconded the Board approved these changes
Determination Director Independence
Mr Reed
reported
that the Governance Committee reviewed information necessary
for
determination of each Directors independence under the Washington
Mutual Guidelines for
Determining Director Independence
The Committee recommended that the Board determine
that all directors with the exception
of Mr
Killinger
Ms
Pugh
and Mrs Farrell are
independent
On motion duly made and seconded the Board made this determination A
copy
of the resolutions adopted by the Board
i
n
making
this determination will be
kept i
n the minute
book as an appendix to these minutes
Declassification of tBoard and Related Actions
Mr Reed also
reported
that the Governance Committee recommended amendments of
the
Companys
Articles of Incorporation and bylaws to declassify
the
Companys
Board of
Directors and establish annual director elections beginning i
n 2007 On motion duly made and
seconded the Board resolved to
approve
the amendment of the Articles for submission to the
Companys shareholders
and to amend the
bylaws
effective
upon
the filing of the amendment
of the Articles A
copy
of the resolutions
adopted by
the Board will be
kept i
n the minute book
131168
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
as an appendix to these minutes
Human Resources Committee
Mr Stever submitted the
report
of the
Companys
Human Resources Committee The
Committee met telephonically on Friday February 17 2006 i
n
joint
session with the Human
Resources Committeeof WMB
Amendment of Resources Committee Charter
Mr Stever submitted the Committees recommendations for changes i
n the Committees
charter subject
to further
changes
recommended
by
the Governance Committee On motion
duly
made and seconded the Board resolved to
approve
these
changes
A
copy
of the
resolutions
adopted by
the Board will be kept i
n the minute book as an appendix to these
minutes
Other Human Resources Committee Matters
Mr Stever
reported
that the Committee had reviewed the draft report of the Committee
for the
proxy
statement to be sent to shareholders The Committee directed certain
changes i
n
this report prior
to its
incorporation
into the
proxy
statement
Amended and Restated i Incentive Plan
Mr Stever reported that the Committee recommended the Boards approval
of the
Amended and Restated 2003 Equity Incentive Plan for submission to shareholders Among
other
things
the amendments would increase the number of shares available for grant under
this
plan
Mr Stever noted a difference between option grants and restdcted stock or
performance share grants On motion duly made and seconded the Board resolved to
approve
this plan and directed management
to submit this
plan
for
approval by
shareholders at the
April
2006 annual
meeting
Mr
Killinger
recused himself from deliberations and
voting
of the Board
with
regard
to this matter A
copy
of the resolutions adopted by the Board will be
kept i
n the
minute book as an appendix to these minutes
Executive Incentive Compensation Plan
Mr Stever reported that the Committee had approved
the Executive Incentive
Compensation
Plan and directed management to submit this
plan
for
approval by
shareholders
at the April 2006 annual meeting
This new umbrella
plan imposes
an
aggregate
limit on
incentive compensation for executives I
n
response
to a comment
by
Mr Lillis Mr Stever
noted that 05 percent of a companys
net income
i
s
a common percentage limit and reported
on the
purpose
of the limitation
I
n
response
to a question by Mr Reed Mr Stever described
the
scope
of
coverage
of the limitation
I
n
response
to a question by
Mr
Murphy
Mr Stever
described the nature of the limitation
Preparations
for Annual Shareholder Meeting
Mr Killinger requested that the Board approve
certain actions
i
n
preparation
for the
submission of matters to the shareholders at the 2006 annual
meeting
He noted procedures
for further comments by Directors on the draft
proxy
statement On motion duly
made and
approve
the
preparations
for this annual meeting A
copy
of
the resolutions adopted by
the Board will be kept i
n the minute book as an appendix to these
minutes
i31168
7 WIVI Confidential Limited Access
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Long Beach y Reorganization
Mr Killin er submitted a comprehensive set of resolutions to
approve
all phases of the
corporate reorganization involving Long
Beach
Mortgage Company
On motion
duly
made and
approve
this
reorganization
A
copy
of these resolutions will
be
kept i
n the minute book as an
appendix
to these minutes
Clarification of
Support
for
Capital Raising
Transaction
by
WMB
Mr Klllin er submitted a proposal
for
clarifying
amendments of the resolutions
adopted
by
the Board at its
January meeting i
n connection with the planned issuance of securities the
LLC Preferred
Securities by a Delaware limited
liability company
that would be
organized as
an operating subsidiary
under WMBs indirect
subsidiary University Street Inc Investors
would
purchase
certain other securities
the
SPE Securities from two special purpose
entities each of which will use the proceeds of its issuance of SPE Securities to finance the
purchase of one of the two classes of LLC Preferred Securities The
Company
will serve as a
source of
strength
for WMB as the SPE Securities will
automatically
be
exchangeable
into one
share of a new class of preferred stock of the Company WMI Preferred or a share of
depositary stock representing a fractional interest
i
n I Preferred
upon
the occurrence of a
Supervisory Event as defined
i
n the materials submitted to the
Board I
n
response
to
questions by
Mr Matthews r Casey
confirmed that executives do not have
any personal
interest
i
n the
special purpose
entities
being
used to effectuate this transaction On motion duly
unanimously adopted
the clarifying resolutions A
copy
of
these resolutions will be kept i
n the minute book as an appendix to these minutes
Officer
Elections
Promotions and Transfers
On motion
duly
made and seconded the Board approved certain officer
elections
promotions transfers and other
changes
A
copy
of a schedule of all such
changes as
submitted to the
Board
will be
kept i
to these minutes
Executive Session with CEO
Ms Chapman and Messrs David and Lynch left the meeting The members of the
Board including Mr Killinger
discussed such matters as the Board deemed to be appropriate
for its discussion
Nominees r Election to Board by
Shareholders
Mr Reed reported on the Governance Committees recommendations of candidates to
be nominated
by
the Board for election as Directors
by
the shareholders at the Companys
2006 annual
meeting
On motion
duly
made and seconded the Board resolved to nominate
these candidates for election A
copy
of the resolution
adopted by
the Board regarding
nominees for Directors will be kept i
to these minutes
Mr Reed submitted the report of the Governance Committee relating to Regina Montoya
motion duly made and seconded the Board directed
management
to
complete
certain checks of
references and contingent on the completion
of this
process
with no negative references approved
the nomination of s Montoya as a candidate for election by the shareholders at the
Companys
2006 annual
meeting
for a term to
expire i
n 2007
i
n addition to the candidates whose names are
set forth
i
n the resolutions adopted by the Board regarding
nominees for Directors and
i
n the
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HIGHLY CONFIDENTIAL
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resolutions
adopted by
the Board
regarding matters to be submitted to the shareholders at the 2006
annual
meeting
Remainder Executive Session
Mr David and Mr Killin er then left the
meeting
The Board then discussed matters
that were deemed appropriate for discussion
by
the Board i
n its discretion
There
being no further business the
Appendices
Approval
Director
Independence
Determinations
Approval
Declassification of Board of Directors
Approval of Human Resources Committee Charter
D
Approval
of Amended Restated 2003
Equity
Incentive Plan
Approval Comprehensive Preparations
for 2006 Annual
Meeting
F
Approve
Action
Relating
to
Long
Beach e Company Reorganization
G University Street Inc Issuance Preferred Securities
Schedule of Officer Elections Promotions Transfers and r Changes
I
Approval
of Nominees for Election tote Board
by
Shareholders
1311
HIGHLY CONFIDENTIAL
Return
Confidential WM Limited
I Director lgdependence Determinations
VED that the Board hereby finds that all of tcurrent Company directors other than
r
Mrs Farrell and s Pugh are independent
directors
pursuant
to the
Washington
Director
Independence
Guidelines
RESOLVED FURTHER that the Board hereby finds that all of the current members of the
Corporations
Audit Committee are independent
directors
pursuant
to the
applicable
rules and
regulations
of the Securities
Exchange
Commission and the New fork Stock
Exchange
131168 10 Confidential Limited Access
HIGHLY CONFIDENTIAL
Return
Appendix
B
Approval of Declassification of Board of Directors
WHEREAS based on the recommendation of the Governance Committee the Board of
Directors deems
i
t
i
Company
to
change
the terms of all
Company
directors from three
year
terms to one
year
terms effective as of the annual meeting
of
Company
shareholders
i
n
2007
NOW THEREFORE IT RESOLVED that ARTICLE IV of the
Companys
Amended
Articles of
Incorporation
be amended and replaced i
n its entirety with the following
ARTICLE I
BOARD OF DIRECTORS
The Company shall be managed by a Board of Directors The number of directors shall
be stated
i
n the Companys Bylaws provided however that such number shall not be less than
five 5 The directors elected at
any
annual meeting
of shareholders
prior
to the 2007 annual
meeting of the Companys shareholders shall be classified into three classes of elected
directors
designated as Class 1 Class 2 and Class 3 directors Each class shall contain
onethird
of the total number of directors as near as
may
be The terms of the Class 1 directors
shall expire at the first annual shareholders
meeting
after their election The terms of the Class
2 directors shall
expire
at the second annual shareholders
meeting
after their election The
terms of the Class 3 directors shall
expire
at the third annual shareholders meeting after their
election At each annual meeting of the Companys shareholders from and after the
Companys
annual
meeting
of shareholders to be held
i
n
2007 the directors shall be elected for
terms
lasting
until the next annual
meeting
of shareholders following their election and until
their successors are elected and qualified subject to their earlier death resignation or removal
A
vacancy
on the Board of Directors
may
be filled by
the Board
i
n accordance with the
applicable provisions of the
Companys Bylaws
A director elected to fill a
vacancy
shall be
elected for a term of office
continuing only
until the next election of directors by shareholders
any
Senior Executive Vice President any
Senior Vice
President and Associate General Counsel the
Secretary
or
any
Assistant Secretary any
of the
foregoing an Authodzed
Officer
are
hereby
authorized and directed to submit a proposal
and resolution to the Companys shareholders for approval of the foregoing
amendment to
Article IV of the Companys articles of incorporation at the 2006 annual
meeting
of
shareholders
RESOLVED FURTHER that the Authorized Officers are hereby
authorized and directed
to take
any
actions that are aropriate i
n the discretion of any
of them to effect the
forgoing
resolutions
RESOLVED FURTHER that effective
upon
the filing of Articles of Amendment with the
Washington Secretary
of State to amend the Companys
Articles of
Incorporation pursuant
to
the foregoing resolutions Section 42 of the Companys
Amended
Bylaws
shall be amended
and replaced i
n its entirety with the following
Section 42 Number Tenure Qualification
The number of directors set
forth
i
n Article
I
i of these bylaws may
be increased or decreased from time to time by
amendment to or
i
n the manner provided i
n these bylaws
No decrease however
131168
HIGHLY CONFIDENTIAL
Return
shall have the effect of
shortening the term of
any
incumbent director unless such
director resigns or
i
s removed
i
provisions
of these
bylaws
The
directors shall hold such terms as set forth
i
n the articles of incorporation I
n all cases
directors shall serve until their successors are duly elected and qualified or until their
earlier
resignation
removal from office or death Directors need not be residents of
the state of
Washington
or shareholders of the
corporation
any
Authorized Officer
i
s
hereby authorized and directed to
take
any
actions that are appropriate i
n the discretion of
any
of them to effect the forgoing
resolution
131168
HIGHLY CONFIDENTIAL
Return
WM I Limited Access
Privileged
and Confidential
f
a
l
of Human Resources Committee Charter
HEREAS the Board of Directors previously adopted
the Human Resources Committee
Charter
the
uC
rtr and
HEREAS
the Committee deems
i
t advisable to amend the Charter and
WHEREAS the amended Charter must approved by the Board or Directors
NOW THEREFORE IT IS HEREBY RESOVED that the Committee hereby
recommends that the Board of Directors
approve
the attached revised Human Resources
Committee Charter
131168
13 Confidential Limited Access
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
ix Approval of Amended Restated 2003 Equity Incentive Plan
WHEREAS the
Company previously adopted
the 2003
Equity
Incentive Plan
the Plan to
provide
for awards of stock
options
restricted stock performance shares and other
types
of
equity
vehicles Equity Awards and
WHEREAS the Board of Directors deems
i
t advisable to amend and restate the Plan to
among
other
things
increase the number of shares that
may
be issued or
subject
to an award under
the Plan and
WHEREAS the Plan must be
approved by
the Board of Directors and the
Companys
shareholders
NOW THEREFORE IT IS RESOLVED that the Board of Directors hereby approves
the
attached Amended and Restated 2003 Equity Incentive Plan the New Plan substantially i
n
the form attached and
FURTHER RESOLVED that Board of Directors
hereby
authorizes and directs the
Companys
senior executive officers to make
any
amendments to the New Plan
they
deem
necessary
to
secure the approval of a majority
of the
Companys
shareholders or to
clarify provisions of the
New Plan provided that such amendments do not materially increase the Companys liability
under the New Plan and
FURTHER RESOLVED that the Board hereby directs
management t
o submit the New Plan as
amended
i
preceding paragraph to the shareholders
i
n the 2006
Proxy
131168
14 Confidential Limited Access
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Appendix E
Approval
of Comprehensive Preparations
for 2006 Annual etin
any
Senior Executive Vice President any
Senior Vice President
and Associate General Counsel the
Secretary
or
any
Assistant
Secretary any of the
foregoing
an Authorized
Officer or
any
one of them
acting
alone
is hereby
authorized and directed to
take
any
action that
i
s
appropriate i
n the discretion of
any
of them to submit
proposals
for
election of the Kerry K
Killinger
Thomas C
Leppert
Charles M Lillis Michael K
Murphy
and
Orin C Smith the Nominees
n
ratification of the Auditor Appointment to the shareholders the
approval
of the
Washington
Mutual Executive Incentive Compensation Plan the approval
of a
Company
Amended and Restated
Equity
Incentive Plan and the
approval
of a management
proposal to declassify the Board of Directors and establish annual director elections as items of
business the items at the Annual Meeting and to
oppose
a shareholder proposal regarding
disclosure of the Corporations political contributions i
f
i
t
i
s
brought at the Annual Meeting the
Shareholder
Proposal
RESOLVED FURTHER that the Board of Directors recommends that the shareholders vote
FOR all of the Items and AGAINST the Shareholder Proposal
pursuant
to Article lll Sections 31 and 33 of the
bylaws
of the
Corporation
the Board of Directors
hereby declares that the Annual
Meeting
shall be held
i
n
Seattle Washington on Tuesday April 18 2006 at 130
pm
at the S Mark
Taper
Foundation
Auditorium at
Benaroya all 200
University Street Seattle Washington
RESOLVED FURTHER that the
purposes
of the Annual Meeting shall be to act on the Items
and Proposal and to transact such other business as
may properly come before the meeting or
any adjournments
thereof
pursuant
to Article III Section 34 of the
Corporations bylaws
the
Board of Directors hereby sets February 24 2006 as the record date for determination of the
shareholders entitled to notice of and to vote at the Annual
Meeting
LV FURTHER that the Board of Directors hereby approves
the Proxy Statement
i
n
the form presented to the Board and that the Authorized Officers are hereby authorized
empowered
and directed to finalize the
Proxy
Statement with such
changes as shall be
appropriate
with the advice of counsel and to
incorporate i
n such
Proxy
Statement
1
a
Report
of the Human Resources Committee
i
n such form as the Human Resources Committee shall
approve
and ii a
Report
of the Audit Committee
i
n such form as the Audit Committee shall
approve
RESOLVED FURTHER that the Authorized Officers and each of them
acting alone i
s
hereby
authorized empowered
and directed to make or to
designate any person
to make any
necessary filings
with the Securities and
Exchange Commission The New York Stock
Exchange
and
any
other appropriate Federal or State governmental entities or regulatory
authorities
i
n connection with the preparation and distribution of the Notice Proxy Statement
and Form of Proxy
LVED FURTHER that the Authorized Officers and each of them acting alone i
s
hereby
and directed to cause to be mailed at least 20 days prior to the Annual
Meeting
to all shareholders
eligible
to vote at the Annual Meeting copies
of the Notice Proxy
Statement Form of Proxy and Annual Report and i
f
necessary
to secure a quorum
of
shareholders a Reminder
Notice
all
pursuant
to the
Corporations bylaws and applicable
regulations
131168
15 WIVI Confidential Limited Access
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
RESOLVED FURTHER that William L
Lynch and
Fay
L
Chapman are
hereby appointed
as
proxies
of the Board of Directors to vote and act with
respect
to the shares of common stock of
this Corporation for which
proxies
will be solicited for use i
n connection with the Annual
Meeting
RESOLVED FURTHER that the Board of Directors hereby authorize Automated Data
Processing
Inc to act as Inspector
of Elections for the Annual
Meeting
HIGHLY CONFIDENTIAL
Return
Appendix Approve Action Relating to Long Beach e Company Reorganization
WHEREAS the Board deems
i
t
i
n the best interests of the Bank to effect together with certain
affiliates a reorganization the Reorganization
the first
phase
of which would occur on or
about arch 1 2006 and would result
i
n
Long
Beach
Mortgage Company Long Beach
becoming
a firsttier
wholly
owned
subsidiary
of the Bank and the second phase of which would
occur on or about July 1 2006 and would result
i
n the assets of Long Beach becoming vested
i
n the Bank
WHEREAS i
Reorganization
the Bank desires to enter into a
plan
of
reorganization substantially i
n the form presented at this meeting the Plan of Reorganization
WHEREAS following the formation of an interim federal savings association Interim
Association by Washington Mutual
Inc
WMI
the contribution
by
I of all of the stock of
Long
each to Interim Association and the contribution
by
I of all of the stock of Interim
Association to New American
Capital Inc the Bank desires to
engage i
n
a merger
transaction
the
Bank
Merger
with Interim Association
i
n which Interim Association will
merge
with and
into the Bank pursuant to an agreement for
merger
and a plan
of
merger substantially i
n the
forms presented at this
meeting the Agreement
for
Merger
and the Plan of
Merger
respectively
WHEREAS the Plan of
Reorganization contemplates that following the Bank Merger Long
Beach will be converted the Conversion
from a Delaware
corporation
to a Delaware limited
liability company the LLC
WHEREAS the Plan of
Reorganization contemplates
the establishment following
the
Conversion of a Delaware common trust
the Trust having
the Bank as the sole beneficiary
and trustee and
having
a
thirdparty
administrative trustee
the ThirdParty Trustee as the
sole administrative trustee of the Trust
WHEREAS the Plan of
Reorganization contemplates that following the establishment of the
Trust the LLC will be merged with and into the Trust the
Trust
Merger pursuant
to an
agreement
and plan of
merger substantially i
n the form
presented
at this
meeting the
Trust
Merger Agreement
and
WHEREAS the Plan of
Reorganization contemplates that following the Trust
Merger
the
ThirdParty
Trustee will
resign resulting i
n the assets of the Trust
being
vested
i
n the Bank
THEREFORE IT IS RESOLVED that the Reorganization
and the Plan of
Reorganization
are
hereby approved and each of the Authorized Officers
i
s
hereby
authorized to execute and
deliver the Plan of Reorganization on behalf of the Bank
Merger
the Agreement for Merger and the Plan of
Merger are
hereby approved
and
adopted
and each of the Authorized Officers
i
s
hereby
authorized to
execute and deliver the
Agreement
for
Merger
and the Plan of
Merger on behalf of the Board
RESOLVED FURTHER that the Trust Agreement
and establishment of the Trust are hereby
approved and each of the Authorized Officers
i
s
hereby
authorized to execute and deliver the
Trust Agreement on behalf of the
Company
RESOLVED FURTHER that the Trust Merger and the Trust Merger Agreement are hereby
approved
and
adopted
and each of the Authorized Officers i
s
hereby
authorized to execute and
deliver the Trust Merger Agreement on behalf of the Company
131168
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WM
t
i I Limited Access
RESOLVED FURTHER that for the
purposes
of these resolutions each of the
following
persons
shall be an Authorized Officer the Chief Executive Officer the President and Chief
Operating r the Chief Financial Officer the Senior Executive Vice President and
any
Executive Vice President
RESOLVED FURTHER that each of the Authorized Officers
i
s
hereby
authorized on behalf of
the Bank to execute and deliver
any
consents of the Bank as shareholder or member of
any
entity
involved
i
n the Reorganization to execute and deliver
any
other documents or writings as
may
be
necessary
or appropriate i
n such Authorized Officers judgment i
n connection with or to
effect the Reorganization or the transactions contemplated by these resolutions and to take
any
other actions including
without limitation the selection of the
ThirdParty Trustee as may
be
necessary or appropriate i
n such Authorized Officers judgment i
n connection with or to effect
the Reorganization or the transactions contemplated by these resolutions and
RESOLVED FURTHER that the Chief Executive Officer
i
s
authorized on the advice and
consent of the General Counsel on behalf of the Bank to make such
changes
with regard to
the
Reorganization including
without limitation changes i
n the Plan of Reorganization the
Agreement
for Merger and the Plan of Merger as
may
be necessary or appropriate i
n their
joint
judgment to conform to all applicable Federal regulatory guidance i
Reorganization or the transactions
contemplated by
these resolutions or to effect the
Reorganization or such transactions
i
n
compliance with all applicable Federal regulatory
requirements
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
fix G University Street
inc Issuance of Preferred Securities
WHEREAS Washington Mutual Inc
the Company indirectly owns all of the issued and
outstanding common stock of University Street Inc University Street
WHEREAS University
Street
proposes
to cause the formation of a Delaware limited
liability
company the LLC
and
i
n connection therewith
University
Street and
Washington
Mutual
Bank will contribute to the LLC assets of
approximately
54 billion
i
n the
aggregate
WHEREAS i
t
i
s
proposed that the LLC will issue common interests substantially
all of which
will be issued to
University Street
WHEREAS i
t
i
s
proposed that the LLC will issue to WMB or its designee two series or classes
of preferred interests the LLC Preferred
Interests
which LLC Preferred Interests
i
n the
aggregate will not exceed 20 billion
WHEREAS
i
t
i
s
proposed that one class of the LLC Preferred Interests will have a fixed
dividend rate and the other class will have a dividend rate which
i
s fixed for
approximately
5
years
and thereafter
i
s
variable
WHEREAS i
t
i
s
proposed that the LLC Preferred Interests will be transferred to two special
purpose
entities which
i
n turn will issue substantially similar securities the SPE Securities to
investors
WHEREAS under
specified circumstances each class of SPE Securities will
automatically
be
exchanged
for
preferred
stock of the
Company
or for
depositary
shares
representing
fractional
interests
i
n
preferred stock of the Company
WHEREAS i
n
a set of resolutions adopted at its January 17 2006
meeting the
Prior
Resolutions
the Board
previously
authorized the issuance of two series of such
preferred
stock of the
Company
established substantive terms of each series delegated authority to
appropriate
officers of the
Company to determine
within the limits
specifically prescribed i
n the
Prior Resolutions the
designation
and relative
rights preferences
and limitations of each series
and
provided
for other matters
relating
to the
preferred
stock and the LLC preferred interests
and
WHEREAS the Board now desires to amend and supplement
certain of the terms of each of
the series of
preferred
stock of the
Company
and certain of the
provisions i
n the Prior
Resolutions
THEREFORE IT IS HEREBY RESOLVED that the two series of preferred stock authorized by
the Prior Resolutions shall be designated as the Series I Perpetual
Noncumulative
FixedtoFloating
Rate Preferred Stock the Series l Preferred Stock
and the Series J Perpetual
Noncumulative
Fixed Rate Preferred Stock
the
Series J Preferred Stock respectively
notwithstanding
the Prior Resolutions the Series I Preferred Stock
and the Series J Preferred Stock
collectively
the Preferred Stock
shall each have
rights
preferences
and limitations which are set forth
i
n the respective designations
for each series
presented
at this meeting subject to the completion
and
any
modification
by
Authorized Officers
as herein provided the Designations
RESOLVED FURTHER that the Board
hereby authorizes and delegates the authority to any
two of the Authorized Officers
as
defined
i
n the Prior Resolutions
to
designate finalize
determine and
complete
the
rights preferences privileges
restrictions and other matters and
t
o take such other actions relating
to the Preferred Stock subject to the limits
i
n the Prior
131168
HIGHLY CONFIDENTIAL
Return
Resolutions
relating
to the number of shares
i
n each series liquidation amount maturity
holders redemption rights sinking
fund and
convertibility
and to the
following
limits
i the Series I Preferred Stock will be at a fixed rate from issuance not to exceed 750
per
annum until March 15 2011 or another date
i
n March 2011 as provided i
n the completed
Designation
and thereafter will be at a floating
rate for each dividend
period
at a rate
equal
to
the 3month LIBOR
applicable
to such
period or i
n circumstances set forth
i
n the
Designation
475
per annum i
f
higher plus a spread which will not exceed 275 basis points
ii the Series J Preferred Stock will be at a fixed rate not to exceed 80
per annum
iii
the
Company
will be able to redeem the Preferred Stock
any
time on or after March 15
2011 or another date
i
n March 2011 as provided i
n the
completed Designation
and
iv the holders of the Preferred Stock will have no voting rights except 1 to the extent i
f
any required by Washington law and ii i
n
the event that dividends are not declared and
paid
on a series of the Preferred
or on certain other classes or series as described
i
n the
completed
Designation
then holders of the Preferred Stock
together
with
any
other classes or series
described
i
n the completed Designation will have the right to elect two directors of the
Company
at the next annual
meeting
RESOLVED FURTHER that the authorization and
delegation i
n the
immediately preceding
resolution shall subject
to the limits therein include without limitation the
authority
to
determine the number of shares of each series of Preferred Stock to be
authorized
to
determine the dividend rates to
specify
additional
redemption rights
of the
Company
to
specify
limits on the
Companys rights
to
pay
dividends on other
equity
securities
i
f dividends have not
been
paid
on the Preferred Stock to
approve
the form of
any
stock certificate and to
prepare
and authorize the filing
of articles of amendment for each series of Preferred Stock with the
Secretary
of State of the State of
Washington
RESOLVED FURTHER that the number of shares authorized
i
n the
Designations
as
completed by
the Authorized Officers as provided
herein shall
upon filing of the articles of
amendment for each series be fully reserved for issuance
RESOLVED FURTHER that the declaration of covenants or other agreements referred to
i
n
clause
iii
of the last resolution
i
n the Prior Resolutions
may
also include such other provisions
or items as
any
Authorized Officer deems
necessary
or advisable including without limitation
restrictions on dividends and distributions on the Companys other equity securities i
f dividends
are not paid on the Preferred Stock after its issuance and restrictions on the sources of funds
for
any redemptions
except as hereby
amended and supplemented the Prior
Resolutions remain
i
n full force and effect and
any
Authorized Officer together
with other
proper
officers of the
Company including
without
limitation
those authorized from time to time pursuant to the
Companys
Asset and
Liability Management Policy
and the standards and procedures
from time
to time
i
n effect
thereunder i
s
hereby
authorized to negotiate enter into execute and deliver
any
and all additional
agreements any undertakings or other documents or supplemental
agreements on behalf of the Company including
without limitation filings
or applications with
banking regulators securities regulators or stock
exchanges
domestic or foreign and to take
any
other actions i
n each case as such Authorized Officer or other
proper
officer deems to be
necessary
or advisable
i
n connection with the issuance of the Preferred Stock the LLC
Preferred Interests or the SPE Securities or to further the intent of these resolutions or the Prior
Resolutions subject
to the limits set forth
i
n these resolutions
131168
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Appendix Schedule of Officer
Elections Promotions
Transfers and Other
Changes
Dual Officer Elections
Bellavla Christopher J from none to First Vice
President
effective
February 21 2006
Officer Terminations flncl i
Resignations
Chapman Craig J Group President to none effective January 31 2006
Vanasek James Executive Vice President to
none
effective
January 3 2006
Dual OfFicer Terminations including Resignations
Grady
Kevin J Assistant
Secretary
to
none
effective
January 18 2006
Meryl Seely K Assistant Secretary to none effective January 31 2006
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
ix I
Approval
of Nominees for Election the Board by Shareholders
OLVED that the Governance Committee
hereby
recommends to the Washington Mutual
Inc Board of Directors the Board that the Board shall
propose
to the holders of the
Corporations Common Stock at the 2006 Annual Meeting of the Corporations shareholders
the election of the
following persons
to serve as directors of the Corporation for a threeyear
term
expiring
at the
Corporations
Annual
Meeting
of Shareholders
i
n 2009
Kerry illi er
Michael
Murphy
Thomas C
Leppert
Charles Lillis
Orin C Smith
131168 22 WM Confidential Limited Access
HIGHLY CONFIDENTIAL
Return
AttorneyClient
Communications
WASHINGTON
MUTUAL INC
DIRECTORS BOARD OF MINUTES
The Board of Directors of Washington Mutual Inc
the Company
held its
regular
December meeting on Monday
December
17 2007 and Tuesday December 18 2007 i
n
Seattle Washington
Present were Farrell Frank Killinger Leppert Matthews Montoya
Murphy Osmer McQuade Pugh Reed Smith and Stever Mr
Killinger presided Also
present at the beginning of the meeting on Monday evening were Messrs David and
Landefeld of the
Company
and arc Gamson a
management consultant
Executive
Session
Talent Review and
Managemen
At Mr
Killingers request
Mr Landefeld reviewed the
process leading up
to the
Boards decision at its
special meeting i
n December He distributed a document
setting
forth a chronology of events After a thorough and active discussion r Landefeld
l
e the
meeting
Mr Killinger submitted a report with regard to assessment of
capabilities and the
potential development or succession of the Executives of the Company other than the Chief
Executive Officer
CEO
Messrs
Killinger
David and Gamson left the
meeting and the
Board discussed succession planning for the CEO
position Thereafter the Board recessed
the
meeting until the
following day
Liti ation and
Investigation
Mr
Lillis participating telephonically by means of a conference
telephone enabling
all
participants
to hear one another joined
the
meeting
at the
beginning of the Tuesday
session and all other Directors continued to attend Also present at the
beginning of the
Tuesday session were Messrs Landefeld and Rotella of the Company and Lee
Meyerson
and
Barry Ostrager
of
Simpson
Thacher Bartlett LLP The
Companys Board of Directors
met
i
n
joint
session with the Board of Directors of
Washington
Mutual Bank
WMB which
i
s the
Companys primary banking
institution
subsidiary
Mr Landefeld introduced Messrs
Meyerson
and
Ostrager for an update of the legal
advice that they
had
given at the Boards December 10 2007 and November
19
2007
meetings
Mr
Ostrager reported
on
This
material has been
redacted
Following
an extensive discussion Messrs
Landefeld
Rotella Meyerson
and
Ostrager l
e the
meeting and the Board went into executive session
Subsequently
at the Boards
request
Mr Landefeld
joined
the executive session and the
Board continued its
thorough
discussion of the
subjects
of Mr
Ostragers report
Mr Landefeld
This
material has been
redacted
Approval of December 10 Corrected November 1
Meeting Minutes
Mr Kllli er submitted the minutes of the December 10 2007
meeting
and a
proposed revision of the minutes of the November 19 2007 meeting to show
correctly
that
the Board continued
i
n executive session after Messrs
Meyerson and Ostrager ceased to
attend On motion
duly
approved the minutes of the
November
19
2007 as corrected and the minutes of the December 10 2007
meeting
APPROVED BY THE BOARD OF DIRECTORS JANUARY 15 2008
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Financial Reports and Plans
Messrs Casey Cathcart David Rotella and
Lynch
of the
Company joined
the
meeting along
with John
McMurray
of WMB The materials submitted to the Board included
Mr
Caseys
written Financial Review for November 2007 reporting on the Companys
environment income statement overview balance sheet overview segment summary
specific
information for the Retail Bank Card Services Home Loans Commercial
groups
and an Appendix
of information with regard
to direct
expenses
and
headcount and the
delinquency
and net
chargeoff
trend The Board also received Mr
Caseys
written
Financial
Report
with
regard
to the
Companys
financial performance i
n November 2007
which included the following sections Financial Highlights eg Interest Income Interest
Expense
Net
Income Profitability
Asset
Quality Capital Adequacy
and
Key
Business
Indicators
Noninterest Income f Noninterest Expense comparing November 2007 with
October 2007 Consolidated Statements of Financial
Condition
and Net Interest Spread
and Margin
and his similar
report
with
regard
to the financial
performance
of the
Companys
principal banking subsidiary WMB i
n this period
As background for the Boards review of the financial and
operating plan for 2008
Mr Casey
submitted an updated projection
of
earnings i
n the form of a waterfall chart
showing
factors that
may
cause the Companys earnings for the fourth quarter of 2007 to
differ from earnings for the third quarter
of 2007 including a larger average
amount of
earning
assets for the fourth
quarter
of 2007
I
n
addition gain on sale OS and Retail
Banking
fees are expected to be larger for the fourth quarter of 2007 than for the third
quarter Card Services income
may
be reduced
by a larger
loan loss
provision
for the fourth
quarter than for the third
quarter Expenses
are
expected
to increase
i
n the fourth
quarter
due to a onetime
charge
for business
resizing
costs Net
chargeoffs
of assets
may
be
significantly larger
for the fourth
quarter
than for the third
quarter Earnings are now
expected
to be reduced
by an impairment
of the value of intangible assets
arising
from
prior
mortgage
business acquisitions I
n
response
to a question by
Mr
Frank Mr Casey
reported on possible negative
events that are incorporated
into the
assumptions underlying
the forecast for the fourth quarter Mr Casey also described the indices for adjustments of
interest rates on certain assets
I
n
response
to a question by
Mr Reed Mr
Casey reported
that management
had been aware of the
possibility
of a
widening
of the interest rate
spread
between the Fed Funds rate and the 3month London InterBank Offered Rate LIBOR
but had considered this possible widening to be improbable
Mr
Killinger noted that the
current spread
between the Fed Funds rate and LIBOR
i
s
more than two standard
deviations from the statistical norm
With regard to the planning environment Mr Casey noted that the 2008 plan
assumes sluggish growth i
n the
gross
domestic
product
that the
Companys
annual loan
loss
provision i
n 2008 will be much larger than
i
n
2007 and that the Companys loan
chargeoffs will increase to more than $38 billion
i
n 2008 The
plan assumes the Fed
Funds interest rate will
decline
but that the full benefit of this decline will be
delayed
due to
a wider
spread
between the Fed Funds rate and the 3month LIBOR The
mortgage
market
i
s
projected
to contract and home
prices are expected
to decline Home Loans
production i
s
projected
to decline from $122 billion for 2007 to $72 billion for 2008 and
production
of
conforming
loans
i
s
projected
to be
approximately
50 percent lower for 2008 than for 2007
Accordingly
the Home Loans
group
has further reduced its number of employees GOS
i
s
expected to be limited
Mr
Casey
described interest rate and home
price assumptions underlying
the
current
plan
for 2008
I
n the base
case
the Fed Funds rate would decrease to 400
percent
171285
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HIGHLY CONFIDENTIAL
Return
by
March 2008 and then rise In the base
case
the
assumption
with
regard
to the
yield
curve between the 3month LIBOR and longterm interestrate
exchange agreements
will
conform to the forward interest rate curve i
n the financial markets Home prices are
projected
to decline
I
n
response
to
questions by
Mr
Leppert
Mr
Casey reported that the
assumptions i
n the plan reflect expected trends
i
n
housing prices
in each
metropolitan
statistical area SA
instead of each
state
and that management may
consider more
specific
information with
regard
to the
prices
of individual homes within a SA Mr Cathcart
noted that loan vintage and the borrowers credit scores are better indicators of loan
performance
Mr Rotella
reported on the
practice
of
checking
the value of the
subject
property for each loan as loans move
through foreclosure and Mr
consideration of a stress scenario assuming larger depreciation in home
prices
and noted
that the
general
loan loss
provision
cannot be determined as the sum of projections for
individual loans
Mr Casey submitted a waterfall chart showing the anticipated effects of certain
factors that are expected
to cause a difference between the 2007 forecast and the current
2008 plan These factors for 2008 include an expansion
of 23 basis
points i
n the net
interest margin I an increase of more than $2 billion
i
n the Companys average
earnings assets
the
expected
absence of certain losses on trading securities compared to
2007 a decline
i
n the riskadjusted rate of return
i
n the Card Services
group
an increase
i
n
GOS and Retail Banking fees a decrease
i
n
expenses
and an increase
i
n the loan loss
provision
for 2008
I
n
response
to a question by
Mr
Murphy
Mr
Casey reported that the
Company
has written off 100
percent
of the value of
intangible
assets
arising
from
prior
mortgage
business
acquisitions
Mr Rotella reported on
plans
for the closure of certain
Retail
Banking
stores
i
n
January I
n
response
to
questions by
Mr
Smith Mr Rotella
reported on the number of Retail Banking stores that continue to receive
special
attention
from Executives and reported on plans to
open
stores for the Retail
Banking group
inside
existing
loan offices of the Home Loans
group I
n
response
to a question by
Mr
Murphy
Mr Rotella reported on the number of Retail
Banking
stores that will continue to be
open i
n
one market after the closures
i
n
January I
n
response
to questions by Ms
Pugh
Mr
Casey
submitted an
updated
forecast of the amount of the loan loss
provision the portion of this
amount projected for Card Services and the
projected
effect of securitizations
I
n
response
to a question
b
y
Mr Reed Messrs Casey and McMurray reported on issues
relating
to the
loan loss
provision
for the Card Services
group
Mr Casey submitted a report on highlights of the current 2008
plan I
n
response to a
question by Mr Leppert Mr Casey noted a projected result of decreasing expenses
while
increasing
total revenue Mr
Killinger
noted the
magnitude
of the
projected increase
i
n
Retail Banking fees
I
n
response
to a
question by
Mr Reed Mr Rotella
reported on the
reliability
of the projection for Retail Banking fees Mr Casey noted the
possibility
of
quarterbyquarter
variations
i
n loan loss
provisions I
n
response to a question by Mr Reed
Mr
Casey reported
on the effect of
replenishing
the loan loss
provision for loans charged
off
I
n
response
to
questions by Mr Matthews Messrs
Casey
Rotella and
Killinger
reported on issues
relating
to alternative scenarios that
may affect loan loss provisions
Retail
Banking fees and
earnings
of the Card Services
group
Mr
Casey
also submitted a
waterfall chart showing factors responsible for the increase
i
n
tangible equity
since the end
of the third
quarter
of
2007
and
projected
small
changes i
n 2008
With
regard
to
housing cycles
Mr
McMurray
submitted information on home price
trends
i
n the United States as a whole i
n one state and
i
n a smaller
municipal area since
1980
I
n
response
to a question by
Mr
Leppert Mr
McMurray reported
that the information
171285
3
HIGHLY CONFIDENTIAL
Return
WIW Confidential Limited Access
with regard to home prices i
n his
report was expressed i
n terms of nominal values He also
submitted
pie
chart
showing
that three
categories
of loans amounting
to
only
16
percent
of the total dollar amount of loans generated
51
percent
of the dollar volume of loan
chargeoffs
i
n the third quarter
of 2007 He submitted a graph comparing
loan
delinquencies
for the
Company
with
industry averages
for
singlefamily loans paymentoption adjustable
rate
loans home
equity
loans and subprime loans originated i
n each month from January 2005
to September 2007
I
n most
categories delinquencies on the
Companys
loans are lower
than
industry averages
Mr
McMurray
submitted information on remaining residential mortgage loss
sensitivity Management applied a credit loss model
developed by
Standard Poors
SW
to the
Companys
loans
I
n
response
to questions by Ms
Pugh r McMurray
reported that the SP model depends more heavily on aggregate data whereas the
Companys model uses more particularized data Mr
Casey
identified other factors
affecting
loan losses and
reported
on stress tests and Mr Killinger noted investment bankers advice
that the Company has set a new standard for stresstesting I
n
response
to questions by
Mr Matthews Mr Casey agreed
to monitor and
report on the
relationship
between
capital
and loans loss
provisions
and
distinguished
the loan loss
provision i
n each
quarter
from the
total amount of loss expected to be experienced over the life of a loan
portfolio Mr Casey
also noted the
significance
of
changes i
n
consumer behavior and Mr Cathcart noted a
possible
effect of a rapid deterioration
i
n credit quality Messrs Rotella and Cathcart
reported on the
monitoring
of
nonperforming
assets and
chargeoffs
and Mr
Casey agreed
to
provide
further information to the Board about these items and the loan loss
provision I
n
response
to a request by Mr Leppert Mr Cathcart agreed to provide information regularly
with regard to total delinquencies
and
chargeoffs I
n
response
to
questions by
Mr
Lillis
Messrs
McMurray
and
Casey reported
on the
incorporation
of
yield
curve
assumptions
into
the
optionadjusted spread
model and into the projections of the NIM and the value of
residuals remaining from loan sales as opposed
to
projections
of
changes i
n
the allowance
for loan and lease losses home equity loan delinquencies or net chargeoffs and Mr
Rotella noted the effect of a lack of liquidity i
n
the secondary markets I
n
response to a
question by
Ms
Pugh
Mr
McMurray
noted initiatives to restrict
exposure
to certain lines of
credit and to use workouts and modifications to
mitigate
losses Mr Rotella noted research
into the possibility of selling
certain
assets
and Mr
McMurray
further noted a leading
banking competitors
discontinuation of certain
lending operations
Mr
Casey
submitted information with
regard
to the NI M The 3month LIBOR
continues to be disconnected from the Fed Funds
rate notwithstanding European
governments attempts
to increase
liquidity
The
deposit pricing
market
i
s
highly
competitive
Nonaccrual loans
put pressure
on the NIM Management initiatives include
lengthening
the maturities on liabilities
Mr Casey
submitted a waterfall chart
indicating
that direct
expenses i
n the 2008
plan
will be lower than
i
n the 2007 forecast Direct
expenses i
n the 2007 forecast include
charges
for
impairment
of the value of
intangible
assets
arising
from
prior mortgage
business
acquisitions
and
restructuring charges
for which there are no counterparts i
n the
2008
plan
The 2008
plan
includes increases
i
n direct
expenses
for Retail
Banking stores
but
incorporates projected
decreases
i
n Home Loans
expenses
and the
expenses
of central
corporate operations i
n
2008 as a benefit of
restructuring i
n December 2007
At Mr
Lepperts request
Mr
Casey
returned to the
subject
of direct
expenses
and
headcount as set forth
i
n his November 2007 Financial Review
I
n
response
to a question
by
Mr Leppert
Mr
Casey
noted that this November 2007 Financial Review did not show
171285
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HIGHLY CONFIDENTIAL
Return
the most recent reduction
i
n the number of Home Loans employees i
n December 2007 and
reported on the
contemporary
need to hire additional loan
servicing personnel Mr Casey
noted an increase
i
n the
expenses
of
administering
real estate
acquired as a result of
foreclosure or
receipt
of a deed
i
n lieu of foreclosure and Mr Rotella
reported
on the
conformity
with the
accounting
standard for loan
origination
costs Mr
Casey submitted a
waterfall chart
showing
the
anticipated
effects of actions to
accomplish
further reductions
i
n
expenses
which are to be evaluated These actions include organizational rationalizations
and consolidations and the use of centers of excellence The
Companys efficiency ratio
i
s
projected
to improve to 50
percent by
the end of 2008
Mr Casey submitted information on housing
and interest rate scenarios
Earnings
are expected
to
improve
from a loss
i
n 2008 to a profit i
n 2009 and a significantly larger
profit i
n 2010 The annual loan loss
provision i
n this base case i
s
projected
to decline
significantly i
n 2009 and more significantly i
n 2010
I
n an alternative
recessionary scenario
the Fed Funds rate
i
s
projected
to be
significantly
lower
i
n
2008 2009 and 2010 but the
annual loan loss
provision i
s
projected
to be
significantly higher i
n
2008 to decline
only
slightly i
n
2009 to decline
i
n 2010 to a level that
i
s twice as high as
i
n the base case for
2010 and not to normalize until 2011
I
n
response
to questions by
Mr Stever Mr
incorporation
of
information for each business segment and on targets for 2008 r Killinger noted a
possibility
of
reassigning
the
responsibility
for a portfolio i
f the
plan
for a business
group
were revised to exclude the costs of
servicing
and
managing
the
portfolio
and Mr
Casey
suggested that management may
return to the Board with regard to this issue Mr Rotella
indicated that
management
also will
provide
information related to the sensitivities of
earnings
drivers for certain business
segments I
n
response
to a
question by
Mr
Matthews
Mr Casey reported that the
plan
assumed continuation of the $015 cent
per
share quarterly
dividend
i
n the adverse
recessionary scenario and Mr Killinger
committed to
provide certain
information with
regard
to business
segment projections
On motion
duly
made and
seconded
the Board
approved
the 2008
plan
for the
Company as a whole subject
to
adjustment i
n
projections
for individual business
segments
and finalization of the
assumption with regard to the yield curve between the 3month LIBOR and
longterm
interestrate exchange agreements i
n the base case to conform to the forward interest rate
curve
i
n the financial markets on the date when the business
segment plans are finalized
Voice of the Customer Report
Mr
Killinger
submitted the Voice of the Customer
Report
The
report described the
results of initiatives to improve customer
loyalty
and reduce the number of customer
complaints I
n
response
to a comment
by
Ms Osmer
McQuade Mr Rotella committed to
follow
up
on issues
relating
to the
performance
of Small Business
Banking
Economic Cornmenta
Mr
Killinger
submitted Mr Lon brakes economic outlook
commentary for
December The written
commentary
included a
summary
of recent
developments analysis
and projection of trends Mr Killinger noted that more negative scenarios include lower
interest rates
I
n
response
to a comment by Mr Leppert r Killinger noted that the
commentary
focuses on matters of concern to
consumers
and noted the
significance
of
strong exports Mr
McMurray
left the
meeting
171285
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HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
RegulatoEy
to
Mr Killinger submitted Mr Robinsons report on regulatory matters The report
included information about matters
requiring
Board attention and the
regulatory
examinations Ms Osmer McQuade noted an
emerging
issue
relating
to Small Business
lending
Investor Relation
Mr
Killinger
submitted the monthly report by
the Investor Relations
Department The
report reflected trading activity ownership
Investor Relations
events
and
analyst
commentary
Media I ics o
Mr
Killinger
submitted a Media
Analytics Report
The
report
summarized
press
and
other media
coverage
of the
Company i
n October
2007
and
compared
the
frequency of
coverage
with five
competitors
Finance Committee Rego
Ms
Pugh
submitted the
report
of the Finance Committee
I
n addition to all Directors
who are members of the Committee all but two of the other Directors also attended this
meeting of the Committee as observers The Committee met
i
n
joint
session with the
Finance Committee of WMB
The Committee reviewed an update on capital including
the results of the
offering of
$30 billion
i
n Series R 775 NonCumulative
Perpetual
Convertible Preferred Stock As a
result of the
offering
the
Company
has excess capital to withstand a wide
range
of
scenarios The Committee reviewed an update on liquidity including actions with regard to
escrow deposits
and the results
i
n the covered bond markets of recent
downgrades i
n the
ratings
for WMB and the
Company
The Committee reviewed an
update
on credit the
substance of which was subsequently provided to the full Board by Messrs McMurray and
Cathcart as described above
The Committee completed its annual review and approval of the Asset and Liability
Management Policy
Governance
CommitteeMr
Reed submitted the
report
of the Governance Committee The Committee met
i
n
joint
session with the Governance Committee of WMB The Committee reviewed matters
related to Director development i
n
preparation
for the retirement of Mrs Farrell
Preparations are underway
for other members of the Committeeto meet with a candidate
with whom r Reed already had a preliminary interview Mr Reed noted some of the
qualifications
of this candidate
The Committee reviewed a
proposal by
a former director of a small
savings
and loan
institution
i
n
Utah who had requested that he be considered as a candidate for nomination
to the Companys Board of Directors Having
reviewed the letter from this
proponent the
Committees consultant Heidrick
Struggles International Inc advised the Committee that
the
proponent i
s not
among
the most qualified candidates
currently being
considered The
Committee also found that the
proponent i
s not
among
the most
qualified candidates
currently being considered
and directed that a response
be sent to him
I
n
response
to a
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HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
question by
Mr Stever Mr Reed
reported
that the
qualifications
of other
potential
candidates are also
being
reviewed
Appointment
of Committee Members and
Presiding
Director
Mr Reed
reported
that the Governance Committee reviewed the
assignment
of
committee members and
chairs
and the designation
of a presiding Director The
Committee recommended the
appointment
of Directors to committees and the
appointment
of a presiding Director without change from the current assignments and
designation except
for the appointment of Mr Leppert as Chair of the Corporate Relations Committee effective
as of
January 1 2008 To assist Mr
Leppert
with this transition Mrs Farrell has indicated
that for an additional period of
up
to six months after the expiration of her current term
i
n
April 2008
she
i
s available to serve on the Board
i
f
necessary
and
i
f she
i
s reelected at the
2008 annual
meeting Thus the
Corporate
Relations Committee would consist of Mr
Leppert Chair
Mrs Farrell Ms
Montoya
Ms
Pugh
and Messrs
Murphy
and Stever the
Audit Committee would continue to consist of Mr Frank Chair and Messrs
Leppert
Matthews Murphy
Reed and
Smith
the
Corporate Development Committee would
continue to consist of Mr KiUin er Chair and Messrs Frank Lillis Matthews and Stever
the Finance Committeewould continue to consist of s Pugh Chair Mrs Farrell Ms
Montoya
Ms Osmer McQuade and Messrs Frank Lillis Murphy
and
Reed
the
Governance Committeewould continue to consist of Mr Reed Chair Mrs Farrell Ms
Osmer
McQuade
and Messrs
Leppert Matthews
Smith and
Stever the Human
Resources Committeewould continue to consist of Mr Stever
Chair
Ms Osmer
McQuade and Messrs Frank Lillis and Matthews and Mr Frank would continue to serve
as the
Presiding
Director Mr
Killinger
recused himself from
voting or consideration of the
appointment
of a
Presiding
Director On motion
duly
appointed its members to committees and appointed a Presiding Director effective as of
January 1 2008 as recommended
by
the Committee
Approval
of
Compensation
for Board Committee Members and Presiding Director
Mr Reed
reported
that the Governance Committee reviewed the
report
of Towers
Perrin with
regard
to the
compensation
of Directors i
n
comparison
with the
compensation
of
Directors of 14 other large banking companies The Committee recommended an increase
of $5000 i
n the compensation of the Chair of the Audit Committee and 20000 i
n the
compensation
of the
Presiding
Director Thus the annual cash retainer would continue to
be $60000 the annual restricted stock grant to be granted on January 22 2008 with
restrictions to released after one year
would continue to be 70000 for a number of shares
to be determined
according
to the
closing price
on
January 22 2008
the economic value of
the annual stock option grant to
be
granted on January 22 2008 and to vest after one
year
would continue to be
$30000 for a number of shares determined
i
n accordance with
the
Companys policies
and
practices
for
granting
of stock
options
the fee for attendance at
a purely telephonic Board or Committee meeting other than a meeting of the
Corporate
Development Committee
would continue to be $750
per meeting the fee for attendance at
other Board or Committee
meetings other
than
meetings
of the
Corporate Development
Committee would continue to be $1500 per
meetin the additional annual retainers would
be $20000 for the Chair of the Audit Committee 7500 for the Vice Chair of the Audit
Committee $10000 each for the Chairs of the Finance Committee the Governance
Committee and the Human Resources Committee $7500 for the Chair of the
Corporate
Relations Committee $6000 for members of the Corporate Development Committee
in
lieu
of
meeting fees
and $25000 for the
Presiding
Director Mr Frank left the meeting during
171285
7
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
the
voting on this matter On motion
duly
approved
this
compensation
schedule Mr Frank rejoined the meeting
Remainder vi
ri
omn
ort
Mr Reed
reported
that the Governance Committee reviewed
report on four
shareholder proposals This
material has been
redacted
The Committee its checklist and determined to reschedule certain items
The Committee also reviewed
plans
for
providing
additional education for
Directors
and
gave preliminary
consideration to certain changes
Clarification Officer t
r
i
Mr
Killinger
submitted resolutions
reflecting changes i
n the
composition
of the
group
of officers who have
authority
to
perform significant policymaking
functions of the Company
and the
group
of officers who
participate i
n
major policymaking
functions within the
meaning
of Federal Reserve Regulation motion duly made and seconded the Board
adopted these resolutions A
copy
of the resolutions will be
kept i
appendix
to ts minutes
Officer Elections Promotions Transfers
motion
duly
made and seconded the Board approved an officer
promotion
A
copy
of schedule of this change as submitted to the Board will be
kept i
n the minute book
as an appendix
to these minutes
Executive Session with Committee
Messrs
Casey Cathcart Rotella Lynch and left the
meeting
Mr Stever
submitted the report of the Human Resources Committee The Committee met
i
n
joint
session with the Human Resources Committee of WMB
The Committeereviewed an update
on
changeincontrol agreements
and
employment
contract changes and on plans
for related public filings The Committee
reviewed the status of investments held
by
the Cash Balance Pension fund and determined
that these investments are
satisfactory
The Committee
approved
the terms of an
agreement relating
to the retirement of the former Chief Legal Officer and the terms of
employment for the interim Chief Legal
Officer The Committeediscussed potential
compensation strategies
for 2008 i
n
light of the dramatic loss of retention value
i
n the
Companys stock vehicles for executives Mr David left the meeting Board continued
a discussion which i
t had commenced on Monday
of the assessment of
capabilities and
potential development or succession of the Executives of the
Company
other than the CEO
Remainder Executive Session of Boa
Mr
Killinger
left the
meeting
The Board discussed the succession
planning for the
CEO
position
The Board also determined to
require management
to submit
reports
at the
Boards January 15 meeting with regard to whether the
performance of the Retail Banking
and Card Services
group may
deteriorate The Board also determined to
require enhanced
171283
8
APPROVED BY THE BOARD OF DIRECTORS JANUARY 152008
HIGHLY CONFIDENTIAL
Return
regular reporting
with
regard
to
housing price appreciation
credit losses capital
and the
cumulative loss
expectation
for loans held for investment
There being no further business the meeting was adjourned
Appendices
Designation
of Section 16Reg
Officers
Schedule of Officer
Elections Promotions
Transfers and they
Changes
171285
9
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Appendix Designation of Section 16Reg 0 Officers
ecification of Authority of Officers
WHEREAS the securities of Washington Mutual Inc the Company are subject to the
Securities
Exchange
Act of 1934 as amended the 1934 Act and the regulations promulgated
thereunder
WHEREAS
under Section 16 of the 1934 Act officers of the Company are subject to
certain limitations on transactions
i
n
securities
WHEREAS the Company
also
i
s the
holding company
of a federal
savings
association
chartered and
regulated by
the Office of Thrift
Supervision OTS
and of a bank chartered
under the laws of the State of Washington with deposit insurance provided by the Federal
Deposit Insurance Corporation FDIC
WHEREAS OS
regulations
as codified at 12 CF Section 56342 and IC
regulations
codified at 12 CRR Section 3373 and Part 349 place certain limitations on loans
to executive officers of the
Company
and its affiliates
WHEREAS officers of the Company and its affiliates who do not participate i
n the major
policymaking
functions of the Company
and who are expressly
excluded from
participating i
n
such functions by
resolution of the boards of directors of the
Company
and of each such affiliate
are not considered executive officers for these
purposes
WHEREAS this Board has
specified
the
authority
of its officers
i
n the
Bylaws
of the
Company
and
WHEREAS this Board intends further to clarify the authority of certain officers
NOW THEREFORE
IT RESOLVED pursuant
to a review of the duties and functions
performed by
senior officers that the
following persons
are deemed
b
y the Board to meet the
definition of o rcersfor
purposes
of Section 16 of the 1934 Act and the
regulations promulgated
thereunder
Todd Baker James B Corcoran
Stephen
J Rotella
Melissa J
Ballenger Daryl
D David David C Schneider
Alfred R Brooks Debora D Horvath
Anthony
F Vuoto
Thomas W
Casey Kerry
K
Killinger
Ronald J Cathcart Stewart M Landefeld
RESOLVED FURTHER
that
i no officer of the
Company
other than the individuals
listed below
shall have
authority
to
participate i
n the
major policymaking
functions of the
Company
and
ii
no officer of
any subsidiary
of the
Company
other than the individuals listed
below shall have authority
to
participate i
n the
major policymaking
functions of the
Company
Washington Mutua
Inc
Todd Baker James B Corcoran Stephen
J Rotella
Melissa J
Ballenger Daryl
D David David C Schneider
Alfred R Brooks Debora Horvath
Anthony
F Vuoto
Thomas W
Casey Kerry K Killinger Robert J Williams
Ronald J Cathcart Stewart M Landefeld
Subsidiaries of Washington Mutual Inc
No officers
except persons
who are also the Companys officers as specified above
171285
10
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Appendix
B Schedule of Officer Elections PromotLoons Transfers Other
Changes
Officer Changes Promotions or Transfers
Scully James Vice President to First Vice President effective November 1 2007
171285
11
APPROVED BY THE BOARD OF DIRECTORS JANUARY
15 2008
HIGHLY CONFIDENTIAL
Return
BOARD OF DIRECTORS MINUTES
The Board
o
f
Directors of Washington Mutual Inc the Company began its regular
February meeting at 604 PM on Monday February 25 2008 i
n
Seattle Washington
Present at the beginning
of the Monday session
were
Farrell Frank Killinger Leppert
Lillis Montoya Murphy
Osmer McQuade Pugh Reed Smith and Stever Mr
Killinger
presided
Also
present were Messrs Baker Casey Cathcart Landefeld Rotella Schneider
and Lynch secretary
of the
Company John McMurray
of
Washington Mutual Bank
WMB and Stephen Chazen The Board
o
f
the
Company met i
n
joint session with the
Board of Directors of WMB which
i
s the Companys primary banking institution subsidiary
Report on Credit
Mr Killingerexplained the decision to provide updated information on developments
i
n the
housing
and credit environment and on systems to monitor and
manage credit
conditions
i
n lieu of
previously
scheduled sessions on other
subjects Credit conditions
i
n
the
housing
market are of critical importance
i
n the current financial environment Credit
costs continue to rise The normal annual amount of such costs for the
Company i
s
i
n
the
$2 billion $25 billion
range
The
Companys actual costs were less than this level until
mid2007 and the Company continues to earn a
pretax
income of
approximately $6 billion
$65 billion
i
n the absence of such costs
I
t now
appears however
that
credit costs
i
n
2008
might
rise further than previously expected and erode earnings
As
o
f
September 2007 the
expectation was that credit costs would amount to
only $45 billion
i
n 2008
Higher credit
costs consume capital and might result i
n
changes t
o
regulatory or other
ratings
To guard
against
these risks the
Companys management decelerated mortgage lending i
n
anticipation of a slowdown
i
n the housing market despite
the fact that mortgage loans
normally are relatively lowrisk assets The key open issues now relate to the extent and
duration of the
housing
market downturn and whether to raise additional capital
Management i
s
pursuing
the
possibility
of
segregating
some
mortgages
to minimize the
dilution of current shareholders stake
i
n the enterprise
Mr
McMurray reported on the
background
of current developments on geographic
variations and on portfolio performance and provisions Credit risk
i
s
associated with
investing
and
deposittaking as well as lending
The
basic terms of the lending business
may
include either riskbased or average pricing Reasons for taking credit risk include the
fact that historically
lenders
generally earn an
expected return and diversification can be
beneficial because credit risk
generally i
s not highly correlated with interest rate risk To
limit the extent of credit risk portfoliolevel
measures
supplement operational
controls and
procedures
at the loan transaction level leaving the portfolio of loans held for investment as
the most important retained position Factors affecting credit risk include the market
environment collateral characteristics and quality and borrower characteristics
Mr McMurray
noted the
predominant importance
of residential mortgage loans
i
n the
Companys
current situation but reported also on credit factors
affecting
the
performance
of
credit cards commercial real estate loans and small business loans Losses on credit
cards are very
sensitive to
unemployment
and are expected
to increase from the levels of
recent
years
which have been
very
low The
Companys commercial real estate loans are
performing well and losses though increasing are within expectations Delinquencies and
losses on small business loans are i
n
excess of
expected levels but balances are relatively
low only $14 billion i
n
outstanding balances and another $14 billion i
n
lines of credit not
yet drawn down and multiple actions are underway to address
performance issues
APPROVED BY THE BOARD OF DIRECTORS MARCH 17 2008
HIGHLY CONFIDENTIAL
Return
W Confidential Limited Access
With
regard
to the
performance
of residential
mortgage loans Mr
McMurray
submitted a chart showing trends since 1977
i
n
housing prices measured
by
First American
Real Estate Solutions FARES
for
metropolitan statistical areas MSAs
and
indicating
that the national average housing price never suffered a
yearoveryear decline during that
period until 2007 Individual groups o
f
five MSAs outperformed or underperformed the
national
average
and sometimes certain
underperforming groups
of MSAs
experienced
yearoveryear
declines
i
n
housing prices
but
very
few MSAs after 1999 suffered such
declines until 2006 In
response
to a question by
Mr
Leppert
Mr
McMurray reported that
2007 was probably the first
year
of a national average housing price decline since the Great
Depression
Mr
McMurray
submitted a map showing
the locations of
properties securing the
Companys aggregate
real estate loan portfolio including prime singlefamily residential
mortgage loans loans originated through a subprime mortgage channel SMC loans
commercial loans and home equity
loans More than 30
percent
of this aggregate portfolio
now i
s
i
n
seven counties Mr McMurray submitted another
map showing that the credit card
portfolio i
s more geographically diversified and two additional
maps showing areas that
have experienced
certain
percentages
of cumulative
housing price depreciation according to
FARES data for the period from the peak
i
n each area to January 2008 This data indicates
that housing prices are declining significantly i
n most of the seven counties where more than
30
percent o
f
the Companys real estate loan
aggregate portfolio i
s located
I
n
response to
questions by
Mr
Leppert
Mr
McMurray reported that the peak generally
was
i
n 2005 or
2006 and noted continued rises
i
n
housing prices i
n certain other areas
Mr
McMurray submitted a chart comparing and contrasting yearoveryear trends
i
n
housing prices as measured by FARES and alternatively by the Office of Federal
Housing
Enterprise Oversight OFHEO
since
1977
and
b
y
Standard Poors CaseShiller
CaseShiller
since 1988 i
n
the
Southern California MSA that
i
s the
location
of the largest single
concentration of loans i
n
the Companys aggregate
real estate loan
portfolio
He
reported
on OFHEOs data sources
I
n
response
to
aquestion by Mr Leppert
Mr
McMurray
reported that FARES data
i
s
updated frequently I
n
response t
o a question by Mr Frank
however Mr McMurray reported that there are shortcomings
i
n each of the FARES
OFHEO and CaseShiller indices
and that an update
of OFHEO data
i
s
pending I
n
response
to a question by
Mr
Killinger
Mr
McMurray reported on
the
anticipated timing
o
f
the update of OFHEO data and noted that the OFHEO and FARES indices are
unitweighted
i
n that each valuation pair is given
the
same weight all else being equal
whereas the CaseShiller index
i
s
valueweighted i
n that a
given transaction pair i
s
given a
weight proportional to the value of the home Most institutions have
historically
used the
index
published by the official U S
government source
OFHEO In
response
to a
question
by
Ms
Pugh
Mr
McMurray reported
that FARES now has data for all categories of
mortgage
loans
I
n
response
to a question by
Mr Killinger Mr McMurray reported on the
number of years for which a chart provided information
I
n
response
t
o a question by Ms
Pugh Mr McMurray reported that of the three indices the OFHEO index has the best
geographic
and historical data coverage I
n
response to a question by
Mr Rotella Mr
McMurray reported on the validity
of one index I
n
response to a question by Mr Killinger
Mr
McMurray noted a historical weakness
i
n the FARES information and advised that
based on the
frequency
of revision the statistical base
i
s less rigorous for FARES than for
OFHEO or CaseShiller Mr Rotella noted the relatively
small data set of this index
i
n
past
years
In
response
to a
question
b
y
Mr Frank Mr
McMurray noted the number of
years
that
may pass prior to a return to home price appreciation and submitted information about
the most recent yearoveryear change i
n
prices I
n
response to a comment by Mr Chazen
HIGHLY CONFIDENTIAL
Return
Mr
McMurray reported
that OFHEOs
reports lag as much as four months behind
CaseShiller
reports
Mr
McMurray
submitted a chart comparing
and
contrasting cumulative changes i
n
housing prices as measured by
FARES and OFHEO since 1976 and
by CaseShiller since
1987 i
n this Southern California MSA
Historically
there have been relatively long intervals
of time between troughs and peaks i
n the
housing market Credit
cycles have affected the
quality
of data
Mr McMurray submitted additional information about this Southern California MSA
including unemployment not seasonally adjusted
and
housing inventory since 1990 net
migration
since 2001 and quarterly fluctuations i
n
yearoveryear housing price changes
since the
beginning of 2006 as measured by
OFHEO
through a date i
n 2007 and as
subsequently
forecast at
Moodys Economycom MECOM
and
i
n the base case and the
creditstressed scenario of the
Companys
2008 financial
plan Unemployment i
s
especially
relevant to Card Services
I
n
response
to questions by
Mr Reed Mr
McMurray reported
on
past emigration from this MSA reported that the
housing price forecasts are new and
cautioned that trends are likely t
o follow forecasts
i
n
general
direction but not i
n
exact timing
Mr Cathcart reported that there are adjustments i
n the Companys forecasts andnoted the
utility
of the OFHEO index In response to a question by
Mr
Leppert Mr McMurray noted
that unemployment appears
to be moderating i
n this MSA but both he and Mr Casey
cautioned that unemployment may
worsen
i
n this MSA Mr Rotella reported on a large and
abrupt negative change
i
n the MECOM forecast of housing price depreciation for this MSA
Mr
Killingernoted
the
possibility
that the trend
i
n
many
MSAs toward such
housing price
depreciation might reflect an asset
price revaluation which would be
relatively unlikely
to be
related to unemployment I
n
response to comments
b
y
Messrs Leppert and Frank
however Mr
Killinger noted the significance of the
linkage between home equity lendin
and consumer spending i
n the broader
economy
and Mr Casey noted possible future
trends
For
purposes
of
comparison
Mr
McMurray submitted a chart
comparing
and
contrasting yearoveryear
trends
i
n
housing prices as measured
by
FARES and OFHEO
since 1977 and by CaseShiller since 1988 i
n a Pacific Northwest MSA where the
Company
has a concentration of such real estate loans
eg prime singlefamilyresidential mortgage
loans SMC loans commercial loans and home
equity loans
This market
i
s
relatively
stable currently In response to a question by Mr Reed Mr McMurray noted that the
average longterm trend
i
n
housing prices from 1976 to 2008 according to FARES data for
this Pacific Northwest MSA
i
s the same as for the Southern California MSA where as noted
above the Company has its
largest single concentration of such real estate loans For
this Pacific Northwest
MSA
Mr
McMurray also submitted charts comparing and contrasting
cumulative change
i
n
housing prices
as measured
by
FARES and OFHEO since 1976 and
by
CaseShiller since 1990
and
showing additional other information including
unemployment not seasonally adjusted since 1990 net migration since 2001 and
quarterly fluctuations
i
n
yearoveryear housing price changes
since the
beginning
of 2006
as measured by OFHEO through a date
i
n 2007 and as subsequently forecast at MECOM
and i
n
the base case and the creditstressed scenario of the Companys 2008 financial plan
He noted the lack of information about
housing inventory prior
to 2006
i
n this Pacific
Northwest MSA
Also for
purposes
of
comparison
Mr
McMurray submitted a chart
comparing and
contrasting yearoveryear
trends
i
n
housing prices as measured
by
FARES since 1977 and
by OFHEO since
1978 in a Central California MSA
i
n
which the Company
has another
concentration of such real estate loans He noted the lack of
any CaseShiller data for this
HIGHLY CONFIDENTIAL
Return
Central California MSA For this MSA he also submitted charts comparing and contrasting
cumulative change i
n
housing prices as measured by
FARES since 1976 and
by OFHEO
since 1977 and showing other information including unemployment not seasonally
adjusted since 1990 housing inventory
since 1997 net migration
since
2001
and
quarterly
fluctuations
i
n
yearoveryear housing price changes since the beginning of 2006 as
measured by
OFHEO
through
a date
i
n 2007 and as subsequently forecast at MECOM and
i
n
the base case and the creditstressed scenario of the
Companys
2008
financial plan
He
noted that immigration into this Central California MSA continues i
n
part
as a result of the
attraction of its relatively low median home price
Mr McMurray submitted his opinion of the prerequisites
for a peak i
n
mortgagerelated
losses including liquidity improvement a rise in prepayments a slowing
of the rate
o
f
housing price declines and improvements i
n the economic outlook He outlined federal
policy initiatives to increase liquidity especially
for
housing
and submitted his opinion
of the
expected impact
of those initiatives Investors increased demand for US
Treasury
securities has decreased the interest rates on such securities to which the rates on
adjustable rate mortgage
loans
ARMS
are indexed This decrease thus
i
s
reducing
the
risk of default on such ARMs
With
regard
to initiatives to increase liquidity through governmentsponsored
enterprises GSEs Mr Killinger noted that the housing GSEs are facing high credit
losses
and Mr Rotella noted increases
i
n
the fees charged by these GSEs Mr
Leppert
noted possible changes i
n federal bankruptcy laws that may adversely affect the supply of
liquidity for housing
Mr
McMurray
submitted a
portfolio summary showing composition and
delinquency
rates as of January 2007 and January 2008 for prime singlefamily residential mortgages
SMC loans
home
equity loans the managed balance of creditcard receivables multifamily
residential and commercial real estate loans and other commercial and retail small business
loans He also submitted information on mortgageconcentration at major banking
institutions among which the Company
has the highest mortgage
loan
portfolio
concentration He noted that
mortgage loans had typically been one
o
f
the safest assets i
n
the market over the
years
Mr Killinger noted that traditional thrift institutions have
disappeared I
n
response
to a question
b
y Mr Frank Mr
Killinger
noted that Mr
McMurrays information on
mortgage
loan portfolio concentration did not include
mortgage
servicing rights MSRs or residuals resulting from the sale of residential mortgage loans
and Mr Casey noted the
importance
o
f
mortgagebacked securities investments
a
t
some
banking
institutions
Mr McMurray submitted his assessment of the effect on
portfolio credit
performance
of certain factors
i
n the financial environment including lending industry
guidelines
and
housing price
trends
i
n
past years
and the
unprecedented
lack of
liquidity
He also noted concentrations
i
n certain products and geographic markets and noted past
actions by management to contain
risk including tightening lending guidelines
earlier than
many competitors i
n the industry I
n
response
to a question by Mr Reed Mr Casey noted
expenses that would have been incurred as a result of increased reliance on credit
enhancements
I
n
response
to a comment
by
Mr Baker Mr
McMurray
noted that credit
enhancements can be provided by monoline mortgage insurance companies whose
securities have recently been downgraded by
investment
rating agencies In
response
t
o a
comment
b
y
Mr Killinger Messrs Casey
and
McMurray
noted issues associated with a
strategy
of
betting against
an ABX index Mr McMurray
also
reported on the
application o
f
standards for
lending
and stressed the importance
of the quality
of data about loans
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Mr McMurray submitted timelines for responses to delinquencies on residential
mortgage
loans and credit card accounts He
noted that state laws
may delay the timing o
f
remedies for default on a residential loan
agreement He noted that January loan
chargeoffs
were greater than forecast I
n
response
to a question by Mr Casey Mr McMurray
reported that the Home Loans forecast had been made
i
n November 2007 on the basis
o
f
information from earlier
i
n 2007
I
n
response to a question by Mr Frank Mr McMurray noted the need to estimate the
proceeds
of the sale of real estate acquired through foreclosure or
receipt of a deed
i
n lieu
of foreclosure REO and to reevaluate on the basis of the actual results of foreclosure
Mr
McMurray noted that historically many
home
equity loans are paid off and Mr
Casey
noted a
delay i
n
updating
indices
I
n
response
to a
question by
Ms
Pugh Mr McMurray
noted
an
investment
banking firms use of the OFHEO index and Mr
Casey
noted
an issue
to be covered at the Tuesday session of the meeting In response to a question by
Mr Lillis
Mr McMurray provided an assessment of the research work that would be
necessary
to
build an independent index and noted that
many mortgage lenders are confronted
b
y
similar data
challenges
and Mr Cathcart noted that more recent data will not ensure
accurate predictions of future events Mr Schneider
reported
that
management uses the
most recent data available Mr Casey noted the importance of a consistent
application
of
data
and the role of the unallocated reserve
i
n preparing for future
contingencies
Mr
Rotella noted an increase
i
n the number of units ofREO for sale
I
n
response
to a question
by
Mr
Leppert
Mr Rotella
agreed
to
provide
further information about REO In
response to
a question by
Ms
Montoya
Mr
McMurray
noted the
importance
of
countybycounty
variations i
n
trends
i
n home prices
and Mr Lillis noted the importance
of seven counties
I
n
response
to a question by Ms Pugh Mr McMurray noted a scarcity of investors taking a
long position on certain futures investments
Mr
McMurray
submitted information illustrating the inverse
relationship between
loan prepayments and loan losses
I
n
response
to a
question by
Mr Baker Mr McMurray
noted the direct relationship between such prepayments and liquidity Mr McMurray
submitted information onprepayments trends and loss trends for 51
prime hybrid ARMs
and paymentoption ARMs
i
n the
period
from 2004 through 2007 showing that such trends
have varied
among
loans that are current or 30 60 or 90 days past due He also submitted
a description
of the process
for
determining and forecasting the allowance for loan and
lease losses the ALLL net
chargeoffs
and the
quarterly
loan loss
provision
and
submitted historical information about these and other items including
the reserve coverage
ratio
i
n 2006 and 2007 the last
previous
forecast for
2008 and an updated forecast for
2008
I
n
response
to a
question by
Mr Reed Mr
McMurray
noted that accounting
firms
can object to high reserve
coverage
ratios
a
t
some times
I
n
response to questions by
Mr Stever Messrs Casey
and Rotella noted a potential transaction and Mr Casey
reported
that trends i
n the economic environment are not clear and assured the Board that
the
Companys annual report
will
provide marktomarket information for the loan
portfolio
Mr Baker indicated that he i
s
monitoring information for
planning purposes
Mr
McMurray
submitted a list of factors that are
expected
t
o contribute
t
o
volatility i
n the
provision
Mr Casey noted difficulties
i
n
introducing any
new
approach
at this time Messrs
Casey
and
McMurray noted predictions
that would be reflected
i
n a provision of a
particular
amount I
n
Mr Frank Mr
Casey
assured the Board that
any
proposal to change the reserving methodology
shall be submitted to the Audit Committeefor
review
i
n advance and Mr Cathcart noted the need for careful deliberation
Mr
McMurray reported
on the
application
of a widely
used external benchmarking
tool the credit loss model
developed
b
y
Standard Poors to generate a spectrum
o
f
HIGHLY CONFIDENTIAL
Return
cumulative loss forecasts
This model which depends more heavily on aggregate data
whereas the Companys model uses more particularized data was the
subject
of a detailed
report to the Board at its December 18 2007 Board meeting He submitted an update of a
report thus generated which had been submitted to the Finance Committee He noted that
an unusually large portion of the Companys home equity
loan portfolio consists
o
f
firstmortgage
loans In
response
to a question by
Mr Rotella Mr Baker
reported
on the basis
o
f
an investment banking
firms
forecast
Mr McMurray reported
on actions that are underway
or that are to be considered to
implement further limits on credit risk Mr
Killinger noted the
difficulty
of
making a
precise
forecast of the timing of developments relating to credit
i
n the current unusual environment
The duration of the current credit
slump
cannot be foreseen at this time
I
n
response to a
question by
Mr Lillis Mr Killinger noted that some selfstyled financial advisors are
advocating defaults on mortgage loans and Mr Rotella noted the legislative proposal to
amend federal
bankruptcy
laws in a manner
that
may adversely affect the
supply
o
f
liquidity
for housing Mr Killinger noted the probability of continued government initiatives
t
o
provide
economic stimulus
i
n the
housing
markets The
Monday
session of the Boards
meeting
ended at 818 PM
Bylaw Amendment Election of Director and Appointment to Committees
The Board reconvened at 1201 PM on Tuesday February 26 2008 i
n
Seattle
Present at the beginning of the Tuesday session were Farrell Frank Killinger Leppert
Lillis Matthews Montoya Murphy Osmer McQuade Pugh Reed Smith and Stever
Mr Killinger presided Also present were Messrs Baker Casey Cathcart David
Landefeld Rotella Schneider and Lynch secretary The Board reviewed a candidate
report
with
regard
to Stephen Chazen
whom the Governance Committee recommended
t
o
serve on the Board and certain committees as an independent Director On motion
duly
made and seconded the
Board resolved to amend the
bylaws
t
o
increase the number of
Directors from 13 to 14 to find that Steve Chazen would be an independent Director to
elect him as a Director and to appoint him to serve on the Audit and Finance Committees
A
copy
of these resolutions will be
kept i
n the
Secretarys
file as an appendix to these
minutes Mr Chazen then
joined
the
meeting
Approval of Minutes of January 15 2008 and January 24 2008 Meetings
Mr
Killinger submitted the minutes
o
f
the
January 15 2008 meeting
and the
January 24 2008 special meeting On motion
duly made and seconded the Board
approved the minutes
Financial Report and Submission of Updated 2008 Financial Plan
Mr
Casey
noted factors
i
n the economic environment including thecombination of
gross
domestic product growth and a housing recession a decrease
i
n the
unemployment
rate for January and home inventory The 3month London InterBank Offered Rate
i
s
declining
i
n line with expectations
Mr
Casey
submitted an income statement overview To show the
underlying
profitability
of
operations
he
provided a bar chart showing pretax operating income
excluding the onetime restructuring charge
for business
resizing and the impairment of the
value of intangible assets arising
from
prior mortgage
business acquisitions
i
n December
2007 the noncard provision and REQ expenses
for the months of December 2007 and
January 2008 and the plan for February 2008 March 2008 and the first quarter of 2008
HIGHLY CONFIDENTIAL
Return
Even
including
the noncard
provision
and RE
expenses
for the month of
January 2008
net income was positive The net interest
margin NIM
of 292
percent
for January 2008
was 5 basis
points greater
than for December 2007 The loan loss provision was $53 million
greater
for
January
than for December Gain on sale
GOS
was
greater
for
January
than
for December as a
result of lower repurchase reserves and a required accounting change
to recognize gains on the date when
mortgage
loan interest rates are locked rather than
when the loans are sold Approximately $28 billion
i
n
prime residential
mortgage loans
were sold
i
n
January
The results of the management of MSRs i
n
January were not as
strong as i
n
December when results had been increased as a result of an adjustment i
n
prepayment speeds I
n
summary as a result of Retail
Banking
fees and the sale
o
f
assets
actual results
i
n
January were favorable
Mr
Casey
submitted a balance sheet overview showing
actual total assets for
December 2007 and
January
2008 Single family residential loans on the balance sheet
declined
I
n
response to a question by Mr Stever Mr Rotella reported that
conforming
loans which are originated i
n
refinancing transactions are sold
t
o the housing USES As a
result of promotional activity i
n
January 2008 average
retail deposits for the month were
greater
than for December 2007 The Companys ratio of tangible equity to
tangible
assets
increased to 692
percent
i
n
January as a result of the decrease i
n
assets on the balance
sheet
Mr Casey submitted information on net chargeoffs of prime residential loans
subprime
residential loans and home
equity
loans
i
n the
portfolio including a revised
forecast He provided a bar chart
showing
such net chargeoffs for
each month from
January 2007 to January 2008 and forecasts for each month through December 2008 with
a range of
possible
variance around the forecast numbers I
n
response to a question by Mr
Leppert Messrs Rotella and
Casey
submitted information about the severity of losses
resulting
from loan defaults default rates the cure rate for loans that become
delinquent
and
the
percentage
of
delinquent
loans that become more delinquent I
n
response
to
questions by Mr Reed Messrs Rotella and
Casey reported on factors
contributing
to the
deterioration of loan
performance I
n
response
to a question by Mr Murphy Messrs Rotella
and Casey reported on factors related
t
o the
management
of home equity loan performance
With regard to net
chargeoffs i
n
January 2008 Mr
Casey submitted information
comparing
the
frequency of defaults and severity o
f
losses for each of
prime
residential
loans subprime residential loans and home equity
loans
i
n
the portfolio Increased loss
severities caused net chargeoffs
to increase Severe declines i
n
home prices are affecting
the
portfolio as forecasts are updated Mr Cathcart noted recurring chargeoffs as the value
of REQ
inventory i
s reduced
Mr
Casey submitted information on metrics related to credit performance including
aggregate
loan balances 60day delinquencies net chargeoffs and
nonperforming
assets
that
were prime residential loans subprime residential loans and home
equity
loans
i
n the
portfolio for January and December 2007 and for
January
2008 Mr
Killinger emphasized
the importance of creditat this point i
n the business cycle and noted that some borrowers
who can afford to
pay
their loans are refusing to do so He reported that the performance
o
f
loans
i
n the
Companys portfolio i
s better than
industry averages
Current credit
conditions
however are two standard deviations
away
from the historical norm The absolute dollar
magnitude o
f
the decrease
i
n home prices i
s the greatest i
n
history
Mr Rotella submitted the
Segment Summary showing net income direct
noninterest
expenses
and the efficiency ratio of each business group
for
January 2008
i
n
comparison with December of 2007 and to show the underlying profitability of their
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
respective operations for the same two months each business
groups pretax operating
income excluding the effect of the noncard provision REO expenses and for December
2007 the onetime restructuring charge for business resizing and the impairment of the
value
o
f
intangible assets arising from prior mortgage business acquisitions
direct
operating expenses excluding
REO expenses and the onetime December 2007
restructuring charge and impairment and operating efficiency also excluding REO
expenses and the onetime December 2007
restructuring charge
and impairment Card
Services net income and pretax operating income improved
Home Loans loss
i
n
January
2008 was much smaller than
i
n December 2008 when
i
t had been enlarged by the
impairment o
f
the value
o
f
intangible
assets
arising
from
prior mortgage
business
acquisitions Expenses are wellmanaged
Mr Rotella reported i
n
more detail on the financial performance
of the Retail Banking
group Depositor
fees for
January
2008 were the same as for December 2007 as
consumers used debit cards less
i
n
January than
i
n December The net increase
i
n the
number of retail checking
accounts for
January
2008 was greater
than for December 2007
The volume
o
f
home equity loans originated
i
n January was lower than
i
n
December due to
a tightening
o
f
underwriting
standards
I
n
response
to a question by Mr Leppert Mr Rotella
reported
thatWMBs lending standards are
tighter
than most
competitors Productivity
remains
good i
n
Retail Banking I
n
response
to questions by Mr Reed Mr Rotella noted
growth i
n
deposits Mr Casey reported that the growth was mostly i
n retail time
deposits
and Mr Rotella noted the relatively low costof such funds
Mr Rotella reported i
n
more detail on the financial performance of the Card Services
group
Net income for January 2008 was greater than for December 2007 due to decreased
funding costs discount rates and lower expenses Managed
receivables were slightly
lower as consumers used their credit cards for a lower volume of purchases i
n
January
than
i
n December The riskadjusted margin decreased As
forecast the net credit loss
percentage was more negative for January
2008 than for December 2007 Initiatives to
manage asset
quality
include
tight
standards for new accounts and
factoring i
n the
possible
effects of the reduction
i
n
liquidity from home equitybased financing
In
response
to a
question by
Mr
Leppert
Mr Rotella
reported
that current information does not show a shift
to reliance on credit cards and from reliance on home equity loans and lines of credit and
Mr Casey noted the recent decline
i
n debit and credit card usage With regard to regional
variations Mr Cathcart noted that theProvidian cardholder base was
geographically
diversified
I
n
response to questions
b
y
Mr Leppert Mr Rotella noted that
many
holders of
cards originated through the Retail
Banking group
reside
i
n Florida and some California
markets where housing prices
are decreasing but
many
Card Services customers reside
i
n
rental housing Mr Casey noted that Card Services credit performance i
s more
closely
related to unemployment
than to housing prices Mr Killinger noted a change i
n the
significance of holding mortgages on multiple properties
Mr Rotella reported
that
geographic concentration
i
s less pronounced for Card Services than for Home Loans
Mr Rotella provided additional details on the financial performance
o
f
the Home
Loans
group Operating income was lower for January 2008 than for December 2007
MSR
management
results
i
n
January were weaker than
i
n December due to issues
relating
t
o
prepayment speeds and hedging costs Noninterest
expense
was lower
i
n
January than
i
n December
Currently
a
relatively high proportion
of
mortgage
volume consists of
conforming loans which are sold to the housing GSEs The volume
o
f
paymentoption
ARMs
i
s
relatively low Hybrid 5year ARMs remain relatively popular The mortgage
portfolio i
s
running
off due to
prepayments
Loans
originated
to refinance
existing
loans are
a source of COS Management i
s committed to controlling expenses
in
response t
o
HIGHLY CONFIDENTIAL
Return
questions by
Mr
Frank
Messrs Rotella and Casey reported on aspects of the
relationship
between asset size and noninterest
expenses
Mr Rotella noted the
significant importance
o
f
having a competitive advantage to stay i
n the
mortgage
business
i
n the
long run and the
utility
of the
mortgage
business as a source
of
revenue
inthe short run and Mr Casey
reported
that management i
s
carefully monitoring
the volume of
refinancing I
n
response to
questions by Mr Stever Mr Rotella reported on plans for increased home loan originations
through Retail Banking stores noted the
importance
of
jumbo
loan
volumes
and
reported
on the ability of other business groups to generate assets Mr Baker assured the Board
that
management
will seek to avoid dilution of
earnings per
share Mr Rotella noted that
overall Home Loans performance i
n
January 2008 was better than
i
n December 2007
Mr Rotella reported on the financial performance of the Commercial
group
Both net
income and operating income were lower for
January 2008 than for December 2007
Deposit spreads compressed Loan production declined as did total deposits
With regard to the updated 2008 financial plan Mr Casey
submitted a new waterfall
chart showing the incremental extent
o
f
revisions
i
n the forecasts for net interest income
noninterest income and
expenses affecting
2008
pretax operating earnings excluding a
total $76 billion loan loss provision the amount of which was forecast
i
n the version of the
plan that was submitted
t
o the Board
i
n
January This new waterfall chart
separately
showed the incremental extent
o
f
additional credit costs
i
n
the
updated forecast and the
resulting total
pretax
2008
plan earnings Key assumptions included an updated forecast of
the Fed Funds rate
i
n the base case
which
i
s
projected to decline to 225
percent by July
2008 The
plan
for GCS
i
n 2008
i
s
$52 million higher but an additional decrease
i
n
MBRs
i
s now anticipated I
n
response to a question by Mr
Leppert Mr Casey reported on
projections
of aftertax earnings
As background for the updated 2008
plan
Mr
Casey submitted a graph showing
alternative credit scenarios for 2008 2009 and 2010 superimposed on the
graph that he
had submitted at the January
2008 Board meeting to show a base case and
recessionary
case for housing and interest rates After declining i
n
2008 the Fed Funds rate
i
n the
updated base scenario would rise i
n
2009 and 2010 The NIM would be 322 percent i
n
2008 but would decrease
i
n 2009 and 2010 Under these circumstances the ratio of
tangible equity
to
tangible assets i
s
projected
to increase from 610
percent i
n 2008 to 771
percent i
n 2010 In
response
to a question by
Mr Frank Mr
Casey advised on valuation
o
f
earnings and Mr Killinger noted the possibility that i
f
tangible equity
rises so
high the
Company may repurchase
its stock
I
n the alternative scenario of higher credit costs the Fed Funds rate would remain at
225 percent
in 2009 and 2010
thus contributing
t
o an increase i
n the
NiM I
n
response to
questions by Ms Pugh Mr Casey reported on the differing assumed
percentages o
f
housing price depreciation i
n the
updated
base scenario and
i
n the alternative scenario of
higher credit costs and Mr Cathcart reported that these are percentages o
f
annual
depreciation I
n
Mr
Killinger Mr Casey reported that both of the
scenarios assume that housing price depreciation may
be higher i
n some
locales balanced
by lower depreciation i
n other locales I
n
response
to a question by Ms Pugh
Mr
Casey
explained
that these
percentages
of
housing price depreciation are cumulative
over
the life
of the loan from
peak to trough
and Mr Cathcart noted the
importance of regional
variations
I
n
response
to a question by Mr
Murphy
Mr
Casey
advised that the
provision i
n
some
years
after 2010
i
s
expected to be lower than the normalized level of $2 billion
per
year I
n
response t
o
questions by Ms Pugh
Mr
Casey reported on the possibility o
f
multiple scenarios the
uncertainty
of the timing of a reduction of credit
costs
the
repricing of
assets
and the importance
of
earnings
Mr Cathcart spoke i
n favor of planning for a specific
APPROVED BY THE BOARD OF DIRECTORS MARCH 17>2008
HIGHLY CONFIDENTIAL
Return
annual provision for 2008 and Mr Rotella noted trends
i
n recent OFHEO and CaseShiller
data revealing a credit environment that i
s
far worse than at the time when WMB tightened
its lending standards i
n 2006
I
n
response
to a question by
Mr Frank Mr
Casey reported
on the maximumcumulative depreciation and possible effect on capital
i
n
response t
o a
question by
Mr Lillis Mr
Casey
noted the information conveyed by
the updated base
scenario
Mr Casey submitted a bar chart showing
for each quarter of 2008 alternative
quarterly earnings per share three capital percentages tangible equity as a percentage of
tangible assets Tier I
capital and total riskbased capital dollar amount of excess capital
and annual earnings per share for each of the two credit scenarios the updated base
scenario and the alternative scenario of higher credit costs
He noted the influence of
investment ratings on institutional depositors
and
counterparties I
n
response
to questions
by
Mr
Leppert
Mr
Casey reported
on plans for meetings with ratings agencies and
estimated the amount of a possible incremental increase
i
n capital I
n
response to
questions by
Mr
Lillis
Mr Rotella noted the significant past reduction
i
n
Home Loans
operating expenses and the possibility of further reduction Mr
Casey
noted the breadth of
initiatives under consideration and Mr Cathcart
reported
on his confidence
i
n
past
and
upcoming measurements
Written Financial Report
The Board received Mr Caseys
additional written Financial Report with regard to the
Companys financial performance i
n
January 2008 which included the following sections
Financial Highlights eg Interest Income Interest Expense Net Income Profitability Asset
Quality Capital Adequacy and Key Business Indicators Noninterest Income Noninterest
Expense comparing January 2008 with December 2007 Consolidated Statements of
Financial Condition and Net Interest Spread
and
Margin
and his similar
report
with
regard
to the financial performance
of the Companys principal banking subsidiary WMB i
n this
period
Corporate Development Report on Possible Capital Issuance
Mr Baker submitted a report on the statusof work on alternative initiatives to
strengthen
the Company John Mahoney Huntley Garriott and Scott Romanoff
o
f
Goldman
Sachs joined the meeting
to
report
on the alternatives with particular attention to a possible
issuance of a new kind
o
f
equity security to segregate certain mortgage assets from the rest
of the
Companys
assets the segment equity
Mr
Mahoney reported
that the current
mortgage
market continues to be challenging with unprecedented credit and liquidity issues
related to home price depreciation
Market deterioration has contributed to
uncertainty
about the magnitude and volatility
of losses on
subprime mortgages mortgages
with
high
loan
t
o
value ratios
and secondlien credit The Companys share price has been
negatively
affected
by
the market dynamics Mr Mahoney stated that There are reasons
t
o believe that the market overstates potential losses on such mortgage assets and hence
undervalues the Companys franchise The goals of the project include creating
transparency
for
equity
investors and generating
additional core capital
He submitted
information indicating
that the Companys core franchise
i
s
undervalued
I
n
response t
o
questions by Ms Pugh
and Mr Killinger
he explained the basis of this assessment
Mr Romanoff
reported
on alternative initiatives He noted the limited market appetite
for a sale of assets and the technical issues associated with a transfer of
mortgage assets
to a new legal entity
with securitization and with the
possible
issuance of a segment equity
to track the
performance
of a new business segment
towhich would be allocated the
PROVED BY THE BOARD OF DIRECTORS MARCH 17 2008
HIGHLY CONFIDENTIAL
Return
mortgage assets about which some current investors are uncertain
I
n
response to
questions by
Messrs Frank and Matthews Messrs
Mahoney and
Romanoff
compared and
contrasted the segment equity with tracking stocks and with transactions that could be used
to
segregate
liabilities Mr Garriott identified
categories
of assets that could be tracked by
the segment equity I
n
response
to questions
b
y Messrs Casey and Killinger Mr Garriott
reported on components
of this
pool
of assets and the status
o
f
work on financial
modeling
In
response
to questions by
Messrs
Killinger
and Rotella Messrs
Casey
and Baker
reported on categories
of
assets that might be included and on the
challenges
of
volatility
I
n
response
to
questions by
Ms
Pugh
Mr Romanoff commented on the use of tracking
stocks
i
n the past and reported that the new equity
would be
fundamentally different
I
n
response to a question by Mr Matthews Mr Romanoff reported that the new
equity
would
have its own earnings per share metric
and Mr Baker clarified that the
earnings
on the
assets would be included
i
n the
Company consolidated earnings
but that the new business
segment holding the assets would have segregated earnings per
share In
response
to
questions by
Mr Lillis Mr Romanoff noted a regulatory requirement for core capital
treatment and noted a possibility of reintegrating the
segment
and Mr
Mahoney noted the
goal
of
returning to a stable bank In
response to questions by Mr Stever Messrs
Mahoney and Casey projected
the nearterm performance
of the segment equity I
n
response
to a question by
Mr Matthews Mr
Casey
noted that
retention
of
a particular
category
of asset might delay the differentiation of the Companys common stock and the
segment equity I
n
response
to a question by
Mr Lillis Mr Romanoff reported that
reintegration
of the
segment might
be
accomplished by
a
marktomarket liquidation
mechanism
I
n
response
t
o a question by Mr Frank Mr Mahoney noted the
importance o
f
comprehensive due diligence
Mr Mahoney submitted a comparison
of the
earnings impacts
of alternative $3 billion
issuances of the
segment equity
and
o
f
the Companys common stock In
response
to a
question by Mr Lillis Mr
Mahoney explained the reason for a
convergence
of earnings
projected
to occur i
n
2013 Mr Casey reported that the
independent auditor
i
s
reviewing the
segment equity proposal I
n
Mr Lillis Mr
Casey noted an
unresolved issue with regard to the accounting effect of the conversion feature of the
segment equity Following a comment
by
Mr Chazen Mr
Casey noted another issue to be
resolved
I
n
response
to a
question by Mr Lillis Mr Garriott reported on the
possibility that
purchasers
o
f
the segment equity would want certain assets to be contributed at a discount
In
response
to a
question by
Mr
Killinger Mr Mahoney reported on the kinds of investors
that would be interested
i
n
the
segment equity and identified three
key
issues with regard to
this segment equity I
n
response
to a question by
Mr
Matthews Mr Casey reported
on the
timeframe for the resolution of issues related to the segment equity issuance and other
alternatives
I
n
response
to a question by Mr Killinger Mr Romanoff reported on the
results of his firms
preliminary inquiry
t
o the Board of Governors of the Federal Reserve
System about capital
treatment
I
n
response
to a question by Ms Pugh Mr Mahoney
reported
on factors affecting the probability of successful issuance of the
segment equity
and Mr Casey noted the
very
short timeframe for a decision whether
t
o pursue the issuance
of this new kind of
equity Messrs Mahoney Garriott and Romanoff left the
meeting
Review of
Strategic
Alternatives
Mr Baker submitted a report on strategic alternatives beginning with a
copy
of the
bar chart that Mr
Casey
had submitted as
part
of the
updated
financial
plan showing
alternative quarterly earnings per share three capital percentages tangible equity
as a
percentage
of
tangible assets
Tier 1
capital and total riskbased capital dollar amount of
excess capital and annual earnings per share for each
o
f
the two credit scenarios the
APPROVED BY THE BOARD OF DIRECTORS MARCH 172008
HIGHLY CONFIDENTIAL
Return
updated
base scenario and the alternative scenario of
higher
credit
costs for each quarter
of 2008 Messrs Casey and Cathcart reported on the possibility that as a result of such
changes i
n financial condition and
prospects
the OTS
may downgrade WMBs assets
earnings
and
liquidity
In
response
to a question by
Mr
Reed
Messrs
Casey
and Baker
outlined possible consequences
of the
downgrades
Mr Casey reported that he
expects
the
ratings
of securities issued
by
WMB to stay above investment grade I
n
response to a
question by Mr Frank
Mr
Casey reported on issues related
t
o institutional deposits and
Federal Home Loan Bank requirements for collateralization of advances I
n
response
to a
question by Mr Matthews Mr Casey reported
that the
changes i
n
ratings
were driven
by
creditrelated
developments and Mr Rotella
reported that the
ratings agencies are
updating
their assessments of other banks Mr Casey reported on the results of a stress
test of liquidity and noted the importance of collateral
Mr Casey reported i
n
greater detail on the consequences
of various strategic
alternatives He noted the differing amounts of dilution that would result from pursuing
different alternatives In
response
to questions by
Mr Lillis Mr Casey reported i
n
greater
detail on the
consequences
of a sale of assets He also reported on a
possible private
equity issuance and noted the short time for due diligence I
n
response
to
a question by
Mr Lillis Mr Casey noted the relatively
low dilution that would result from a successful
issuance of segment equity
and Mr Killinger noted the
rights
of the holders of a segment
equity security to elect two Directors of the Company by a class vote
i
n the event
o
f
sustained nonpayment
of dividends
I
n
response
to a question by Mr Reed Mr Baker
reported
that these dividends would be paid
out of the cash flows from the
mortgage
assets
I
n
response to a
question by Mr Lillis Mr Baker reported on the rate
o
f
return that
purchasers of segment equity
would be
likely
to demand
I
n
response
to
questions by Mr
Chazen Mr
Casey
noted the importance of successfully segregating the
mortgage
assets
about which
many
current investors are uncertain and advised on the size of the offering
and Mr Baker noted the
exposure
of the segment equity to risk
I
n
response to a question
by Mr Leppert Mr Casey noted the possibility of a
larger issuance of the segment equity
and Mr Chazen noted the possibility of a supplemental issuance of a different equity
security to a private investor
I
n
Mr Matthews Mr Casey
reported on a
possible consequence
of a
larger
issuance of the
segment equity I
n
response
to questions by Messrs Frank and Stever Messrs Killinger and Baker reported
on advice from Lehman Brothers about certain matters and Mr Baker noted the importance
of
satisfactory earnings
Mr Killinger summarized the challenge facing the Company by noting that valuations
are unusually low because the
housing
market
i
s two standard deviations below historical
norms
The Company would be worth a much
higher price i
n a more normal
environment
In
response
to a question by
Mr Lillis
Mr
Casey noted the
significance of current
uncertainty about the future
and advised about the
likely
conversion
price
Mr
Killinger
reported that management would pursue
the issuance of
segment equity
and would further
research other alternatives He advised on plans for a special Board meeting i
n March
Approval of Updated 2008 Financial Plan
Having reviewed strategic alternatives and considered the additional information with
regard
to the financial environment the Board resumed its consideration
o
f
the
updated
2008 financial plan
that Mr
Casey
had submitted earlier
i
n the
meeting
On motion
duly
made
and
seconded the Board
approved the updated plan
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Loan Modification Initiatives
At Mr Schneiders
request
John Berens WMBs Division ExecutiveLoan Servicing
joined the meeting participating by means of a conference
telephone enabling
all
participants
to hear one
another
Mr Rotella described Mr Berens background and noted
the premier ranking achieved
by
Loan Servicing under Mr Berens leadership Messrs
Berens and Schneider submitted a report on the implementation of Home Loans
commitment to
homeownership preservation
Mr Schneider
explained that WaMu
views
foreclosure as a last resort He described the
categories
of current customers to whom
certain initiatives are directed and noted the use of a prepayment model i
n
the outbound
mail and
telephone
calls for a customer retention
program
The rate reset campaign
includes notification refinance offers and modification offers to
eligible
ARM borrowers The
program
for
subprime borrower assistance includes a commitment of
up
to $2 billion and
more than $800 million has been funded I
n
response
to a question by Ms Osmer
McQuade Mr Schneider reported on initiatives to contact customers
I
n
response
t
o a
question
b
y
Mr Leppert Mr Schneider reported on the
scope
of the
program
Mr Berens submitted an
update on the
subprime
borrower assistance
program
including a scorecard showing the volume
of
applications
and
fundings
for 2007 and for
January 2008 categorized by type
of new loan or modification and showing that cumulative
fundings thus far have achieved 442
percent
of the $2 billion commitment He also
reported
on outreach initiatives to avert borrower defaults The
emphasis i
s on outbound
telephone calls In
response
to a question by Mr Leppert Mr Berens
reported
that 100000
borrowers have been called Mr Berens stated the number of loans that are 60 days or less
past due
I
n
response
to a question by
Mr Leppert Mr Schneider reported on the number
of REO
properties for loans
i
n
portfolio and for loans serviced for others
I
n
response
to a
question
b
y Mr Rotella Mr Berens reported on the number of
pending
foreclosures
I
n
response to a
question by
Mr Matthews Mr Berens
compared
the current number of
pending foreclosures with the number
pending as of a
previous date and Mr Schneider
provided a similar comparison
with
regard to the number of REO properties I
n
response to
a question by
Mr Rotella Mr Berens reported on some borrowers reactions to home price
depreciation I
n
response
to a question by
Mr
Stever Mr Berens reported on targets
for
loss
mitigation
and assured the Board that WMB meets the loss mitigation goals of the
housing GSEs
Approximately 80 percent
of borrowers to whom WMB offers workout
solutions retain their homes whereas approximately 20
percentof
such borrowers
ultimately
engage i
n a short sale of their home or grant a deedinlieu of foreclosure Mr Schneider
noted that to be
eligible
for a repayment plan borrowers must
provide
detailed financial
informationwith regard to the ability to make payments according
to this new plan
Mr Berens
reported on the WaMu Cares
program including hiring counselors to
reach out to borrowers
directly
and
through nonprofit organizations i
n areas with large
numbers of troubled loans The WaMu Cares inbound team responds
to customers facing
imminent default Other initiatives include door knock representatives visiting borrowers
who have not contacted WMB mailing thousands of educational DVDs and CDs
enhancements of home equity credit strategies to assist borrowers interest rate
modifications
and the provision of a dedicated email box for nonprofit organizations I
n
response
to a question
b
y Mr
Leppert
Mr Berens reported that a majority o
f
the WaMu
Cares counselors were hired since mid2007
Mr Schneider reported on participation i
n the HOPE Now Alliance including more
than 40000 letters sent
t
o customers i
n
2007 The
Community and External Affairs
Department supplements
these efforts The
Company supports
the HOPE Now
Project
Lifeline program to offer a 30day pause i
n foreclosure proceedings to allow more time for
APPROVED BY THE BOARDOF DIRECTORS MARCH 17 2008
HIGHLY CONFIDENTIAL
Return
loans modifications
Mr Schneider submitted an update on the loan workout
program
which helped
nearly 50000 borrowers
i
n 2007 The
Company
has
joined
forces with a number of
organizations including the NeighborWorks Center for Foreclosure Solutions and the
Homeownership Preservation Foundation to launch a national effort to avert foreclosures
I
n
response
to a question by Mr Killinger Mr Berens also reported on issues
relating to loan loss experience including
RED sales
percentages
and
prices I
n
response
to a question by
Mr
Leppert
Messrs Berens and Schneider
reported on the extent to which
RED sales prices may be below original valuations and on the prospects for stabilization
o
f
values
I
n
response
to a question by
Mr
Schneider Mr Berens noted the transition of loans
into more seriously delinquent categories Messrs Schneider and Cathcart discussed
issues relating
to the possible
extent of loan losses
i
n the first
quarter
of 2008
I
n
response
to a question by Mr Leppert Messrs Schneider and Berens reported on a difference
between loss percentages on prime first mortgage loans and subprime loans I
n
response
to a
question by
Mr Smith Mr Berens reported on the metric for calculation of a breakeven
point I
n
response
to questions by
Mr
Leppert
Mr Schneider discussed the effect of
a
possible systematic
reduction
i
n loan
principal due Mr Rotella stated that
management will
continue to look at alternatives including such a reduction and Mr
Casey
noted how certain
assets affect the amount of the ALLL Mr Rotellanoted the importance of timely action
i
n
the current housing market environment I
n
response
to
questions by Mr Murphy Mr
Schneider
reported
that the term BPD
i
n this context refers to a broker price opinion and
described the nature and use of a BPD Mr Berens subsequently discontinued his
attendance of the
meeting by disconnecting from the conference telephone
Voice of the Customer Report
Mr
Killinger
submitted the Voice of the Customer
Report
The
report
described the
results of initiatives to improve customer loyalty and reduce the number of customer
complaints He noted that the Company i
s
now tied with its leading competitor i
n customer
satisfaction Ms
Montoya
noted issues related to service
Business Process Outsourcing
Mr Killingersubmitted the Business Process Outsourcing Report The report
provided highlights and a summary of status and results of this program for 2007
Economic Commentary
Mr
Killinger
submitted Mr Longbrakes economic outlook
commentary for February
The written commentary included a
summary
of recent developments analysis and
projection
of trends
Regulatory Update
Mr Killinger
submitted a February
2008
regulatory update
The
report included
information about the results of past regulatory examinations and the status of
ongoing
examinations
Investor Relations Report
Mr Killinger submitted the monthly report by the Investor Relations Department
This report reflected trading activity ownership
Investor Relations events and analyst
HIGHLY CONFIDENTIAL
Return
AVM Confidential Limited Access
commentary during
the
period
from
January 7 2008 to
February 13 2008
Media Analytics Report
Mr
Killinger
submitted a Media
Analytics Report
which summarized
press
and other
media
coverage
of the Company i
n
December 2007 and compared the frequency and tone
of
coverage with five competitors
Audit Committee Report and Approval of Inclusion of Financial Statements
Mr Frank submitted the
report
of the
Companys
Audit Committee The Committee
met
i
n joint session with the Audit Committee of WMB
The Committee reviewed lists of action items The Committee reviewed the financial
statements for the
Companys annual report on Form 10K including changes i
n the
discussion of the ALLL reflecting comments from the Securities and
Exchange Commission
The Committee
also reviewed the Controllers description of the
summary o
f
unadjusted
differences
i
n the fourth
quarter
of 2007 and for the
year
2007 There were no significant
differences The Committee reviewed a report on pending certifications for the Form 10K
Having received the Committees report
with
regard to these financial statements
the Board on motion duly
made and seconded approved
the inclusion of financial
statements
i
n the Form 10K Any material
changes
that occur prior t
o
filing will be
submitted to Mr Frank as chair of the Committee
Audit Committee Review and Actions on Other
Reports
Redacted
HIGHLY CONFIDENTIAL
Return
Redacted
The Committee reviewed a report on the status
of
work relating to the renewal of
directors and officers insurance The
goal i
s to maintain the current amount of
coverage
The Committee also heard a report on
the status of work on parallel reporting under the
Basel
I
I
capital accords
The Committee reviewed a report
on losses suffered by a nonaffiliated
company as
a result of the conduct of a rogue trader and was informed that there are preventative
controls at the Company
The Committeealso reviewed a
report
on a new
process
for
tracking
and
escalating certain issues and a report on whistleblower reports including
enhancements
i
n the
program
Identification of Audit Committee Financial Experts
Mr Frank reported that the Audit Committee reviewed information with regard to the
expertise of its members and recommended a Board determination
o
f
Mr Franks Mr
Smiths and Mr Chazens
qualifications
to serve as an Audit Committee financial expert
Messrs Frank Smith and Chazen recused themselves from voting with regard
to this
determination On motion
duly
made and seconded the Board determined that Messrs
Frank Smith and Chazen
satisfy
the
requirements
for an audit committee financial expert
under rules established by the Securities and
Exchange Commission
Amendment of Audit Committee Charter and Board Correspondence Policy
Mr Frank reported that the Audit Committee had performed an annual review of the
Committees charter Mr Frank reported on the Committees recommendation in favor of all
changes including changes
that he had proposed after the Board mailing and which were
submitted to the Board as a written
supplement
at this Board
meeting
On motion duly
made
and
seconded
the Board
approved
this charter including all the changes
Mr Frank reported that the Committeereviewed the Board Correspondence Policy
He described changes to the policy
to
provide
for
posting changes onBoardVantage
and
notifying Directors of the changes by email The Committee recommended
approval
of the
changes
On motion
duly
approved
these changes i
n the
Policy
Other Audit Committee Matters
Mr Frank reported that the Committee reviewed the
hiring policy The Committee
also reviewed the results of its selfevaluation The Committee met
i
n executive sessions
with the
independent auditor and the internal auditor During an
executive session the
Committee approved the engagement of Deloitte Touche as independent auditor and
approved the inclusion ofthe Committees report i
n the
proxy statement for the
Companys
annual shareholder meeting
Human Resources Committee Report
Mr Stever submitted the
report
of the Companys Human Resources Committee
The Committee met
i
n
joint session with the Human Resources Committee of
WMB
The Committee reviewed performance
of the investment plans for
employees Two
largecap
funds are on a watch list Current assets
i
n the plan amount to $22
billion
whereas current obligations are only
16 billion Some assets
may
be moved to fixed
income investments
171023
HIGHLY CONFIDENTIAL
Return
The Committee reviewed a change approved
b
y the Plan Investment Committee
i
n
the core lineup
of investments
i
n the 401k plan This change will allow employees
to better
select individual
funds and should reduce fees paid to investment advisors The Committee
reviewed a report on the WaMu Savings Plan and the WaMu Pension Plan including
amendments implemented to comply with recent legislation
Amendments to Employee Stock Purchase Plan
Mr Stever reported that the Human Resources Committee had reviewed and
recommended approval of amendments to the Employee Stock Purchase Plan
the
ESPP I
n
response
to a question by
Mr Reed Mr Stever informed the Board of the
number
of shares that were available for the ESPP prior
t
o this amendment
I
n
response
to
a question by Ms Pugh
Mr Stever noted the Committees discussion of the possibility that
employees may choose to direct investment
i
n the
Companys stock within the
401k plan
as well as the ESPP Mr Frank informed the Board that the lawsuits
relating
to the
401
plan do not include claims
relating
to the ESPP On motion duly made and
seconded
the
Board resolved to
approve
the amendments to the ESPP A copy of
the
resolutions
adopted
by the Board will be kept
i
n the Secretarys
file as an appendix
t
o these minutes
Human Resources Committee Review and Actions on Other Reports
Mr Stever reported that the Human Resources Committee had reviewed and
approved inclusion of a proposed Compensation Discussion and
Analysis section and report
o
f
the Committee
i
n the
proxy statement for the Companys annual shareholder meeting
The Committee also reviewed the survey results relating to the Committee and discussed
changes including a possible additional report
to the Board The Committee reviewed a
report
on the status of a
response
to an
inquiry
from the House Committee on Oversightand
Government Reform and approved the
response
Amendment of Human Resources Committee Charter relating to Contract Authority
The Committee reviewed relationships between the Towers Perrinfirm the
Committee and the Company The Committee
previously had authority only over work
related to executive
compensation Mr Stever has
authority to
approve
such work
Management had authority to enter into contracts for Towers Perrin to
perform
other work
for the Company under the Contracts Policy
o
f
the Company without approval by
the
Committee Under a new policy adopted by
the Committee
i
n the future the Committees
approval
shall be
required
for any contracts with
any
such firm The Committee
recommended that its charter also be amended to reflect the Committees
authority i
n this
regard
On motion duly made and
seconded
the Board directed that such a change be
made
i
n the Committees charter
Governance CommitteeReport and Determination of Director Independence
Mr Reed submitted the
report
of the
Companys Governance Committee The
Committee met
i
n
joint session with the Governance Committee of WMB
Mr Reed
reported
that the Committee reviewed information
necessary
for
determination of each Directors
independence
under the Guidelines for
Determining
Director Independence The Committee recommended a determination that all directors
with the exception of Mr
Killinger
and Ms
Pugh are independent On motion
duly
made
and seconded the Board made this determination A copy of the resolutions
adopted by
the
Board
i
n
making this determination will be kept i
appendix t
o these
HIGHLY CONFIDENTIAL
Return
minutes Mr Reed also noted that the Committee had discussed a
response
to a proposal
from Change to Win CtW which represents
certain labor unions
Nominees for Election to the Board by Shareholders
Mr Reed
reported on the Governance Committees recommendations to nominate
candidates for election to the Board
b
y the shareholders at the Companys annual meeting
On motion duly made and
seconded
the Board resolved
t
o nominate these candidates for
election A
copy
of the resolution adopted by the Board
regarding
nominees for Directors
will be kept i
Governance Matters relating to Shareholder Proposal and Communications
Mr Reed reported on the Governance Committees recommendation
i
n favor of the
retention at this time of the current
provisions
with
regard
to
majority voting including the
requirement
for submission of a resignation
b
y
any
Director nominee who has received
fewer for votes than withholds i
n
an uncontested election
Accordingly at this time the
Committeerecommends
against
the shareholder proposal
for initiation of a process
to
amend the Companys articles
o
f
incorporation
to
provide that director nominees must be
elected
by
the affirmative vote of the
majority
of votes cast at an annual
meeting of
shareholders Accordingly a recommendation
by the Board
against
this shareholder
proposal will be included
i
n the resolutions
i
n
preparation
for the 2008 annual
meeting
which will be submitted at a later point i
n the Board meeting Management
will
communicate with the shareholder proponent prior to this 2008 annual meeting The
Committee plans to revisit the relevant issues at a subsequent Committee meeting
I
n
response
to a question by
Ms Osmer McQuade Mr Reed
reported on plans
for
communications also with Institutional Shareholder Services and CtW
I
n
response
to a
question by Mr Matthews Mr Reed
reported on the
subject
of a letter
I
n
response
to a
question by Mr Reed
Mr
Killinger noted plans
for a meeting
Lead Independent Director
Mr Reed reported on the Governance Committees recommendation that in lieu of
supporting an alternative proposal relating
t
o the Chairman of the
Board
the
Corporate
Governance Guidelines be amended to provided for the Board to
appoint
in lieu of a
Presiding Director a Lead Independent
Director
having authority
to call meetings of
nonmanagement
or independent Directors i
n the discretion of the Lead
Independent Director
and that Mr Frank be appointed as Lead Independent Director On motion duly made and
seconded
the
Board
resolved to approve
this
change i
n the Guidelines and the appointment
of Mr Frank Ms Pugh and Mr Killinger recused themselves from
voting
A
copy
of the
resolutions adopted
b
y
the Board including
the substitution of a reference
t
o
nonmanagement Directors instead
o
f
independent Directors will be kept i
n the Secretarys file
as an appendix to these minutes
Other Changes in Corporate Governance Guidelines
Mr Reed
reported
that the Governance Committee had considered and
recommended Board approval
o
f
certain other
changes
t
o update the Corporate
Governance Guidelines On motion duly
approved these
changes
HIGHLY CONFIDENTIAL
Return
Governance CommitteeReview and Actions on Other Reports
Mr Reed reported that the Governance Committee reviewed the 2007 Board goals
He outlined modifications of the goals for 2008
Mr Reed noted the Committees
receipt
of the
completed surveys with regard
to the
Board and its committees The Committeewill review the
survey responses
to ensure all
recommendations are properly
considered The Committee also reviewed a proposal for
Director education about the Basel
I
I
accords and reviewed the schedule of Board
meetings The Committee also held
an executive session
i
n which the Committee reviewed
issues
relating
to attendance and succession
planning
for the chairs of the committees of
the Board
Amendment of CommitteeCharters
Mr Reed reported that the Governance Committee recommended changes i
n
its
charter
and
certain governance related changes to the Finance Corporate Relations
Human Resources and Corporate Development Committees charters On motion duly
made and seconded the Board approved these changes i
n the charters as recommended
by
the Committee
Preparations for Annual Shareholder Meeting
Mr
Killinger requested
that the Board
approve
certain actions
i
n
preparation for the
submission of matters to the shareholders at the 2008 annual
meeting I
n
response
to
a
question by
Mr Reed Mr Landefeld reported that the
proxy
statement will
go to press i
n the
following week I
n
Mr
Stever Mr Landefeld reported on certain
revisions
relating
to the Human Resources Committee On motion duly made and
seconded the Board resolved
t
o
approve these preparations for this annual
meeting
A
copy
of the resolutions
adopted by
the Board will be
kept i
to these minutes
Registration of Employee Stock Purchase Plan
Mr Killinger submitted a proposal for the
registration
of stock to be issued
i
n the
Employee
Stock Purchase Plan On motion
duly
made and seconded the Board resolved
t
o
approve the filing of the Form S8 registration statement A
copy
of the resolutions will be
kept i
Officer Elections Promotions and Transfers
On motion
duly made and seconded the Board approved
officer elections and
another change
A
copy
of a schedule of all such changes as submitted to the Board will
be kept i
Executive Session to Discuss Management Response to Appraisal Investigation
Messrs Casey Cathcart David and Lynch left the meeting
Redacte
0
1
HIGHLY CONFIDENTIAL
Return
Executive Session including CEO
Messrs Landefeld and Rotella left the meeting The remainder of the Board meeting
was
i
n executive session The Board continued its discussion of
strategic issues
Executive Session without CEO
Mr
Killinger
left the
meeting
The Board
continued
the discussion of
strategic
issues and determined that additional insight into the Companys credit outlook including
further information with regard to the forecasting models and their inputs would be
appropriate for the next
meeting
of the Board
I
n addition promptly after each meeting o
f
the
Corporate Development Committee the Board shall have the
opportunity
for a
discussion of the issues that were reviewed by this Committee
There being no further business the
meeting was adjourned at 730 PM
Appendices
A Approval
of
Bylaw Amendment Independence
of Potential Director Election of
Director and Appointment to Committees
B Approval
of Amendments to the ESPP
C
Approval
of Director
Independence
Determinations
D Approval
of Nominees for Election to the Board
by
Shareholders
E Approval of Lead Independent Director
F
Approval
of
Comprehensive Preparations
for 2007 Annual
Meeting
G Approval of Filing of S8 Form
H Schedule of Officer Elections
APPROVED BY THE BOARD OF DIRECTORS MARCH
17 2008
HIGHLY CONFIDENTIAL
Return
Appendix A Approval of Bylaw Amendment Independence of Potential Director
Election of Director and Appointment to Committees
Bylaw Amendment
RESOLVED that Article
I
I of the
Bylaws
of the
Company are amended to
provide
The board of directors of this corporation shall consist of fourteen
14
directors
Independence of Potential Director
RESOLVED that the Board of Directors hereby finds that i
f
elected Stephen I
Chazen would be an independent director pursuant to the Washington Mutual Inc
Guidelines for
Determining
Director
Independence
RESOLVED FURTHER that the Board of Directors hereby
finds that
i
f elected
Stephen
I Chazen would be
an independent director pursuant
to the
applicable
rules and
regulations of the Securities and Exchange Commission and the New York
Stock
Exchange
Election as Director
RESOLVED that the Board of Directors
hereby
elects Stephen 1 Chazen to serve
as a director of the
Corporation
for an initial term to expire as of the next annual
meeting
of the
Companys
shareholders
Appointment to Committees
RESOLVED
that the Board of Directors
the Board hereby appoints Stephen I
Chazen to serve as a member of the Boards Audit Compliance and Finance
Committees effective February 26 2008
HIGHLY CONFIDENTIAL
Return
Appendix BApproval
of Amendments to the ESPP
APPROVAL OF AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN
WHEREAS Washington Mutual Inc the Corporation maintains the 2002
Employee Stock Purchase Plan the ESPP
WHEREAS Section 16a
of the ESPP authorizes the Board of Directors of the
Corporation the Board to amend the ESPP from time to time
WHEREAS i
t has been
proposed
that the
Corporation
increase the number of shares
of common stock
o
f
the Corporation that may
be issued pursuant to awards granted under
the ESPP by 4000000 shares of the Corporations common stock
WHEREAS the Board
believes that
i
t
i
s
i
n the best interest of the
Corporation
to
amend the ESPP to increase the number of shares of common stock that
may
be issued
under the plan and
WHEREAS the ESPP
requires approval by
the shareholders of the
Corporation t
o
increase the number of authorized shares
Now THEREFORE BE
I
T RESOLVED that subject
to
approval by
the shareholders of
the Corporation the ESPP
be
and
hereby
i
s
amended
by deleting
the
existing
Section 4 of
ESPP
i
n its
entirety
and
replacing i
t with the following
Subject
to adjustment from time to time as
provided i
n Section 19
1 a maximum of
8863590
shares shall be available for issuance under the Plan Shares issued under
the
Plan shall be drawn from authorized and unissued shares or from shares subsequently
acquired by the Company
RESOLVED FURTHER
that the
foregoing amendment to increase the number of
shares of common stock of the Corporation that
may
be issued pursuant to the ESPP be
submitted to the shareholders
o
f
the Corporation for a vote
i
n accordance with the ESPP at
the next regular meeting
of the shareholders of the
Corporation
RESOLVED FURTHER that subject
to the approval
of the foregoing amendment by
th
Corporations shareholders the Corporation hereby i reserves an additional 4000000
shares of the
Corporations common stock for issuance
pursuant
to the terms of the ESPP
as amended which shares may
be authorized but unissued shares
o
f
common stock or
shares of
common
stock held
b
y
the Corporation
as
treasury stock
and
ii authorizes the
issuance of such 4000000 shares of the Corporations common stock under the terms
o
f
the ESPP as amended and that such shares of the Corporations common stock shall
when issued
i
n
accordance with the provisions of the ESPP as amended constitute validly
issued fully paid and nonassessable shares of common stock
AUTHORIZE FILING OF FORM S8
WHEREAS the Board has deemed
i
t to be
i
n the best interests of the Corporation
and
its shareholders to register the additional 4000000 shares of the
Corporations common
stock that may
be issued pursuant to the
ESPP under the Securities Act of 1933 as
amended the Securities Act
HIGHLY CONFIDENTIAL
Return
Now THEREFORE BE
I
T
RESOLVED that subject to the approval of the foregoing
amendments by the Corporations shareholders any officer of the Corporation and each a
them severally hereby i
s authorized and directed on behalf of the Corporation and
i
n its
name
to
prepare
execute and cause
t
o be filed with the Securities and Exchange
Commission
SEC one or more Registration
Statements on Form S8
the
8
Registration Statements
for the additional shares available for issuance under the ESPP
as amended all amendments and supplements and
any
and all certificates documents
letters and other instruments to be filed with the SEC
andor any
other
governmental
agency pertaining thereto including
without limitation i
f
necessary appropriate exhibits
and supplemental documents
for the
purpose
of
registering
the offer and issuance of the
Corporations common stock pursuant
t
o the ESPP as amended
under the Securities Act
any
officer of the Corporation and each of them severally
i
s authorized to be appointed the agent for service of
process o
f
the Corporation under the
Securities Act
i
n connection with the S8 Registration Statements
RESOLVED FURTHER that the Corporations common stock to be issued pursuant to
the ESPP as amended be qualified or registered for sale i
n various states that the officers
of the
Corporation
and each of them
severally are authorized to determine the states in
which
appropriate
action shall be taken to qualify or register for sale such the Corporations
common stock as such officers deem advisable that such officers are hereby authorized to
perform on behalf of the Corporation any and all acts that they may
deem
necessary or
advisable i
n
order
t
o comply with the applicable law of
any
such states and
i
n connection
therewith to execute and file all requisite documents
RESOLVED FURTHER that the officers of the
Corporation be and each of them
hereby
i
s
authorized and directed by
and on behalf of the
Corporation
and
i
n its name to take all
action
necessary
to comply
with
any
and all federal and state securities laws
i
n
respect
of
the above described issuances of the
Corporations common stock and to take such other
action as he
or she may deem necessary
or appropriate to
carry
out the issuance of such
the Corporations common stock and the intent of the foregoing resolutions
RESOLVED FURTHER that any officer of the Corporation be and each of them hereby
i
s authorized and directed i
n
the name and on behalf of the Corporation to
prepare or cause
to be prepared and to distribute one or more prospectuses for offers andor issuances of the
Corporations common stock under the ESPP as amended
APPROVAL OF APPLICATION FOR NYSE LISTING
WHEREAS the Board has determined that
i
t
i
s
i
n
the best interests of the Corporation
to apply to list on the NYSE the additional shares of the Corporations common stock
authorized for issuance under the ESPP the Listing Application
Now THEREFORE BE
I
T
RESOLVED that subject
to the approval of the
foregoing
amendments
by the Corporations shareholders any
officer of the Corporation be
and each
of them hereby
i
s authorized and directed on behalf of the Corporation and
i
n its name to
prepare
and
cause
to be filed with the NYSE the Listing Application
any
officer of the
Corporation be
and each of them hereby
i
s authorized and directed on behalf of the
Corporation
and
i
n
its name to
prepare and
cause
t
o be filed as exhibits to said
Listing Application such documents as
may
be
required
171023 23 WM confidential Limited Access
HIGHLY CONFIDENTIAL
Return
or appropriate
for
filing as exhibits to such Listing Application or
any supplements or
amendments thereto
RESOLVED FURTHER that any
officer of the Corporation be and each of them her
i
s named as a representative
of the Corporation to represent the Corporation before the
NYSE with all
authority
to make
changes i
n the
application
and execute all
documents
including
without
limitation any agreement required by the NYSE
requiring the Corporation
to perform all acts
required or reasonably requested by the NYSE
i
n connection with such
application and
any
officer of the
Corporation be and each of them hereby
i
s appointed as the Corporations agent
for service of
process
of the Corporation i
n
connection with the Listing Application
GENERAL
RESOLVED that the officers of the Corporation be and each of them
individually
hereby i
s
authorized directed and empowered to take all actions and do all
things
necessary and
appropriate
to effectuate the
preceding resolutions including making
execution and
delivery
of all documents exhibits agreements waivers papers
undertakings instruments and certificates filing
with the Securities and Exchange
Commission such notices documents or other
items andor performing such other acts as
each officer of the
Corporation may
from time to time deem
necessary desirable or
appropriate i
n order to
carry
out the intent and purpose
of the foregoing resolutions and
RESOLVED FURTHER that the acts and deeds heretofore done by any
of the officers
o
f
the
Corporation and by any other officer employee or agent o
f
the Corporation acting on
behalf of an Authorized Officer to effect the
purpose
and intent of the foregoing resolutions
be and hereby are adopted ratified confirmed and approved i
n all
respects
HIGHLY CONFIDENTIAL
Return
Appendix C Approval of Director Independence Determinations
RESOLVED that the Board finds that the following current Company directors are
independent directors pursuant to the Washington Mutual Director Independence
Guidelines
Stephen E Frank Anne V Farrell
Charles M Lillis Thomas C
Leppert
Regina
T
Montoya Phillip D Matthews
Margaret Osmer McQuade Michael K
Murphy
William G Reed Jr Orin C Smith
James H Stever
RESOLVED FURTHER that the Board finds that all of the current members of the
Companys Audit Committee are independent directors
pursuant
to the applicable rules and
regulations
o
f
the
Securities and Exchange Commission and the New York Stock
Exchange
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Appendix DApproval of Nominees for Election to the Board by Shareholders
Nominees for Directors
RESOLVED
that the following persons are hereby
nominated for election to serve as
directors of the Corporation for a
oneyear
term expiring
a
t
the Corporations Annual
Meeting of Shareholders
i
n
2009 or until his or her successor
i
s duly elected and qualified
Stephen
1 Chazen Charles M Lillis
Mary
E
Pugh
Stephen
E Frank Phillip
D Matthews William G
Reed Jr
Kerry K Killinger Regina Montoya
Orin C Smith
Thomas C Leppert Michael K Murphy James H Stever
Margaret
Osmer McQuade
RESOLVED FURTHER that the Corporation
shall
propose
to the holders of the
Corporations Common Stock
a
t
the 2008 Annual Meeting of the Shareholders the election
o
f
the foregoing individuals to the Board of Directors for a
oneyear
term expiring
a
t
the
Corporations
Annual Meeting of Shareholders i
n 2009
171023 2 WM Confidential Limited Acce
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Appendix E Approval of Lead
Independent
Director
hereby
amends the
Corporate
Governance
Guidelines the Guidelines
of the Company
as follows
The following new subsection I shall be inserted into the Guidelines
i
n the section
Board Composition and Leadership and the
remaining subsections shall
accordingly
be
assigned the next letter i
n the alphabet
Lead
Independent
Director
The Board recognizes the benefits
o
f
designating a lead independent director The
independent
Directors shall
by majority
vote
annually
select one of the
independent
Directors to serve as the Lead
Independent
Director The Lead
Independent
Director will
assist the Chair of the Board with boardrelated matters including meeting agendas
and
schedules and will serve as a liaison between the independent Directors and the Chair
o
f
the Board The Lead
Independent
Director also will
preside
at
any meetings
of
nonmanagement
or independent Directors and at
any meeting
of the Board at which the Chair
of the Board will not be present
The Lead Independent Director has authority to call
meetings o
f
the
independent
Directors and to recommend to the Chair the retention of
outside advisors and consultants who
report directly
to the Board on boardwide issues
I
n
addition while the Human Resources Committee shall continue to evaluate the performance
of the Chief Executive
Officer the Lead Independent
Director shall coordinate with the Chair
of the Human Resources Committee and join him or her to communicate to the Chief
Executive Officer the results of the Committees evaluation of the Chief Executive Officers
performance
2 The last sentence of subsection H The Chair of the Board
i
n the section Board
Composition and Leadership
shall be amended with the additions and deletions
shown
I
n the absence of the Chair the Lead Independent Director will chair the meeting or i
n the
absence of the Lead
Independent Director the Board will elect a Chair Pro Tern to chair the
meeting
HIGHLY CONFIDENTIAL
Return
Current subsection E Executive Sessions of Directors and
Presiding
Director
i
n
the
section Board Meetings shall be amended with the deletions and additions shows
as marked below
Executive Sessions of Directors and Lead
Independent Director
The nonmanagement Directors generally meet i
n executive session at every
regularly scheduled board meeting
The
nonmanagement
Directors who have been
determined to be independent i
Boardapproved
Guidelines for
Determining Director Independence
meet
i
n executive session once
per year Any
nonmanagement
Director
may
submit topics he or she deems appropriate for discussion at
executive sessions to the Chief Executive Officer or to the Lead
Independent
Director
t
o
ensure that the interests and needs of the
nonmanagement
Directors are appropriately
addressed
I
f the Lead Independent Director i
s absent from
or
otherwise unable to preside
a
t
an
executive session the independent Directors i
n
attendance shall by majority
vote select one
o
f
their members to preside at that executive session
FURTHER RESOLVED that the Board of Directors hereby appoints Stephen Frank to serve
for the remainder of 2008 as the Lead Independent Director and that he shall no longer
serve as presiding Director
which
position has been eliminated and
FURTHER RESOLVED that the Board of Directors hereby determines that the annual
retainer for the position o
f
Lead Independent Director be $25000
HIGHLY CONFIDENTIAL
Return
WMConfidential Limited Access
Privileged
and Confidential
Appendix FApproval of Comprehensive Preparations for 2007 Annual Meeting
Comprehensive Preparations
for 2008 Annual Meeting
RESOLVED FURTHER that the Executive Vice President and Interim Chief
Legal Officer
any
Senior Vice President and Associate General Counsel the Secretary or
any
Assistant
Secretary any
of the
foregoing an Authorized Officer or
any
one of them
acting
alone
i
s
hereby authorized and directed
t
o take
any action that i
s
appropriate
i
n the discretion of
any
of them to submit proposals for
a the election of the following nominees
Stephen
1 Chazen Charles M
Lillis Mary
E
Pugh
Stephen
E Frank Phillip
D Matthews William G Reed Jr
Kerry K Killinger Regina Montoya Orin C Smith
Thomas C Leppert Michael K Murphy James H Stever
Margaret
Osmer McQuade
to the Corporations Board of Directors the Nominees b the ratification of the selection
of the Corporations outside auditor for2008by
the shareholders
the Auditor Ratification
c the
approval
of an increase i
n the number of shares that
may
be issued pursuant to the
Corporations Amended and Restated 2002 Employee Stock Purchase Plan the ESPP
Shares Proposal and dto
oppose
the
following shareholder proposals i
f
they are
presented
at the Annual Meeting i a proposal regarding an independent Board Chair and
i
i a proposal regarding the Corporations
director election process the
Shareholder
Proposals
RESOLVED
FURTHER
that the Board of Directors recommends that the shareholders vote
FOR all of the Nominees
the Auditor Ratification and the ESPP Shares Proposal
and
AGAINST the Shareholder Proposals
pursuant
to the
bylaws
of the
Corporation
the Board of
Directors
hereby
declares that the Annual Meeting shall be held
i
n
Seattle Washington on
Tuesday April 15 2008 at 100
pm
at Benaroya Hall 200 University Street Seattle
Washington
purposes
of the Annual Meeting shall be to act on the
Nominees the Auditor Ratification the ESPP
Shares Proposal
and the Shareholder
Proposals
and to transact such other business as may properly come before the
meeting or
any adjournments thereof
RESOLVED FURTHER that pursuant
to the
Corporations bylaws
the Board of Directors
hereby
sets February 29 2008 as the record date for determination
of the shareholders
entitled to notice of and to vote at the Annual
Meeting
RESOLVED FURTHER that the Board of Directors hereby approves
the Proxy Statement
and Form of Proxy
in the forms
presented
to the Board and that the Authorized Officers
are
hereby authorized empowered
and directed to finalize the
Proxy
Statement with such
changes
as shall be
appropriate
with the advice of counsel and to incorporate i
n such
Proxy Statement i Compensation Discussion and Analysis
and
Report of the Human
Resources Committee as required by
the applicable Securities and
Exchange Commission
rules and ii a Report of the Audit Committee
i
n such form as the Audit Committee shall
approve
HIGHLY CONFIDENTIAL
Return
RESOLVED FURTHER that the Authorized Officers and each of them
acting alone
i
s
and directed to make or t
o
designate any person t
o make
any necessary filings
with the Securities and Exchange Commission The New York Stock
Exchange and any other appropriate
Federal or State governmental entities or regulatory
authorities
i
n connection with the preparation
and distribution of the
Notice Proxy
Statement and Form of
Proxy
RESOLVED FURTHER that the Authorized Officers and each of them acting alone i
s
and directed to cause to be delivered prior t
o the Annual
Meeting to
a
l
l
shareholders eligible to vote
a
t
the Annual Meeting copies of the Notice
Proxy Statement Form of Proxy and Annual Report and i
f
necessary
to secure a quorum
of shareholders a Reminder Notice all
pursuant t
o the Corporations bylaws and
applicable
regulations
RESOLVED FURTHER that William L
Lynch
and Stewart M Landefeld are hereby
appointed
as
proxies
of the Board of Directors to vote and act with
respect
to the shares of
common stock of this Corporation for which proxies
will be solicited for use
i
n connection
with the Annual
Meeting
RESOLVED FURTHER that the Board of Directors
hereby
authorizes
Broadridge Financial
Solutions Inc to act as
Inspector
of Elections for the Annual
Meeting
HIGHLY CONFIDENTIAL
Return
Appendix GApproval of
Filing
of S8 Form
Authorization of
Filing
of
Registration
Statement on Form
SWHEREAS
Washington Mutual Inc the Company will ask its shareholders at the
Companys 2008 annual meeting to
approve an increase i
n the number of shares
o
f
Company common stock no par value the Common Stock issuable pursuant to the
Companys
2002 Amended and Restated Employee
Stock Purchase Plan
ESPP i
n the
amount of 4000000 shares
WHEREAS
to
register
the future issuance of the increased number of shares
pursuant
to the ESPP the
Company will file with the Securities and
Exchange Commission
the SEC
a
Registration
Statement on Form S8
the
Form
S8 and
WHEREAS the Form S8 will also
register i Common Stock
t
o be issued by the
Company i
n the future pursuant t
o the Companys 2003 Amended and Restated Equity
Incentive Plan the 2003 EIP 1994 Stock
Option
Plan
the
1994
Plan
and WaMu
Savings
Plan
the Savings Plan
and
ii
deferred compensation obligations under the
Companys Deferred Compensation Plan the DCP
NOW THEREFORE i
t
i
s
hereby
RESOLVED that the Company
file the Form S8 with
the SEC i
n
accordance
with
the Securities Act of 1933
and
i
n
conformity
with the rules and
regulations thereunder
i
n
order t
o
register i up
to 75000000 shares
o
f
Common Stock
i
n the aggregate that may
be
offered and sold pursuant to the ESPP the 2003 EIP the 1994 Plan or the Savings Plan
and ii up
to $50000000 of deferred
compensation obligations
that
may
be issued
pursuant
to the DCP and that the Form S8 substantially i
n the form
attached hereto as
Exhibit A i
s
hereby authorized and approved
RESOLVED FURTHER that the executive officers of the Company or
any
of them
are authorized and directed to make such changes i
n the FormS8 and to do
any
and all
acts as they may
deem
necessary or advisable to
cause
the FormS8 to be filed and to
become effective
RESOLVED
FURTHER
that the executive officers of the Company
or
any
of
them
are authorized
i
n their discretion to
complete execute and file with the SEC
any
amendments or posteffective amendments to the Form S8 with such
provisions as the
executive officers executing the same may consider necessary or advisable
and such other
documents as they i
n their discretion deem necessary or desirable to effect or withdraw the
Form S8 i
n accordance with the Securities Act and
any
other applicable federal or state
law and
RESOLVED FURTHER
that
upon
the issuance of shares pursuant to the Form S8
said shares shall be
validly issued fully paid and nonassessable shares
o
f
Common Stock
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
Appendix H Schedule of Officer Elections
Officer Elections
Kennedy Matthew none to First Vice President effective February 1 2008
Moore Robert none to First Vice President effective
February 1 2008
Stearns Steve
none to First
Vice President effective
February 1 2008
Taylor Susan none to Senior Vice President effective
January 1 2008
Taylor Susan none to Assistant
Secretary
effective
January 1 2008
Officer Terminations
Boyle Hugh F Senior Vice President to
none effective January 31 2008
McMullen Kenneth Chester Vice President to none effective
January 31 2008
Montgomery Susan E Vice President to
none
effective
January 31 2008
APPROVED BY THE BOARD OF DIRECTORS MARCH 1 7 2008
HIGHLY CONFIDENTIAL
Return
Board of Directors Meeting Minutes
Drii 1 2008
Washington Mutual Inc the Holding Company
met
concurrently with the Board of Directors of
Washington
Mutual Bank
the Bank on
April 1 2008
for a telephonic meeting
Directors Present
Stephen
I Chazen
Regina
T
Montoya
Anne V Farrell Michael K Murphy
Stephen E Frank Margaret
Osmer
McQuade
Kerry K Killinger Mary E
Pugh
Thomas C
Leppert
William G Reed
Charles M Lillis Orin C Smith
Phillip D Matthews James H Stever
Directors Absent None
Management Present Advisors Present
Todd Baker Frank Cicero of Lehman Brothers
Carey
M Brennan Phil Erlanger of Lehman Brothers
Thomas W
Casey Huntley Garriott of Goldman Sachs
Ronald J Cathcart John Mahoney of Goldman Sachs
Daryl D David Lee
Meyerson of Simpson Thacher
Stewart M Landefeld Todd Owens of Goldman Sachs
John
McMurray Steve Wolitzer of Lehman Brothers
John Robinson
Stephen
J Rotella
Robert J Williams
Craig E Tall
Susan R Taylor
Office of Thrift Supervision Management Present
Darrel W Dochow Regional Director
Scott M Polakoff Deputy
Director
Timothy T Ward Senior Deputy Director an Chief
Operating Officer
no
HIGHLY CONFIDENTIAL
Return
Mr Killinger presided
and called the
meeting
to order at 400
pm
Pacific
Daylight
Time
and the undersigned served as
secretary
to the
meeting
All those
present
attended the
meeting by telephone management
and Mr
Killinger being together
at the offices of the
Holding Company and could hear each other
during
the
meeting
All attendees were
present
at the beginning
of the
meeting except
for Mr Tall and the advisors from
Lehman Brothers and Goldman Sachs who joined later
Receive Input from OTS Senior Management
Mr Polakoff introduced himself
Mr Ward and Mr
Dochow
and indicated that
they
had
important messages
for the Board Mr Polakoff
acknowledged
the
important
decisions
to be made by
the Board and the difficult process and complex analysis being undertaken
He indicated that the OTS would not
pressure
the Board into making any particular
decision but that the Board should know the OTSs view that
capital
needed to be
brought into the Bank and doing nothing was not an option
He
conveyed
the
importance
of keeping
the OTS
apprised
of relevant events and decisions all of which would be
kept confidential and that OTS
management
would be available
day and night
to provide
support during the decision making process
Mr Dochow
added that
membership on the
Holding Companys
and Banks Boards was
identical and that consideration must be
given
to the Banks
depositors as well as the
Holding Companys shareholders He expressed
his satisfaction with the
open and full
dialogue between OTS and Holding Company management throughout
the
process
Mr
Dochow reminded the Board of the OTS action to
downgrade the Banks composite
rating in February
and noted that further
downgrades were possible
He reviewed the
Banks
capital ratios noting concerns about the Banks and the Holding Companys
ability to meet their
appropriate capital ratios Ile acknowledged the challenge before the
Boards and stressed the
importance
of
keeping
the Bank safe and sound
Mr Dochow responded
to a question
from Mr
Leppert responding positively regarding
managements responsiveness
to the OTS He
responded to a Directors
question
regarding
the
appropriate
amount of capital to be raised In
response
to another Directors
question
Mr Polakoff indicated that the Board should ensure the Holding Company
i
s
prepared
with a media plan
Mr Dochow expressed his belief that
reporting negative
financial results with an announcement of
having
raised
capital
could be
positive
but
reporting results without such an announce rent would be
very negative Mr Killinger
thanked Messrs Polakoff Ward and Dochow for joining the
meeting
The three
gentlemen
then left the meeting by disconnecting from the telephone line
Minutes from the Board Meeting on March 17 and the Informational Briefings on
March 14 and March 25
Dlr Killinger submitted the minutes of the March 17 Board meeting
and the March 14
and March 25 informational briefings On motion duly made and seconded the Board
unanimously
approved
the minutes
Messrs Garriott Mahoney and Owens from Goldman Sachs and Messrs Cice
Erlanger
and Wolitzer from Lehman Brothers then
joined
the
meeting
Doe 174350
HIGHLY CONFIDENTIAL
Return
Review Financial Analysis
Management presented a series of
updates relating to the financial condition of the
Holding Company including information
responsive
to
questions
and
requests
raised
previously by
the Board
First Quarter 2008
Expected Results
Mr Casey presented
his material
summarizing
the financial results
expected for the first
quarter
of 2008 While the net interest margin expanded
due to a lower Fed Funds rate
the first
quarter provision was
expected
to be
approximately
$34 billion or 26 times
charge
offs of
approximately $13 billion Mr Casey then reviewed with the Board the
Q1
2008 Forecast
Update provided
in the Board material He
reported
on the
shrinkage
i
n the size of the balance sheet the
impact on capital
and
responded to a Directors
question regarding the expected balance sheet run rate for the remainder of the
year
Credit and Financial Outlook
Mr Casey then turned the Boards attention to the material provided on the Credit and
Financial Outlook and
began
the
presentation by submitting a stresscase scenario
represented by
an income statement balance sheet and related financial and
capital
metrics for the
years
2008 to 2012 The scenario assumed that $5 billion of
capital had
been raised in a stressed environment with a high provision amount Mr Casey indicated
that the scenario was provided
to assist the Board in its deliberations
regarding
the
amount of
capital to be raised Mr Casey responded to several
questions from Directors
concerning the
impact
of
raising
different amounts of capital and he and Mr
McMurray
responded to questions concerning the provision Mr
Casey walked the Board
through
several
key assumptions
reflected in
the scenario Messrs
Casey
and
Killinger responded
to
questions
from Mr Reed
regarding the assumptions the business model and
anticipated pricing of a capital transaction
Mr Tall joined
the
meeting during the discussion described above
Mr Rotella then reported to the Board on strategic plans to
change
the business model
The
plans hinged primarily on accelerating
the focus on retail distribution including
changing
the home loans model
significantly
to focus on the retail sweet spot I
n
addition capital will be conserved
by reducing balance sheet growth
and
by reducing
expenses
overall Mr Rotella noted some of the actions
anticipated
t
o be taken and the
resulting impacts noting corrections to some of the
figures in the materials
previously
provided
to the Board He responded
to several questions from Directors
regarding
various
aspects
of the
plans
Mr McMurray then presented an
update on credit He reviewed the
amounts charged off
in the loan
portfolios
in each of the last four
quarters
and as forecast for the current
quarter
and the level of the Allowance for Loan and Lease Losses
the ALLL
for the
first
quarter of 2008 In
response
to previous requests
from the
Board he presented a
probability analysis
of
remaining
credit
losses
which related to four different loss
scenario drivers and resulted in sixteen different
probability scenarios which each
4174350
HIGHLY CONFIDENTIAL
Return
corresponded
to a different
range
of forecast credit loss and to a different
provision
amount Mr McMurray responded to several questions
from Directors to confirm and
clarify
their
understandings
of the credit
loss
scenarios and the
corresponding
implications for loss assumptions timing
of loss
experience
and
provision
amounts
Mr Casey
then
presented
the
implications
ofa
very high credit loss scenario noting
that
the
private equity
firms examining the Holding Company had used their own assumptions
t
o predict
credit
losses and
may
be basing
their analysis of the
Holding Companys
prospects using a
very high
credit loss scenario He submitted financial information
projected
for a scenario
representing
an extremely stressed environment and reviewed the
capital metrics in such a scenario with the Board He presented several risks that might
arise in such an environment even i
f
capital had been raised including aggressive actions
by regulators
and rating agencies
Capital
Outlook
Messrs
Casey and Williams then jointly made a presentation on capital Mr Casey
outlined the reasons and assumptions supporting managements recommendations to
raise additional capital and reduce the Holding Companys dividend to $001
per
share
He indicated that under each
capital
raise scenario under consideration management
assumes that at least $2 billion of capital would be contributed
b
y
the
Holding Company
to the Bank He and Mr Williams then walked the Board through the 2008 capital ratio
comparisons
forecast for the Holding Company and the Bank in each of the low medium
and high provision scenarios i
f
$0 $4 $5 or $6 billion of
capital
had been raised
Liquidity
Outlook
Mr Williams presented an update on liquidity
He reviewed
changes to the Holding
Companys excess liquidity position from mid2007 to the end of the first
quarter
of
2008 He then submitted the stress case liquidity metrics noting that the Bank does not
meet the
three
six or twelve month excess funding capacity liquidity targets
under the
stress case The
presentation
ended with a list of various
funding sources and the
corresponding amounts of liquidity at risk for each
source as well
as information
concerning each funding sources sensitivity
t
o ratings
headline or regulatory risks
Equity Scenario
Mr
Casey
referred the Board to the Equity Case materials which had been provided for
the Board on BoardVantage on March 25 and
were provided again
in the material for this
meeting as requested by the Board
Investment Bankers Presentation
Mr
Mahoney
of Goldman Sachs and Mr Cicero of Lehman Brothers jointly presented
material
previously provided
to the Board entitled Confidential Presentation to
Olympics
Board of Directors Mr Mahoney began
the
presentation by briefly reporting
that three bids had been received from
private equity
firms interested in
purchasing
equity securities from the Holding Company and conversations were underway
with
institutional investors One financial institution had submitted a bid to
purchase
the
Holding Company
Doc 74350
HIGHLY CONFIDENTIAL
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Summary
of
Capital Raising Proposals
Mr Mahoney
then reviewed the list of the private equity
firms
initially contacted and the
subsequent steps presentations proposals due diligence that winnowed down the firms
to the three final bids Mr
Mahoney reviewed
the relevant decision variables for
comparing
the
proposals generally
and then
provided specific information
relating to
those variables for each of the bids from Titanium Carbon and
BoronlOxygen He fully
compared and contrasted the proposals using the terms size structure governance and
other nonfinancial considerations as the basis for
comparision Contingencies
and
closing
issues were reviewed focusing
in
particular on Carbons condition that the Bank
enter into a fiveyear
term auto flow
purchase agreement
under which the Bank would be
required to purchase auto loans from certain auto manufacturers in which Carbon held an
interest
Summary of Flint Proposal
Mr Cicero then
presented a
summary
of the financial institutions which had been
contacted for
purposes
of
eliciting a proposal
to
buy
the
Holding Company and the
subsequent steps confidentiality agreements management presentations data room due
diligence
in
person
due
diligence that led to the final bid from Flint He noted that the
investment bankers had focused on those institutions expected to be able to execute in the
current environment He reviewed the
key
terms of Flints
proposal noting the base value
offered
per
share and the possible adjustment
based on better than
expected performance
of the Banks home equity portfolio He reviewed Flints request
for
exclusivity and the
terms of proposed lockups He expressed
the
opinion that the bid indicated Flints
relatively low level of interest
Capital Raising Process
Mr Mahoney continued the presentation by reviewing the Holding Companys strategic
situation and then
summarizing the rationale for
raising capital noting
the
desirability of
exceeding capital targets
in a stressed environment and the importance of providing a
cushion in a difficult credit environment that would held address
concerns of
rating
agencies
and
regulators
He reviewed the benefits of
raising capital by illustrating
the
incremental
impact on the target capital
ratios of
raising
different amounts of capital i
n
the low medium and high credit
provision
scenarios He also showed the
cost
of
raising
capital by illustrating
the extent to which different amounts of
capital
raised at different
prices
results
i
n
ownership
dilution and earnings per
share dilution
At this
point
in the
meeting the Directors asked numerous questions Mr Mahoney
responded to a question from Mr Frank regarding
the extent to which
existing
shareholders who participate in the capital raise would be diluted Several bankers
responded to a question
from Mr Lillis
concerning the advantages of
holding a private
versus a public offering
Mr
Mahoney emphasized the risk associated with first
publicly
announcing negative financial results and then attempting to raise
capital publicly as
opposed to announcing financial results and the
capital
raise
simultaneously Mr
Mahoney noted that a
private offering
could be
completed sooner than a
public offering
and therefore prior to other institutions
attempts
to raise
capital
and
prior
t
o numerous
HIGHLY CONFIDENTIAL
Return
anticipated earnings releases which might negatively impact
the market Mr Cicero
noted that risks were reduced
by raising capital privately given
the
capital markets
volatility
and
general
economic
uncertainty
In response to an additional comment from
Mr Lillis
Mr Wolitzer
emphasized
that he viewed
speed to completion of a transaction
to be of
paramount importance
Mr Mahoney then outlined the form of the securities anticipated
to be offered as well as
the
approvals
from shareholders and the OTS that would be
required
under NYSE and
OTS rules to
fully
effect the
capital
raise He reviewed a sample
allocation of demand
among
investors to illustrate the roles played by
the
primary private equity
firm
serving
as the anchor and the other investors He reviewed the calendar and timeline for
negotiations
board deliberations and the goal
of
announcing a transaction
i
n six
days on
April
7 He reviewed a list of the investors being contacted as
part
of the second
stage
including large
institutional investors many
of whom were current shareholders as well
as sovereign wealth funds and international banks
Mr Cicero then presented
information
on equity offerings announced by financial
services companies during
2007 and 2008 He discussed factors relating to the
anticipated pricing
of the
Holding Companys securities to be
offered noting that
investors will focus on tangible
book value In
response
to a question
from Mr
Murphy
Messrs Erlanger and Wolitzer discussed
the
difficulty
of
predicting the price
at which the
Holding Companys stock would trade after announcement of the
Holding Companys
financial results and the
capital raise noting multiple factors reflected by the stock price
Mr
McMurray
left the
meeting
at this time
Analysis of Capital Raising Process
Mr Cicero presented considerations related to negotiating the capital issuance
price
including
the
relationship
between issuance prices and the Holding Companys tangible
book value
per
share Mr Erlanger responded to comments from Directors regarding the
prices
bid
by
the private equity firms He
reported on the
degree to which the investment
bankers had aggressively
identified firms
a
s
possible sponsors
for the
offering and the
importance
of
finding experienced
firms with deep pockets He reviewed the dual track
process by
which the investment bankers
pursued
both a capital raise transaction and a
strategic buyer
transaction Mr Cicero continued the presentation by reviewing the
extent to which he
expects
the Holding Companys stock price to be driven primarily by
the
tangible book
value until 2a 1O when he
expects
the
price
to
begin to reflect
greater
earnings power
He also reviewed a discounted cash flow
analysis
with the Board tinder
different scenarios and noted that the Flint bid compared poorly to the other alternatives
under the discounted cash flow analysis He responded to a question from Mr Lillis
regarding assumptions
Mr Cicero then submitted
numerous valuation metrics for the
equity
case under different credit scenarios He closed the
presentation
with information
regarding valuing the warrants
The Board then raised numerous questions
and
engaged
in a
thorough
discussion with
management
and their advisors Messrs Wolitzer and Mahoney responded to a question
from Mr Stever
regarding
the factors already
reflected
i
n the
Holding Companys current
Doc 4174350
HIGHLY CONFIDENTIAL
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stock price Mr Wolitzer commented on the extent to which the news about the collapse
o
f
Bear Steams had disrupted the financial
marketplace
In
response
to a question
from
Ms
Pugh
Mr
Mahoney
reviewed the extent to which
competition existed
among
the
private equity firms Mr Killinger responded
t
o a Directors question by thoroughly
reviewing
the
pros
and cons of each of the different
equity
bids from his
perspective
Management
and Mr Meyerson responded to a question
from Mr
Leppert by describing
the
regulatory
issues associated with the auto flow
agreement proposed by Carbon
Mr Killinger responded to a question from Mr Lillis
regarding timing by reviewing the
short time line and the
steps
that must be taken in order to make an announcement
early
i
n the following week In response to a question
from Ms Pugh Messrs Wolitzer and
Erlanger
discussed the
negotiation strategy
Flint
Proposal
The Board then
engaged
in an active discussion with
management
and the Boards
advisors regarding the bid from Flint and its relative value as compared to the
prospect
of
raising capital including
the
opportunity
that
i
t
represented
and the level of interest being
indicated by
Flint The Holding Companys advisors discussed
a range
of
possible
responses
to the bid
The representatives from Goldman Sachs and Lehman Brothers left the
meeting
at this
time as
did Messrs Tall and
Casey
Issues Related to Capital Raise Shareholder pproval
Redacted
7
HIGHLY CONFIDENTIAL
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Executive Session
At 620
pm
Mr
Killinger
asked that the
meeting go
into executive session All
members of
management
left the meeting at this time other than Messrs David
Landefeld Rotella and
Killinger
Mr
Meyerson
also remained Mr David then
scussed the pros and cons of raising different amounts of anital
submitted his presentation on compensation
issues related to the
recapitalization plan
and
provided
information in
response
to an earlier request
from the Board
reviewing
executive managements
economic incentives to
pursue
the different
strategic
alternatives After
answering questions
from the Board Messrs David and Rotella left
the
meeting
The Board then engaged in a thorough
discussion
regarding the Holding
Companys
financial condition and the relative merits of the different
strategic
and
financial alternatives for the Holding Company
under the circumstances The Board
fully
Redacted
seeking capital
and how much information about the
Holding Company would be
a r Iona quest ions including a question
about what other institutions
might
also be
Messrs Wo itzer and
Erlanger rejoined
the
meeting
to
respond
as being
clearer than first
anticipated noting the
strong
direction provided by the OTS
the number of firms and institutions initially contacted and the
relatively
few choices now
n response t
o a Directors request
Mr
Meyerson
framed the decisions before the Board
rovided to the wall crossed institutional investors as compared to private equity
firms
before the Board
The executive session concluded at
Respectfully Submitted
Susan
RT ylor
174350
HIGHLY CONFIDENTIAL
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AttorneyClient Privileged Work Product
WASHINGTON
MUTUAL INC
WASHINGTON MUTUAL BANK
Board of Directors Conversation with OTS
Saturday April 5
2008
The Office of Thrift
Supervision OTS requested a meeting with the Boards of
Directors of
the Holding Company
and
Washington
Mutual Bank the Bank
on
Saturday April 5 2008 at 400
pm
Notes of that
conversation follow
Directors Present
Stephen
1 Chazen
Anne V Farrell
Stephen
E Frank
Kerry K Killinger
Thomas C
Leppert
Phillip D Matthews
Regina
T
Montoya
Michael K
Murphy
Margaret Osmer McQuade
Mary
E
Pugh
Wm G Reed Jr
Orin C Smith
Director Absent James H Stever
Management Presen
Todd Baker
Carey M Brennan
Thomas W
Casey
Ronald J Cathcart
Stewart M Landefeld
John Robinson
Stephen J Rotella
Susan R
Taylor
Robert J Williams
Advisor Presen
Lee
Meyerson
of
Simpson
Thacher
Bartlett LLP
OTS
Management
Present
John M Reich Director
Scott M Polakoff Senior Deputy Director and Chief
Operating
Officer
John E Bowman Deputy Director
Chief Counsel
Darrel W
Dochow Regional Director West
Region
Kevin Corcoran Deputy Chief Counsel Business Operations
No material was
provided
for this
briefing
Ms
Taylor
acted as Secretary
Doc 178106
HIGHLY CONFIDENTIAL
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Robert Williams provided background regarding
the
Holding Companys progress
i
n its efforts to raise additional
capital
He
reported
that Titanium had committed
to
acting as lead investor and
providing up
to $2 billion He also
reported
that
Messrs Rotella and
Casey
had been speaking about the transaction with several
of the
Holding Companys large
institutional shareholders all of which had
signed
confidentiality agreements
with the
Holding Company
and had received
positive
feedback from each of them
concerning
their interest
i
n
investing
Mr Williams
described the next
steps
that needed to take
place i
n order to announce a
transaction within the next three
days
Mr Killinger described the status of
conversations with Flint noting that due diligence was still
underway He noted
that the decision
concerning a capital
raise transaction or a strategic
transaction
with Flint would be
subject to the
Holding Companys
Boards deliberations and
approval
Management then responded to several
questions
from the OTS
regarding
progress
Mr Reich asked about the
probability
of
raising $5 billion or more of
capital
Mr
Killinger responded
that the investment bankers were encouraged
but that
i
t was early i
n the discussions with the existing institutional shareholders
Mr Reich then
presented
the views of the OTS to the
Holding Companys
Board
and to
management
He reported
that the OTS was
very
concerned about
conditions
i
n the banking industry as a whole and
Washington
Mutual
Mr Reich
reported
that the OTS viewed the
Holding Company
as
being i
n critical
condition and that
i
f
i
t did not raise at least $5 billion of capital or enter into a
strategic merger agreement by April 15 the OTS would
pursue a downgrade
and
enforcement action
I
n
response
to a
question
from Ms Pugh Mr Polakoff reported that the OTS did
not
prefer
one alternative over another but that
i
n his view the Flint bid had more
certainty
at the
present
time because the Titanium offer
only represented a
portion of the total capital
the
Holding Company
needs to raise He indicated that
notwithstanding managements optimism
about the likelihood of a successful
capital raise he was skeptical
I
n
response
to a question
from Mr Matthews
regarding
the financial
system
environment generally
Mr Reich
reported
that the
regulators
have concerns
about
many
institutions and that bank failures are being
discussed
Many
downgrades
have occurred and more are
expected
Mr Polakoff added that the
environment was
leading
institutions that were previously friends with each other
to act
opportunistically
Secure relationships
have
evaporated
Doc 178106 2
HIGHLY CONFIDENTIAL
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HIGHLY CONFIDENTIAL
Attorney-Client Privileged Work Product
WM: Confidential Limited Access
WASHINGTON MUTUAL, INC.
Sunday, April 6, 2008
The Board of Directors of Washington Mutual, Inc. (the "Holding Company") met
concurrently with the Board of Directors of Washington Mutual Bank (the "Bank") on
Sunday, April 6, 2008, for a special meeting.
Directors Present:
Stephen I. Chazen
Anne V. Farrell
Stephen E. Frank
Kerry K. Killinger
Thomas C. Leppert
Charles M. Lillis
Phillip D. Matthews
Directors Absent: None
Management Present:
Todd Baker
Carey M. Brennan
Thomas W. Casey
Ronald J. Cathcart
Daryl D. David
Stewart M. Landefeld
Stephen J. Rotella
Charles Smith
Craig E. Tall
Susan R. Taylor
Robert J. Williams
Regina T. Montoya
Michael K. Murphy
Mary Pugh
Wm. G. Reed, Jr.
Orin C. Smith
James H. Stever
Advisors Present:
Huntley Garriott, of Goldman Sachs
John Mahoney, of Goldman Sachs
Todd Owens, of Goldman Sachs
Frank Cicero, of Lehman Brothers
Phil Erlanger, of Lehman Brothers
Steve Wolitzer, of Lehman Brothers
Jason Trock, of Lehman Brothers
Lee Meyerson, of Simpson Thacher
& Bartlett LLP
The materials for the meeting, including a PowerPoint presentation prepared by
Goldman Sachs and Lehman Brothers, copies of the Investment Agreement and the
Securities Purchase Agreement, a summary of the terms of both agreements
prepared by Simpson Thacher and Bartlett, and correspondence with Flint were
posted to BoardVantage prior to the meeting.
Doc #178377
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HIGHLY CONFIDENTIAL
Mr. Killinger presided and called the meeting to order at 10:00 a.m. Pacific Daylight
Time and the undersigned served as secretary to the meeting. Messrs. Chazen,
Leppert, Matthews, Murphy, Smith, Stever and Tall attended the meeting by
telephone. All others attended the meeting in person in the Boardroom at the WaMu
Center in Seattle, Washington.
Mr. Killinger welcomed everyone to the meeting, thanking the Holding Company's
Board members for their high level of engagement over the past several weeks. Ms.
Taylor entered the room and distributed the material for the Holding Company's
Board which had been posted electronically to BoardVantage earlier in the morning.
Mr. Killinger asked the investment bankers/financial advisors to present.
Investment Bankers
J
Presentation
Mr. Mahoney of Goldman Sachs, and Mr. Cicero of Lehman Brothers, jointly
presented material previously provided to the Holding Company's Board, entitled
"Confidential Presentation to Board of Directors, Discussion Materials - Project
Olympic." Mr. Cicero began the presentation by briefly reporting that a preliminary
agreement had been reached with Titanium to invest $2 billion in newly issued
equity securities of the Holding Company, and that negotiations would continue with
the "wall crossed" institutional investors through the following day, Monday. Pricing
was anticipated to occur Monday evening with an announcement early Tuesday
morning. The pricing of the transaction would be exposed to one day of market risk.
He reported that conversations had also continued with Flint's advisors and that
information had continued to be exchanged, but that there have been no
improvements to the terms of Flint's offer.
Investment Structure and Process
Mr. Mahoney then reviewed the terms of Titanium's proposed investment, talking the
Holding Company's Board through each feature listed on the pages entitled, "TPG
Capital Investment - Term Sheet" and "Contingent Convertible Non-Voting Preferred
Stock - Term Sheet." He explained how the security had been deSigned to be
outstanding only until conversion to common equity after receipt of shareholder
approval. He responded to several questions from Directors, including questions
about: the price reset feature, the NYSE rule concerning approval of certain common
stock issuances and the current tangible book value of the Holding Company's
common stock. He responded to a question from Mr. Frank by describing the
intensity of the most recent negotiations and the impact of Friday's stock price
decrease on pricing and other aspects of the negotiations. Mr. Mahoney then
described the extent to which the terms of the investments from other investors,
whether private equity firms or institutional investors, would be the same or different
from the terms of Titanium's investment. Mr. Erlanger reviewed the list of other
potential private equity investors, noting that Carbon was no longer among them due
to its requirement that an auto flow purchase agreement be entered into
simultaneously with the investment Mr. Erlanger reviewed the list of "Public 'Wall-
Crossed' Potential Investors" and described the rocess for communicatin with
Doc #178377 2
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HIGHLY CONFIDENTIAL
likelihood they would be able to participate due to time constraints. Mr. Erlanger
emphasized the importance of marketing to all the identified investors over the next
24-to-36 hour period. Mr. Erlanger responded to a number of questions from the
Directors concerning the various potential investors and the likely terms of their
investments.
Analysis of Capital Raise
Mr. Mahoney then presented a detailed analysis of the capital raise, which included
analysis of the impact of the conversion of the preferred stock on the relevant capital
ratios, the impact of the warrants and the conversion of the preferred stock on
earnings per share, and the impact of the warrants on the investor price and an
analysis of discounted cash flows. The discounted cash flow analysis included
analysis at different warrant levels using different assumptions, and showed results
over a five-year period. He also reviewed the features of the preferred stock that
would incent shareholders to vote for the conversion and reported that it was highly
likely that shareholders would approve the conversion. Mr. Mahoney responded to
questions from the Directors.
Review and Analysis of Flint Proposal
Mr. Cicero presented the terms of the proposal from Flint to acquire all of the shares
of the Holding Company by reviewing each of the terms listed on the page entitled
"Flint Proposal." He then reviewed the structure of Flint's payment offer and
described the contingent payment portion of the offer in detail. Mr. Killinger briefed
the Board on his correspondence with Flint. The Holding Company's Board then
engaged in an active and lengthy discussion with management and its advisors
concerning Flint, focusing on their offer, the extent to which the offer was based on
contingent performance, the scope of Flint's due dlligence requests and the due
diligence still to be completed, the SUbstance and tone of their negotiations, their
communications with regulators, and their perceived level of interest in acquiring the
Holding Company. In response to a question, Mr. Wolitzer discussed the possibility
that Flint is interested in acquiring the Holding Company but is waiting to be
opportunistic and could take actions that disrupt the capital raising process. In
response to Directors' questions, the financial advisors and management then
described the importance of getting through the next trading day without market
disruption in order to announce a transaction at the current pricing. Mr. Cicero then
presented the discounted cash flow analysis of Flint's offer. The offer represented a
price per share of common stock that was significantly less than the proposals
received from the private equity investors to purchase a minority interest in the
Holding Company's stock. The Holding Company's Board then asked the
investment bankers several more questions concerning negotiations with Flint. In
response to one question, Messrs. Meyerson and Landefeld framed some of the
issues that would be before the Holding Company's Board if Flint provided an
updated offer the next day, and the need to consider both execution risk and value.
Mr. Wolitzer also noted that an acquisition in the future was not precluded by the
capital raise. In response to a Director's question about whether the amount of
capital to be raised should be capped, Messrs. Killinger and Rotella reminded the
Holding Company's Board that the OTS had said that $5 billion was a minimum and
that it might be prudent to expand to $6 billion or more if sufficient interest exists.
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HIGHLY CONFIDENTIAL
Summary of Principal Terms of Investment
Redacted
Review of Press Release
Mr. Casey then reviewed the contents of the preliminary press release that had been
provided to the Holding Company's Board in advance of the meeting, and noted that
the Holding Company's Board was reviewing it rather than the Audit Committee, in
order to allow the Holding Company's Board to fully assess and analyze the financial
information being presented, and the impact of the financing. He explained that the
press release focused on the transaction and only a few key financial results and
metrics. A second press release reporting all of the Holding Company's earnings
results for the first quarter would be released on April 15. Mr. Casey answered
questions about timing and about the extent to which the press release scheduled
for release on April 15 would include the same information that the "wall crossed"
institutional investors had received.
Discussion of Duties of Boards ofWMI and WMB
Redacted
its adoption of resolutions in March to resolve the issues raised in conjunction with
the downgrade by the OTS of the composite rating.
Doc #178377 4
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WMI_PC_08788107.00005A Restricted For Use in Connection with Plan Confirmation Only
HIGHLY CONFIDENTIAL
REDACTED
Overall Transaction - Bankers' Analysis
Mr. Landefeld reported that both Lehman Brothers and Goldman Sachs had agreed
to deliver opinions to the Holding Company's Board assessing their review of the
reasonableness of the terms of the equity transaction. He asked the investment
bankers to describe the terms of the letters that they intended to present. Mr.
Mahoney summarized the terms of the letter to be delivered by Goldman Sachs. He
reviewed the scope of the opinion, the assumptions identified therein, and the
general content of the letter. He indicated that the opinion would focus only on the
equity investment and would not compare it to other strategies. The letter would
indicate that the investment was a reasonable means of obtaining financing. Mr.
Wolitzer described the letter to be delivered by Lehman Brothers, noting similarities
and differences from the Goldman Sachs' letter.
In response to a question from Mr. Frank, Mr. Wolitzer noted that his firm was not
viewing the transaction and the strategic sale as mutually exclusive alternatives and
that it was not appropriate for them to advise the Holding Company's Board
regarding which option was superior. He distinguished between the two alternatives,
noting that one was strategic while the other was an ongoing operating alternative.
Redacted
The Holding Company's Board then engaged in an active and thorough discussion.
Mr. Ullis noted that given the current two options, he would choose the
recapitalization and therefore the bankers' views were needed on the
recapitalization. Mr. Killinger indicated that the recapitalization transaction would not
preclude selling the Holding Company in the future, and that the Holding Company's
Board should consider whether shareholders would get a better value by accepting
the capital now, getting through the current difficult period and possibly having more
potential acquirers in the future. One Director emphasized that while the investment
bankers approached many potential acauirers. onlv one had submitted an offer.
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HIGHLY CONFIDENTIAL
REDACTED
Redacted
OTS Matters
The meeting of the Washington Mutual Bank Board then adjourned.
Adopt Resolutions to Approve Transaction
teo Ing ompany soar wou cons! er au onza Ion for raising up to $7
billion of capital, noting that, based on discussions with investors, it might be
practical to raise up to $7 billion without adversely affecting the pricing terms and
that having a greater capital cushion might be very prudent in the current
environment. Mr. Casey responded to a Director's question regarding dilution,
noting that there was the potential for buying back stock if the capital raised
ultimately exceeded what was needed. He indicated that a larger amount of capital
would reduce certain risks significantly, such as risks related to rating agency
actions and actions by the OTS. Mr. Baker indicated that the stock trading price is
expected to be based on tangible book value so the additional amount of capital
raised would not likely impact the price in the market. The Holding Company's
Board weighed a number of different factors.
Executive Session
The Holding Company's Board then went into executive session. All advisors other
than Mr. Meyerson left the meeting. All members of management left the meeting,
other than Messrs. Killinger and Landefeld, who then left after answering questions
and participating in discussion.
The Holding Company's Board engaged in a thorough discussion reviewing the
information and input received from management and advisors, including the
magnitude of the capital raising, and the risks and benefits of this versus other
transactions. Upon a motion made and duly seconded, the Holding Company's
Board adopted the resolutions described by Mr. Landefeld earlier in the meeting.
Discussion continued regarding the amount of capital to be raised. Mr. Frank
agreed to contact the OTS.
At 1 :45 p.m., the meeting of the Holding Company's Board went back into regular
session and Messrs. Baker, Brennan, Casey, Cathcart, Killinger, Landefeld, Rotella,
and Williams, and Ms. Taylor joined the meeting.
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HIGHLY CONFIDENTIAL
WMI Annual Meetina
Redacted
The meeting of the Washington Mutual, Inc. Board then adjourned and the meeting
of the Washington Mutual Bank Board reconvened.
WMB Regulatory Capital Matters
Mr. Williams presented material on capital and reported on the anticipated receipt of
capital by the Bank, which was estimated at $2 billion if $5 billion of capital is raised
by the Holding Company. He reviewed the forecast capital ratios for the Bank and
the Holding Company. Mr. Casey responded to a question from Mr. Reed regarding
the adequacy of capital at the Bank level given the different cumulative loss
scenarios.
The meeting of the Washington Mutual, Inc. Board then reconvened and continued
to meet jointly with the Washington Mutual Bank Board.
Readoption of Resolutions
I a munon OUly mao: an: t:e resolUtIOns set IOrm on
"Appendix A" were unanimously approved by the Holding Company's Board.
Mr. Killinger indicated that there would be an update for the Holding Company's
Board at 5:00 p.m. on Monday, and that later Sunday evening Mr. Frank would
speak with the regulators.
The meeting adjourned at 2:00 p.m.
Appendices:
A - Approval of Capital Investment
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HIGHLY CONFIDENTIAL
SUMMARY OF BOARD RESOLUTIONS FOR
INVESTMENT AGREEMENT; SECURITIES PURCHASE AGREEMENTS
III Approval of investment agreement
III Approval of securities purchase agreements
III Authorization of actions to ensure exclusion from anti-takeover provisions
III Approval of exclusion from rights agreement
APPENDIX A
CONVERTIBLE PREFERRED STOCK; ISSUANCE OF COMMON AND PREFERRED STOCK
AND WARRANTS
III Authorization of terms of the convertible preferred stock
III Authorization of filing of preferred stock articles of amendment
III Approval of issuance of common stock, convertible preferred stock and warrants in the
transaction
AMENDMENT TO ARTICLES OF INCORPORA TlON AND BYLAWS
III Approval of amendment to the articles of incorporation authorizing creation of blank
check common stock and an increase in the number of authorized shares of common
stock
., Approval of amendment to the bylaws to increase board size
REGULATORY FILINGS AND CONSENTS
III Authorization of governmental and regulatory filings necessary for approval of the
transactions contemplated by the investment agreement and the securities purchase
agreements
III Approval of blue sky registrations and listing of shares on the New York Stock Exchange
III Authorization of registration statements
MISCELLANEOUS
III Approval of engagement of financial advisors
Approval of general enabling resolutions
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RESOLUTIONS OF THE BOARD OF DIRECTORS OF
APRIL 6, 2008
WHEREAS, unprecedented challenges continue to face Washington
Mutual, Inc. (the "Corporation") as a result of continuing disruptions in the mortgage
and credit markets;
WHEREAS, as a result of such challenges, senior management of the
Corporation has engaged financial advisors to explore and assist senior
management in evaluating all strategic alternatives available to the Corporation
during this challenging time;
WHEREAS, senior management has concluded that a series of actions
be taken to, among other things, strengthen the Corporation's capital;
WHEREAS, such actions include undertaking significant business
model changes, the issuance and sale of additional shares of the Corporation's
common stock, new series of contingent convertible perpetual non-cumulative
preferred stock and warrants;
WHEREAS, senior management is recommending to this Board of
Directors that such actions be taken on the basis that they represent the best
strategy for preserving and enhancing the franchise value of the Corporation for the
benefit of its shareholders; and
WHEREAS, the financial advisors retained by senior management
have confirmed that the actions being recommended by senior management are
commercially reasonable to the Corporation under the currently existing market
conditions.
APPROVAL OF AGREEMENTS
RESOLVED, that it is advisable and in the best interests ofthe
Corporation and its shareholders for the Corporation to approve a private offering by
the Corporation of Investor Shares (as defined below) and Investor Warrants (as
defined below) pursuant to the terms of the Investment Agreement by and among
the Corporation, Olympic Partners, LP, a Delaware limited partnership ("Olympic
Partners"), and Titanium Partners VI, LP, a Delaware limited partnership
Partners" and together with Olympic Partners, the "Investors"), substantially in the
form presented to this Meeting (the "Investment Agreement"); and further
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RESOLVED, that it is advisable and in the best interests of the
the Corporation of Public Preferred Purchaser Shares (as defined below) pursuant to
the terms of the Public Preferred Securities Purchase Agreement by and among the
Corporation and the purchasers party thereto (the "Public Preferred Purchasers"),
substantially in the form presented to this Meeting (the "Public Preferred Purchase
Agreement"); and further
the Corporation of Common Stock Purchaser Shares (as defined below) pursuant to
the terms of the Common Stock Purchase Agreement by and among the
Corporation and the purchasers party thereto, the "Common Stock Purchasers"),
substantially in the form presented to this Meeting (the "Common Stock Purchase
the Corporation of Public Warrant Shares (as defined below) pursuant to the terms
of the Public Warrant Purchase Agreement by and among the Corporation and the
purchasers party thereto, the "Public Warrant Purchasers" and collectively with the
Public Preferred Purchasers and the Common Stock Purchasers, the "Purchasers"
and collectively with the Investors, the "Investor Parties"), substantially in the form
presented to this Meeting (the "Public Warrant Purchase Agreement" and together
with the Public Preferred Purchase Agreement and the Common Stock Purchase
Agreement, the "Purchase Agreements" and collectively with the Investment
Agreement, the "Agreements"); and further
Corporation and its shareholders for the Corporation to enter into, perform its
obligations under and consummate the transactions under the Agreements pursuant
to which, among other things:
(i) the Corporation agrees, subject to the terms and conditions of the
Investment Agreement, to sell to the Investors, and each such Investor severally and
not jOintly will agree to purchase from the Corporation, as an investment in the
Corporation, shares of a series of contingent convertible non-cumUlative non-voting
perpetual preferred stock, no par value, of the Corporation (the "Series T Convertible
Preferred Stock" or the "Investor Convertible Preferred Stock"), at a price per share
of Investor Convertible Preferred Stock equal to $100,000 in cash, which the Board
of Directors of the Corporation (the determines to be adequate
consideration for such Investor Convertible Preferred Stock, and
(ii) the Corporation agrees, subject to the terms and conditions of the
Investment Agreement (including any warrant or other certificates attached thereto),
to sell to the Investors, and each such Investor severally and not jointly will agree to
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purchase from the Corporation, as an investment in the Corporation, shares of
Common Stock (as defined below), no par value, of the Corporation (the "Investor
Common Stock" and together with the Investor Convertible Preferred Stock, the
"Investor Shares") and warrants to purchase shares of Common Stock (as defined
below) (the "Investor Warrants"). at price per share of Investor Common Stock equal
to $8.75 in cash (or such other amount as may be determined by the Transaction
Committee (defined below, which the Board of Directors determines to be
adequate consideration for such Investor Common Stock, and
(iii) the Corporation agrees, subject to the terms and conditions of the
Public Preferred Purchase Agreement, to sell to the Public Preferred Purchasers,
and each such Public Preferred Purchaser severally and not jointly will agree to
purchase from the Corporation, as an investment in the Corporation, shares of a
series of contingent convertible non-cumulative non-voting perpetual preferred stock,
no par value, of the Corporation (the "Series S Convertible Preferred Stock" and
together with the Investor Convertible Preferred Stock, the "Convertible Preferred
Stock") and shares of Common Stock, no par value, of the Corporation (the "Public
Preferred Purchaser Common Stock" and together with the Series S Convertible
Preferred Stock, the "Public Preferred Purchaser Shares"), at a price per share of
Series S Convertible Preferred Stock equal to $100,000 in cash and a price per
share of Public Preferred Purchaser Common Stock equal to $8.75 in cash (or such
other amount as may be determined by the Transaction Committee). each of which
the Board of Directors determines to be adequate consideration for such Public
Preferred Purchaser Share, and
(iv) the Corporation agrees, subject to the terms and conditions of the
Common Stock Purchase Agreement, to sell to the Common Stock Purchasers, and
each such Common Stock Purchaser severally and not jointly will agree to purchase
from the Corporation, as an investment in the Corporation, shares of Common
Stock, no par value, of the Corporation (the "Purchaser Common Stock"), at a price
per share of Purchaser Common Stock equal to $8.75 in cash, each of which the
Board of Directors determines to be adequate consideration for such Purchaser
Common Stock; and
(v) the Corporation agrees, subject to the terms and conditions of the
Public Warrant Purchase Agreement, to sell to the Public Warrant Purchasers, and
each such Public Warrant Purchaser severally and not jointly will agree to purchase
from the Corporation, as an investment in the Corporation, shares of Series S
Convertible Preferred Stock, at a price per share of Series S Convertible Preferred
Stock equal to $100,000 in cash, which the Board of Directors determines to be
adequate consideration for such Series S Convertible Preferred Stock, and
(vi) the Corporation agrees, subject to the terms and conditions of the
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Stock, no par value, of the Corporation (the "Public Warrant Common Stock" and
together with the Series S Convertible Preferred Stock purchased by the Public
Warrant Purchasers, the "Public Warrant Purchaser Shares") and warrants to
purchase shares of Common Stock (the "Public Warrants" and together with the
Investor Warrants, the "Warrants"), at price per share of Public Warrant Common
Stock determined in the manner set forth in the Agreements, and further
RESOLVED, that the Investment Agreement and the transactions
contemplated thereby, including the purchase and sale of the Investor Shares and
the Investor Warrants (the "Investment"), are advisable and consistent with, and in
furtherance of, the business strategies and goals of the Corporation; and further
RESOLVED, that the Public Preferred Purchase Agreement and the
transactions contemplated thereby, including the purchase and sale of the Public
Preferred Purchaser Shares (the "Public Preferred Purchase"), are advisable and
consistent with, and in furtherance of, the business strategies and goals of the
Corporation; and further
RESOLVED, that the Common Stock Purchase Agreement and the
transactions contemplated thereby, including the purchase and sale of the
Purchaser Common Stock (the "Common Stock Purchase"), are advisable and
RESOLVED, that the Warrant Purchase Agreement and the
transactions contemplated thereby, including the purchase and sale of the Warrant
Purchaser Shares and the Public Warrants (the "Public Warrant Purchase" and
together with the Public Preferred Purchase and the Common Stock Purchase, the
"Purchase" and together with the Investment, the "Transactions") are advisable and
RESOLVED, that the Agreements be, and each hereby is, in the form
presented to this Meeting, and the Chairman and Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer, any Executive Vice President, the
Treasurer, any Senior Vice President reporting directly to the Treasurer, and the
Senior Vice President and Controller of the Corporation (collectively, the "Authorized
Officers") and any officer of the Corporation designated by one of the Authorized
Officers be, and each of them hereby is, authorized, on behalf of and in the name of
the Corporation, to execute and deliver such agreements in the forms presented to
this Meeting, and, in connection therewith, with such changes therein or thereto as
the officer or officers executing the same shall approve, which approval shall be
conclusively evidenced by such execution and delivery; and further
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AUTHORIZATION FOR ENSURING EXCLUSION FROM ANTI-TAKEOVER
PROVISIONS
RESOLVED, that for purposes of Section 238.19.040 of the
Washington Business Corporation Act, the entry by the Corporation and [ ]1
(together, the "Major Stockholders") into the applicable Agreement to which such
Major Stockholder is party, the issuance of Investor Shares or Purchaser Shares, as
the case may be (including the conversion of the Convertible Preferred Stock into
Common Stock and the exercise of the Warrants for Common Stock) and the
consummation by such Major Stockholder of the transactions contemplated thereby,
is hereby approved; and further
RESOLVED, that in response to the letters received from each Major
Stockholder seeking unanimous approval prior to becoming a "Major Stockholder"
for purposes of Article X of the Articles of Incorporation (as defined below), each
such Major Stockholder becoming a "Major Stockholder" pursuant to the entry by the
Corporation and such Major Stockholder into the applicable Agreement to which
such Major Stockholder is party, the issuance of shares (including the conversion of
the Convertible Preferred Stock into Common Stock and the exercise of the
Warrants for Common Stock) and the consummation by such Major Stockholder of
the transactions contemplated thereby, is hereby unanimously approved; and further
EXCLUSION FROM RIGHTS AGREEMENT
RESOLVED, that the entry by the Corporation and the Investors into
the Investment Agreement, the issuance of the Investor Shares (including the
conversion of the Convertible Preferred Stock into Common Stock and the exercise
of the Warrants for Common Stock) and the consummation by the Investors of the
transactions contemplated thereby is hereby approved for purposes of, and shall not
result in the Investors becoming an "acquiring person" for purposes of, the Rights
Agreement of the Corporation, dated as of December 20, 2000; and further
CONVERTIBLE PREFERRED STOCK
RESOLVED, that there is hereby created out of the authorized and
unissued shares of preferred stock of this Corporation a series of contingent
convertible non-cumulative non-voting perpetual preferred stock designated as the
"Series S Contingent Convertible Non-cumulative Non-voting Perpetual Preferred
Stock" to be sold in accordance with the Public Preferred Purchase Agreement and
in one or more transactions exempt from the registration requirements of the
I The Board of Directors amended and restated this Resolution on April 7, 2008.
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Securities Act (the "Series S Convertible Preferred Stock Offering"), The number of
shares constituting such series shall not exceed 100,000, which amount includes
shares which may be issued as a paid-In-kind dividend. The stock in such series
shall have no par value and the liquidation preference of the Series S Convertible
Preferred Stock shall be $100,000 per share; and further
"Series T Contingent Convertible Non-cumUlative Non-voting Perpetual Preferred
Stock" to be sold in accordance with the Investment Agreement and in one or more
transactions exempt from the registration requirements of the Securities Act (the
"Series T Convertible Preferred Stock Offering"), The number of shares constituting
such series shall not exceed 100,000, which amount includes shares which may be
issued as paid-in-kind dividends. The stock in such series shall have no par value
and the liquidation preference of the Series T Convertible Preferred Stock shall be
$100,000 per share; and further
RESOLVED, that each series of the Convertible Preferred Stock
described above shall have the rights, preferences and limitations set forth in the
designation for such series set forth in the Preferred Stock Articles of Amendment
(as defined below), substantially in the form attached hereto as Exhibit A, with such
completions, determinations, changes and modifications as may be approved by a
committee of the Board of Directors (the "Transaction Committee") consisting of
Kerry K. Killinger, Stephen E. Frank and Charles Lillis; and further
RESOLVED, that the Board hereby authorIzes, and delegates the
authority to, the Transaction Committee (a) to designate, finalize, determine and
complete (it being understood that this authority includes without limitation making
appropriate modifications and changes to the attached designation) the preferences,
limitations, voting powers and relative rights of each series of the Convertible
Preferred Stock, (b) to determine the final number of shares of Common Stock and
Warrants to be issued pursuant the Agreements and the price therefor, in each case
subject to the limits specified in these resolutions; and further
RESOLVED, that the authorization and delegation in the immediately
preceding resolution shall include, without limitation, the authority to determine the
number of shares of each series of the Convertible Preferred Stock to be authorized,
to determine the dividend rates and whether such rates are fixed, fixed-to-floating or
floating, or are at a percentage that is greater than the dividend rate applicable to the
Corporation's Common Stock (and to make appropriate modifications in other
provisions to reflect such rates), to provide for paid-in-kind dividends, to determine
anti-dilution provisions, to determine the liquidation amount, to determine the
situations In which each series of the Convertible Preferred Stock will convert into
Common Stock (including without limitation the terms of such provisions), to
designate circumstances involving amendments to the Articles of Incorporation as
amended or involving mergers or other combinations or similar events in which
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holders of each series of the Convertible Preferred Stock may have voting rights, to
determine the consideration to be received by holders of each series of the
Convertible Preferred Stock upon reorganization, merger or similar events, to
approve the form of any stock certificate and to prepare and authorize the filing of
articles of amendment for each series of the Convertible Preferred Stock with the
Secretary of State of the State of Washington; provided, however, that (i) the
number of shares of Series S Convertible Preferred Stock and Series T Convertible
Preferred Stock authorized shall not exceed 100,000 shares for each series of the
Convertible Preferred Stock (provided, that the combined number of shares of either
series initially issued by the Corporation shall not exceed 70,000), (ii) the liquidation
preferences shall not exceed $100,000 per share, (iii) the dividend rate shall not
exceed the greater of (x) the equivalent dividends declared on the Common Stock
and (y) 17% per annum, and (iv) the number of Common Stock into which each
share of Convertible Preferred Stock may be converted shall not exceed
1,000,000,000 (reflecting an initial conversion price of no less than $7.00per share of
Common Stock); and further
RESOLVED, that the maximum number of shares of Common Stock to
be issued by the Corporation in accordance with the terms of the Agreements s h a ~ 1
not exceed 1,000,000,000 and the price therefor shall not be less than $7.00; and
further
RESOLVED, that maximum number of shares of Common Stock into
which a Warrant will convert shall not exceed 25% of the shares of Common Stock
purchased by the holder of a Warrant with a purchase price thereof determined in
accordance with the terms of the Investment Agreement; and further
RESOLVED, that the Corporation be, and hereby is authorized and,
upon required shareholder and regulatory approvals having been obtained, directed
to reserve for issuance upon conversion of the Convertible Preferred Stock such
number of shares of Common Stock as may be sufficient and necessary from time to
time for issuance upon conversion of all of the Convertible Preferred Stock issued,
taking into account any and all adjustments in the conversion rate or price; and
further
PREFERRED STOCK ARTICLES OF AMENDMENT
RESOLVED, that in connection with the Investment Agreement and
the transactions contemplated thereby, the Authorized Officers and counsel for the
Corporation be, and each of them hereby is, authorized and directed, in the name
and on behalf of the Corporation, to prepare and file with the Secretary of State of
the State of Washington Articles of Amendment (the "Preferred Stock Articles of
to the Articles of Incorporation designating the preferences,
Preferred Stock, substantially in the form attached hereto as Exhibit A, with such
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completions, determinations, changes, and modlfications as may be approved by
any Authorized Officer; and further
ISSUANCE AND RESERVATION OF SHARES AND OTHER MATTERS
RESOLVED, that the issuance of Investor Shares and Investor
Warrants in accordance with the terms of the Investment Agreement be, and it
hereby is, authorized and, upon such issuance, such Investor Shares and such
Investor Warrants shall be validly issued, fully paid and nonassessable and free of
preemptive rights; and further
RESOLVED, that the issuance of shares of Purchaser Shares in
accordance with the terms of the Purchase Agreements be, and it hereby is,
authorized and, upon such issuance, such Purchaser Shares shall be validly issued,
fully paid and nonassessable and free of preemptive rights; and further
RESOLVED, that the issuance of shares of Common Stock upon
conversion of the Convertible Preferred Stock or exercise of the Warrants in
accordance with the terms of the Agreements be, and it hereby is, upon required
shareholder and regulatory approvals having been obtained, authorized and, upon
such issuance, such shares of Common Stock shall be validly issued, fully paid and
nonassessable and free of preemptive rights; and further
RESOLVED, that the Corporation shall reserve and keep available for
issuance at all relevant times such number of shares of Common Stock and
Convertible Preferred Stock as may be required to be issued in connection with the
Transactions or upon conversion of the Convertible Preferred Stock or exercise of
the Warrants, as the case may be; provided that in the case of Convertible Preferred
Stock or Warrants, the Corporation shall reserve such sufficient number of Common
Stock following approval of the shareholders as contemplated by Section 3.1 (b) of
the Investment Agreement and Section 3.1 (b) of the Public Preferred Purchase
Agreement and approval by the applicable regulatory authorities; and further
APPROVAL OF ARTICLES OF AMENDMENT TO THE AMENDED AND
RESTATED ARTICLES OF INCORPORA TlON OF THE CORPORA TION
Corporation and its shareholders to increase the number of authorized shares of
Common Stock to 2,500,000,000 (the "Common Stock Share Increase") from the
total number of shares that the Corporation currently has the authority to issue, as
set forth in the Common Stock Articles of Amendment (defined below), and that the
same be, and hereby is, approved; and further
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Corporation and its shareholders that the Board of Directors have authority to fix and
state the voting powers, designations, preferences and relative, participating,
optional or other special rights of the shares of Common Stock to be sold from time
to time (the "Blank Check Common Stock") and the qualifications, restrictions and
limitations thereon, as set forth in the Common Stock Articles of Amendment
(defined below); and further
Corporation and its shareholders for the Corporation to amend the Amended and
Restated Articles of Incorporation of the Corporation (the "Articles of Incorporation")
to provide for the Common Stock Share Increase and the Blank Check Common
Stock, substantially in the form attached hereto as Exhibit B (the "Common Stock
Articles of Amendment"); and further
RESOLVED, that the Board hereby recommends that the shareholders
of the Corporation at the special meeting of shareholders of the Corporation approve
the Common Stock Articles of Amendment (the "Articles of Amendment Shareholder
Approval"); and further
RESOLVED, that the Common Stock Articles of Amendment be, and
hereby are, approved by the Board of Directors in all respects, with such Common
Stock Articles of Amendment to become effective upon receipt of the Articles of
Amendment Shareholder Approval and their filing with the Secretary of State of the
State of Washington; and further
RESOLVED, that the Authorized Officers be, and each of them hereby
is, authorized, in the name and on behalf of the Corporation, following approval
thereof by the shareholders of the Corporation at the special meeting of
shareholders of the Corporation, to execute the Common Stock Articles of
Amendment and file such executed Common Stock Articles of Amendment with the
Secretary of State of the State of Washington; and further
APPROVAL OF AMENDMENT TO THE RESTATED BYLAWS OF THE
CORPORATION
Corporation and its shareholders for the Corporation to amend the Restated
Bylaws of the Corporation (the "Bylaws") to increase the number of Directors
on the Board from fourteen to sixteen effective as of the closing of the
Transactions; and further
RESOLVED, that the Bylaws Amendment be, and hereby is,
approved by the Board of Directors in all respects, with such Bylaws
Amendment to become effective upon the Closing of the Transactions; and
further
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GOVERNMENTAL AND REGULATORY APPROVALS AND FILINGS
RESOLVED, that the Authorized Officers and counsel for the
and on behalf of the Corporation, to prepare and file all such applications and any
and all certificates, documents, letters and other instruments with the Office of Thrift
Supervision, and any other appropriate Federal, state, foreign or other banking or
other governmental authority necessary or desirable for approval of or to otherwise
effect the transactions contemplated by the Agreements, with full power and
authority by such officers and counsel to take any and all such action as may be
necessary or advisable in their judgment to obtain such approvals, including, without
limitation, appearing before the Office of Thrift Supervision and any such other
governmental authority; and further
RESOLVED, that in connection with the Agreements and the
transactions contemplated thereby and in order for the Corporation to comply with all
applicable requirements of the Securities Act of 1933, as amended (the "Securities
Act") and the Exchange Act, each Authorized Officer is authorized on behalf of and
in the name of the Corporation to execute and file, or cause to be filed, with the
SEC, in the name and on behalf of the Corporation, all reports, statements,
documents and information required to be filed by the Corporation pursuant to the
Securities Act and the Exchange Act and the rules and regulations of the SEC
thereunder; and further
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Acf') and the rules and regulations thereunder, and
any other antitrust, competition or similar laws, rules or regulations of any federal,
state, local or other foreign jurisdiction or other governmental authority necessary or
desirable for approval of the transactions contemplated by the Agreements, the
Authorized Officers and counsel for the Corporation be, and each of them hereby is,
authorized and empowered, on behalf of and in the name of the Corporation, to
prepare and file all such applications and any and all certificates, documents, letters
and other instruments in connection therewith, with full power and authority by such
Authorized Officers and counsel to take any and all such action as may be
limitation, appearing before any such governmental authority; and further
BLUE SKY REGISTRA nONS
RESOLVED, that it may be advisable and in the best interests of the
Corporation that the Registered Securities be qualified or registered for sale in
various states and foreign jurisdictions (or political subdivisions thereof); that the
Authorized Officers of the Corporation be, and each of them hereby is, authorized to
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determine the states or other jurisdictions in which appropriate action shall be taken
to qualify or register for sale all or such part of each of the Registered Securities as
such officers deem advisable; that such officers are hereby authorized to perform on
behalf of the Corporation any and all acts that they may deem necessary or
advisable in order to comply with the applicable laws of any such states or
jurisdictions, and in connection therewith to execute and file all requisite papers and
documents, including, without limitation, applications, reports, surety bonds,
irrevocable consents and appointments of agents for service of process; that the
execution by such officers of any such papers or documents or the doing by them of
any act in connection with the foregoing matters shall conclUSively establish their
authority therefor from the Corporation and the approval and ratification by the
Corporation of the papers and documents so executed and the action so taken; and
that the form of any and all resolutions required by any state authority or the
competent authorities of other applicable jurisdictions to be filed in connection with
any such application, consent to service or other document is hereby adopted if the
Chief legal Officer (or the Interim Chief legal Officer) of the Corporation deems the
adoption of such resolutions necessary or advisable and evidences such adoption of
such resolutions by filing with the records of the Corporation copies of such
resolutions (the filing thereof to be conclusive evidence of such adoption), which
shall thereupon be deemed to be adopted by the Board of Directors and
incorporated in and made a part of these resolutions with the same force and effect
as if fully set forth herein; and further
NEW YORK STOCK EXCHANGE
RESOLVED, thatthe Authorized Officers be, and each of them hereby
is, authorized to prepare or cause to be prepared one or more listing applications
and to otherwise take such actions necessary or advisable in order for the
Corporation to comply with all applicable requirements of the New York Stock
Exchange, Inc. (the "NYSE"), for the listing on the NYSE of the additional shares of
Common Stock (including shares issuable upon exercise of the Convertible
Preferred Stock); and that the Authorized Officers be, and each of them hereby is,
authorized, in the name and on behalf of the Corporation, to execute and file with the
NYSE said listing applications; and further
is, authorized, in the name and on behalf of the Corporation and, if required, under
its corporate seal, to enter into, execute and file with the NYSE such other
agreements and instruments as may be approved by the officer or officers executing
the same, such approval to be conclusively evidenced by his, her or their execution
and filing thereof; and further
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Corporation be, and each of them hereby is, authorized to appear on behalf of the
Corporation before the appropriate committee or body of the NYSE as such
appearance may be required, with authority to make such changes in any such
applications that shall be presented thereto, and in the agreements that may be
made in connection therewith, as may be deemed necessary or desirable to conform
to the requirements of the NYSE; and further
RESOLVED, that the Board of Directors hereby adopts the form of any
and all resolutions required to be filed with the NYSE in connection with any of the
aforementioned applications if the Chief Legal Officer (or the Interim Chief Legal
Officer) of the Corporation deems such resolutions necessary or advisable and
evidences such adoption by filing with the records of the Corporation copies of such
thereupon shall be deemed to be adopted by the Board of Directors and
incorporated as part of these resolutions with the same force and effect as if fully set
forth herein; and further
REGISTRATION STATEMENTS
RESOLVED, that, if required pursuant to the Agreements, the
Authorized Officers be, and each of them hereby is, authorized, in the name and on
behalf of the Corporation, to prepare, execute and file, or to cause to be prepared,
executed and filed, with the SEC when required under the Agreements a registration
statement (including a "shelf' registration statement) or any amendment to an
existing "shelf' registration statement under the Securities Act pursuant to which
holders of Registrable Securities (as defined in the Agreements) may resell such
Registrable Securities and thereafter to prepare or cause the preparation of and, if
deemed necessary or advisable by any of such Authorized Officers, to file or cause
to be filed any amendments thereto, and to do all other things and to execute any
and all other documents that any of them may deem necessary or advisable in
connection therewith; and further
is, authorized to prepare, execute and file, or cause to be prepared, executed and
filed, on behalf of the Corporation, such amendments and/or supplements, including
post-effective amendments, to such registration statements, and to file or cause to
be filed such other documents and instruments with, and furnish such other
information to, the SEC and to take all such other actions as any of such Authorized
Officers may deem necessary or advisable (i) to comply with the rules and
regulations of the Securities Act and the Exchange Act, and (ii) to terminate,
suspend or delay the effectiveness of" such registration statements; and further
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RESOLVED, that the Chief Legal Officer (or the Interim Chief Legal
Officer) of the Corporation be, and he hereby is, appointed as agent for service of
process for the Corporation to receive notices and communications from the SEC in
connection with such registration statements and from any state authority in any
jurisdiction where the Registrable Securities are to be offered or sold; and to
exercise the powers conferred upon him or her as such agent by the Securities Act
and the rules and regulations of the SEC thereunder and any state authority in any
jurisdiction where the Registrable Securities are to be offered or sold; and further
RESOLVED, that any Authorized Officer is hereby authorized to act as
attorney-in-fact for the Corporation, with full power to act and with full power of
substitution and re-substitution, to sign any and all amendments to and supplements
to such registration statements, together with any exhibits or other documents
relating thereto or required in connection therewith, in the name or on behalf of the
Corporation and to file, or cause to be filed, the same with the SEC, with full power
and authority to do and perform every act which such attorney-in-fact may deem
necessary or advisable in connection therewith; and further
RESOLVED, that each officer and director who may be required to
execute such registration statements or any amendment or supplement thereto is
hereby authorized to execute a power of attorney to such person or persons as he
may designate to sign such registration statements, any and all amendments or
supplements thereto and documents related thereto, and to file the same or cause
the same to be filed with the SEC, with full power and authority to do and perform
every act which such attorney-in-fact may deem necessary or advisable in
AGREEMENTS WITH FINANCIAL ADVISORS
RESOLVED, that the form, terms and provisions of the engagement
letters between the Corporation and each of Goldman, Sachs & Co. and Lehman
Brothers Inc., as financial advisors, copies of which have been directed to be filed
with the records of the Corporation, be, and they hereby are, in all respects
approved and adopted; and that the actions of any officer of the Corporation in
executing, in the name and on behalf of the Corporation, such agreements be, and
they hereby are, ratified, confirmed and approved in all respects; and further
GENERAL ENABLING RESOLUTIONS
RESOLVED, that until further action of the Board of Directors, the
Board of Directors hereby authorizes each of the Authorized Officers to approve the
taking of any actions, the payment of any costs and expenses and the forms and
terms of any instruments, documents or agreements, consistent with these
resolutions, in connection with the Agreements, the transactions contemplated
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thereby and the other transactions referred to in or contemplated by these
resolutions, including, without limitation, approval of any amendment to, waiver of, or
consent under, the Agreements or any other agreement or instrument authorized or
contemplated by these resolutions as such officer shall deem necessary or desirable
in connection with the Agreements and the transactions contemplated thereby; and
further
RESOLVED, that each Authorized Officer is authorized and directed to
take, or cause to be taken, all actions, and to execute and deliver, or cause to be
executed and delivered, all agreements, undertakings, documents, instruments and
certificates, and to pay all charges, fees, taxes and other expenses, from time to
time, as such Authorized Officer deems necessary, desirable or appropriate to
provide for the consummation of the transactions contemplated by the Agreements
and to accomplish the purpose and intent of these resolutions, and the actions
heretofore taken and to be taken by any Authorized Officer in that connection are
hereby ratified, confirmed and approved in all respects; and further
RESOLVED, that, for purposes of carrying out the foregoing
resolutions, any person authorized to execute any document or take or cause to be
taken any action on behalf of the Corporation is authorized to grant, execute and
deliver a power of attorney, individually or in the name and on behalf of the
Corporation, to any other person, whether or not an employee of the Corporation, as
the person executing the power of attorney may deem appropriate, and any action
taken by any such duly authorized person pursuant to and within the scope of any
such power of attorney is hereby ratified and confirmed as the act and deed of the
Corporation.
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Attorney-Client Privileged Work Product
Sunday, April 6, 2008
The Board of Directors of Washington Mutual, Inc. (the "Holding Company") met
concurrently with the Board of Directors of Washington Mutual Bank (the "Bank") on
Sunday, April 6, 2008, for a special meeting.
Directors Present:
Stephen I. Chazen
Anne V. Farrell
Stephen E. Frank
Kerry K. Killinger
Thomas C. Leppert
Charles M. Lillis
Phillip D. Matthews
Directors Absent: None
Management Present:
Todd Baker
Carey M. Brennan
Thomas W. Casey
Ronald J. Cathcart
Daryl D. David
Stewart M. Landefeld
Stephen J. Rotella
Charles Smith
Craig E. Tall
Susan R. Taylor
Robert J. Williams
Regina T. Montoya
Michael K. Murphy
Mary Pugh
Wm. G. Reed, Jr.
Orin C. Smith
James H. Stever
Advisors Present:
Huntley Garriott, of Goldman Sachs
John Mahoney, of Goldman Sachs
Todd Owens, of Goldman Sachs
Frank Cicero, of Lehman Brothers
Phil Erlanger, of Lehman Brothers
Steve Wolitzer, of Lehman Brothers
Jason Trock, of Lehman Brothers
Lee Meyerson, of Simpson Thacher
& Bartlett LLP
The materials for the meeting, including a PowerPoint presentation prepared by
Goldman Sachs and Lehman Brothers, copies of the Investment Agreement and the
Securities Purchase Agreement, a summary of the terms of both agreements
prepared by Simpson Thacher and Bartlett, and correspondence with Flint were
posted to BoardVantage prior to the meeting.
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Mr. Killinger presided and called the meeting to order at 10:00 a.m. Pacific Daylight
Time and the undersigned served as secretary to the meeting. Messrs. Chazen,
Leppert, Matthews, Murphy, Smith, Stever and Tall attended the meeting by
telephone. All others attended the meeting in person in the Boardroom at the WaMu
Center in Seattle, Washington.
Mr. Killinger welcomed everyone to the meeting, thanking the Holding Company's
Board members for their high level of engagement over the past several weeks. Ms.
Taylor entered the room and distributed the material for the Holding Company's
Board which had been posted electronically to BoardVantage earlier in the morning.
Mr. Killinger asked the investment bankers/financial advisors to present.
Investment Bankers
J
Presentation
Mr. Mahoney of Goldman Sachs, and Mr. Cicero of Lehman Brothers, jointly
presented material previously provided to the Holding Company's Board, entitled
"Confidential Presentation to Board of Directors, Discussion Materials - Project
Olympic." Mr. Cicero began the presentation by briefly reporting that a preliminary
agreement had been reached with Titanium to invest $2 billion in newly issued
equity securities of the Holding Company, and that negotiations would continue with
the "wall crossed" institutional investors through the following day, Monday. Pricing
was anticipated to occur Monday evening with an announcement early Tuesday
morning. The pricing of the transaction would be exposed to one day of market risk.
He reported that conversations had also continued with Flint's advisors and that
information had continued to be exchanged, but that there have been no
improvements to the terms of Flint's offer.
Investment Structure and Process
Mr. Mahoney then reviewed the terms of Titanium's proposed investment, talking the
Holding Company's Board through each feature listed on the pages entitled, "TPG
Capital Investment - Term Sheet" and "Contingent Convertible Non-Voting Preferred
Stock - Term Sheet." He explained how the security had been deSigned to be
outstanding only until conversion to common equity after receipt of shareholder
approval. He responded to several questions from Directors, including questions
about: the price reset feature, the NYSE rule concerning approval of certain common
stock issuances and the current tangible book value of the Holding Company's
common stock. He responded to a question from Mr. Frank by describing the
intensity of the most recent negotiations and the impact of Friday's stock price
decrease on pricing and other aspects of the negotiations. Mr. Mahoney then
described the extent to which the terms of the investments from other investors,
whether private equity firms or institutional investors, would be the same or different
from the terms of Titanium's investment. Mr. Erlanger reviewed the list of other
potential private equity investors, noting that Carbon was no longer among them due
to its requirement that an auto flow purchase agreement be entered into
simultaneously with the investment Mr. Erlanger reviewed the list of "Public 'Wall-
Crossed' Potential Investors" and described the rocess for communicatin with
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likelihood they would be able to participate due to time constraints. Mr. Erlanger
emphasized the importance of marketing to all the identified investors over the next
24-to-36 hour period. Mr. Erlanger responded to a number of questions from the
Directors concerning the various potential investors and the likely terms of their
investments.
Analysis of Capital Raise
Mr. Mahoney then presented a detailed analysis of the capital raise, which included
analysis of the impact of the conversion of the preferred stock on the relevant capital
ratios, the impact of the warrants and the conversion of the preferred stock on
earnings per share, and the impact of the warrants on the investor price and an
analysis of discounted cash flows. The discounted cash flow analysis included
analysis at different warrant levels using different assumptions, and showed results
over a five-year period. He also reviewed the features of the preferred stock that
would incent shareholders to vote for the conversion and reported that it was highly
likely that shareholders would approve the conversion. Mr. Mahoney responded to
questions from the Directors.
Review and Analysis of Flint Proposal
Mr. Cicero presented the terms of the proposal from Flint to acquire all of the shares
of the Holding Company by reviewing each of the terms listed on the page entitled
"Flint Proposal." He then reviewed the structure of Flint's payment offer and
described the contingent payment portion of the offer in detail. Mr. Killinger briefed
the Board on his correspondence with Flint. The Holding Company's Board then
engaged in an active and lengthy discussion with management and its advisors
concerning Flint, focusing on their offer, the extent to which the offer was based on
contingent performance, the scope of Flint's due dlligence requests and the due
diligence still to be completed, the SUbstance and tone of their negotiations, their
communications with regulators, and their perceived level of interest in acquiring the
Holding Company. In response to a question, Mr. Wolitzer discussed the possibility
that Flint is interested in acquiring the Holding Company but is waiting to be
opportunistic and could take actions that disrupt the capital raising process. In
response to Directors' questions, the financial advisors and management then
described the importance of getting through the next trading day without market
disruption in order to announce a transaction at the current pricing. Mr. Cicero then
presented the discounted cash flow analysis of Flint's offer. The offer represented a
price per share of common stock that was significantly less than the proposals
received from the private equity investors to purchase a minority interest in the
Holding Company's stock. The Holding Company's Board then asked the
investment bankers several more questions concerning negotiations with Flint. In
response to one question, Messrs. Meyerson and Landefeld framed some of the
issues that would be before the Holding Company's Board if Flint provided an
updated offer the next day, and the need to consider both execution risk and value.
Mr. Wolitzer also noted that an acquisition in the future was not precluded by the
capital raise. In response to a Director's question about whether the amount of
capital to be raised should be capped, Messrs. Killinger and Rotella reminded the
Holding Company's Board that the OTS had said that $5 billion was a minimum and
that it might be prudent to expand to $6 billion or more if sufficient interest exists.
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Summary of Principal Terms of Investment
Redacted
Review of Press Release
Mr. Casey then reviewed the contents of the preliminary press release that had been
provided to the Holding Company's Board in advance of the meeting, and noted that
the Holding Company's Board was reviewing it rather than the Audit Committee, in
order to allow the Holding Company's Board to fully assess and analyze the financial
information being presented, and the impact of the financing. He explained that the
press release focused on the transaction and only a few key financial results and
metrics. A second press release reporting all of the Holding Company's earnings
results for the first quarter would be released on April 15. Mr. Casey answered
questions about timing and about the extent to which the press release scheduled
for release on April 15 would include the same information that the "wall crossed"
institutional investors had received.
Discussion of Duties of Boards ofWMI and WMB
Redacted
its adoption of resolutions in March to resolve the issues raised in conjunction with
the downgrade by the OTS of the composite rating.
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REDACTED
Overall Transaction - Bankers' Analysis
Mr. Landefeld reported that both Lehman Brothers and Goldman Sachs had agreed
to deliver opinions to the Holding Company's Board assessing their review of the
reasonableness of the terms of the equity transaction. He asked the investment
bankers to describe the terms of the letters that they intended to present. Mr.
Mahoney summarized the terms of the letter to be delivered by Goldman Sachs. He
reviewed the scope of the opinion, the assumptions identified therein, and the
general content of the letter. He indicated that the opinion would focus only on the
equity investment and would not compare it to other strategies. The letter would
indicate that the investment was a reasonable means of obtaining financing. Mr.
Wolitzer described the letter to be delivered by Lehman Brothers, noting similarities
and differences from the Goldman Sachs' letter.
In response to a question from Mr. Frank, Mr. Wolitzer noted that his firm was not
viewing the transaction and the strategic sale as mutually exclusive alternatives and
that it was not appropriate for them to advise the Holding Company's Board
regarding which option was superior. He distinguished between the two alternatives,
noting that one was strategic while the other was an ongoing operating alternative.
Redacted
The Holding Company's Board then engaged in an active and thorough discussion.
Mr. Ullis noted that given the current two options, he would choose the
recapitalization and therefore the bankers' views were needed on the
recapitalization. Mr. Killinger indicated that the recapitalization transaction would not
preclude selling the Holding Company in the future, and that the Holding Company's
Board should consider whether shareholders would get a better value by accepting
the capital now, getting through the current difficult period and possibly having more
potential acquirers in the future. One Director emphasized that while the investment
bankers approached many potential acauirers. onlv one had submitted an offer.
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REDACTED
Redacted
OTS Matters
The meeting of the Washington Mutual Bank Board then adjourned.
Adopt Resolutions to Approve Transaction
teo Ing ompany soar wou cons! er au onza Ion for raising up to $7
billion of capital, noting that, based on discussions with investors, it might be
practical to raise up to $7 billion without adversely affecting the pricing terms and
that having a greater capital cushion might be very prudent in the current
environment. Mr. Casey responded to a Director's question regarding dilution,
noting that there was the potential for buying back stock if the capital raised
ultimately exceeded what was needed. He indicated that a larger amount of capital
would reduce certain risks significantly, such as risks related to rating agency
actions and actions by the OTS. Mr. Baker indicated that the stock trading price is
expected to be based on tangible book value so the additional amount of capital
raised would not likely impact the price in the market. The Holding Company's
Board weighed a number of different factors.
Executive Session
The Holding Company's Board then went into executive session. All advisors other
than Mr. Meyerson left the meeting. All members of management left the meeting,
other than Messrs. Killinger and Landefeld, who then left after answering questions
and participating in discussion.
The Holding Company's Board engaged in a thorough discussion reviewing the
information and input received from management and advisors, including the
magnitude of the capital raising, and the risks and benefits of this versus other
transactions. Upon a motion made and duly seconded, the Holding Company's
Board adopted the resolutions described by Mr. Landefeld earlier in the meeting.
Discussion continued regarding the amount of capital to be raised. Mr. Frank
agreed to contact the OTS.
At 1 :45 p.m., the meeting of the Holding Company's Board went back into regular
session and Messrs. Baker, Brennan, Casey, Cathcart, Killinger, Landefeld, Rotella,
and Williams, and Ms. Taylor joined the meeting.
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WMI Annual Meetina
Redacted
The meeting of the Washington Mutual, Inc. Board then adjourned and the meeting
of the Washington Mutual Bank Board reconvened.
WMB Regulatory Capital Matters
Mr. Williams presented material on capital and reported on the anticipated receipt of
capital by the Bank, which was estimated at $2 billion if $5 billion of capital is raised
by the Holding Company. He reviewed the forecast capital ratios for the Bank and
the Holding Company. Mr. Casey responded to a question from Mr. Reed regarding
the adequacy of capital at the Bank level given the different cumulative loss
scenarios.
The meeting of the Washington Mutual, Inc. Board then reconvened and continued
to meet jointly with the Washington Mutual Bank Board.
Readoption of Resolutions
I a munon OUly mao: an: t:e resolUtIOns set IOrm on
"Appendix A" were unanimously approved by the Holding Company's Board.
Mr. Killinger indicated that there would be an update for the Holding Company's
Board at 5:00 p.m. on Monday, and that later Sunday evening Mr. Frank would
speak with the regulators.
The meeting adjourned at 2:00 p.m.
Appendices:
A - Approval of Capital Investment
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SUMMARY OF BOARD RESOLUTIONS FOR
INVESTMENT AGREEMENT; SECURITIES PURCHASE AGREEMENTS
III Approval of investment agreement
III Approval of securities purchase agreements
III Authorization of actions to ensure exclusion from anti-takeover provisions
III Approval of exclusion from rights agreement
APPENDIX A
CONVERTIBLE PREFERRED STOCK; ISSUANCE OF COMMON AND PREFERRED STOCK
AND WARRANTS
III Authorization of terms of the convertible preferred stock
III Authorization of filing of preferred stock articles of amendment
III Approval of issuance of common stock, convertible preferred stock and warrants in the
transaction
AMENDMENT TO ARTICLES OF INCORPORA TlON AND BYLAWS
III Approval of amendment to the articles of incorporation authorizing creation of blank
check common stock and an increase in the number of authorized shares of common
stock
., Approval of amendment to the bylaws to increase board size
REGULATORY FILINGS AND CONSENTS
III Authorization of governmental and regulatory filings necessary for approval of the
transactions contemplated by the investment agreement and the securities purchase
agreements
III Approval of blue sky registrations and listing of shares on the New York Stock Exchange
III Authorization of registration statements
MISCELLANEOUS
III Approval of engagement of financial advisors
Approval of general enabling resolutions
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RESOLUTIONS OF THE BOARD OF DIRECTORS OF
APRIL 6, 2008
WHEREAS, unprecedented challenges continue to face Washington
Mutual, Inc. (the "Corporation") as a result of continuing disruptions in the mortgage
and credit markets;
WHEREAS, as a result of such challenges, senior management of the
Corporation has engaged financial advisors to explore and assist senior
management in evaluating all strategic alternatives available to the Corporation
during this challenging time;
WHEREAS, senior management has concluded that a series of actions
be taken to, among other things, strengthen the Corporation's capital;
WHEREAS, such actions include undertaking significant business
model changes, the issuance and sale of additional shares of the Corporation's
common stock, new series of contingent convertible perpetual non-cumulative
preferred stock and warrants;
WHEREAS, senior management is recommending to this Board of
Directors that such actions be taken on the basis that they represent the best
strategy for preserving and enhancing the franchise value of the Corporation for the
benefit of its shareholders; and
WHEREAS, the financial advisors retained by senior management
have confirmed that the actions being recommended by senior management are
commercially reasonable to the Corporation under the currently existing market
conditions.
APPROVAL OF AGREEMENTS
RESOLVED, that it is advisable and in the best interests ofthe
the Corporation of Investor Shares (as defined below) and Investor Warrants (as
defined below) pursuant to the terms of the Investment Agreement by and among
the Corporation, Olympic Partners, LP, a Delaware limited partnership ("Olympic
Partners"), and Titanium Partners VI, LP, a Delaware limited partnership
Partners" and together with Olympic Partners, the "Investors"), substantially in the
form presented to this Meeting (the "Investment Agreement"); and further
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the Corporation of Public Preferred Purchaser Shares (as defined below) pursuant to
the terms of the Public Preferred Securities Purchase Agreement by and among the
Corporation and the purchasers party thereto (the "Public Preferred Purchasers"),
substantially in the form presented to this Meeting (the "Public Preferred Purchase
the Corporation of Common Stock Purchaser Shares (as defined below) pursuant to
the terms of the Common Stock Purchase Agreement by and among the
Corporation and the purchasers party thereto, the "Common Stock Purchasers"),
substantially in the form presented to this Meeting (the "Common Stock Purchase
the Corporation of Public Warrant Shares (as defined below) pursuant to the terms
of the Public Warrant Purchase Agreement by and among the Corporation and the
purchasers party thereto, the "Public Warrant Purchasers" and collectively with the
Public Preferred Purchasers and the Common Stock Purchasers, the "Purchasers"
and collectively with the Investors, the "Investor Parties"), substantially in the form
presented to this Meeting (the "Public Warrant Purchase Agreement" and together
with the Public Preferred Purchase Agreement and the Common Stock Purchase
Agreement, the "Purchase Agreements" and collectively with the Investment
Agreement, the "Agreements"); and further
Corporation and its shareholders for the Corporation to enter into, perform its
obligations under and consummate the transactions under the Agreements pursuant
to which, among other things:
(i) the Corporation agrees, subject to the terms and conditions of the
Investment Agreement, to sell to the Investors, and each such Investor severally and
not jOintly will agree to purchase from the Corporation, as an investment in the
Corporation, shares of a series of contingent convertible non-cumUlative non-voting
perpetual preferred stock, no par value, of the Corporation (the "Series T Convertible
Preferred Stock" or the "Investor Convertible Preferred Stock"), at a price per share
of Investor Convertible Preferred Stock equal to $100,000 in cash, which the Board
of Directors of the Corporation (the determines to be adequate
consideration for such Investor Convertible Preferred Stock, and
(ii) the Corporation agrees, subject to the terms and conditions of the
Investment Agreement (including any warrant or other certificates attached thereto),
to sell to the Investors, and each such Investor severally and not jointly will agree to
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purchase from the Corporation, as an investment in the Corporation, shares of
Common Stock (as defined below), no par value, of the Corporation (the "Investor
Common Stock" and together with the Investor Convertible Preferred Stock, the
"Investor Shares") and warrants to purchase shares of Common Stock (as defined
below) (the "Investor Warrants"). at price per share of Investor Common Stock equal
to $8.75 in cash (or such other amount as may be determined by the Transaction
Committee (defined below, which the Board of Directors determines to be
adequate consideration for such Investor Common Stock, and
(iii) the Corporation agrees, subject to the terms and conditions of the
Public Preferred Purchase Agreement, to sell to the Public Preferred Purchasers,
and each such Public Preferred Purchaser severally and not jointly will agree to
purchase from the Corporation, as an investment in the Corporation, shares of a
series of contingent convertible non-cumulative non-voting perpetual preferred stock,
no par value, of the Corporation (the "Series S Convertible Preferred Stock" and
together with the Investor Convertible Preferred Stock, the "Convertible Preferred
Stock") and shares of Common Stock, no par value, of the Corporation (the "Public
Preferred Purchaser Common Stock" and together with the Series S Convertible
Preferred Stock, the "Public Preferred Purchaser Shares"), at a price per share of
Series S Convertible Preferred Stock equal to $100,000 in cash and a price per
share of Public Preferred Purchaser Common Stock equal to $8.75 in cash (or such
other amount as may be determined by the Transaction Committee). each of which
the Board of Directors determines to be adequate consideration for such Public
Preferred Purchaser Share, and
(iv) the Corporation agrees, subject to the terms and conditions of the
Common Stock Purchase Agreement, to sell to the Common Stock Purchasers, and
each such Common Stock Purchaser severally and not jointly will agree to purchase
Stock, no par value, of the Corporation (the "Purchaser Common Stock"), at a price
per share of Purchaser Common Stock equal to $8.75 in cash, each of which the
Board of Directors determines to be adequate consideration for such Purchaser
Common Stock; and
(v) the Corporation agrees, subject to the terms and conditions of the
from the Corporation, as an investment in the Corporation, shares of Series S
Convertible Preferred Stock, at a price per share of Series S Convertible Preferred
Stock equal to $100,000 in cash, which the Board of Directors determines to be
adequate consideration for such Series S Convertible Preferred Stock, and
(vi) the Corporation agrees, subject to the terms and conditions of the
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Stock, no par value, of the Corporation (the "Public Warrant Common Stock" and
together with the Series S Convertible Preferred Stock purchased by the Public
Warrant Purchasers, the "Public Warrant Purchaser Shares") and warrants to
purchase shares of Common Stock (the "Public Warrants" and together with the
Investor Warrants, the "Warrants"), at price per share of Public Warrant Common
Stock determined in the manner set forth in the Agreements, and further
RESOLVED, that the Investment Agreement and the transactions
contemplated thereby, including the purchase and sale of the Investor Shares and
the Investor Warrants (the "Investment"), are advisable and consistent with, and in
furtherance of, the business strategies and goals of the Corporation; and further
RESOLVED, that the Public Preferred Purchase Agreement and the
transactions contemplated thereby, including the purchase and sale of the Public
Preferred Purchaser Shares (the "Public Preferred Purchase"), are advisable and
RESOLVED, that the Common Stock Purchase Agreement and the
transactions contemplated thereby, including the purchase and sale of the
Purchaser Common Stock (the "Common Stock Purchase"), are advisable and
RESOLVED, that the Warrant Purchase Agreement and the
transactions contemplated thereby, including the purchase and sale of the Warrant
Purchaser Shares and the Public Warrants (the "Public Warrant Purchase" and
together with the Public Preferred Purchase and the Common Stock Purchase, the
"Purchase" and together with the Investment, the "Transactions") are advisable and
RESOLVED, that the Agreements be, and each hereby is, in the form
presented to this Meeting, and the Chairman and Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer, any Executive Vice President, the
Treasurer, any Senior Vice President reporting directly to the Treasurer, and the
Senior Vice President and Controller of the Corporation (collectively, the "Authorized
Officers") and any officer of the Corporation designated by one of the Authorized
Officers be, and each of them hereby is, authorized, on behalf of and in the name of
the Corporation, to execute and deliver such agreements in the forms presented to
this Meeting, and, in connection therewith, with such changes therein or thereto as
the officer or officers executing the same shall approve, which approval shall be
conclusively evidenced by such execution and delivery; and further
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AUTHORIZATION FOR ENSURING EXCLUSION FROM ANTI-TAKEOVER
PROVISIONS
RESOLVED, that for purposes of Section 238.19.040 of the
Washington Business Corporation Act, the entry by the Corporation and [ ]1
(together, the "Major Stockholders") into the applicable Agreement to which such
Major Stockholder is party, the issuance of Investor Shares or Purchaser Shares, as
the case may be (including the conversion of the Convertible Preferred Stock into
Common Stock and the exercise of the Warrants for Common Stock) and the
consummation by such Major Stockholder of the transactions contemplated thereby,
is hereby approved; and further
RESOLVED, that in response to the letters received from each Major
Stockholder seeking unanimous approval prior to becoming a "Major Stockholder"
for purposes of Article X of the Articles of Incorporation (as defined below), each
such Major Stockholder becoming a "Major Stockholder" pursuant to the entry by the
Corporation and such Major Stockholder into the applicable Agreement to which
such Major Stockholder is party, the issuance of shares (including the conversion of
the Convertible Preferred Stock into Common Stock and the exercise of the
Warrants for Common Stock) and the consummation by such Major Stockholder of
the transactions contemplated thereby, is hereby unanimously approved; and further
EXCLUSION FROM RIGHTS AGREEMENT
RESOLVED, that the entry by the Corporation and the Investors into
the Investment Agreement, the issuance of the Investor Shares (including the
conversion of the Convertible Preferred Stock into Common Stock and the exercise
of the Warrants for Common Stock) and the consummation by the Investors of the
transactions contemplated thereby is hereby approved for purposes of, and shall not
result in the Investors becoming an "acquiring person" for purposes of, the Rights
Agreement of the Corporation, dated as of December 20, 2000; and further
CONVERTIBLE PREFERRED STOCK
"Series S Contingent Convertible Non-cumulative Non-voting Perpetual Preferred
Stock" to be sold in accordance with the Public Preferred Purchase Agreement and
in one or more transactions exempt from the registration requirements of the
I The Board of Directors amended and restated this Resolution on April 7, 2008.
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Securities Act (the "Series S Convertible Preferred Stock Offering"), The number of
shares constituting such series shall not exceed 100,000, which amount includes
shares which may be issued as a paid-In-kind dividend. The stock in such series
shall have no par value and the liquidation preference of the Series S Convertible
Preferred Stock shall be $100,000 per share; and further
"Series T Contingent Convertible Non-cumUlative Non-voting Perpetual Preferred
Stock" to be sold in accordance with the Investment Agreement and in one or more
transactions exempt from the registration requirements of the Securities Act (the
"Series T Convertible Preferred Stock Offering"), The number of shares constituting
such series shall not exceed 100,000, which amount includes shares which may be
issued as paid-in-kind dividends. The stock in such series shall have no par value
and the liquidation preference of the Series T Convertible Preferred Stock shall be
$100,000 per share; and further
RESOLVED, that each series of the Convertible Preferred Stock
described above shall have the rights, preferences and limitations set forth in the
designation for such series set forth in the Preferred Stock Articles of Amendment
(as defined below), substantially in the form attached hereto as Exhibit A, with such
completions, determinations, changes and modifications as may be approved by a
committee of the Board of Directors (the "Transaction Committee") consisting of
Kerry K. Killinger, Stephen E. Frank and Charles Lillis; and further
RESOLVED, that the Board hereby authorIzes, and delegates the
authority to, the Transaction Committee (a) to designate, finalize, determine and
complete (it being understood that this authority includes without limitation making
appropriate modifications and changes to the attached designation) the preferences,
Preferred Stock, (b) to determine the final number of shares of Common Stock and
Warrants to be issued pursuant the Agreements and the price therefor, in each case
subject to the limits specified in these resolutions; and further
RESOLVED, that the authorization and delegation in the immediately
preceding resolution shall include, without limitation, the authority to determine the
number of shares of each series of the Convertible Preferred Stock to be authorized,
to determine the dividend rates and whether such rates are fixed, fixed-to-floating or
floating, or are at a percentage that is greater than the dividend rate applicable to the
Corporation's Common Stock (and to make appropriate modifications in other
provisions to reflect such rates), to provide for paid-in-kind dividends, to determine
anti-dilution provisions, to determine the liquidation amount, to determine the
situations In which each series of the Convertible Preferred Stock will convert into
Common Stock (including without limitation the terms of such provisions), to
designate circumstances involving amendments to the Articles of Incorporation as
amended or involving mergers or other combinations or similar events in which
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holders of each series of the Convertible Preferred Stock may have voting rights, to
determine the consideration to be received by holders of each series of the
Convertible Preferred Stock upon reorganization, merger or similar events, to
approve the form of any stock certificate and to prepare and authorize the filing of
articles of amendment for each series of the Convertible Preferred Stock with the
Secretary of State of the State of Washington; provided, however, that (i) the
number of shares of Series S Convertible Preferred Stock and Series T Convertible
Preferred Stock authorized shall not exceed 100,000 shares for each series of the
Convertible Preferred Stock (provided, that the combined number of shares of either
series initially issued by the Corporation shall not exceed 70,000), (ii) the liquidation
preferences shall not exceed $100,000 per share, (iii) the dividend rate shall not
exceed the greater of (x) the equivalent dividends declared on the Common Stock
and (y) 17% per annum, and (iv) the number of Common Stock into which each
share of Convertible Preferred Stock may be converted shall not exceed
1,000,000,000 (reflecting an initial conversion price of no less than $7.00per share of
Common Stock); and further
RESOLVED, that the maximum number of shares of Common Stock to
be issued by the Corporation in accordance with the terms of the Agreements s h a ~ 1
not exceed 1,000,000,000 and the price therefor shall not be less than $7.00; and
further
RESOLVED, that maximum number of shares of Common Stock into
which a Warrant will convert shall not exceed 25% of the shares of Common Stock
purchased by the holder of a Warrant with a purchase price thereof determined in
accordance with the terms of the Investment Agreement; and further
RESOLVED, that the Corporation be, and hereby is authorized and,
upon required shareholder and regulatory approvals having been obtained, directed
to reserve for issuance upon conversion of the Convertible Preferred Stock such
number of shares of Common Stock as may be sufficient and necessary from time to
time for issuance upon conversion of all of the Convertible Preferred Stock issued,
taking into account any and all adjustments in the conversion rate or price; and
further
PREFERRED STOCK ARTICLES OF AMENDMENT
RESOLVED, that in connection with the Investment Agreement and
the transactions contemplated thereby, the Authorized Officers and counsel for the
and on behalf of the Corporation, to prepare and file with the Secretary of State of
the State of Washington Articles of Amendment (the "Preferred Stock Articles of
to the Articles of Incorporation designating the preferences,
Preferred Stock, substantially in the form attached hereto as Exhibit A, with such
Doc #178377 A-a
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HIGHLY CONFIDENTIAL
completions, determinations, changes, and modlfications as may be approved by
any Authorized Officer; and further
ISSUANCE AND RESERVATION OF SHARES AND OTHER MATTERS
RESOLVED, that the issuance of Investor Shares and Investor
Warrants in accordance with the terms of the Investment Agreement be, and it
hereby is, authorized and, upon such issuance, such Investor Shares and such
Investor Warrants shall be validly issued, fully paid and nonassessable and free of
preemptive rights; and further
RESOLVED, that the issuance of shares of Purchaser Shares in
accordance with the terms of the Purchase Agreements be, and it hereby is,
authorized and, upon such issuance, such Purchaser Shares shall be validly issued,
fully paid and nonassessable and free of preemptive rights; and further
RESOLVED, that the issuance of shares of Common Stock upon
conversion of the Convertible Preferred Stock or exercise of the Warrants in
accordance with the terms of the Agreements be, and it hereby is, upon required
shareholder and regulatory approvals having been obtained, authorized and, upon
such issuance, such shares of Common Stock shall be validly issued, fully paid and
nonassessable and free of preemptive rights; and further
RESOLVED, that the Corporation shall reserve and keep available for
issuance at all relevant times such number of shares of Common Stock and
Convertible Preferred Stock as may be required to be issued in connection with the
Transactions or upon conversion of the Convertible Preferred Stock or exercise of
the Warrants, as the case may be; provided that in the case of Convertible Preferred
Stock or Warrants, the Corporation shall reserve such sufficient number of Common
Stock following approval of the shareholders as contemplated by Section 3.1 (b) of
the Investment Agreement and Section 3.1 (b) of the Public Preferred Purchase
Agreement and approval by the applicable regulatory authorities; and further
APPROVAL OF ARTICLES OF AMENDMENT TO THE AMENDED AND
RESTATED ARTICLES OF INCORPORA TlON OF THE CORPORA TION
Corporation and its shareholders to increase the number of authorized shares of
Common Stock to 2,500,000,000 (the "Common Stock Share Increase") from the
total number of shares that the Corporation currently has the authority to issue, as
set forth in the Common Stock Articles of Amendment (defined below), and that the
same be, and hereby is, approved; and further
Doc #178377 A-9
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HIGHLY CONFIDENTIAL
Corporation and its shareholders that the Board of Directors have authority to fix and
state the voting powers, designations, preferences and relative, participating,
optional or other special rights of the shares of Common Stock to be sold from time
to time (the "Blank Check Common Stock") and the qualifications, restrictions and
limitations thereon, as set forth in the Common Stock Articles of Amendment
(defined below); and further
Corporation and its shareholders for the Corporation to amend the Amended and
Restated Articles of Incorporation of the Corporation (the "Articles of Incorporation")
to provide for the Common Stock Share Increase and the Blank Check Common
Stock, substantially in the form attached hereto as Exhibit B (the "Common Stock
Articles of Amendment"); and further
RESOLVED, that the Board hereby recommends that the shareholders
of the Corporation at the special meeting of shareholders of the Corporation approve
the Common Stock Articles of Amendment (the "Articles of Amendment Shareholder
Approval"); and further
RESOLVED, that the Common Stock Articles of Amendment be, and
hereby are, approved by the Board of Directors in all respects, with such Common
Stock Articles of Amendment to become effective upon receipt of the Articles of
Amendment Shareholder Approval and their filing with the Secretary of State of the
State of Washington; and further
is, authorized, in the name and on behalf of the Corporation, following approval
thereof by the shareholders of the Corporation at the special meeting of
shareholders of the Corporation, to execute the Common Stock Articles of
Amendment and file such executed Common Stock Articles of Amendment with the
Secretary of State of the State of Washington; and further
APPROVAL OF AMENDMENT TO THE RESTATED BYLAWS OF THE
CORPORATION
Corporation and its shareholders for the Corporation to amend the Restated
Bylaws of the Corporation (the "Bylaws") to increase the number of Directors
on the Board from fourteen to sixteen effective as of the closing of the
Transactions; and further
RESOLVED, that the Bylaws Amendment be, and hereby is,
approved by the Board of Directors in all respects, with such Bylaws
Amendment to become effective upon the Closing of the Transactions; and
further
Doc #178377 A-10
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HIGHLY CONFIDENTIAL
GOVERNMENTAL AND REGULATORY APPROVALS AND FILINGS
and on behalf of the Corporation, to prepare and file all such applications and any
and all certificates, documents, letters and other instruments with the Office of Thrift
Supervision, and any other appropriate Federal, state, foreign or other banking or
other governmental authority necessary or desirable for approval of or to otherwise
effect the transactions contemplated by the Agreements, with full power and
authority by such officers and counsel to take any and all such action as may be
limitation, appearing before the Office of Thrift Supervision and any such other
governmental authority; and further
applicable requirements of the Securities Act of 1933, as amended (the "Securities
Act") and the Exchange Act, each Authorized Officer is authorized on behalf of and
in the name of the Corporation to execute and file, or cause to be filed, with the
SEC, in the name and on behalf of the Corporation, all reports, statements,
documents and information required to be filed by the Corporation pursuant to the
Securities Act and the Exchange Act and the rules and regulations of the SEC
thereunder; and further
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Acf') and the rules and regulations thereunder, and
any other antitrust, competition or similar laws, rules or regulations of any federal,
state, local or other foreign jurisdiction or other governmental authority necessary or
desirable for approval of the transactions contemplated by the Agreements, the
Authorized Officers and counsel for the Corporation be, and each of them hereby is,
authorized and empowered, on behalf of and in the name of the Corporation, to
prepare and file all such applications and any and all certificates, documents, letters
and other instruments in connection therewith, with full power and authority by such
Authorized Officers and counsel to take any and all such action as may be
limitation, appearing before any such governmental authority; and further
BLUE SKY REGISTRA nONS
RESOLVED, that it may be advisable and in the best interests of the
Corporation that the Registered Securities be qualified or registered for sale in
various states and foreign jurisdictions (or political subdivisions thereof); that the
Authorized Officers of the Corporation be, and each of them hereby is, authorized to
Doc #178377 A-11
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HIGHLY CONFIDENTIAL
determine the states or other jurisdictions in which appropriate action shall be taken
to qualify or register for sale all or such part of each of the Registered Securities as
such officers deem advisable; that such officers are hereby authorized to perform on
behalf of the Corporation any and all acts that they may deem necessary or
advisable in order to comply with the applicable laws of any such states or
jurisdictions, and in connection therewith to execute and file all requisite papers and
documents, including, without limitation, applications, reports, surety bonds,
irrevocable consents and appointments of agents for service of process; that the
execution by such officers of any such papers or documents or the doing by them of
any act in connection with the foregoing matters shall conclUSively establish their
authority therefor from the Corporation and the approval and ratification by the
Corporation of the papers and documents so executed and the action so taken; and
that the form of any and all resolutions required by any state authority or the
competent authorities of other applicable jurisdictions to be filed in connection with
any such application, consent to service or other document is hereby adopted if the
Chief legal Officer (or the Interim Chief legal Officer) of the Corporation deems the
adoption of such resolutions necessary or advisable and evidences such adoption of
such resolutions by filing with the records of the Corporation copies of such
shall thereupon be deemed to be adopted by the Board of Directors and
incorporated in and made a part of these resolutions with the same force and effect
as if fully set forth herein; and further
NEW YORK STOCK EXCHANGE
RESOLVED, thatthe Authorized Officers be, and each of them hereby
is, authorized to prepare or cause to be prepared one or more listing applications
and to otherwise take such actions necessary or advisable in order for the
Corporation to comply with all applicable requirements of the New York Stock
Exchange, Inc. (the "NYSE"), for the listing on the NYSE of the additional shares of
Common Stock (including shares issuable upon exercise of the Convertible
Preferred Stock); and that the Authorized Officers be, and each of them hereby is,
authorized, in the name and on behalf of the Corporation, to execute and file with the
NYSE said listing applications; and further
is, authorized, in the name and on behalf of the Corporation and, if required, under
its corporate seal, to enter into, execute and file with the NYSE such other
agreements and instruments as may be approved by the officer or officers executing
the same, such approval to be conclusively evidenced by his, her or their execution
and filing thereof; and further
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HIGHLY CONFIDENTIAL
Corporation be, and each of them hereby is, authorized to appear on behalf of the
Corporation before the appropriate committee or body of the NYSE as such
appearance may be required, with authority to make such changes in any such
applications that shall be presented thereto, and in the agreements that may be
made in connection therewith, as may be deemed necessary or desirable to conform
to the requirements of the NYSE; and further
RESOLVED, that the Board of Directors hereby adopts the form of any
and all resolutions required to be filed with the NYSE in connection with any of the
aforementioned applications if the Chief Legal Officer (or the Interim Chief Legal
Officer) of the Corporation deems such resolutions necessary or advisable and
evidences such adoption by filing with the records of the Corporation copies of such
thereupon shall be deemed to be adopted by the Board of Directors and
incorporated as part of these resolutions with the same force and effect as if fully set
forth herein; and further
REGISTRATION STATEMENTS
RESOLVED, that, if required pursuant to the Agreements, the
Authorized Officers be, and each of them hereby is, authorized, in the name and on
behalf of the Corporation, to prepare, execute and file, or to cause to be prepared,
executed and filed, with the SEC when required under the Agreements a registration
statement (including a "shelf' registration statement) or any amendment to an
existing "shelf' registration statement under the Securities Act pursuant to which
holders of Registrable Securities (as defined in the Agreements) may resell such
Registrable Securities and thereafter to prepare or cause the preparation of and, if
deemed necessary or advisable by any of such Authorized Officers, to file or cause
to be filed any amendments thereto, and to do all other things and to execute any
and all other documents that any of them may deem necessary or advisable in
is, authorized to prepare, execute and file, or cause to be prepared, executed and
filed, on behalf of the Corporation, such amendments and/or supplements, including
post-effective amendments, to such registration statements, and to file or cause to
be filed such other documents and instruments with, and furnish such other
information to, the SEC and to take all such other actions as any of such Authorized
Officers may deem necessary or advisable (i) to comply with the rules and
regulations of the Securities Act and the Exchange Act, and (ii) to terminate,
suspend or delay the effectiveness of" such registration statements; and further
Doc #178377 A-13
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HIGHLY CONFIDENTIAL
RESOLVED, that the Chief Legal Officer (or the Interim Chief Legal
Officer) of the Corporation be, and he hereby is, appointed as agent for service of
process for the Corporation to receive notices and communications from the SEC in
connection with such registration statements and from any state authority in any
jurisdiction where the Registrable Securities are to be offered or sold; and to
exercise the powers conferred upon him or her as such agent by the Securities Act
and the rules and regulations of the SEC thereunder and any state authority in any
jurisdiction where the Registrable Securities are to be offered or sold; and further
RESOLVED, that any Authorized Officer is hereby authorized to act as
attorney-in-fact for the Corporation, with full power to act and with full power of
substitution and re-substitution, to sign any and all amendments to and supplements
to such registration statements, together with any exhibits or other documents
relating thereto or required in connection therewith, in the name or on behalf of the
Corporation and to file, or cause to be filed, the same with the SEC, with full power
and authority to do and perform every act which such attorney-in-fact may deem
necessary or advisable in connection therewith; and further
RESOLVED, that each officer and director who may be required to
execute such registration statements or any amendment or supplement thereto is
hereby authorized to execute a power of attorney to such person or persons as he
may designate to sign such registration statements, any and all amendments or
supplements thereto and documents related thereto, and to file the same or cause
the same to be filed with the SEC, with full power and authority to do and perform
every act which such attorney-in-fact may deem necessary or advisable in
AGREEMENTS WITH FINANCIAL ADVISORS
RESOLVED, that the form, terms and provisions of the engagement
letters between the Corporation and each of Goldman, Sachs & Co. and Lehman
Brothers Inc., as financial advisors, copies of which have been directed to be filed
with the records of the Corporation, be, and they hereby are, in all respects
approved and adopted; and that the actions of any officer of the Corporation in
executing, in the name and on behalf of the Corporation, such agreements be, and
they hereby are, ratified, confirmed and approved in all respects; and further
GENERAL ENABLING RESOLUTIONS
RESOLVED, that until further action of the Board of Directors, the
Board of Directors hereby authorizes each of the Authorized Officers to approve the
taking of any actions, the payment of any costs and expenses and the forms and
terms of any instruments, documents or agreements, consistent with these
resolutions, in connection with the Agreements, the transactions contemplated
Doc #178377 A-14
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HIGHLY CONFIDENTIAL
thereby and the other transactions referred to in or contemplated by these
resolutions, including, without limitation, approval of any amendment to, waiver of, or
consent under, the Agreements or any other agreement or instrument authorized or
contemplated by these resolutions as such officer shall deem necessary or desirable
in connection with the Agreements and the transactions contemplated thereby; and
further
RESOLVED, that each Authorized Officer is authorized and directed to
take, or cause to be taken, all actions, and to execute and deliver, or cause to be
executed and delivered, all agreements, undertakings, documents, instruments and
certificates, and to pay all charges, fees, taxes and other expenses, from time to
time, as such Authorized Officer deems necessary, desirable or appropriate to
provide for the consummation of the transactions contemplated by the Agreements
and to accomplish the purpose and intent of these resolutions, and the actions
heretofore taken and to be taken by any Authorized Officer in that connection are
hereby ratified, confirmed and approved in all respects; and further
RESOLVED, that, for purposes of carrying out the foregoing
resolutions, any person authorized to execute any document or take or cause to be
taken any action on behalf of the Corporation is authorized to grant, execute and
deliver a power of attorney, individually or in the name and on behalf of the
Corporation, to any other person, whether or not an employee of the Corporation, as
the person executing the power of attorney may deem appropriate, and any action
taken by any such duly authorized person pursuant to and within the scope of any
such power of attorney is hereby ratified and confirmed as the act and deed of the
Corporation.
Doc #178377
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Privileged
and Confidential
1817108
Washington Mutual 1 c
Board of Directors
Minutes
Special Telephonic Meeting
Date August 7 2008
Attendance
Directors Present
Stephen Frank Chair
David Bonderman
Stephen
1 Chazen
Kerry
illin er
Phillip
D Matthews
Regina
T
Montoya
Directors Absent
Thomas C
Leppert
Charles M Lillis
Larry
Kellner
Margaret
Osmer McQuade
Michael
Murphy
Wm G
Reed Jr
Orin C Smith
James Stever
Advisors Present
Lee
Meyerson
Partner at
Simpson
Thacher
l
e LLP
Richard Alexander Partner at Arnold and Porter
John
Mahoney
Goldman Sachs
Management
Present
Todd Baker
Stephen
J Rotella
Thomas
Casey
Michael Solender
Cathy
L
Doperalski
Robert J Williams
Stewart M Landefeld Susan R Taylor Secretary
The materials for the Board
meeting
had been
posted
to
BoardVantage to the
Directors on
August 5 2008
Washington Mutual Inc 1 or the
Holding
Company met concurrently with the Board of Directors of
Washington
Mutual Bank
WMB or the
Bank on August 7
2008 for a special telephonic meeting
Mr
Doc 184973
HIGHLY CONFIDENTIAL
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Privileged
and Confidential
1 81708
Killinger and all members of management joined
the
telephone call from a
conference room WaMu Center
Everyone
listed above was present
at the
beginning
of the
meeting except
for Mr
Mahoney
A
quorum was present
at the
beginning
of the
meeting
Mr Frank called the meeting to order at 730 am
RegullatoEy
Action
Mr Solender introduced Mr Alexander as a
partner
from Porter who
would be
assisting
with his partner Jerry Hawke to negotiate the
regulatory
documents with the Office of Thrift
Supervision
Mr Sol ender
reported on
an exchange
of draft documents and a call with the OTS earlier
i
n the
week noting
that constructive
dialogue
took
place I
n
response
to a
question
from Mr
Bonderman an r olen r reported
that
negotiations were proceeding i
n
a t
i
l
n
Redacted
Mr Frank share
con
S
some feedback with the Board that he had received
i
n a
U
Redad Iced
Government Relations
Mr Solender described
managements
recommended
strategy
with the Board for
engaging
with
political
and
regulatory
constituencies
i
n the current environment He
emphasized
the need to work closely
and be
collaborative
with the
OTS as
i
t
i
s the
Banks and
Holding Companys primary regulator
He then identified other
regulatory and political
entities and described the level of current and recommended
interaction between
management
and each one Mr
Killinger
then commented on
the
currently challenging political backdrop
Approval Regulatoy and Strategy Oversight
Committee r
Mr Frank
reviewed his recommendation that the Board not use the
existing
Compliance
Committee of the Bank as previously discussed to oversee the
regulatory negotiation
and remediation
process
but instead use the committee
composed
of Messrs Bonderman Leppert Smith and himself that had
already
met
on an ahoc basis and whose
purpose
existence and members had
already been
reviewed on an informal basis with all Directors He
reported
that
having
the
committee focus on the
regulatory
action was insufficient
given
the current stresses
on the Holding Company
and ank
e
d acted
Doc 1 B3723
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
WMI 8f708
He noted that a revised version of the charter had been posted to
BoardVantage
earlier that
morning
He asked for
questions or comments
I
n
response
to a Directors question Mr Frank explained that the OTS was not
required to
approve
the charter or committee although
the committees existence
had been communicated to them Mr Reed asked whether there was
overlap
with
the duties of the
Compliance Committee to which r Frank
responded that the
Compliance
Committee would continue to focus on the Bank
Secrecy Act and
AntiMoney
Laundering
issues
Upon a motion made and
duly seconded
the Board
unanimously adopted
resolutions
approving
establishment of the
Regulatory
and
Strategy Oversight
Committee and
adoption
of the charter
i
n the form
presented copy
of the
resolutions as adopted will be maintained as an appendix
to these minutes
Liguidity
and
Capital Update
Mr
Casey
started the
report on liquidity
and
capital by describing the impact of
recent
deposit
runoff He
emphasized
the
speed
with which situations
change
as
evidenced
by
the Bank
being
excluded from the 84
day
TAF market
just
two
days
ago
with little warning He reminded the Board of the
possibility
that the FDIC could
cause the Banks
composite rating to be lowered further which would
directly impact
funding through
brokered
deposits
and
might
restrict FHLB
funding Mr
Casey
reviewed actions
being
taken
by management
to
strengthen
the
liquidity profile
including building
the cash reserve He indicated that the
proposals to be
presented
by
Goldman Sachs would
marginally improve liquidity
but would not
directly
address
the issues
just
raised Mr
Casey
outlined the
possibility of
releasing some
thirdquarter financial
projections to the market shared some early third quarter
financial information with the Board Mr
Casey
indicated that
management was
preparing
to move
quickly
and to
update
the
regulators
and credit
rating agencies on
July results
and to
respond
to a disclosure or media event i
f
necessary
Mr
Mahoney joined the meeting during Mr Caseys presentation
Mr
Mahoney
then
presented
the material
prepared Goldman Sachs and
previously provided
to the Board After
identifying
the
objectives
of a liquidity
transaction notably
to raise
approximately
billion
i
n additional
liquidity on the
best terms within the next two to four weeks he focused on seven possible
transactions that Goldman Sachs had identified as most
likely
For each of the
seven options
he described the
potential transaction
its size and cost the likelihood
of
success
the time to
execute
its
predicted impact on asset diversity and
capital
and the
signal
such a transaction would send to the market He answered Directors
questions
Mr
Mahoney
then left the
meeting
Doc 183723
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
8f7108
D si
t
i
o Compliance Officer
Mr Frank referred tote material
previously provided
on the
request
to
designate
Barry
Koch as the Bank
Secrecy
Act
BSA compliance
officer
Upon a motion
duly
adopted
the resolutions
appointing
Mr Koch as
the BSA officer for the
Holding Company
A
copy
of the resolutions as
adopted
will
maintained as an appendix
to these minutes
Mr Frank indicated that
i
t was time to
go
into executive session Ms
Taylor
indicated to r Frank that
representatives
of
McKinsey
were
standing by i
f he
decided to ask them to
join
Executive Session
All members of
management including
r Killinger
then disconnected from the l
at 815 am leaving r Meyerson
as the
only
nonDirector on the
I
I The
meeting
was
adjourned
at approximately 850 am
Susan R
Taylor
Secreta
Appendices
A Regulatory
and
Strategy Oversight
Committee
B Appointment
of BSA officer
Doc183723
HIGHLY CONFIDENTIAL
Return
APPENDIX A
WASHINGTON
MUTUAL
INC
DIRECTORS BOARD OF
RESOLUTIONS
WHEREAS the Board of Directors of
Washington Mutual Inc wishes to
establish an interim committee to
provide
assistance to the Board with
respect
to
regulatory
and
general strategy matters including
the
oversight or remediation of
issues that arise out of
any regulatory
matter
NOW
THEREFORE IT
RESOLVED that the
Regulatory
and
Strategy Oversight Committee
Oversight Committee i
s
hereby
established with the duties and
powers as set
forth
i
n the Charter i
n the form submitted to the Board which
i
s
hereby adopted
FURTHER
hereby appoints David
Bonderman Stephen Frank Thomas Leppert and Orin Smith to serve on the
Oversight
Committee
FURTHER
RESOLVED Stephen
Frank
i
s
appointed to serve as Chair of the
Oversight
Committee
183046
HIGHLY CONFIDENTIAL
Return
APPENDIX
I
BOARD OF DIRECTORS
RESOLUTIONS
WHEREAS pursuant
to 12 CFR 563177
Is Board of Directors must
designate individuals responsible
for
coordinating
and
monitoring daytoday
compliance
with the Bank
Secrecy
Act
BSA
and
WHEREAS after
thorough
review of the background and experience of
Barry
Koch the Board of Directors believes him to be
qualified
to serve as Is BSA
compliance
officer
the
BSA
Officer
NOW THEREFORE BE IT
RESOLVED
that the Board of Directors
hereby designates Barry
Koch as
the BSA Officer of I effective
immediately
until his successor i
s
duly designated
and
qualified or until his earlier
resignation
removal or termination
FURTHER RESOLVED that along
with such additional duties and
responsibilities
as
may
be
delegated by
Is Chief
Compliance
Officer and those
inherent
i
n his office Mr Koch i
n his
capacity
as WMIs BSA Officer shall be
responsible
for
Coordinating
and
monitoring
Is
daytoday
BSA and
antimoney
laundering AML compliance
Managing or working
with others
i
n conformance with 12 CFR 563177 to
oversee or
manage
all aspects
of WMIs BSAAML
compliance program
and
Overseeing
WMIs adherence to the BSA and
implementing regulations
1 B334
HIGHLY CONFIDENTIAL
Return
Privileged
and ConfidE
W MI 91708
Washington
Mutu
Board of Director
Specia
Date
Sunday September 7
2008
Attendance
Directors Present
Minutes
Felephonic Meeti%
Stephen
E
Frank Chair
David Bonderman
Stephen
1 Chazen
Alan H Fishman
Thomas C Leppert
Charles M Lillis
Phillip D Matthews
Director Absent None
resent
server Present
Regina
T
Montoya
Margaret Omer McQua
Michael K
Murphy
Wm G
Reed Jr
Orin C Smith
James H Stever
eiiner
Lee
Meyerson
of
Simpson
Greg Grogan of Simpson Thacker Bartlett LLP
Richard
Alexander o
f
Arnold and Porter
George Paulin of FW Cook
Management Present
nomas
The materie
and 7n
Daryl David
Stewart M Landefeld
John Robinson
Michael S Solender
Susan R
Taylor Secretary
Stephen
J Rotella
meeting had been posted
to BoardVan
ge on September
Washington Mutual Inc WMl or the
Holding
Company met concurrently
with the Board
o
f
Directors
o
f
WMB or the
Bank on September 7 2008 for a special telephonic meeting
The
meeting began
i
n executive session with all Directors and Mr
Meyerson present
Doc 189537
HIGHLY CONFIDENTIAL
Return
Messrs Frank and
Meyerson joined
the call
together from the Executive Conference
Room atWaMuCenter A
quorum was present
a
t
the
beginning
of the
meeting
Mr Frank called the
meeting
to order at 130
pm Pacific Time
xecutive
Management Matters
Mr Frank reviewed with the Board the
meeting
he and
Mr Smith had had with Mr
Killinger regarding the Boards
request
that he
resign from his
positions with WMI
and its
subsidiaries and Mr
Killingers agreement
to do so Mr Frank noted that he
had called each of the Directors after the meeting with Mr
Killinger and briefed them
on the
meeting
Mr Frank then reported to the
Board on the discussions he had had
with Mr Killinger subsequent to that
meeting regarding
the
process for Mr Killin
departure and the text of the
press
release
i
n which his
departure would be
announced Mr Frank also reported to the Board on the
briefings he
had
given
t
o
executive management regarding
the
change i
n
leadership
of the
company their
positive reactions to
i
t and the
meeting that had been held earlier
i
n the
day i
n
whi
Mr Fishman met
i
n
person with all the members of the
executive management
team
Mr Stever summarized the
payments and other benefits that Mr Killin
entitled to receive
upon resignation as detailed in the materials
posted to
Board
Vantage pursuant
to his
existing contractual agreements with WMI and
be
subsidiaries and the
plans i
n which he was a participant Mr Stever noted that M
Killingers resignation at the Boards
request constituted a termination without
cause under his
employment agreement and the
company plans that he
articipated i
n and that he would therefore be
receiving
those
payments and be
which he was contractually entitled as a result of the circumstances of his
termination Mr Stever then noted that the Board was not
being asked to
approve
any
other payments or benefits
Mr Frank then
updated the Board on the discussions he and others had had with
Mr Alan Fishman to finalize the
arrangements for Mr Fishman to become Chief
Executive Officer of WMI and the Bank Mr Frank noted for the Board the strengths
and benefits that Mr Fishman would
bring
to the
company and reviewed with the
Board their
previous discussions about the importance of new leadership for the
company and the Boards efforts to recruit a new chief executive office
Mr
Stever then reviewed with the Board the details of Mr Fishmans
proposed
employment agreement and compensation arrangements as set out
i
n
the materiah
posted to
BoardVantage Mr Grogan provided further detail on the terms of these
arrangements
Mr Stever
reported that after extensive review and negotiations with
Mr Fishman and his counsel the Human Resources Committee had unanimously
determined to recommend that the full Board
approve the
proposed employment
terms and authorize WMI to enter into the
employment agreement
with Mr Fishman
on the terms proposed
Doc 189537
HIGHLY CONFIDENTIAL
Return
Mr Paulin then provided his views to the Board on Mr Fishmans
proposed
employment
terms He discussed the different
components
of Mr Fishmans
proposed compensation and retention arrangements and his assessment
o
f
how
those different
components compared
t
o practice at selected comparable
companies
He concluded
by expressing
his view
that
Mr Fishmans
proposed
compensation and retention
arrangements were reasonable and within the
range
o
f
market
practice
for
comparable situations
Active discussion
among the Directors followed with Mr Frank and other Directors
noting that the Board had been
actively seeking
for several months to
bring i
n
strong
new leadership
t
o the
company
and that
given
the challenges that the
company
faced
i
n
the current environment i
t was important
t
o move forward now with a
h
i
qualified candidate who could provide that leadership
Mr Stever then described the
compensation arrangements
which the Human
Resources Committee had
approved for Frank Baier who would be
joining the
company with Mr Fishman and planned option grants t
o executive officers as well
as creation of a 21 million share pool to be used for stock
option grants to selected
senior leaders Mr David
provided
additional detail on the terms of these planned
grants noting that a
majority
of the stock
options granted
to the executive officers
would have performancebased vesting
and that this feature would send a
message
that the executive
management team
i
s focused and its interests are closely aligned
with shareholders
Discussion of Memoranda of
Understanding
with OTS
Messrs Casey Landefeld Robinson Rotella and Solender and Ms
Taylor then
joined
the
meeting
at 230
pm by joining
Messrs Frank and Meyerson i
n the
Executive Conference Room Mr
Grogan and Mr Paulin left the meeting and Mr
Alexander joined Mr Solender
presented the final Memoranda of
Understanding
MOs between the Office of Thrift
Supervision
and each of the Bank and the
Holding Company that the Board of each would be asked
t
o
approve
later
i
n the
meeting
He directed their attention to the MOUs i
n the material previously provided
and
provided some background regarding the development of the MOUs He then
asked Mr Alexander of Arnold and
Porter to present
the MOUs to the Board
Redacted
Doc 189537
HIGHLY CONFIDENTIAL
Return
Redacted
Following
Mr
Alexanders review
of the
MOUs their provisions and the Boards
responsibilities thereunder Mr Frank asked for questions Mr Solender
responded
to a question from Mr Bonderman
regarding tiring
He reviewed the proposed
resolutions noting that the resolutions authorized Mr Frank to execute the MOUs on
b h
I
f f th l d U a o e oar
a I
esponse to a ques1101
one Director Mr Rotella confirmed that he and Messrs Casey McMurray
Solender had all been involved
i
n the
development
of the MOUs and shared their
comfort level with satisfying the obligations i
n
the MOUs
Redacted
components
of the business
plan
Active discussion among the Boar+
y then describe
ing developed
and
the progress i
members continued
The Board then engaged
i
n discussion with Mr
Meyerson
and
management
regarding
the communication plan
for the upcoming release of information
t
o the
public and to various constituencies
Redabted
Management
was then asked to leave the
room so that the Board could continue
meeting
i
n executive session with Mr
Meyerson as the
only nonDirector
presen
Executive Session
The Board then discussed further the matters that had been covered at the meeting
focusing on the importance of
appointing a new chief executive officer and
effectively rollinn out the announcement of this action
After
discussion the Board unanimously approved the resolutions
i
n the form
attached to these minutes
appointing Mr Fishman as Chief Executive Officer of WMI
and the Bank approving
the terms of his
proposed employment agreement
approving the MOUs with the OTS and
taking
the other actions set forth therein
man joined the meeting by joining
Messrs
Meyerson and Frank
Executive Conference Room at 330 om
The meeting was
adjourned
at 345
pm
Pacific Time
HIGHLY CONFIDENTIAL
Return
SteDhen
Appendix
Frank Chairman
WMB Resolution to
appoint
Ala H Fishman
t
o serve as CEO
WMI Resolution to appoint Alan HI Fishman to serve as CEO
Doc
HIGHLY CONFIDENTIAL
Return
P
RESOLUTIONS OF THE BOARD OF DIRECTORS
SHINGTON MUTUAL BANK
nber 7 2008
WHEREAS the Board of Directors
the Board I atop
Mutual Bank
the Bank
has determined
i
t to be
i
n the best interests
Bank to
appoint
Alan H Fishman to serve as Chief Executive Officer
k effective immedi
WHEREAS the Board has received a letter from
Kerry
Killi
current Chief Executive Officer of the Bank
the Departing
Office
confirming
his
resignation pursuant
to the
request
of the Board from all
positions includi
effective
immediately
director he holds with the Bank and its affiliat
WHEREAS the Board a
from all positions inch
an
cepts
he
resignation of the
Departing
ing as a director that he holds with the
diately
WHEREAS the Board has determined be in
end
i
x A
the Bank to
approve
and execute the memorandum of
understanding the
Memorandum of
Understanding with the Office of Thrift
Supervision
the
Commit
ction of the
ie
Understanding
ecommended
by
the RE
tort
and Strategy Oversight
`Committee
which
management
Committee
has
negotiated
with the
ake the actions set forth in the Me
of the
Bank under the
and to direct
ranur o
NOW THEREFORE BE IT RESOLVED that effective
immediately
the Board has determined
i
t
t
o be
i
Bank to
appoint
and
hereby does appoint Alan H Fishman to sea
Chief Executive Officer of the as a director of the Bank and as
chairperson and a member of the Corporate Development Committc
each caseto fill the
vacancy resulting
from the
resignation of the
Departir
Officer referred to herein and to serve
i
Bylaws
of t
Bank until his
respective successor i
s elected and
qualified or until his
earlier
resignation or
7
HIGHLY CONFIDENTIAL
Return
Appendix A
Bank here by accepts
the
resignation
of the
Departing
Officer as Chief Executive Officer of the Bank and from all of
offices and
positions that he
holds with the Bank and its
affiliates includi
n to be effective immediate
RESOLVED that the Memorandum of
Understanding i
s
hereby
aui orized and
approved i
n
substantially
the form attached her
nd the Chairman or Chief Executive Officer of the Bank
i
s
hereby
authorized and directed to execute and deliver the Memorandum
Understanding on
behalf of the
Bank
ESOLVED that
upon
such execution and
delivery c
Memorandum of Understanding management
of the Bank
i
s hereb
to take the actions set forth
therein
directed
RESOLVED that the
proper
officers
be
and each of them hereby
and directed on behalf of the
Bank to take such
other actions and to execute deliver and file all such further documents
certificates deeds notices or instruments as
may
be
required or
authorized
person may
deem
necessary
or
appropriate i
n furtherance of or
connection with each
purposes
and intent I
foregoing resolutions and to effectuate
f
u
SID FURTHER RESOLVED that all actions heretofore taken
jirector or officer of the Bank in connection with
any
matters i
i
n the
foregoing resolutions are hereby approved
ratified and confirmed
i
n
all
Doc 189537
HIGHLY CONFIDENTIAL
Return
rre ahx
RESOLUTIONS OF
npany
has determined
i
t
to be
i
WHEREAS the Board of Directors
the Board of
Washing
Mutual Inc
the
Company t
o
appoint Alan H Fishman to serve as Chief Executive
f the
Company
effective
immediately
WHEREAS the Board has received a letter from
Kerry Killing
current Chief Executive Officer of the
Company the Departing Officer
confirming his
resignation pursuant to the
request
of the Board from all
positions including as a director he holds with the
Company
and its
affiliates effective
immediately
WHEREAS the Board
accepts
the
resignation of the
Depalti
Officer from all oositions
Company
and
SHIM
HE BOARD OF DIRECTORS
GTON MUT
September 7
2008
g as a director that he holds with
tlecrrve
immediately
Board has determined
i
t to be
i
the
Company to
approve
and execute the memorandum of
understanding
the
Memorandum of
Understanding with the Office of Thrift
ision the OTS as recommended
by
the
Regulatory and Strate
Oversight
Committee
the Committee which
management
of the
Company under the direction of the
Committee has negotiated with the
OT and to direct
management to take the actions set forth
i
n
the
Memorandum of Understanding
NOW THEREFORE
BE IT RESOI
provisions
of Article V of the
Company
rat in accordance wi
stated
Bylaws as amended
the Bylaws effective
immediately
the Board has determined
i
t
to be
i
n
the best interests of the
Company
to
appoint
and
hereby
does
appoir
H Fishman to serve as Chief cutive Officer of thr
respective successor i
s elected and qualif
ompany until
Doe
HIGHLY CONFIDENTIAL
Return
RESOLVED that
the formterms and provisions of the
Employment
greement
between the
Company
and Alan H Fishman the
Employment
reeinent are hereby authorized and
approved
in
substantially
the form
attached hereto
the
proper
leers of the
Company or
any
member of the Board are
hereby
authorized and directed to execute and
deliver the
Employment Agreement on behalf of the
Company together wit
any
and all documents
that in accordance with the
provisions
and amendments and
i
n such foi the
proper
officers
executing
the same
shall have approved such
proper officers or
proper
officers execution
thereof to be
conclusive evidence of such
approv
RES
thee Bylaws
t inter
illarythereto each with such
changes additions
immediately the Board has d
s of the
Company
t
o appoint
and herel~
irector of the
Company
and Alan H Fishman a
member
of
the Col
vacancy
resulting
herein and to
respective succ
removal
Departi
other offic
including h retirement
purposes
or
any employment e quit
compensation or benefit
agreement plan or arrangement
of the
Compa
cued and qualified or until
ompany
until
his
her
resignation c
the
Company accepts the resignation of the
efExecutive Officer of the
Company
and from a
is that he holds with the
Company
and its affiliat
tion of the
Departing
Offic
Board shall constitute a termination other than for cause
otherwise
est e
such term
defined in
any
such applicable agreement plan or
arrangement
RESOLVED t viemorandum of Understand
hereby authorized and
approved i
n
substantially the form attached
hereto as
Exhibit
B
and the Chairman or the Chief Executive Officer of the
Company
i
s
hereby authorized and directed to execute and deliver the Memorandum a
Understanding on behalf of the
Company
e
Development Committee
om the
resignation
of the
Depar
e
i
Bylaw
Article
etenined
i
t
y
does
appoint
the
chairperson and
each case to fill the
fficer referred to
Doc 189537
HIGHLY CONFIDENTIAL
Return
Appendix
RESOLVED that
upon
such execution and deliver
Memorandum of
Understanding management
of the
Company
directed to take the actions set forth therein
iereby
RESOLVED
that the
engagement
letter with Sard Verbinnen
Co dated
August 7 2008 i
s
hereby authorized and the execution and
delivery thereof by
Steve Frank
on behalf of the
Company i
s
hereby ratified
and
approved
RESOLVED
that the
proper
officers be and each of them
hereby
i
s
and directed
on behalf of the
Company
take such other
ions and to execute deliver and file all such further
documents certificates deeds notices or instruments as
may
be
required or
as each such authorized
person may
deem
necessary or appropriate
i
n
furtherance of or
i
n
connection
with each of the
foregoing resolutions
and t
effectuate
fully the
purposes
and intent thereof
AND FURTHER
RESOLVED that all actions heretofore taken
by any
director or officer of the
Company i
n connection with
any
matters
referred to i
n the
foregoin resolutions are hereby approved i
confirmed
i
n all
respec
Doc 189537 10
HIGHLY CONFIDENTIAL
Return
WMI 91708
Board
o
f
Directors
Minutes
pedal Telephonic Meeting
Dat
Wednesday September 17 2008
Attendance
Directors Present
Stephen
E Frank Chair
David Bonderman
Stephen
I
Chazen
Alan
H Fishman
Thomas C
Leppert
Charles M Lillis
Phillip D Matthews
Regina
T
Montoya
Michael
K
Murphy
Wm G
Reed Jr
Orin C Smith
James H Stever
Director Absent None
Larry Kellner
Advisors Present
Lee
Meyerson of Simpson Thacher Bartlett LLP
John
Mahoney
of Goldman Sachs
Huntley Garriott of Goldman Sachs
John Esposito
of
Morgan Stanley
Kirk Wilson of
Morgan Stanley
Management
Present
Frank Baler
Todd Baker
Carey
M Brennan
Thomas W Casey
Stewart M Landefeld
John
McMurray
John Robinson
Stephen
J Rotella
Michael S Solender
Robert J Williams
Susan R
Taylor Secretary
The materials for the
meeting
had been
posted
to
BoardVantage earlier during the
day
on September 17 2008
I
n
addition Mr Rotella had sent
information on
daily
deposit flows to the Board
by
email
Doc 188177
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
WM 1911
7108
The Board
o
f
Directors of
WMI or the Holding
Company
met
concurrently
with the Board of Directors of
WMB or the
Bank
on
September 17 2008 for a special telephonic meeting
Several members of management joined the telephone call from a conference room
at WaMu Center A
quorum
was present at the
beginning
of the
meeting
Mr Frank called the
meeting
to order at 400
pm
He asked Mr Fishman
t
o report
CEO Update
Mr Fishman began his report by commenting on the unstable financial environment
marked
by todays
400
point drop i
n the Dow Jones Industrial
Average following
the
dramatic events at Fannie Mae Freddie
Mac
Lehman Brothers
and
AIG
over the
past
few
days
He then
reported
on the
days events including important
conversations that he had had with the OTS and the FDIC He described a phone
call he had received that morning from
Christopher Spoth Senior
Deputy
Director of
the
FDIC i
n which Mr Spoth explained
that the Holding Company
must enter into a
transaction
by
the weekend Mr Fishman also described a conversation he had with
Mr Reich of the OTS
i
n which Mr Reich indicated he had not been informed of the
FDICs
position
Messrs Fishman and Bonderman described information
received
from various parties regarding the views of various
government agencies
Mr
Fishman shared his belief that the FDIC has decided
i
t must take action because of
the
deposit
flow
figures
of the
past
several
days
and the
national financial crisis
Mr Fishman
reported that as he had discussed with the
Regulatory and Strategic
Oversight Committee
yesterday
he had asked Goldman Sachs and
Morgan
Stanley WaMus financial advisers to accelerate their efforts to
identify a
transaction He
then reviewed two of the
types
of transactions that appear to be
feasible a purchase
of the Holding Company or a stakeout position
i
n which a
minority
interest
i
n the
Holding Company
would be
purchased by
investors He
reported
that
meetings
had occurred today
with
Citigroup and Banco Santander and
that other parties were being contacted
Mr Fishman also
announced TPGs decision to waive its rights to the price reset
payments
which had been announced earlier that
day and described the mixed
reactions to the announcement Mr Rotella then discussed the medias interest
i
n
WIVII and how the current crisis was affecting i
t At Mr Fishmans
request
Mr
Rotella then reviewed the retail
deposit
flows out of the Bank noting that while still
high todays deposit outflow was estimated to be less than experienced on the
previous two days
Investment Bankers
Update
Mr
Mahoney
of Goldman Sachs reviewed a list of the
companies being contacted
and classified them into two different categories depending upon
their likely interest
in
and
ability to buy the entire
company
versus
taking
a
significant ownership
Doc 186177 2
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
WMI 911708
interest He started
by identifying
the
companies likely
to be interested
i
n
acquiring
the
Holding Company Citigroup
Wells Fargo and
JPMorgan
Chase Co
JPMC
He reported that representatives from Citigroup had started their due diligence and
were using
the electronic data
room
A
phone
call with Mr
Stumpf
CEO of Wells
Fargo
had taken
place
and Mr
Stumpf
seemed to understand the
Holding
Companys expedited
time frame Mr
Mahoney explained
that the initial
conversation with Mr Scharf of JPMC had
gone
well and that JPMC had wanted
access to the data
room
but then later
i
n the day JPMC indicated that they were not
interested and were uncomfortable with the media interest and with participating i
n a
competitive process
JPMC indicated that
they may work with us or
may
decide to
just
work with the
regulators
Mr Mahoney then described the
parties
who were more likely to enter into a stake
out transaction He reported that the meeting with Banco Santander went well and
that
they had access to the data room He
then identified other entities which were
being contacted but were less
likely
to
participate including
Toronto
Dominion
who
was initially interested
i
n a branch sale and SMBC USBancorp and BBVA Mr
Mahoney
indicated that he
anticipates a fairly
low success rate
among
these
companies
and
explained
the basis for this opinion
Mr Fishman described some of the
meetings
with third
parties i
n
further detail
noting that the presentation made to Citigroup had been well received He
emphasized
that
given
the current environment the
companys options may
be
determined
by government and
regulatory
actions outside the companys
control
He stressed the
urgency
of developing a solution by the weekend
I
n
response
to a question from Mr Frank Mr
Meyerson reviewed possible
scenarios regarding
how the FDIC and OTS
may
be
interacting
the
messages being
conveyed by
each and the
powers
held
by
each He also reviewed the
Treasury
Departments possible
role Mr Bonderman then shared his views of the
political
landscape and its
implications
for the current situation The Board
engaged i
n an
active discussion with respect to these matters and appropriate steps for the Holdin
Company
Fishman then
reported on previous
discussions with
regulators including
separate meetings
with Ms Bair
o
f
FDIC and Mr Reich of OTS
yesterday
and his
efforts to convince them that the basic fundamentals of the institution were strong
and that with appropriate public support
from the regulators the institution could
weather the current financial storm He believed he had been unsuccessful in
convincing Ms Bair
Board Discussion
Mr Fishman then asked for
questions Management responded to several
questions including questions regarding opportunities
for
managing
the situation
Doc 186177
HIGHLY CONFIDENTIAL
Return
Privileged
and Confidential
WMI 91708
from a public relations or political perspective Mr Frank then
reported
to the Board
on the
meeting
of the Regulatory
and
Strategy Oversight Committee that took place
yesterday
Mr
Casey responded
to a Directors
question by explaining
that the
FDIC had not indicated how much
capital they thought was needed Mr Fishman
commented that i
n
light
of economic and
regulatory developments seeking major
new investments or
selling
the
Holding Company likely
would be the
only options i
f
the deposit outflows did not abate Mr Fishman responded to a question regarding
the FDICs views of our options
and the
parties
involved
I
n
response
to a Directors
question
Mr Fishman confirmed that the FDICs
preference was clearly that JPMC
acquire
the
Holding Company i
n
part
because the FDIC believed that JPMC was
the most
prepared
due to its due
diligence i
n
March although a sale of the
Holding
Company
to another institution would also be
satisfactory
Mr Rotella
responded
to
a question regarding communications to the branches Mr Stever commented that
he was interested
i
n the Board
being
well
prepared
for whatever action
i
s
required
Mr Bonderman
suggested
that the Board meet
daily i
n order to exercise
oversight
over the
process
Directors
engaged i
n discussion and Mr Frank then called a daily
meeting of the Board for the same time tomorrow and
through
the weekend
The Board continued to
engage i
n active discussion
concerning
the
points
of view of
the various federal
agencies
and
departments
Mr Fishman shared information that
he had shared with the
Regulatory
and
Strategy Oversight
Committee
yesterday
concerning
his
meetings
with Messrs Kroszner and Kohn of the Federal Reserve
Discussion ensued
The
at 510
pm
Pacific Time
Susan R
Taylor
Doc 186177 4
HIGHLY CONFIDENTIAL
Return
WMI 92408
Board of Directors
Minutes
Date
Wednesday September 24 2008
Attendance
Directors Present
Stephen
E Frank Chair
David Bonderman
Stephen 1 Chazen
Alan H Fishman
Thomas C
Leppert
Phillip
D Matthews
Director Absent Charles M Lillis
Board Observer Present Larry Kellner
Advisors Present
Regina
T
Montoya
Michael K
Murphy
Wm G Reed Jr
Orin C Smith
James H Stever
Lee
Meyerson
of
Simpson Thacher
Bartlett LLP
John
Mahoney
of Goldman Sachs
Huntley Garriott of Goldman Sachs
John Esposito
o
f
Morgan Stanley
Kirk Wilson
of
Morgan Stanley
Management
Present
Frank Baier
Todd Baker
Carey M Brennan
Thomas W Casey
Daryl
D David
Stewart M Landefeld
John Robinson
Adrian
Rodriguez
Stephen J Rotella
Michael S Solender
Robert J Williams
Susan R Taylor Secretary
The
materials
for the
meeting
had been
posted
to Board
Vantage earlier during the
day on September 24 2008 and Mr Rotella had sent daily deposit
flow information
to the Board via email
The Board of Directors of Washington Mutual Inc
WMI or the
Holding
Company
met
concurrently
with the Board of Directors
o
f
Doc 187297
HIGHLY CONFIDENTIAL
Return
WM 1924108
WMB or the
Bank on September 24
2008 for a
special telephonic meeting Mr
Frank and several members of
management joined the telephone call from a
conference room at WaMu Center Other members of management joined the call
from a conference room at the offices of
Simpson
Thacher
i
n New York
City
A
quorum
was present at the
beginning
of the
meeting
Mr Frank called the
meeting to order at 445
pm
Pacific Time
CEO
Update
Mr Fishman reported that
i
t had been a
relatively quiet day
At 1100 that
morning
he had received
a request to be on a call with Federal Reserve Vice Chairman Kohn
and staff from the FDIC and OTS The call occurred at 300
pm Eastern Time
Mahoney joined the call as well Questions had been asked and answered
concerning
the
proposed standalone recapitalization plan A vigorous debate
ensued on the call Mr Fishman then
reported
that he understood that the
FDIC
bidding process
was
underway
and that five bidders had
participated
Mr Fishman
dropped
off the call for
a short time due
t
o a faulty connection Mr Bonderman
continued to submit the
report He noted that
a call had been scheduled with John
Reich of the OTS at 500 Eastern Time but that Mr Reich had indicated that he
would prefer to have a conversation tomorrow
morning
Based on information
received through
media
sources and politicians i
t
appears
that all the bidders were
asking
the FDIC for assistance and were bidding on certain assets and liabilities He
reported that the
process appeared to not be going well from the FDICs
perspective
Mr Fishman
rejoined
the call
during
this discussion A
copy
of the letter from
Messrs Fishman and Frank
transmitting
the
proposed standalone
recapitalization
plan to the Federal Reserve FDIC and OTS will be
kept i
n
the Secretarys
file
Mr Frank then asked for
questions I
n
response
to a question
from Mr Smith Mr
Fishman outlined the
regulators principal questions regarding the standalone
recapitalization plan noting that achievability
of the plan was their
primary question
Mr
Leppert joined the meeting during
this discussion
Investment Bankers Update
Mr
Mahoney
then asked the Board to refer to the materials
previously provided
noting
that the
power point deck was the same material that
they
had taken the
regulators through
He directed the Boards attention to
page 10 which listed four
alternatives The first alternative was the standalone recapitalization plan
described
by
Mr Fishman the previous day and presented
to the regulators The plan had
several components the contribution
by
the
Holding Company of $4 billion
i
n cash to
the
Bank the conversion of REIT preferred shares to
Holding Company preferred
shares the restructuring
of debt and the sale
o
f
nonperforming
loans Mr
Mahoney
reviewed each
step
and that steps impact on
liquidity
and
capital
He
explained that
the first step
of
contributing cash to the Bank would not impact the Banks liquidity
because the cash was
already
held as a deposit
at the Bank
but that
i
t would
favorably impact capital
He
reported
that the
overall plan would improve the Banks
capital position by $17 billion and its
liquidity by $15 billion noting that this
point
had
Doc 187297
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Privileged
and Confidential
WMI 92408
been made to the
regulators
He then reviewed the
plan
for
restructuring
the debt
i
n
more detail including
the
categories
of securities that would be
exchanged
under
the
plan
and the estimated allocation of
preferred
and common stock to be issued
He reviewed the impact on the consolidated balance sheet and
presented a
proposed
timeline for
completion
Mr
Mahoney
then
responded
to a Directors
question regarding
the execution risk of the
plan by describing
what he
expected a
debt holders considerations would be and
why i
n his
view the offer to
exchange
would be viewed
as fair and
logical by a debt holder He reviewed the forecast of
capital and
liquidity generated by
the
plan by reviewing
the balance sheet rollforward
which showed
proforma financial metrics assuming
the
plan
had taken
place
Discussion
The Board
engaged i
n discussion
They
reviewed issues
relating to the standalone
recapitalization plan and discussed the
regulators
interests After
discussion Mr
Frank concluded that he viewed the likelihood of our
being permitted to undertake
the
recapitalization plan as
depending upon
the success of the FDICs
bidding
process
The other Directors
agreed and one of them noted that
i
t would also
depend upon
US
government policy
considerations
Minutes
Mr Frank then
reported
that the minutes for the
July
15 Board
meeting
had been
revised to reflect comments
by
Mr Stever and that a new version had been
posted
to
BoardVantage Upon a motion
duly
made and
seconded the Board
unanimously
approved
the minutes for the
July
11 Informational
Briefing and the
July 15 August
7
and September 10 Board
meetings
Executive Session
All members of
management
other than Messrs David and Fishman were then
excused so that the Board could meet
i
n executive session
They
first considered
issues related to
employees
After the discussion
concerning employee issues Ms
Montoya disconnected from
the conference line so that the Board could consider her offer to resign
due to her
change i
n
employment i
Corporate
Governance Guidelines
Mr
Leppert presented
the issue to the Board on behalf of the Governance
Committee Mr Frank recommended that the
resignation not be
accepted
After
discussion and
upon
a motion
duly
unanimously
agreed not to accept Ms
Montoyas
offer to
resign
Doc 187297 3

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WMI 92608 730 am
Board of Directors
Minutes
Date
Friday September 26 2008
Attendance
Directors Present
Stephen E
Frank Chair
David Bonderman
Stephen
I Chazen
Thomas C Leppert
Charles M Lillis
Director Absent Alan Fishman
Board Observer
Absent Larry Kellner
Phillip D Matthews
Regina T
Montoya
Michael K
Murphy
Wm G Reed Jr
Orin C Smith
James H Stever
Advisors Present
Lee
Meyerson of
Simpson Thacher Bartlett LLP
Marcia Goldstein of Well Gotshal
Manges
Michael Walsh of Weil Gotshal
Manges
Management Present
Frank Baier
John McMurray
Todd Baker John Robinson
Thomas W
Casey Michael S Solender
Daryl
D David
Robert J Williams
Stewart M Landefeld Susan R
Taylor Secretary
No
materials were provided for the
meeting
Washington Mutual Inc WMI or the
Holding
Company met on
September 26 2008 for a special telephonic meeting
Mr Frank
and all members of
management joined
the
telephonic meeting from the Executive
Doc 186364
HIGHLY CONFIDENTIAL
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Privileged
and Confidential
WMI 92608 730 am
Conference Room at WaMu Center A
quorum was present at the beginning of the
meeting
Mr Frank called the
meeting
to order at 730 am He noted that the
meeting was
solely a meeting o
f
the Board of the Holding Company since
Washington Mutual
Bank the Bank no
longer
existed
Mr Frank
reflected on yesterdays events He noted discussions with Mr Meyerson
and Ms
Wahlquist
of
Simpson Thacher and then asked the Board to determine that
the minutes should reflect that a change
i
n control had occurred Mr Frank
commented that
although
the Board and
management had not
participated i
n the
decision
triggering yesterdays events a sale of
substantially
all of the
Holding
Companys
assets had occurred The Directors agreed
Mr Frank asked Mr Landefeld to report reoardina suoaeted next stn
Redacted
Mr Meyerson then provided a factual review of
yesterdays
events He
reported
that
without prior notice other than Mr Polakoffs call representatives from the OTS
and FDIC had arrived at the
companys headquarters i
n Seattle
yesterday evening
Together they
had communicated that the FDIC had been
appointed as a receiver
for the Bank based
upon a determination that the Bank was
likely
to be unable to
pay
its
obligations
or meet its
depositors demands
i
n the normal course of business
and the
institution was i
n
an unsafe or unsound condition to transact business As
receiver the FDIC took
possession of the Bank
Immediately thereafter most of the
assets and some of the liabilities were
assigned
to
JPMorgan Chase Bank NA
JPMC i
n
exchange for $19 billion Mr
Meyerson
discussed with the Board
certain aspects of the
scope of the FDICs
receivership powers
and
procedural
issues the Board would need to decide with respect to the FDICs recent action
Ms Goldstein and Mr
Walsh
of Weil Gotshal then
joined the call Mr Landefeld
introduced them to the Board
I
n
response
to a Directors
question Messrs
Casey
and Walsh reviewed the
Holding Companys principal
assets and liabilities Mr
Walsh
reported
that the
largest asset was approximately $4 billion
i
n cash deposited
i
n an account with JPMC as successor to the Bank
Red Acted
Doc 186364
HIGHLY CONFIDENTIAL
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WMI 912608 730 am
Redacted
asked them to
join a second
meeting
at 300
pm
There
meeting
was then
adjourned
Susan R
Taylor
Mr Fran
Doc 186364
HIGHLY CONFIDENTIAL
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WMI 92608 300
pm
Board of Directors
Minutes
Special Telephonic eeting
Date
Friday September 26 2008
Attendance
Directors Present
Stephen E Frank Chair
Phillip
D
Matthews
David Bonderman
Regina T
Montoya
Stephen 1 Chazen
Alan Fishman
Michael K
Murphy
Charles M Lillis
Wm G Reed Jr
James
H
Stever
Director Absent Thomas C
Leppei
Orin C Smith
Larry
Kellner
Advisors Present
Lee
Meyerson of
Simpson Thacher Bartlett LLP
Marcia
Goldstein of Weil Gotshal Manges
Michael
Walsh of Weil Gotshal
Manges
Brian Rosen of Weil Gotshal
Manges
Management Present
Thomas W
Casey Michael S Solender
Stewart M Landefeld
Susan R
Taylor Secretary
Materials for the
meeting consisting of resolutions to terminate and elect officers
were posted to
BoardVantage earlier
i
n
the afternoon
The Board
o
f
Directors
o
f
WMI or the
Holding
Company met on September 26 2008 for a
special telephonic meeting Mr Frank
and the
management attendees
joined the telephonic meeting from the Executive
Conference Room at WaMu Center A
quorum was
present
at the
beginning
of
the
meeting
Doe 186364
HIGHLY CONFIDENTIAL
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WMl 92608 300
pm
Mr Frank called the
meeting
to order at 300
pm
He noted that the media had
reported today that JPMorgan Chase Bank NA
JPMC
held a
very large deposit
owed to the
Holding Company
Mr Frank reminded the Board that earlier
i
n the
day
they had discussed possibly withdrawing those funds Messrs Fishman and Casey
discussed the possible
benefits and risks of doing that particularly i
n
light
of the
interconnections between
Washington Mutual Banks business and operations now
being conducted by JPMC and the
Holding Company
Redacted
Doc 186364 2
HIGHLY CONFIDENTIAL
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WMI 9126108 300
pm
Messrs Solender Fishman and
Casey
then left the
meeting
Mr Landefeld noted
that he was now solely
an officer and employee of the Holding Company as
opposed
to Messrs Solender Fishman and
Casey who were all JPMC officers and
that Ms
Taylor
could
stay
and continue
taking minutes since she was
performing
an
administrative duty
r Rosen then read aloud the resolutions to
approve
the
filing by
WMI of a Chapter
11
bankruptcy petition
later that afternoon After discussion upon a motion
duly
unanimously adopted the resolutions as
presented
A
copy i
s attached to these minutes as Appendix A
Mr Frank then left the
meeting to catch an airplane
and
designated
Mr Bonderman
t
o continue
t
o chair the
meeting
There
meeting
was then
adjourned
10kSusan
R Taylor
W
Appendix A Resolutions to Approve WMI Filing of Chapter 11
Bankruptcy
Petition
Doc 186364
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WMI 92608 300
pm
Appendix
A
Resolutions to Approve WMIs Filing of Chapter 11
Bankruptcy Petition
WHEREAS Washington Mutual Inc has determined that
i
t
i
s
desirable and
i
Corporation
and its creditors employees
and other
interested
parties
that a petition
be filed
b
y
the Corporation seeking relief under the
provisions o
f
chapter 11 of title 11 of the United States Code the Bankruptcy
Code
NOW THEREFORE BE IT
RESOLVED that the Chief Executive Officer Chief Financial Officer
President and Chief
Operating Officer and any
Executive Vice President and any
other
person designated
and so authorized to act
each an Authorized
Officer
of
the Corporation be and each hereby is authorized empowered and directed inthe
name and on behalf of the
Corporation t
o execute and verify
the
petition under
chapter
11
o
f
the Bankruptcy Code and to cause the sameto be filed
i
n the United
States
Bankruptcy
Court for the District of Delaware
the Bankruptcy Court
at such
time
as
the Authorized Officer
executing the petition
shall determine and
i
t
i
s further
RESOLVED that the law firm of Weil Gotshal
Menges LLP be and
hereby
i
s employed as attorneys
for the
Corporation under a general retainer
i
n
any
such
chapter
11
case subject to the approval of the Bankruptcy Court and
i
t
i
s further
RESOLVED that the law firm of Richards Layton Finger PA be and
hereby is employed
as local counsel for the
Corporation
under a
general
retainer
i
n
any
such
chapter 1
1
case subject to the
approval
of the
Bankruptcy Court and
i
t
i
s
further
RESOLVED that the law firm of
Simpson Thacher Bartlett LLP be
and
hereby
i
s
employed a special
counsel for the Corporation under a general retainer
i
n
any such chapter
11
case subject
to the
approval
of the
Bankruptcy Court and
i
t
i
s further
RESOLVED that any
Authorized Officer be and
hereby
i
s
authorized
empowered and directed to execute and file all
petitions schedules motions lists
applications pleadings
and other
papers and i
n connection therewith to employ
and retain
a
l
l
assistance by legal counsel accountants financial advisors and other
professionals
and to take and perform any
and all further acts and deeds that such
Authorized Officer deems necessary proper or desirable in connection with the
Corporations chapter
11 case with a view to the successful
prosecution
of such
case and
i
t
i
s further
RESOLVED that
any
Authorized Officer and such other officers of the
Corporation as the Authorized Officers shall
designate
from timeto time and
any
employees or agents including counsel designated by or directed
by any
such
officers be and each
hereby
i
s authorized empowered
and directed i
n the name
and on behalf of the
Corporation to cause the
Corporation
to enter into execute
deliver certify file
andor
record and perform such
agreements instruments
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Privileged
and Confidential
WMI 92608 300
pm
motions affidavits applications
for
approvals or rulings
of
governmental or
regulatory authorities certificates or other documents and to take such other
actions as
i
n the judgment of
any
such officer shall be or become necessary
proper
and desirable to effectuate the successful prosecution of the
chapter 1
1
case
and
i
t
i
s further
RESOLVED that
any
Authorized Person be and
hereby
i
s authorized and
directed on behalf of the Corporation as parent corporation
of WMI
Investment
Corp WMI Investment
to remove each member of the Board of Directors
of
WMI
Investment and to appoint Stewart M Landefeld as a the sole member of the WMI
Investment Board of Directors and b the Executive Vice President
o
f
WMI
Investment and i
t
i
s
further
RESOLVED that
any
and all past actions heretofore taken by any
Authorized
Officer or the directors of the
Corporation i
n the name and on behalf
of the
Corporation i
n furtherance of
any or all of the
preceding
resolutions
be
and the
same
hereby are ratified confirmed and
approved
Doe 186364 A2
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WMI Confidential Limited Access
WMI 100308
Meeting of the Board of Directors
Minutes
pecial Telephonic Meeting
Date October 3 2008
Attendance
Directors Present
Stephen
E Frank
David Bonderman
Stephen I Chazen Alan H Fishman
Charles M Lillis
Regina T
Montoya
Michael K
Murphy Margaret Osrner McQuade
Wm G
Reed Jr James H Stever
Thomas C Leppert
Directors Absent
Phillip
D
Matthews
Orin CSmith
Board Observer Absent
Larry Kellner
Advisors Present
Lee
Meyerson Simpson Thacher Marcia Goldstein Weil Gotshal
Michael
Walsh
Weil Gotshal Simeon
Gold Weil Gotshal
John
Baicr Davis
Wright Tremaine
nage ment Present
Stewart M Landefeld
WMImet on October 3 2008
for
a
special telephonic meeting
John Baier of the law firmof Davis Wright Tremaine attended from
a conference room at WaMu Center and
kept minutes of the
meeting A
quorum
was
present a
t
the
beginning
of the meeting
Mr Frank called the
meeting
to order at 1140 am
PDT
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WMI 100308
Alvarez Marsal
Mr Landefeld informed the Board that Weil Gotshal had
arranged
interviews with Jay Alix of
AlixPartners Kroll Zolfo Cooper and Alvarez Marsal He and Frank Baier with Michael
Walsh and Marcia Goldstein interviewed these three firms for the
engagement of
assisting WMI
I
t d i i in i s VWIL s t on process p
uiscussion isensuea a ou w a Alvarez s
specific
rolewould be and how much they would be
compensated Mr Landefeld reported that their mandate would be
t
o
i identify and secure the
safety of WMI
assets ii wind down I and assist with the transition to JP
Morgan and
iii establish the claims of WMIs
bankruptcy estate and
develop a plan to
preserve corporate
data The Board
tentatively approved the
engagement of Alvarez subject
t
o
the Boards review
and
approval
of a final
budget and
engagement letter to be provided by Alvarez
Issues for the week of October 6 10
New Officers Mr Landefeld led the Board in a discussion about the need to hire a COO or
CEO who would
manage
the
Chapter
11
process Several names were discussed as potential
candidates and
i
t was agreed that Mr Frank would contact one of the candidates to determine
his interest The Board also discussed
whether a secondary officer should be retained who
migh
succeed the interim CEO
Update b Michael Walsh Weil Gotshal
Red acted
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MI Confidential Limiter Access
WMI 100308
Redacted
Upcoming Action Items
Mr Landefeld discussed the action items for the
upcoming week including forming a budget
and plan
for administrative
matters final Board
approval
of the
Alvarez
engagement
and a final
recommendation to the Board of
new officers
SEC Film Issues
Board Issues of compensation Board ices onsibilites
Mr Landefeld led a brief discussion about Board compensation and
expensereimbursement
issues Also discussed were status of board member indemnification and DO insurance
coverage I
t
was agreed that these issues will be
placed on the
agenda for the next Board
meeting
Aboard member further
requested that a
specific report
be made at the next
meeting
regarding the
compensation of Stephen Frank and Stewart Landefeld
The next board
meeting call was tentatively scheduled for Friday October
10 at a time to be
specified
The meeting adjourned at 1245
PDT
John B
erSecre`y
of the
meeting
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WMI 102308
Meeting of the Board of Directors
Minutes
Date October 23 2008
Attendance
Directors Present
David Bonderman
Stephen E Frank
Thomas Leppert
Charles M Lillis
Philip
Matthews
Regina T
Montoya
Michael K
Murphy
William G Reed Jr
Orin Smith
James H Stever
Directors Absent
Stephen Chazen
Alan Fishman
Board Observer
Larry Kellner
dvisors Present
Michael
Walsh Well Gotshal
Manges LLP
Marcia Goldstein Weil Gotshal
Manges LLP
Simeon Gold Weil Gotshal Manges LLP
Adam Strochak Weil Gotshal
Manges
LLP
Lee
Meyerson Simpson
Ron
Berenstain Perkins Coie LLP
Heather WightAxling Davis Wright Tremaine LLP
Officers Present
Stewart M
Landefeld Executive Vice President
Bill
Kosturos Chief
Restructuring
Officer
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WMI 102308
the Company met on October
23 2008
for a
special telephonic meeting Heather
WightAxling of the law firm of Davis
Wright
Tremaine
kept minutes of the
meeting A
quorum was present at the
beginning of the
meeting
On
Wednesday October 22 2008 the
following materials were distributed to the Board
i
agenda ii minutes of the October 17 2008 board
meeting iii banking resolutions iv a draft
motion
regarding trading restrictions and v a memorandum from Weil Gotshal
Manges
Weil regarding receivership litigation
Mr Frank called the meeting to order at 730 am PDT
Update on Hiring
Mr Landefeld
reported
that
hiring has
progressed at a slower than
anticipated pace The desired
candidate for the position of Chief Executive Officer indicated this week that he has received
competing offers and will not make a decision until the end of the
current month Mr Landefeld
pointed out that
i
n the interim Mr Kosturos
may
be
regarded as the
Companys senior officer
although there
i
s
a strong preference to have a heritage officer in
place Mr Landefeld
summarized for the Board the status of hires in seven critical
departments
Treasury Two individuals have been hired
Tax No
progress
to
report The
Company has prepared an offer
package for one individual
which
i
t will present this week JP
Morgan Chase
JPMhas identified tax as a critical need
and has been
distributing competitive packages
to members of the tax
group
Accounting The
Company
has identified a few individuals in
junior positions and will assemble
offer
packages
for them In the
meantime the new Treasury
hires have been able to meet the
Companys accounting needs at least on a shortterm basis
Legal
The
Company
has assembled offer packages for at least two individuals in senior
positions
Insurance Subsidiaries The
Company
has identified the individual who would best address the
needs of the
captive insurance
companies and has prepared an offer
package
Technology The
Company i
s
waiting on a
response to its offer to
employ an individual
i
n
a
senior position The
hope i
s
that the rest of the
technology team would follow that
person
Human Resources The
Company needs one IIR
person
Candidates are being asked to
respond promptly to the offers Most offers are for six months of
employment plus a sixtyday notice window For individuals hired to cover areas with
longer
term needs such as litigation i
t
i
s
possible they will remain in the
employ
of the
Company
for
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WMI 102308
one to three years Some discussion ensued
regarding
the
Companys urgent
needs to
i
have
a
tax team in
place
and
ii access information and
systems
Update on Chapter 11
Update on Deposits and the Stipulation with
JPM Mr Walsh
reported
that the
hearing
originally scheduled for
Monday October 20 to address the cash stipulation between the
Co p v and JPM has been nostnoned
Redhcted
Update on Tax Issues Mr Walsh next delivered a
report
on the current status of tax assets
Prior to the
filing
of the Chapter 11
petition the
Company and Washington Mutual Bank the
were parties to a tax
sharing agreemei
dacted
Banking Resolutions There was a motion for
approval of the
banking resolutions that will a
the Company to transfer funds from JPM to Wells
Fargo US and Bank of America as
soon as the Bankruptcy Court
grants access to the deposits The resolutions also allow the
o
Company
to redocument
existing
accounts at JPM and Bank ofNew York which will facilitate
the transfer of funds The motion was seconded and the resolutions attached hereto as Exhibit A
were
unanimously approved
Administrative Issues
Redacted
At
this
point Mr
eppert dropped
off
the call
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WMI 102308
Redacted
At
this
point one of the directors
dropped
off the call
PrePetition Board
Expenses Mr Landefeld then described to the
Board
how the
directors
prepetition fees and
expenses
will be addressed
by
the
Company
To the extent directors have not
already submitted
receipts for the
prepetition period
Mr Landefeld instructed the Board to send
them to Heather WightAiling
of Davis
Wright
Tremaine Mr Landefeld explained that the
directors prepetition
fees and
expenses
are
generally treated as general unsecured creditors
claims
against the chapter 1 I estate However there
may
be an exception that would allow the
directors to recover the full amount of these claims
up
to approximately $11000 Some
discussion ensued
regarding
the
procedure for seeking such
recovery
and the
timing
of
any
such
request
Mr Walsh will raise the issue with the Creditors Committee and ask for its
support
Mr Walsh concluded by regrinding the Board that postpetition fees and
expenses are ordinary
course
expenses
and will be
paid
in due
course
Status Retort on Director Compensation Mr Stever
reported that he
i
s in the process
of
evaluating how much time directors will be
expected to commit to the Company on a
postpetition basis vas a vis the
prepetition period Mr Stever
currently
estimates the commitment to
be
approximately one quarter to one half of the time but he will
report
with more conclusive
information at the next meeting of the Board In evaluating
director
compensation Mr Stever
will focus on how
much
cash retention
i
s
appropriate in light of
postpetition time commitments
relative to the total compensation paid to directors prepetition Prepetition
the
Company paid
directors a retainer of $160000 annually and additional fees for
attending
Board and Committee
meetings
and for
serving
as Chairs of Committees Mr Stever will
consider data from other
companies in
bankruptcy
and will
report how such
companies
have
compensated directors and
chairpersons during the
pendency
of such
proceedings
Board Minutes There was a motion for
approval of the minutes from the
prior
Board
meeting
held on October 17 2008 The motion
was seconded and the minutes were unanimously
approved
Securities Update
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W 11023108
Transfer
Agent Mr Gold reported that the retention of the
Companys transfer
agent costs
nearly $40000 per
month The Creditors Committee
i
s
unwilling
t
o
support the continued
retention of the transfer
agent
at this level and there
i
s little or no value to the estate in
continuing
to do so Consequently
the
Company shall terminate its retention of the transfer
agent
Redacted
Strategic Issues
Redacted
5
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WMI 102308
Redacted
At
this
point Mr Matthews
dropped
off the
calla
acted Redacted
Liti ation Investigation
Mr Landefeld had
nothing new to
report
to the Board on this
topic
Upcomne Telephonic Meetin
Thursday
October 30 at 800am PDT 1100 am EDT
Thursday November 6 at 800 am PDT 1100 amEDT
Thursday November 13 at
800 am PDT 1100 am EDT
Thursday November 20 at 800 am PDT 1100 am EDT
Wednesday November 26 at 800 am PDT 1100 ain EDT
DWT 12039407v2 0013149000106
HIGHLY CONFIDENTIAL
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WMI 102308
Dialin information
Domestic 18007821473
International 7204790947
Access Code 6193140
The next Board call will be on
Thursday
October
30 2008 at 800 am PDT
Meeting adjourned at 910 am PICT
Heather
WightAxling Secretary of the
meeting
DWT 1239407v2 0013149000106
HIGHLY CONFIDENTIAL
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W 1102308
Exhibit A
Banking
Resolutions
JP
Morgan Chase BankNA
Wells
Fargo
US Bank
Bank of New York
Bank of erica
attached
DWT 12039407v2 0013149000106
HIGHLY CONFIDENTIAL
Return
From: Brouwer, Curt
To: Anderson, Jason
S
.
US Seattle)
Sent: 8/21/2008 6:54:23 PM
Subject: Per our discussion
Attachments: Discussion Materials 032608.pdf
As we discussed, only provide this document
t
o Jimuntil we have further discussionswith Todd tomorrow.
Curt <<...>>
Curt Brouwer
Washington Mutual
Senior Vice President, Corporate Tax
1301 Second Ave., WMC3201
Seattle, WA 98101
206.500.4155 direct 206.377.3018 fax
E-mail: curt.brouwer@wamu.net
IRS Circular 230 Disclosure: To Ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal
tax advice contained in this communication including any attachments) is not intended or written to be used, and cannot be
used, for the purpose of i) avoiding penalties under the Internal Revenue Code or ii) promoting, marketing or recommending
to another party any transaction or matter addressed herein.
CONFIDENTIALITY NOTICE: This message including any attachments) is confidential and may contain sensitive information. Do
not disseminate this information to parties who do not have the authorization to view this material. If you are not the
intended recipient of this information or an employee or agent responsible for delivering this message to the intended
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I
f you have received this message in
error, please contact the sender immediately. Washington Mutual reserves the right tomonitor all e-mail. Electronic mail
sent through the Internet is not secure.
CONFIDENTIAL
Return
Project Olympic
Discussion Materials
26 March 2008
CONFIDENTIAL
Return
Summary
Project Olympic
1
Cerberus has significant interest
i
n a partnership with WaMu
Partnership will
b
e
a strategic and financial investment
Significant value created through synergies and revenue enhancement
opportunities; access
t
Material equity investment
b
y
Cerberus
Creation
o
f
SPV majority owned
b
y
Cerberus
t
o buy residuals from
securitization
o
f
higher-risk assets
WaMu acquisition
o
f
Chrysler Financial provides asset and earnings
diversification
a
s
well
a
s
substantial tangible equity capital
Cerberus team able
t
o move quickly
CONFIDENTIAL
Return
Advantages for WaMu
Project Olympic
2
Diversification
o
f
balance sheet and business
Mortgage loans fall from ~73%
o
f
loans
t
o ~57%
o
f
loans
o
n
a managed basis: adds auto, and
expands commercial and small business loans
Exclusive access
t
o
a
l
l
subvented automotive loans and leases through 9 year exclusivity
agreement with Chrysler
$
7
5
billion managed auto loan portfolio; $
4
0
billion on-balance- sheet portfolio
Improved diversification will improve valuation
i
n public market
Minimal auto lease residual risk (0.5%)
SPV accelerates problem asset disposition
Utilization
o
f
significant excess capital
a
t
Chrysler Financial
Chrysler Financial has tangible common equity
o
f
$7.4Bn( 1
)
resulting
i
n a tangible common
t
o
tangible assets ratio
o
f
17%
Value creation through synergies
Access
t
o 3.6 millioncustomers and over 3,000 dealerships (both Chrysler and non- Chrysler
dealers)
Ability
t
o create affinity branded credit card, deposit and other products
Potential cost saves from combining certain servicing functionality
Access
t
o new capital
Cerberus willing
t
o invest additional capital
i
n new company
Note
1
.
t
CONFIDENTIAL
Return
Resulting Ownership( 1
)
WaMu ownership split between current WaMu
shareholders, Chrysler Holding and Cerberus
Proposed Structure
Project Olympic
3
Transaction Steps
WaMu issues shares
t
o Chrysler Holding
i
n exchange
for Chrysler Financial
Chrysler Financial sold
t
o WaMu
a
t
tangible book
value
Cerberus purchases $500 million
o
f
newly issued
WaMu equity
Daimler
Public
Shareholders
100%
Chrysler
Financial
TBV: $ 7.4Bn
Cerberus
20% 80%
$7.4Bn
Shares
WaMu
Public
Shareholders
Chrysler
Holding
Chrysler
Financial
WaMu
For illustrative purposes, we
have used WaMus current
market cap
o
f
$11.2 billion
based
o
n
3
/
25/
0
8
stock price
o
f
$12.70
t
o calculate pro
forma ownership
percentages
Cerberus willing
t
o work with
OTS on structuring
investment
SPV
WaMu writes-down
t
o
current value and
securitizes up
t
o $48 billion
o
f
higher-risk loans
Cerberus creates wholly
owned SPV
t
o buy
residuals interest
i
n the
trust and WaMu retains the
most senior tranches
$
0.5Bn
$
0.5Bn
shares
Note
1
.
Based
o
n market cap
a
t
3
/ 25/ 08
Chrysler
Holding
Cerberus
Pro Forma Ownership
Valuation
(
$ MM) %Ownership
Existing WaMu (Current Market Cap) $ 11,207
(
1
)
58.7%
ChryslerFinancial ( Tangible Book) 7,387 38.7%
New Raise ( Cerberus) 500 2.6%
Total $ 19,094 100.0%
Assuming Subsequent Distribution Cerberus 33.6%
o
f
Shares
b
y Chrysler Holding: Old Shareholders 58.7%
Daimler 7.7%
Total 100.0%
CONFIDENTIAL
Return
Retail Financing
48%
Operating Lease
28%
Dealership
Financing & Other
25%
Portfolio
b
y
Product
%
o
f
$
7
5
billion 12/ 31/
0
7
Chrysler Financial: A Leading Auto Lender
Project Olympic
4
Overview
Leading provider
o
f
financial services for dealers
and customers
o
f
the Chrysler, Dodge and Jeep
brands
$
7
5
billion managed portfolio ( Avg FICO: 705)
Over 2.7 million consumer loans and over
900,000 leases serviced (3.6 million total
customers) with avg. transaction size
o
f
~
$
25,000
Over 3,000 dealers serviced
4,150 employees
Broad presence across the Americas, with
operations
i
n the
U
.
S
.
,
Canada, Mexico,
Venezuela and Puerto Rico
Major products are retail loans, leases and
dealership finance plans
Includes Business Vehicle Finance (BVF)
business with $1.6 billion
o
f
assets which serves
small businesses
2008E pre-tax income
o
f
$459 million and
12/ 31/
0
7
tangible book value
o
f
$7.4 billion( 1
)
Estimated earning asset yield
o
f
8.4%( 2
)
U
.
S
.
83%
Canada
14%
Mexico
2%
Other 1%
Portfolio
b
y
Region
%
o
f
$75 billion 12/ 31/ 07
Notes
1
.
t
2
.
Assets are originated
a
t
fixed rate
CONFIDENTIAL
Return
Auto
17%
Card
8%
Mortgage
57%
Commercial
19%
Pro Forma 12/ 31/
0
7
Managed Loans
%
o
f
$335Bn
Provides Diversification and Capital Strength
Project Olympic
Notes
1
.
2
.
Assumes 2008 provision
o
f
$13Bn
3
.
Pro forma for $500 million
o
f
new equity issued
t
o Cerberus
4
.
Based
o
n
a
ll
balance sheet loans plus securitized credit card portfolio 5
Card
10%
Mortgage
73%
Commercial
17%
WaMu 12/ 31/ 07 Managed Loans( 4
)
%
o
f
$260Bn
Mortgage assets decrease
from 73%
t
o 57%
Auto assets represent 22%
o
f
managed loans (5% included
i
n Commercial)
Significant capital creation
$6.0 billion
o
f
capital
created above current
WaMu tangible common
ratio
12/ 31/ 07A 12/ 31/ 08P Mid Case
(
2
)
PF + PF +
WaMu CF New Raise
(
3
)
WaMu New Raise
(
3
)
Tangible Equity / Tangible Assets(
1
)
6.6% 17.0% 8.0% 5.6% 7.2%
Tangible Common Equity / Tangible Assets 4.3% 17.0% 6.0% 3.1% 5.1%
Capital Above 5.50% TE/ TA
(
$ MM) 9,026 5,955
Capital Above 4.75% TC/ TA
(
$ MM) 4,453 1,218
Capital Created Above Current WaMu TC/ TA
(
$ MM) 5,970 6,822
CONFIDENTIAL
Return
Benefits
o
f
Asset Diversification
0.03
R
2
Correlation between Mortgages and Prime Auto
Project Olympic
6
0.00
2.00
4.00
6.00
8.00
Apr-
8
9 Dec-
9
0 Aug-92 Apr- 94 Dec-
9
5 Aug-
9
7 Apr-
9
9 Dec- 00 Aug- 02 Apr-04 Dec-
0
5 Dec- 07
Credit Card Mortgages Prime Auto
Historical Industry Charge- Offs
(%)
Sources Moodys, FDIC
5.10%
1.21%
0.49%
Net Charge-Offs
(%)
Credit Prime
Card Mortgages Auto
Current 5.10 0.49 1.21
1
-
Y
r
Avg. 4.67 0.26 0.79
5
-
Y
r
Avg. 5.54 0.13 0.87
10-
Y
r
Avg. 5.80 0.12 1.10
CONFIDENTIAL
Return
GAAP EPS Accretion/( Dilution)
$
2009E EPS (Mid-Case) 1.12 2009E EPS (Mid-Case) 1.12
With $4Bn Capital Raise @ $12.70 0 .83 Pro Forma with Chrysler ex Synergies
(
2
)
0.97
With $4Bn Capital Raise @ $10.00 0 .78 Pro Forma with Chrysler
w
/
Synergies
(
3
)
1.20
%Change
v
s
Standalone 7%
v
v
Accretive
t
o
Earnings Relative
t
o
Equity Issuance
Project Olympic
7
~
$
570 millionpre-tax synergy
run-rate potential( 1
)
45-55% less dilutive
Notes
1
.
Based
o
n funding synergy
o
f
1.5%applied
t
o $38Bn debt. Share
o
f
i
s subject
t
2
.
Assumes Chrysler Financial adjusted earnings and 5% net income growth from 08 plan. $12.70 per share issuance price (
3
/ 25/ 08 market price)
3
.
$ 570 million pre-tax synergies taxed
a
t
38%
CONFIDENTIAL
Return
Potential Synergies
Project Olympic
8
Potential
t
o cross- sell additional products (
e
.
g
.
,
deposits, mortgage)
3.6 million current Chrysler Financial customers
Opportunity
t
o increase ChryslerFinancials penetration rate with lower
cost
o
f
funds and broader product offering
Current US penetration rate
i
s 41%
o
f
Chrysler Automotive retail sales, while
universe
o
f
potential customers
i
s 92% (excluding 8% cash buyers)
This 51%penetration rate opportunity equates
t
o over 900,000 annual contract
originations and over $
2
5
billion
o
f
annual originations
Additional opportunities
i
n Canada, Mexico and Puerto Rico
Access
t
o a network
o
f
over 3,000 dealers (including over 2,500 US dealers,
390 Canadian dealers and 175 Mexican dealers)
Over 60%
o
f
dealers are multi-franchised; dealer count includes over 400 non-
Chrysler dealers
Access
t
Cerberus companies currently employ over 250,000 people and have millions
o
f
customers
On-going auto asset generation
t
o diversify WaMu origination platform
CONFIDENTIAL
Return
Current Capital Structure
Project Olympic
9
Chrysler Financial Funding
$Bn
Funding:
$5.8 Bank debt
(
$ 2Bn) L+400 and
(
$ 4Bn)
L
+
650
Existing term loans would need
t
o
b
e
refinanced
a
t
closing
$28.0 Bank conduit and ABS facilities
Chrysler Financial would continue
t
o draw down on these facilities until the close
o
f
a transaction
a
t
which point the facilities would term-out (facilities would liquidate
over
3
-
5 years
a
s
the assets liquidate, with
n
o
capacity for new originations)
- As the securitizations roll off, the Company would require new financing sources
t
o fund ongoing operations
- Average life
o
f
retail loans and leases
i
s 2.5- 3 years; average life
o
f
wholesale
loans
i
s 3 months
$7.4
(
1
)
Tangible equity
Note
1
.
t
CONFIDENTIAL
Return
Project Olympic
rITOTOMMOT W
Detailed Pro Forma Financials
CONFIDENTIAL
Return
12/ 31/ 07A 12/ 31/ 08P
Mid Case
$ MM WaMu CF New WaMu WaMu CF New WaMu
Goodwill &Other Intangibles 7,675 - 7,675 7,675 - 7,675
AFS securities 27,540 86 27,626 NA NA NA
Loans ( includes HFS) 249,789 39,987 289,776 239,268 NA NA
Other tangible assets 42,909 3,471 46,380 59,520 42,618 341,406
Total Assets 327,913 43,544 371,457 306,463 42,618 349,081
Deposits 181,926 - 181,926 189,855 - 189,855
Unsecured debt 38,958 5,796 44,754 31,938 5,248 37,186
Secured debt 63,852 28,000 91,852 52,346 25,354 77,700
Other Liabilities 14,674 2,361 17,035 8,052 4,344 12,396
Total Liabilities 299,410 36,157 335,567 282,191 34,946 317,137
Minority Interest 3,919 - 3,919 3,917 - 3,917
Preferred Equity 3,392 - 3,392 3,392 - 3,392
Common Equity 21,192 7,387 28,579 16,963 7,672 24,635
Liabilities and Equity 327,913 43,544 371,457 306,463 42,618 349,081
Key Ratios
$500MM New
Raise
$ 500MM New
Raise
Loans / Deposits
1.37x 1.59x
Deposits / Total Assets 55.5% 49.0% 62.0% 54.4%
Common Equity / Total Assets 6.5% 17.0% 7.7% 7.8% 5.5% 18.0% 7.1% 7.2%
Tangible Equity / Tangible Assets
(
1
)
6.6% 17.0% 7.9% 8.0% 5.6% 18.0% 7.1% 7.2%
Tangible Common Equity / Tangible Assets 4.3% 17.0% 5.8% 6.0% 3.1% 18.0% 5.0% 5.1%
Preferred as a %
o
f
Tangible Equity 35.1% 25.9% 25.5% 44.0% 0.0% 30.1% 29.5%
Project Olympic
1
0
Additional common equity
provides capacity for
preferred
Note
1
.
CONFIDENTIAL
Return
2008E Pro Forma Income Statement
WaMu New WaMu
$MM (Mid Severity) CF Synergies
(
1
)
with Synergies
Net interest margin 8,829 8
8
7 570 10,286
Provisions 13,050 4
5
0 - 13,500
Gross margin ( 4,221) 4
3
7 570 (3,214)
Non- interest income 5,779 7
9
9 - 6,578
Non- interest expense 8,220 7
7
7 - 8,997
Income before taxes ( 6,662) 4
5
9 5
7
0 (5,633)
Minority interest 305 - - 305
Taxes ( 2,885) 174 217 (2,494)
Net income ( 4,082) 2
8
5 3
5
3 (3,444)
Plus: provisions 13,050 4
5
0 - 13,500
Plus: insurance losses - 77 - 77
Plus: taxes ( 2,885) 1
7
4 217 (2,494)
Plus: incremental NIM
o
n new capital raised 18 - - 18
Plus: incremental cost cutting savings - 29 - 29
Subtotal 6,101 1,015 5
7
0 7,686
Less: normalized provision ( 500) (310) - (810)
Less: preferred dividends ( 260) - - (260)
Adjusted earnings before taxes 5,341 7
0
5 570 6,616
Taxes 2,514
Adjusted net income 4,102
Pro Forma Income Statement
Project Olympic
1
1
Note
1
.
Based
o
n funding synergy
o
f
1.5%applied
t
o $38Bn debt. Share
o
f
i
s subject
t
CONFIDENTIAL
Return
Project Olympic
Chrysler
Financial Overview
CONFIDENTIAL
Return
Product Overview: Customer Financing and Leasing
Project Olympic
1
2
Retail Lease
Portfolio
(
$ bn) $34.4 $22.0
%
o
f
total 46.0% 29.4%
Origination volume
(
$ bn) $17.5 $10.5
3-year CAGR (8%) 19%
Penetration rate 28.5% 20.5%
Net chargeoff ratio (US) 1.30% 1.09%
Description Majority
o
f
portfolio
i
s conventional
financing with equal monthly payments up to
72 months
New and used motor vehicles
Subvented rates offered via Chrysler
Automotive marketing efforts
Fixed rate simple interest loans
Specialized offerings include: delayed
payment options, College Graduate Finance
Plan, Chrysler Financial Plus (balloon note
with buyback option), Farmer Payment Plan
and other niche programs
Conventional lease program
u
p
t
o 48 months
new Chrysler Automotive products only
Subvented payments offered via Chrysler
Financial marketing programs
Customer EOT options: return vehicle
(subject
t
o contractual charges), exercise
purchase option ( contract residual)
Customers may be offered lease extensions

o
n
lease- to-retail conversions for loss
mitigation purposes
Note: As
o
f
Include balloon note financing
CONFIDENTIAL
Return
Product Overview: Dealer Financing
Project Olympic
1
3
Floor plan Capital loans and Real estate Dealer Rental Car ( DRAC)
Portfolio
(
$ bn) $13.7 $2.2 $ 0.1
%
o
f
total 18.4% 3.0% 0.1%
Penetration rate 74.6% NA NA
Description

Dealer inventory financing
new and used vehicles
for Chrysler Automotive and
non- Chrysler Automotive
dealers
Rates tied to sales volume

and total financing
relationship
Rates based on either LIBOR
or prime, depending on
dealer relationship size
Provides dealer with working

capital needs
Typical capital loan
i
s 60 months
level monthly principal payments
plus interest
Some revolving lines offered on an
interest only basis
Rate
i
s new floorplan rate +
additional margin
Typical real estate loans are fixed

rate, 20- year amortization with
rate / loan renewed
a
t
5
-
year
intervals (indexed to
5
-
year T-bills)
Financing for Dealer Rent- A-

Car program
Vehicles are normally used
a
s
service loaners
Some dealers use program
t
o
run local daily rental
companies
Various incentives may
include upfront allowances
and guaranteed depreciation
Dealer pays monthly
amortization payments,
interest and insurance
Dealer financing
Dealer financing
Note: As
o
f
CONFIDENTIAL
Return
Product Overview: Small Business and Fleet Financing
Project Olympic
1
4
Business Vehicle Finance (BVF) Fleet
Portfolio
(
$ bn) $1.6 $0.7
% of total 2.2% 0.9%
Origination volume
(
$ bn) $1.0 $0.8
3-year CAGR 84.0% NM
Description Retail and lease financing for small
t
o medium size businesses
Tailored terms and conditions
t
o
meet customer needs
Currently integrated with DC Truck

Financial
i
n Chicago for
underwriting, customer service and
collections
Two primary customer groups daily
rental companies and dealer in-house
lease companies
Chrysler Financial receives monthly
payments simple interest on daily
outstandings plus principal amortizations
on individual vehicles
Fleet companies manage all customer

contacts and collections
Note: As
o
f
o
r
for the year ended 12/ 31/ 07
CONFIDENTIAL
Return
Portfolio Statistics
b
y
Country
Project Olympic
1
5
End
o
f
Period On- Balance Consumer Wholesale
Net Managed Sheet Penetration Penetration
Portfolio Portfolio Rate Rate
1
U
.
S
.
Consumer: Retail (new &
used), Lease $43,990 $28,217 48.1% 75.0%

Loan, Real Estate, Dealer
Rental $13,117 $6,385
financing, Business Vehicle $2,156 $2,156
Canada Consumer: Retail (new &
used), Lease
2
$10,548 $175 81.8% 87.1%

Loan, Real Estate $2,297 $512

financing $207 $207
Mexico Consumer: Retail (new &
used), Lease $1,359 $1,359 48.6% 100.0%
Loan $513 $513
Puerto Rico Consumer: Retail (new &
used), Lease $252 $252 36.4% 55.5%
Loan $
3
3 $
3
3
Venezuela Consumer: Retail (new &
used), Lease $109 $109 9.9% 96.0%
Loan $
6
9 $
6
9
Total $74,650 $39,987 51.0% 77.0%
(
1
)
Based on Field Stocks ( units)
(
2
)
Includes Gold Key Leases held
a
t
OEM
12/ 31/
0
7
$MM
Portfolio
State
(
$ billion) Percent
Texas 3.3 12.9%
California 2.1 8.1%
Florida 1.4 5.5%
Illinois 1.0 3.8%
Other 16.8 65.0%
Total 25.8 100.0%
Portfolio
State
(
$ billion) Percent
Michigan 5.3 33.5%
New York 1.8 11.7%
Ohio 1.2 7.8%
Florida 0.9 5.8%
Other 5.7 36.0%
Total 15.8 100.0%
Portfolio
State
(
$ billion) Percent
Texas 1.8 13.8%
California 1.0 7.6%
Florida 0.9 6.7%
Michigan 0.7 5.6%
New York 0.6 4.3%
Other 8.1 62.0%
Total 13.1 100.0%
US Retail Portfolio - Top 5 States (12/ 31/ 07)
US Lease Portfolio - Top 5 States (12/ 31/ 07)
US Dealer Portfolio - Top 5 States (12/ 31/ 07)
CONFIDENTIAL
Return
Project Olympic
Chrysler
Automotive Overview
CONFIDENTIAL
Return
12.6%
12.9% 13.2%
12.6%
13.1%
14.9%
16.0%
17.0%
19.9%
24.6% 24.9%
14.6%
24.0%
25.7%
28.1%
30.6%
33.7%
23.3%
4%
9%
14%
19%
24%
29%
34%
'
9
2 ' 93 ' 94 '
9
5 ' 96 '97 ' 98 ' 99 ' 00 ' 01 '
0
2 ' 03 '04 ' 05 ' 06 ' 07
* - Includes Jobs Bank
** - Only reflects 8,400 hourly workforce reduction due
t
o RTP II.
Salary
Manpower
Hourly
Manpower
Total
Manpower
(000 s Headcount)
45.2
53.6
61.0
21.5
19.1
19.1
' 06 Actual ' 07 Actual ' 08 PF
82.5 *
72.7 *
64.3
*
*
Chrysler Automotive Strong Recent Performance
Project Olympic
1
6
Stability
i
n
U
.
S
.
geographic segment share since 92 relative
t
o significant declines
i
n other big Detroit competitors
Strong balance sheet with $9.7 billion unrestricted cash
Broad and diverse dealer base over 3,000 dealers
i
n the
U
.
S
.
Strong product line up supported by key new vehicle release 2008 minivan, 2009 Dodge Ram truck, 2009 Dodge
Journey
Well positioned
i
n growing international geographical segments
Rationalization
o
f
legacy cost base
GM
Ford
Chrysler
Rationalized cost base
U
.
S
.
Geographical Segment Total (1992 - 2007)
Performance Highlights
CONFIDENTIAL
Return
Project Olympic Chrysler Automotive Overview
1
7
2007 Actual
v
s
2008 Plan
Actual
2007
Plan
2008
2008 H/(
L
)
2007
Total Geographical Segment Share (%) 12.6 11.5 ( 1.1 pts)
SAAR (MM
o
f
units) 16.4 15.5 (0.9)
Worldwide Shipments (000s) 2,610 2,344 (266)
Net Revenue
(
$ Bn) 59.7 58.1 (1.6)
Fixed Cost
(
$ Bn) 14.5 12.9 (1.6)
EBITDA
(
$ Bn) 1.6 2.0
(
2
)
0.4
OpProfitDA
(
$ Bn) 2.2 2.9 0.7
Cash
(
$ Bn) 9.7 7.4 (2.3)
Estimated Dealer Inventory ( yr-end) 000s 438 325 (113)
CAPEX
(
$ Bn) 3.1 3.0 (0.1)
Notes
1
.
Preliminary and un-audited financial results
2
.
2008 business plan EBITDA
o
f
$ 2.0Bn
i
s unchanged fromthe original Investment Plan
(
1
)
CONFIDENTIAL
Return
FinCo / CarCo Relationship
Project Olympic
1
8
ChryslerAutomotive
(
Carco) provides subvention programs exclusively

through Chrysler Financial
(
Finco)
Carco makes
a
l
l
rate subvention payments (
i
n the case
o
f
below-market APR
incentives) upfront
t
o Finco, while residual subvention payments (
i
n the case
o
f
residual enhancements
o
f
leases) are made over the life
o
f
the lease
Payments are based upon a guaranteed 1.25% ROA for Finco and are discounted
back
a
t
Fincos marginal cost
o
f
funds
Finco carries minimal (0.5%) residual value exposure
When off- lease vehicles are remarketed, the first 1%
o
f
any gain/ loss (relative
t
o
original ALG estimate
a
t
lease inception)
i
s split 50/
5
0
between Carco and Finco
All losses
o
r
gains beyond the 1% threshold are assumed
b
y
Carco
FinCo benefits froma $1.5 billion cash collateral account which supports
a
l
l
Cash collateral account
i
s held
b
y
Carco and exists solely for the benefit
o
f
Finco
The main exposure this account supports
i
s the risk
o
f
a significant decline
i
n
residual values (since Finco
i
s relying
o
n
Carco for reimbursement
o
f
any residual
losses)
Even under stressed residual value assumptions, this $1.5 billion account
i
s
expected
t
o
b
e
sufficient
t
o cover
a
l
l
CONFIDENTIAL
Return
WMI Financial
OverviewBoard
o
f
DirectorsMarch
5
,
2008
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500001734.00001
Return
BOD Financial Summary WaMuInternal UseOnlyConfidential Material 2
Income Statement
(
$
M
)
2008200920102011201220082009201020112012Net
Interest Income9,020 8,258 7,582 7,683 8,134 9,020 8,709 8,387 8,011 8,249
Provision10,500 3,900 2,200 1,700 1,800 12,500 7,300 5,000 2,700 1,800
Noninterest Income6,263 6,754 7,201 7,741 8,321 6,263 6,754 7,201 7,813 8,477
Non Interest Expense8,500 8,500 8,627 8,886 9,153 8,500 8,755 8,763 8,898 9,165
Net Income( 2,248) 1,741 2,621 3,198 3,633 (3,490) (355) 1,224 2,797 3,802
EPS(2.88)$ 1.66$ 2.67$ 3.21$ 3.80$ ( 4.31)$ ( 0.68)$ 1.03$ 2.68$ 3.46$
ROA-0.71% 0.58% 0.92% 1.12% 1.21%-1.11%-0.12% 0.43% 0.98% 1.27%
NIM3.22% 3.11% 3.02% 3.06% 3.07% 3.22% 3.28% 3.34% 3.19% 3.11%
ROCE-12.77% 7.75% 11.75% 15.30% 16.77%- 19.72%-3.67% 5.76% 13.91% 18.38%
Select Balance Sheet
(
$
B
)
Ending Assets307.0 292.7 277.0 292.7 305.5 307.0 292.7 277.0 292.7 305.5
Deposits197.9 203.8 209.9 216.2 222.7 197.9 203.8 209.9 216.2 222.7
Dividend0.60$ 0.60$ 1.07$ 1.28$ 1.52$ 0.60$ 0.60$ 0.60$ 0.60$ 1.38$
Buybacks/ Equity Issue- - 0.98 1.40 1.80 - - - - -
Capital
RatiosTE/
TA6.10% 6.85% 7.53% 7.41% 7.33% 5.69% 5.68% 6.28% 6.73% 7.32%
TCE/
T
A (Target 4.75%) 3.67% 4.26% 4.75% 4.75% 4.75% 3.25% 3.09% 3.50% 4.08% 4.74%
Excess capital @ 4.75%TCE
(
$ B)(3.25) (1.40) 0.01 0.01 0.00 (4.50) (4.75) (3.38) ( 1.92) (0.03)
Tier I Leverage (Target 6.0%) 6.10% 6.81% 7.43% 7.29% 7.19% 5.69% 5.63% 6.19% 6.62% 7.18%
Tier I RWA (Target 7.5%) 7.49% 8.40% 9.26% 9.10% 8.98% 6.98% 6.87% 7.63% 8.26% 8.97%
Low CreditHighCredit
Base Case Current Business
ModelAssumptionsFinancialsObservations
2008 Low credit represents
plan
No material changes
t
o business
model
Depositor fee growth
a
t
10% compounded over 5
years
CumLoss through 2010
i
n low credit
a
t
$12.3B &$18.8B
i
n high
credit
Expense levels grow with inflation
o
f
3%, adjusted
f
o
r
lower REO expenses starting
i
n 2009
i
n the low credit
scenario and
i
n 2010
i
n the high credit
scenario
Return dividend
t
o 40% payout
a
s
earnings and equity
levels
allow
Manage TCE/
T
A
@ max
o
f
4.75% through share
buybacks
Balance sheet declines through
2010
ROA recovers
i
n 2010
i
n low credit, not until 2011
i
n the
high credit
case
Key capital ratios severely below target
i
n either the low
o
r
high credit
cases
Quarterly capital ratios likely below year end estimates
i
n
2010
Requires additional capital, and management
actions
Will result
i
n rating agency downgrades
CONFIDENTIAL
Return
Income Statement
(
$
M
)
2008200920102011201220082009201020112012Net
Interest Income8,883 8,416 7,738 7,561 7,419 8,883 8,867 8,469 7,822 7,419
Provision11,050 3,875 1,800 1,933 1,832 13,050 7,075 4,400 2,582 1,932
Net Income( 2,806) 2,007 3,228 3,158 3,288 ( 4,048)
4
2
1,914 2,896 3,214
EPS(3.52)$ 1.97$ 3.20$ 3.35$ 3.79$ ( 4.95)$ ( 0.24)$ 1.77$ 2.79$ 3.26$
ROA-0.89% 0.67% 1.13% 1.16% 1.28%-1.28% 0.01% 0.67% 1.07% 1.25%
NIM3.16% 3.17% 3.07% 3.19% 3.32% 3.16% 3.34% 3.36% 3.30% 3.32%
ROCE-19.31% 9.10% 15.86% 15.60% 16.69%- 28.23%-1.29% 9.41% 13.82% 15.00%
(
$
B
)
Ending Assets
(
$
B
)
306.0 293.2 279.0 263.2 251.9 306.0 293.2 279.0 263.2 251.9
Deposits189.9 173.9 179.1 184.4 190.0 189.9 173.9 179.1 184.4 190.0
Dividend0.20$ 0.20$ 1.28$ 1.34$ 1.52$ 0.20$ 0.20$ 0.71$ 1.12$ 1.30$
Buybacks/ Equity Issue- - 1.83 2.86 2.75 - - - 0.22 2.53
Capital
RatiosTE/
TA6.05% 6.98% 7.50% 7.72% 7.89% 5.64% 5.86% 6.65% 7.72% 7.89%
TCE/ TA (Target 4.75%) 3.61% 4.40% 4.75% 4.75% 4.75% 3.19% 3.27% 3.89% 4.75% 4.75%
Excess capital @ 4.75% TCE
(
$ B)(3.42) (1.02) (0.01) 0.01 (0.00) (4.66) (4.23) (2.34) 0.00 0.01
Tier I Leverage ( Target 6.0%) 6.03% 6.91% 7.39% 7.55% 7.67% 5.62% 5.80% 6.54% 7.55% 7.67%
Tier I RWA (Target 7.5%) 7.40% 8.54% 9.22% 9.51% 9.74% 6.90% 7.11% 8.08% 9.53% 9.78%
One Notch Ratings Downgrade Mgmt Actions/ No
CapitalAssumptionsFinancialsObservations
Net income profile
improves
Growth
i
n card balances improves NIM, but further
challenges capital
ratios
Reduced HLs production drives lower balance
sheet
Management actions insufficient
t
o address capital
shortfall
Further downgrade likely
i
n high credit
scenarioImpacts:
Ratings downgrade triggers deposit runoff
o
f
$
8
B
i
n
0
8
and
0
9
,
lowers NIM
b
y
10bps
Access
t
o card securitizations market limitedthrough
2009, bringing card assets
o
n
the balance sheet
(
$
7.5B
i
n
0
8
and $3.5B
i
n 09)
Reduces excess liquidity down
t
o $10B
t
o $
20B
Retail deposit fee income declines
t
o 8%
Management Actions:
Reduced dividend
t
o $0.20 until earnings and capital
levels
recover
Exit HLs wholesale lending and standalone retail
channel driving $650M annualized expense saves
CONFIDENTIAL
Return
One Notch Ratings Downgrade Mgmt Actions / $4B
Same
a
s
prior
page
Issued $
4
B
i
n common equity
a
t
Goldman Sachs and
Lehmans estimate
o
f
$8 per
share
Significant dilution
t
o current
shareholders
Achieve key capital ratios
i
n low credit
scenario
Key capital ratios below target until 2010
i
n high credit
scenario
Additional downgrade likely
i
f credit exceeds high
scenarioIncome
Statement
(
$
M
)
2008200920102011201220082009201020112012Net
Interest Income8,883 8,416 7,738 7,561 7,419 8,883 8,867 8,469 7,822 7,419
Provision11,050 3,875 1,800 1,933 1,832 13,050 7,075 4,400 2,582 1,932
Net Income( 2,806) 2,007 3,228 3,158 3,288 (4,048)
4
2
1,914 2,896 3,214
EPS(2.46)$ 1.34$ 2.50$ 2.67$ 3.04$ ( 3.46)$ ( 0.16)$ 1.19$ 2.05$ 2.50$
ROA-0.89% 0.67% 1.13% 1.16% 1.28%-1.28% 0.01% 0.67% 1.07% 1.25%
NIM3.16% 3.17% 3.07% 3.19% 3.32% 3.16% 3.34% 3.36% 3.30% 3.32%
ROCE-17.18% 8.06% 14.23% 14.32% 15.38%- 25.02%-1.05% 8.00% 13.02% 15.01%
(
$
B
)
Ending Assets
(
$
B
)
306.0 293.2 279.0 263.2 251.9 306.0 293.2 279.0 263.2 251.9
Deposits189.9 173.9 179.1 184.4 190.0 189.9 173.9 179.1 184.4 190.0
Dividend0.20$ 0.54$ 1.00$ 1.07$ 1.21$ 0.20$ 0.20$ 0.48$ 0.82$ 1.00$
Buybacks/ Equity Issue(4.00) 2.38 2.70 2.71 2.58 (4.00) - 1.48 2.58 2.53
Capital
RatiosTE/
TA7.36% 7.34% 7.50% 7.71% 7.89% 6.95% 7.20% 7.51% 7.71% 7.89%
TCE/
T
A (Target 4.75%) 4.92% 4.75% 4.75% 4.75% 4.75% 4.50% 4.61% 4.75% 4.75% 4.75%
(
$
B
)
0.51 0.01 (0.01) (0.00) (0.00) (0.73) (0.40) 0.01 (0.00) 0.01
Tier I RWA (Target 7.5%) 9.00% 8.97% 9.22% 9.50% 9.74% 8.49% 8.73% 9.13% 9.53% 9.77%
CONFIDENTIAL
Return
Income Statement
(
$
M
)
2008200920102011201220082009201020112012Net
Interest Income8,602 8,136 7,580 7,600 7,658 8,602 8,587 8,315 7,873 7,675
Provision11,050 3,875 2,075 2,208 2,107 13,050 7,075 4,675 2,857 2,207
Net Income( 2,981) 1,762 2,737 2,639 2,730 (4,223) (204) 1,426 2,385 2,668
EPS(2.60)$ 1.13$ 2.03$ 2.15$ 2.43$ ( 3.60)$ ( 0.33)$ 0.82$ 1.58$ 1.95$
ROA-0.95% 0.59% 0.95% 0.95% 1.03%-1.34%-0.07% 0.50% 0.86% 1.00%
NIM3.06% 3.06% 2.99% 3.14% 3.30% 3.06% 3.23% 3.28% 3.25% 3.31%
ROCE-18.25% 6.84% 11.63% 11.61% 12.29%- 26.17%-2.26% 5.68% 10.37% 11.98%
(
$
B
)
Ending Assets
(
$
B
)
306.0 293.2 282.6 270.2 262.2 306.0 293.2 282.6 270.2 262.2
Deposits185.9 173.9 179.1 184.4 190.0 185.9 173.9 179.1 184.4 190.0
Dividend0.20$ 0.45$ 0.81$ 0.86$ 0.97$ 0.20$ 0.20$ 0.33$ 0.63$ 0.78$
Buybacks/ Equity Issue(4.00) 1.35 2.93 2.25 2.08 (4.00) - 0.60 2.10 2.05
Capital
RatiosTE/
TA7.31% 7.59% 7.47% 7.63% 7.77% 6.89% 7.05% 7.47% 7.63% 7.76%
TCE/
T
A
(Target 4.75%) 4.86% 5.00% 4.75% 4.75% 4.75% 4.45% 4.46% 4.75% 4.75% 4.75%
(
$
B
)
0.33 0.72 0.00 (0.00) 0.01 (0.91) (0.82) 0.00 (0.00) (0.00)
Tier I RWA (Target 7.5%) 8.93% 9.27% 9.16% 9.39% 9.56% 8.42% 8.55% 9.08% 9.41% 9.58%
Two Notch Ratings Downgrade Mgmt Actions / $4B
Two notch downgrade
t
o below investment grade
triggers deposit runoff
o
f
$12B
i
n
0
8
and
0
9
,
reducing
NIM
b
y
20bps
Access
t
o card securitization market limitedthrough
2012 bring a total
o
f
$21B
o
n
balance
sheet
Deposit fee growth declines
t
o 5%growth given deposit
runoff, and below investment grade
rating
Reduces excess liquidity
t
o $0
t
o $
5B
Significant dilution
t
o current shareholders
Key capital ratios below target until 2010
i
n high credit
scenario
ROCE below cost
o
f
capital
CONFIDENTIAL
Return
Corporation Return
r
year
2009 or year beginning ending
A Check
i
t
1a contw+oale
istua+ Fpm 45
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dated alum
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HIGHLY CONFIDENTIAL
Return
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HIGHLY CONFIDENTIAL
Return
022307 1 1136 FAX 206 553 5475 OTS SEA E
004
February 7 2007
FPCE OF 1
N
CONFIDDM
Darrel Dochow
Deputy Regional Director West Re
Office of Thrift Supervision
10 1 Stewart t
S uit 1010
Seattle WA 98 11048
REQUESTED
Re
Washington
Mutual Bank Docket Number 08551 Reques
confirmation of
capital
treatment of additional class preferred stock
Dear Mr oc o
behalf of
I
J and Washington Mutual Bank the
Association
I writing
with reference to the
notice filed January 30 2
by
the Association to establish new subsidiary Washington Mutual Preferred
Funding LILC Ffor the
purpose
of issuing classes of preferred
securities collectively the LLC Preferred Securities to be eligible for inclusion
i
n
core capital of theNotice You provid notice of t nonobjection of the
Office of Thrift Supervision to the establishment of WMPF
by your
letter
dated February 9 2006 All
capitalized
terms used but not otherwise defined
herein shall have the same meaning
ascribed to them
I
n Notice
As
you
are aware i
n the Notice the Association requested that the OTS confirm
that the sale of the Cayman Co Preferred Securities and the Delaware Issuer
Securfties to outside investors constitutes the sale of the LLC Preferred Securities
to outside investors and that the LLC Preferred Securities qual for inclusion
i
n
core capital of the Association Youadvised by letter dated
February 24 2006
that the OTS will not exercise its supervisory authority and discretion to exclude the
LLC Preferred Securities from core capital under 12 5675a1 footnot 4 or
the reservation of
authority provision 12
CFR 56711 of the
capital
rule and
confirmed that the LLC Preferred Securities
qualify
for inclusion
i
n the Associations
core capital
Subsequently
the Association by letter to
you
dated November 14 2006
requested
the 0T nfi the
capital
treatment of an issuance an additional
class of LLC Preferred Securities the FixedtoFloating t
o
Perpetual
Noncumulative
Preferred Securities Sedes 2006C LLC Preferred Secudties Jim
You advised
b
y letter dated December 4 2006 the OTS will not exercise its
supervisory
authoritydiscretion to exclude the LLC Preferred Securities
I
I from
core capital
under 12 CFR
5675a1footnote 4 or the reservation of
authority
provision 12
CFR
56711
of the OTS capital
rule and confirmed that the LLC
Preferred Securities
I
I
qualify
f ri fusion
i
n the Associations care capital
Equal Housing Lender

HIGHLY CONFIDENTIAL
Return
022307 I 1137 FAX 206 553 575 OTS SEATTLE
Mr Darrel Dochow
February 7 2007
Page
2
CONFIDENTIAL TREATMENT REQUESTED
WIVIPF
i
s now planning
to Issue an additional class of LLC Preferred Securities
the
LLC Preferred Securities
111
this time WMPF has not determined whether
the LL Preferred Securities
C
l
l will be fixed rate or fixedtofloating rate at
determination will made based
upon
market conditions shortly before the target
date for launching the issuance The Association undertakes to advise OTS of
this determination
prior
to date are targeting
March 2007 as the launch
date and March 13 2007 as the osi date
The LLC Preferred Securities
I
I
I
will include terms
substantially
the same as the
LLC Preferred Securities 11except that LLC Preferred Securities
I
I
I
may
be fixed
rate rather than fixedtofloating rate including
the
requirement
for the prior
approval
of the for
any proposed redemption
Like the LLC Preferred
Securities
1
1 the LLC Preferred Securities
I
l
l
will have stated amount to
determined based
upon
market conditions and Will
pay
distributions on a
noncumulative
basis However the dividend rates
dividend
payment
dates and
redemption
dates and prices will be different than the LLC Preferred Securities
I
I
The LLC Preferred Securities
I
I
I
will be issued to the Association
i
n
exchange
for
not more than
approximately $500 million
i
n cash
Simultaneously
the Association
will then sell the LLC Preferred Securities
I
I
I
to a new
entity Washington
Mutual
Preferred Funding Trust
I
I
I
Delaware Issuer
I
l
l for not more approximately
million
i
n cash Delaware Issuer
I
I
I Will a trustformed under the laws of
the State of Delaware and will not be a subsidiary
of the Association for
purposes
of the notice requirement set forth
i
n 12 11 Delaware Issuer
I
I
I
will own
all of the LLC Preferred Securities III
which will be the sole asset of the Delaware
Issuer Ill
Delaware Issuer
i
l
l
will issue a
single
class of securities
Delaware
Issuer
I
l
l
Securifiess which will
represent
undivided beneficial ownership
interests
i
n the LL
Preferred cur I s I
l
l
held
by
Delaware Issuer Ill Delaware Issuer
I
l
l
will
pass
through any
distributions or payments upon redemption
or
upon liquidation
with
respect
tote LLC Preferred Securities
I
l
l to the holders of the Delaware Issuer
I
I
I
Securities Delaware Issuer
I
l
l Securities will sold solely to
persons
who
are qualified
Institutional buyers within
the
meaning
of Rule 144A under the
Securities Act of 1933 amended Securities Act
who are also
qualified
purchasers within the meaning the Investment Company act of 1940
Investment Company Act i
n a transaction exempt
from the
registration
requirements
of the Securities Act pursuant to Rule 144A thereunder
1
Alternatively WMPF may
sell the LLC Preferred curities
I
l
l
directly to Delaware Issuer
I
I
I
for
$500 million
i
n cash The Association undertakes to advise the CTS
i
f this alternative i
s selected
prior to the launch date or the issuance
HIGHLY CONFIDENTIAL
Return
022307 PRY 1138 SAT 206 553 5475 S S A1 E
Mr Darrel Dochow
February 7 2007
Page
3
CONFIDENTIAL
I
n the the Association
agreed that the amount of the Associations core
capital that
may
be comprised of the LLC Preferred Securities
plus any
other
future issuances of subsidiary preferred stock
will not exceed 25
percent
of te
Associations core capital including
the LLC Preferred Securities and
any future
subsidiary preferred securities issuances The issuance of LLC Preferred
Securities
i
f will not cause Association to exceed this limit On a
pro
forma
basis
based upon
a January 31 2007
forecast
the amount of LIC Prefe
Securities
LL Preferred curios
1
1
and LLC Preferred Securities
I
I
I
will
constitute no more than
approximately 14 percent of Associations core capital
as of March 31 2007
I
request i
n the Notice
regarding
the
capital
treatment of the
LLC Securities I by
letter to
you
dated
February 23 2006 stated
that
i
t will undertake that
i
f result of a
Supervisory vent I
exchanges its
Holding Company
Shares for
Cayman Co Preferred Securities and the Delaware
Issuer Securities or I
subsequent to
suchexchange acquires the LIC
Preferred
Securities l will contribute to the
Cayman Co Preferred
Securities and the Delaware Issuer Securities
or as appropriate the LLC Preferred
Securities On behalf of I I
hereby
extend that undertaking to the issuance of
LLC Preferred Securities
I
I
I
and the Delaware Issuer
I
I
I
Securities
Based on the foregoing the Association
respectfully requests the OTS to confirm
that
`
l not exercise its
supervisory authority and discretion to exclude the
LLC Preferred Securities I I I from core capital
under 12
5675a1footnote 4
or the reservation of authority provision 12
CFR
56711 of the OTS
capital rule
and confirm that the LLC Preferred Securities
I
l
l Will
qualify for inclusion
i
n
the
Associations core
capital
Request
for
ConfidentialTreatment Consistent with the standards of the Freedom
of Information
Act
5 J
552b the Association
hereby requests
confidential
treatment of the information contained
i
n this letter
the Submission The
Submission contains information that
i
s commercial or financial information
obtained from a person and privileged and confidential that
i
s
exempt
from
disclosure under
paragraph b4 of the Freedom of Information Act 5 U
552b4
and the
applicable magulations of
tDepartment of the
Treasury 31
CF
12c1 and
16a
The information
i
s
proprietary compiled for internal
use
only
and
i
s made available to
regulatory authorities
only upon request The
Association
requests
that the information contained
i
n this document treated as
confidential
indefinitely
because the basis for confidential treatment will continue to
exist after the issues
presented by this Submission are resolved The ssoci tion
further
requests
that
i
f notwithstanding the
foregoing
the OTS should determine
preliminarily
to make available to the
public any
of the info ation contained
i
n this
Submission
i
t will inform
the Association prior to any such release
HIGHLY CONFIDENTIAL
Return
022307 11138 FAX 206 553 5475 OTS SEAWLE
Mr Darrel Dochow
February 7 2007
Page 4
CONFIDENTIAL TREATMENT REQUESTED
I
f
you
have
any questions r r I this letter please
call Robert Monheit at
212
3266104 or me at
206 5004149
bhn F Robinson
007
Executive Vice President
Corporate Risk Management
HIGHLY CONFIDENTIAL
Return
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington
DC 20549
FORM 88K
Pursuant to Section 13 or 15d of the
Securities
Exchange
Act of 1934
Date of
Report Date
of earliest event reported September 30 2008 September 26 2008
WASHINGTON MUTUAL C
Exact Name of Registrant as Specified i
n Charter
ashington 114667 911653725
State or Other Jurisdiction Commission IRS Employer
of
Incorporation File Number Identification No
1301 Second A 98101
Address of Principal Executive Offices Zip Code
Registrants telephone number including area code
206 4612000
Former name or former address i
f
changed
since last
report
Check the appropriate box below
i
f the Form 8K filing i
s intended to
simultaneously satisfy
the
filing obligation of the registrant under
any
of the following provisions see General Instruction A2
below
Written communications
pursuant
to Rule 425 under the Securities Act 17 CFR 230425
Soliciting
material
pursuant to Rule l 4a12 under the
Exchange Act 17 C 240i4a12
Precommencement communications
pursuant
to Rule 14d2 under the
Exchange
Act 17 CFR
240142b
Precommencement communications
pursuant to Rule
13e4c
under the
Exchange
Act
17 CFR
24013e4c
HIGHLY CONFIDENTIAL
Return
Item 03 Bankruptcy or Receivership
On September 26 2008 Washington Mutual Inc
the Compan together
with its
whollyowned
subsidiary
WMI Investment
Corp
commenced
voluntary cases under
chapter
I I of title I I of the
United States Code
i
n the United States
Bankruptcy
Court for the District of Delaware The
chapter
I I
filings were a result ofthe appointment by the Office of Thrift Supervision of the Federal Deposit
Insurance Corporation FDIC as receiver of
Washington
Mutual Bank Washington Mutual Ics
banking subsidiary on September 25 2008
In its
chapter
1 I
petition
the
Company reported that the amount of assets reflected on its books
and records was $32896605516 However this amount includes the Companys common stock interest
i
n Washington
Mutual Bank which
i
s
currently i
n
receivership
and the assets of which have
reportedly
been transferred to JP
organ
Chase Co or an affiliate The FDIC which was appointed
the receiver
for the bank indicates on its website that
i
t does not anticipate that there will be
any recovery
to te
Company for that common stock interest In addition the Company and its nonbank subsidiaries had
approximately $5 billion of cash on deposit
with
Washington
Mutual Bank and its bank
subsidiary
Washington
Mutual Bank fsb immediately prior to the time the FDIC was appointed as receiver The
Company i
s in the
process
of confirming the status of those deposits and of its other assets
Item 301 Notice of elisti or Failure to Satisfy a Continued
Listing l
e or Standard Transfe
of Listing
On September 29 2008 NYSE
Regulation
Inc
NYSE Regulation
notified the
Company
that
i
t had
suspended
the New York Stock
Exchange NYSE listings
of the
Companys common stock
NYSEW
the
Companys depositary
shares each
representing 140000th interest
i
n a share of Series
K Perpetual NonCumulative Floating Rate Preferred Stock NYSEWM PR K and the Companys
7759o Series R NonCumulative Perpetual
Convertible Preferred Stock YSE RR effective
immediately
The NYSE
posted
a
press
release on its website
stating
that NYSE
Regulations
decision to
suspend the listings was reached
i
n view of events described under Item 103 of this Current
Report
on
Form 8K the substantial reduction
i
n the
scope
of the
Companys operations as a result of
JPMorgan
Chase Cos acquisition
of all of the
deposits assets and certain liabilities of the
Companys banking
operations
and the
abnormally
low
trading price
of the
Companys common stock which traded as low
as $015
prior
to the regulatory trading halt
i
n the Companys securities at the NYSE market
open
on
September 26 2008
Item 01 Other Events
On September 26 2008
the
Company
issued a
press
release
announcing
that an Exchange
vent had occurred tinder the
applicable
documents
governing
the
preferred
securities the Securities
of
Washington
Mutual Preferred
Cayman
I Itd Washington
Mutual Preferred
Funding
Trust I
hington Mutual Preferred
Funding Trust I Washington Mutual Preferred
Funding Trust III and
Washington
Mutual Preferred
Funding
Trust IV In connection with the
Exchange
Event and
i
n
accordance with the teens of the documents
governing
the Securities the
Company
effected an exchange
the
Conditional Exchange effective as of
September 26 2008 at 800 AM New York time of the
Securities into depositary shares representing a like amount of preferred stock
i
n the
Company
A
copy
of the
press
release issued
by
the
Company announcing
the
Exchange
Event and the
Conditional Exchange i
s attached as Exhibit 991 to this Current
Report
on Form 8K and incorporated
herein by
reference
HIGHLY CONFIDENTIAL
Return
Item 901 Financial Statements and Exhibits
d Exhibits
Exhibit No
Description
991 Press Release ate
September 26 2005
HIGHLY CONFIDENTIAL
Return
XURES
Pursuant to the
requirements
of the Securities Exchange Act of 1934 the
registrant
has
duly
caused this
report
to be
signed
on its behalf
by
the
undersigned
hereunto
duly
authorized
WASHINGTON MUTUAL I NC
Date September 30 2008
By s Stewart M Landefeld
Name Stewart M Landefeld
Title Executive Vice President
HIGHLY CONFIDENTIAL
Return
EXHIBIT INDEX
Exhibit
i
t No Description
991 Press Release slated
September 26 2008
HIGHLY CONFIDENTIAL
EXHIBIT INDEX
99.1 2008.
Return
Exhibit 991
mediate Release
September 26 2008Washington Mutual Inc
N announced
today
that an Exchange
Event has occurred under the applicable documents
governing
the
following
securities
Securities
Washington Mutual Preferred Cayman I Ltd 725
Perpetual
Noncumulative
Preferred
Securities Series A1 to be
exchanged
into
depositary shares representing
Series J
Perpetual
NonCumulative Fixed Rate Preferred Stock of WMI
Washington Mutual Preferred
Cayman
I Lt 725 Perpetual Noncumulative
Preferred Securities Series A2
to
be
exchanged into
depositary
shares
representing
Series J
Perpetual NonCumulative Fixed Rate Preferred Stock of I
Washington
Mutual Preferred Funding Trust I
FixedtoFloating
Rate
Perpetual
Noncumulative
Trust Securities to be
exchanged
into
depositary
shares
representing Series I
Perpetual NonCumulative
FixedtoFloating
Rate Preferred Stock of I
Washington
Mutual Preferred
Funding
Trust I
FixedtoFloating Rate
Perpetual
Noncumulative
Trust Securities
to
be
exchanged into depositary shares
representing
Series L
Perpetual
NonCumulative Fixed Rate Preferred Stock of
I
Washington
Mutual Preferred
Funding Trust III FixedtoFloating Rate
Perpetual
Noncumulative
Trust Securities to be
exchanged
into
depositary
shares
representing
Series
M
Perpetual NonCumulative Fixed Rate Preferred Stock of I and
Washington Mutual Preferred
Funding
Trust IV
FixedtoFloating ate Perpetual
Noncumulative
Trust Securities
to
be
exchanged into depositary shares
representing
Series N
Perpetual
NonCumulative
FixedtoFloating Rate Preferred Stock of W
MI
In connection with the
Exchange Event I will effect an exchange Conditional
Exchange of the Securities into
depositary
shares
representing a like amount of
preferred stock
i
n
I as contemplated by the
applicable documents governing the securities
In accordance with the terms of te documents
governing
the Securities the Conditional
Exchange
of the Securities will occur on Friday September 26 2008 at 800 AM New York
time As of the time of the Conditional
Exchange
each
outstanding Security
will be
exchanged
automatically
for a like amount of
newly
issued Fixed ate
Depositary Shares or newly issued
FixedtoFloating
Rate
Depositary Shares as applicable each representing a 11000th interest in
one share of the
applicable series of preferred stock of i I
WMI will mail the notice required under the
applicable
documents to each holder of
record of Securities within 30
days
and
W
M I will deliver or cause to be delivered to each such
holder of record
depositary receipts
for the Fixed Rate
Depositary
Shares and
FixedtoFloating
Rate
Depositary
Shares
upon
surrender of the Securities Until such
depositary receipts are
delivered or
i
n the event such
depositary receipts
are not delivered any
certificates
previously
representing
Securities will be deemed for all
purposes
effective as of 800 New York time
on September 26 2008 to represent
Fixed Rate Depositary Shares or
FixedtoFloating
Rate
Depositary Shares as applicable
HIGHLY CONFIDENTIAL
Return
Policy
Number ELU108345O8
Renewal of Number NA
MANAGEMENT LIABILITY AND
COMPANY REIMBURSEMENT
INSURANCE POLICY DECLARATIONS
'Q
Greenwich insurance Company
XL Specialty
insurance Company
Members of the XL America Companies
Executive Offices
70 Seaview Avenue
Stamford
CT 069026040
Telephone
8779532636
THIS IS A CLAIMS MADE POLICY EXCEPT AS OTHERWISE PROVIDED HEREIN THIS POLICY ONLY APPLIES TO
CLAIMS FIRST MADE DURING THE POLICY PERIOD OR IF APPLICABLE THE OPTIONAL EXTENSION PERIOD
THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL BE REDUCED AND MAY BE
EXHAUSTED BY THE PAYMENT OF DEFENSE EXPENSES THIS POLICY PROVIDES FOR THE INSURER TO
DEFEND ANY CLAIM MADE AGAINST AN INSURED EXCEPT UNDER THOSE CERTAIN SPECIFIED
CIRCUMSTANCES WHERE THE INSURED CHOOSES TO PROVIDE ITS OWN DEFENSE PLEASE READ AND
REVIEW THE POLICY CAREFULLY
Item 1 Name and Mailing
Address of Parent Company
Attn Insurance Risk Management
WMT07441201 Third Ave 7th
F
l
Seattle WA 98101
Item 2 Policy Period From September 26 2008 To September 26 2009
At 1201 AM Standard Tsme at your Mailing
Address Shown Above
Item 3 Limit of Liability
$25000000 Aggregate
each Policy Period including
Defense Expenses
Item 4 Retentions
$0 each Insured Person under INSURING AGREEMENT I A
$5000000
each Claim under INSURING AGREEMENT I B
NA each Claim under INSURING AGREEMENT I C
Item 5
Item 6
Item 7
Optional
Extension Period
Length of Optional
Extension Period
Either one year
or two
years
after the end of the Policy Period at the election of the Parent Company
Premium for Optional
Extension Period One Year $600000000
Two Years NA
Three Years NA
Pending
and Prior Litigation Date Policy Inception
Notices required
to be given to the Insurer must be addressed to
Executive Liability
Underwriters
One Constitution Plaza 16x` Floor
Hartford CT 06103
Toll Free Telephone 8779532636
DO 70 00 11 01
Page
1 of 2
CONFIDENTIAL
Return
MANAGEMENT LIABILITY AND COMPANY REIMBURSEMENT POLICY DECLARATIONS
Item 8 Premium
Taxes Surcharges or Fees $000
Total Policy
Premium $300000000
Item 9 Policy Forms and Endorsements Attached at Issuance
D0 71 00 09 99 XL 82 00 07 07 XL 80 24 03 03 D0 8512 08 00 00 80 14210 01 D0 80 189 08 02
D0 80 29 06 00 00 83 59 09 02 D0 83 32 08 01 D0 90 01 01 00 D0 83 01 01 00
Countersigned By
Date Authorized Representative
THESE DECLARATIONS AND THE POLICY WITH THE ENDORSEMENTS ATTACHMENTS AND THE APPLICATION SHALL
CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE INSURER AND THE INSURED RELATING TO THIS INSURANCE
In Witness Whereof the Insurer has caused this Policy to be executed by its authorized officers but
this Policy will not be valid unless countersigned on the Declarations
page i
f requited by law by a duly
authorized representative
of the Insurer
Nicholas M Brown Jr
President
Theresa M Morgan
Secretary
Nicholas M Brown Jr Theresa M Morgan
President Secretary
XL Specialty
Insurance
Company
DO70001101 Page
2of2
CONFIDENTIAL
Return
Management Liability
DO71000999
MANAGEMENT LIABILITY AND COMPANY REIMBURSEMENT INSURANCE COVERAGE FORM
THIS IS A CLAIMS MADE POLICY WITH DEFENSE EXPENSES INCLUDED IN THE LIMIT OF LIABILITY
PLEASE READ AND REVIEW THE POLICY CAREFULLY
In consideration of the payment
of the premium
and
i
n reliance on all statements made and information
furnished to Executive Liability
Underwriters the Underwriting Manager
for the Insurer identified in the
Declarations hereinafter
the Insurer including
the Application
and subject to all of the terms
conditions and
limitations of all of the provisions
of this Policy
the Insurer the Insured Persons and the Company agree
as
follows
A
The Insurer shall
pay
on behalf of the Insured Persons Loss resulting
from a Claim first made against
the
Insured Persons during
the Policy
Period or i
f applicable
the Optional
Extension Period for a Wrongful
Act or Employment
Practices Wrongful Act except
for Loss which the Company i
s permitted or required
to
pay on behalf of the Insured Persons as indemnification
B
The Insurer shall
pay
on behalf of the Company
Loss which the Company i
s required
or
permitted
to pay as
indemnification to any
of the Insured Persons resulting from a Claim first made against
the Insured Persons
during the Policy
Period or i
f
applicable
the Optional
Extension Period for a Wrongful Act or Employment
C
The Insurer shall
pay
on behalf of the Company
Loss resulting solely
from any
Securities Claimfirst made
against
the Company during
the Policy
Period or i
f applicable
the Optional
Extension Period for a
Company
Wrongful Act
U DEFINITIONS
A Application
means
1 the application
attached to and forming part
of this Policy
and
2 any
materials submitted therewith
which shall be retained on file by the Insurer and shall be deemed to
be physically
attached to this Policy
13 Change
In Control means
1
the
merger
or acquisition
of the Parent Company or of all or substantially
all of its assets by another
entity
such that the Parent Company i
s not the surviving entity
2
the acquisition by any person entity or
affiliated
group
of persons
or entities of the right to vote
select
or appoint more than fifty percent 50
of the directors of the Parent Company
or
3
the appointment
of a Receiver Conservator Liquidator
Trustee Rehabilitator or any comparable
authority
with respect to the Parent Company
C
Claimmeans
1
2
a written demand for monetary
or nonmonetary relief
any
civil proceeding i
n a court of law or equity
or arbitration
any
criminal proceeding
which i
s commenced by the return of an indictment and
a formal civil criminal
administrative regulatory proceeding
or formal investigation
of an Insured
Person or the Company but
with respect
to the Company only for a Company Wrongful Act
which
i
s commenced by
the filing or issuance of a notice of charges
formal investigative
order or
similar document identifying i
n writing
such Insured Person or the Company
as a person
or entity
against
whom a proceeding
as described i
n C2or 3
above may
be commenced including any
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proceeding before the
Equal Employment Opportunity Commission or
any
similar federal state or local
governmental body having jurisdiction over
any Employment Practices
Wrongful Act
D Company means the Parent
Company and
any Subsidiary created or
acquired on or before the
Inception
Date set forth
i
n ITEM 2 of the Declarations or during the
Policy Period subject to GENERAL CONDITIONS VI
D
E Company Wrongful Act means
any
actual or alleged act error omission misstatement misleading
statement or breach of
duty by the
Company i
n connection with a Securities Claim
F Defense
Expenses means reasonable legal fees and
expenses incurred
i
n the defense of
any
Claim
including the
premium for an appeal bond attachment bond or similar bond but will not include
applying for or
furnishing such bond Defense
Expenses will not include the
Companys overhead
expenses or
any salaries
wages fees or benefits of its
directors officers or
employees
G Employment Practices
Wrongful Act means
any actual or alleged
1 wrongful termination of
employment whether actual or constructive
2 employment discrimination of any kind
including violation of
any federal state or local law
involving
employment or discrimination
i
n
employment which would
deprive or
potentially deprive any person of
employment opportunities or otherwise
adversely affect his or her status as an employee because of
such
persons race color religion age sex national origin disability pregnancy or other
protected
status
3
4
sexual or other harassment
i
n the
workplace or
wrongful deprivation of career
opportunity employment related misrepresentations
retaliatory
treatment
against an
employee
of the
Company failure to
promote demotion wrongful discipline or
evaluation or refusal to hire
H Employment Practices Claim means a Claim
alleging an
Employment Practices
Wrongful Act
1 Insured means the insured Persons and the
Company
J Insured Person means
1 any past present or future director or officer or member of the Board of
Managers of the
Company
and those
persons serving i
n a
functionally equivalent role for the Parent
Company or
any Subsidiary
operating or incorporated outside the United
States
2 any past present or future
employee of the
Company to the extent
any
Claim
i
s a Securities Claim
3 an individual identified
i
n
J1 above who at the
specific written
request of the
Company i
s
serving
as a director officer trustee regent or governor of a NonProfit Entity
4 any
individual Identified
i
n
J1 above who at the specific written
request of the
Company i
s
serving
i
n an elected or appointed position having fiduciary supervisory or managerial duties and
responsibilities comparable to those of an Insured Person of the
Company regardless of the name or
title
by
which such
position i
s designated of a Joint Venture or
5 the lawful spouse of
any person set forth
i
n the above
provisions of this definition but
only
to the extent
the
spouse i
s a party to
any
Claim
solely i
n their
capacity as a
spouse
of such
persons
and
only for the
purposes
of
any Claim
seeking damages recoverable from marital
community property property jointly
held
by any such
person and spouse or property transferred from
any
such
person to the
spouse
I
n the event of the death incapacity or
bankruptcy
of an individual identified
i
n
J1 2 3 4 or 5 above
any Claim against the
estate heirs legal representatives or assigns of such individual for a Wrongful Act or
Wrongful Act of such individual will be deemed to be a Claim
against such
Individual
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DO 71 00 09 99
K
Interrelated Wrongful
Acts means any Wrongful Act Company Wrongful Act or Employment
Practices
Wrongful
Act based on arising out of directly or indirectly
resulting from i
n
consequence
of or i
n any way
involving any
of the same or related facts series of related facts circumstances situations
transactions or
events
L
Joint Venture means any corporation partnership joint venture association or other entity
other than a
Subsidiary during any
time
i
n which the Parent Company
either directly or through one or more
Subsidiarys
1
owns or
controls at least thirty
three percent 33
but not more than fifty percent 50 i
n the
aggregate
of the outstanding
securities or other interests representing
the right to vote for the election
or appointment
of those
persons
of such an entity occupying
elected or appointed positions having
fiduciary supervisory
or managerial
duties and responsibilities comparable
to those of an Insured
of the name or title by
s designated
of a
Joint Venture or
2
has the right by contract ownership
of securities or otherwise to elect appoint
or designate at least
thirty
three 33
of those persons
described i
n L1 above
M
Loss means damages judgments
settlements or other amounts including punitive or exemplary damages
where insurable by lew and Defense Expenses
in excess of the Retention that the Insured i
s legally
obligated to pay
Loss will not include
1
the multiplied portion of any damage award
2 fines penalties or taxes imposed by law or
3
matters which are uninsurable under the law pursuant
to which this Policy I
s construed
NOTE With respect
to judgments i
n which punitive damages
are awarded the coverage provided by
this
Policy
shall apply
to the broadest extent permitted b
y law
I
f based on the written opinion
of counsel for the
insured punitive damages
are insurable under applicable
law the Insurer will not dispute the written opinion
of
counsel for the insured
N
MonProfit Entity
means a corporation
or organization
other than the Company
which i
s
exempt from
taxation under Section 501 c3 4
and 10
of the Internal Revenue Code as amended or any
rule or
regulation promulgated
thereunder
0
Parent Company
means the entity named i
n ITEM I of the Declarations
P Policy
Period means the period
from the Inception
Date to the Expiration
Date set forth i
n ITEM 2 of the
Declarations or to any
earlier cancellation date
Q
securities
Claim means a Claim made against
an insured for
1 any
actual or alleged
1934 as amended
aviolation
ils federal or state statute or any
rules or regulations
promulgated
Exchange
Act
of the Securities Act of 1933 as
of
thereunder or
2 any
actual or alleged act error omission misstatement misleading statement or breach of duty arising
from or i
n connection with the purchase
or sale of or offer to purchase
or sell
any
securities issued by
the Company
whether such purchase
sale or offer involves a transaction with the
Company
or occurs
i
n the open
market
R
Subsidiary
means any entity during any
time in which the Parent Company owns directly or through one or
more Subsidiarys more
than fifty percent 50 o
f
the outstanding
securities representing
the right to vote
for the election of such entitys
directors
S Wrongful
Act means any
actual or alleged act error omission misstatement misleading statement
neglect or breach of duty by any
insured Person while acting i
n his or her capacity as an
1
Insured Person of the Company or a person
serving i
role for the Parent
Company
or any Subsidiary
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2 Insured Person of the
Company who at the specific written
request
of the
Company i
s
serving as a
director officer trustee regent or governor of a NonProfit Entity or
3 Insured Person of the
Company who at the specific written request of the
Company i
s
serving i
n an
elected or appointed position having fiduciary supervisory o
r
managerial duties and
responsibilities
comparable to those of an Insured Person of the
Company regardless of the name or title
by which
such
position i
s
designated of a Joint Venture
III EXCLUSIONS
The Insurer shall not be iable to make
any payment for Loss
i
n connection with
any Claim made
against an Insured
Person or with respect to INSURING AGREEMENT
C
the
Company
A
for
any actual or
alleged bodily injury sickness mental anguish emotional distress libel slander oral or
written publication of
defamatory or disparaging material disease or death of
any person or
damage or
destruction of
any tangible property including loss of use thereof however this EXCLUSION Awill not apply
to
any allegations of libel slander defamation mental
anguish or emotional distress
i
f and only to the extent
that such allegations are made as part of an Employment Practices Claim for an Employment Practices
Wrongful Act
B for
any actual alleged or threatened
discharge dispersal release escape seepage transportation emission
treatment removal or disposal of
pollutants contaminants or waste of
any
kind including but not limited to
nuclear material or nuclear waste or any actual or alleged direction request or voluntary decision to test
for
abate monitor clean up recycle remove recondition reclaim contain treat detoxify or neutralize
pollutants
contaminants or waste of
any kind
including
but not limited to nuclear material or nuclear waste With
respect to
a Claim made under INSURING AGREEMENT
Aonly this EXCLUSION
Bwill not
apply
to a Claim unless
a court of
competent jurisdiction specifically determines the Company i
s not
permitted to
indemnify the
Insured Person
NOTE EXCLUSIONS
Aand B above will not apply with
respect to a Securities Claim brought byagecrarity holder
of the Company or a derivative action brought by or on behalf of or i
n the name or right of the
Company
and
brought
and maintained
independently of and without the
solicitation assistance participation or intervention of an
Insured
C based
n
consequence of or
i
n
actual or alleged violation of the
Employee Retirement Income Security Act of 1974 ERISA as amended or
any regulations promulgated thereunder or
any similar law federal state or local law or regulation
D based
upon arising out of directly or
indirectly resulting from i
n
consequence of or i
n
fact circumstance situation transaction event or Wrongful Act Company Wrongful Act or
Employment
Practices
Wrongful Act underlying or alleged i
n
any prior andor pending litigation or administrative or
regulatory proceeding or arbitration which was
brought prior to the
Pending and Prior Litigation Date set forth
i
n
ITEM 6 of the Declarations
E based
n
consequence of or in
fact circumstance situation transaction event or Wrongful Act Company Wrongful Act or Employment
Practices
Wrongful Act which before the Inception Date of this Policy was the
subject of
any
notice
given
under
any other Management Liability policy Directors and Officers
liability policy or similar
policy
F brought about or contributed to
i
n fact by any
1 intentionally dishonest fraudulent or criminal act or omission or
any
willful violation of
any statute rule
or law or
2 profit or remuneration
gained by any
insured to which such Insured
i
as determined
by a final adjudication i
n the
underlying action or i
n a separate action or proceeding
G by on behalf of or at the direction of the Company except and to the extent such Claim
1 i
s
brought derivatively by a security holder of the
Company who when such Claim
i
s made and
maintained i
s acting independently of and without the solicitation assistance participation or
DO 71000999
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DO 71 00 09 99
intervention of an Insured Person or the Company
or
2 i
s brought by the Bankruptcy Trustee or Examiner of the Company or any assignee
ofsuch Trustee or
Examiner or any
Receiver Conservator Rehabilitator or Liquidator or comparable authority
of the
Company
H by
on behalf of at the direction of or i
n the name or right
of any
NonProfit Entity or Joint Venture against
an Insured Person for a Wrongful Act or Employment
Practices Wrongful
Act while acting i
n his or her capacity
of such or persons occupying
elected or appointed positions
having fiduciary supervisory
or managerial duties and responsibilities
comparable
to those ofan Insured
by
s designated or
entity
other than the
CompanyvNan
l
based un
Person
arising
acting i
n
of
their capacity as a
indirectly
Insured Person of
any
consequence
Insured
onProfit
Entity or Joint Venture
No conduct of any
Insured Person will be imputed
to any
other Insured to determine the application
of
any
of the
above EXCLUSIONS
IV LIMIT OF LIABILITY
INDEMNIFICATION AND RETENTIONS
A
The Insurer shall pay
the amount of Loss
i
n excess o
f
the applicable
Retentions set forth
i
n ITEM 4 of the
Declarations up
to the Limit of Liability set forth i
S
The amount set forth
i
shall be the maximum aggregate
Limit of Liability of the
Insurer under this Policy Payment
of Loss including
Defense Expenses
by the Insurer shall reduce the Limit
of Liability
C
With respect to the Companys
indemnification of its Insured Persons
the certificate of incorporation
charter
bylaws
articles of association or other organizational
documents of the Parent Company
each Subsidiary
and each NonProfit Entity or Joint Venture will be deemed to provide
indemnification to the Insured
Persons to the fullest extent permitted by
law
D
The Retention applicable
to INSURING AGREEMENT B
shall apply
to any
Loss as to which indemnification
by
the Company
NonProfit Entity
or Joint Venture i
s legally permissible
whether or not actual
indemnification i
s made unless such indemnification i
s not made by
the Company
NonProfit Entity or Joint
Venture solely by reason of its financial Insolvency I
n the event of financial insolvency
the Retentions
applicable
to INSURING AGREEMENT A
shall apply
E I
f different retentions are applicable
to different parts
of
any
Loss the applicable
Retentions will be applied
separately
to each part of such Loss and the sum of such Retentions
will not exceed the largest applicable
Retention set forth
i
F
Notwithstanding the foregoing solely
with respect
to a Securities Claim no Retention shall apply
to such
Claim and the Insurer will reimburse those Defense Expenses
incurred by the Insured
i
f
1
the Securities Claim i
s dismissed or there i
s a stipulation to dismiss the Securities Claimwith or
without prejudice
and without the payment
of
any
monetary
consideration by
the Insured
2
there i
s a final judgment
of no liability
obtained prior
to or during trial i
n favor of the Insured by reason
of a motion to dismiss or a motion for
summary judgment
after the exhaustion of all appeals
or
3
there
i
s a final judgment
of no liability
obtained after trial i
n favor of the Insured after the exhaustion of
all appeals
Any
reimbursement i
n the case of F12 or 3above will only occur i
f ninety 90 days
after the date of
dismissal stipulation
final judgment
of no liability i
s
obtained and only i
f
a
the same
Securities Claimor a Securities Claim containing Interrelated Wrongful Acts i
s
not brought again
within that time and
b
the Insured provides
the Insurer with an Undertaking i
n a form acceptable to the Insurer that
DO 7100 09 99
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DO71000999
such reimbursement of the
applicable Retentions will be
paid
back to the Insurer
i
n the event
the Securities Claim
or a Securities Claim
containing Interrelated
Wrongful Acts i
s
brought after the
ninety 90 day period
V
DEFENSE SETTLEMENT AND ALLOCATION OF LOSS
A I
t
shall be the duty of the Insured and not the
duty
of the Insurer to defend
any
Claim under this
Policy
B No Insured
may
incur
any Defense Expenses or admit
liability for make
any settlement offer with respect to
or settle
any Claim without the Insurers
consent such consent not
t
o be
unreasonably withheld
C Upon
the written request of an Insured the Insurer will advance Defense
Expenses on a current basis
i
n
excess of the applicable Retention i
f
any
before the disposition of the Claim for which this
policy provides
coverage
As a condition of the advancement of Defense
Expenses the Insurer
may require a written
undertaking i
n a form
satisfactory to the Insurer which will
guarantee the
repayment of
any
Loss
including
Defense Expenses paid to or on behalf of the Insured i
f
i
t
i
s
finally determined that the Loss incurred
i
s not
covered under this Policy
D I
f both Loss covered by this
Policy and Loss not covered
by this Policy are incurred either because a Claim
made
against
the Insured contains both covered and uncovered
matters or because a Claim
i
s made
against
both the Insured and others including the
Company for Claims other than Securities
Claims not insured
under this
Policy the Insured and the Insurer will use their best efforts to determine a fair and
appropriate
allocation of Loss between that
portion of Loss that
i
s covered under this Policy and that portion of Loss that
i
s
not covered under this Policy Additionally the Insured and the Insurer
agree
that
i
n
determining a fair and
appropriate allocation of
Loss the parties will take into account the relative legal and financial
exposures of
and relative benefits obtained i
n connection with the defense andor settlement of the Claim
by
the Insured
and others
E I
n the event that an agreement cannot be reached between the insurer and the Insured as to an allocation of
Loss as described
i
n
Dabove then the insurer shall advance that portion of Loss which the Insured and
the Insurer agree i
s not
i
n
dispute until a final amount
i
s
agreed upon or determined pursuant to the provisions
of this Policy and
applicable law
V1 GENERAL CONDITIONS
A NOTICE
1
As a condition precedent to any right to
payment under this Policy with
respect to any Claimthe
Insured shall give written notice to the Insurer of
any
Claim as soon as practicable atter
i
t
i
s first made
2
I
f during the Policy Period the Insured first becomes aware of a specific Wrongful Act Company
Wrongful Act or Employment Practices
Wrongful Act and
i
f
during
the
Policy Period the Insured
a provides the Insurer with written notice of the
specific Wrongful Act Company Wrongful Act
or Employment Practices
Wrongful Act the
consequences which have resulted or
may
result therefrom
including but not limited to actual or potential damages the identities of the
potential claimants the circumstances by which the Insured first became aware of such
Wrongful Act Company Wrongful Act or
Wrongful Act and
b requests coverage under this
Policy
for
any subsequently resulting Claim for such
Wrongful
Act Company Wrongful Act or Employment Practices
Wrongful Act
then
any
Claim
subsequently made
arising out of such
Wrongful Act Company Wrongful Act or
Wrongful Act will be treated as i
f
i
t had been first made
during the
Policy
Period
3 All notices under GENERAL CONDITIONS A1and
2 must be sent by certified mail or the
equivalent to the address set forth
i
n ITEM 7 of the Declarations Attention Claim Department
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B
INTERRELATED CLAIMS
All Claims arising from the same Interrelated Wrongful Acts shall be deemed to constitute a single
Claim
and shall be deemed to have been made at the earliest of the time at which the earliest such Claim
i
s made or
deemed to have been made
pursuant
to GENERAL CONDITIONS A1
above or GENERAL CONDITIONS
A2 i
f applicable
C
OTHER INSURANCE AND SERVICE IN CONNECTION WITH NONPROFIT ENTITIES AND JOINT
VENTURES
1 All Loss payable
under this Policy will be specifically excess of and will not contribute with
any
other
insurance including
but not limited to any
Insurance under which there
i
s a duty to defend
unless such
other insurance i
s specifically excess of this Policy
This Policy will not be subject to the terms of
any
other insurance policy
2
All coverage
under this Policy for Loss from Claims made against the Insured Persons while acting i
n
their capacity
or
persons
occupying
elected or appointed positions having fiduciary supervisory or managerial duties and
responsibilities comparable to those of the Insured Persons of the Company regardless
of the name
or title by
s designated of a Joint Venture will be specifically excess of and will
not contribute with any
other Insurance or indemnification available to such Insured Person from such
NonProfit Entity or Joint Venture by reason of their service as such
D
MERGERS AND ACQUISITIONS CHANGES
IN EXPOSURE OR CONTROL
1 I
f
during
the Policy Period the Company acquires any assets acquires a Subsidiary or acquires
any entity by merger
consolidation or otherwise or assumes any liability
of another entity coverage
shall be provided
for
any
Loss involving a Claim for a Wrongful Act Company Wrongful Act or
Employment
Practices Wrongful
Act occurring after the consummation of the transaction
2
I
f however by
reason of the transaction or
series oftransactions described I
n
01 above the
entity assets Subsidiary or liabilities so acquired or so assumed exceed thirty five percent 35 of
the total assets or liabilities of the Company as represented i
n the Companys
most recent audited
consolidated financial statements coverage
under this Policy
shall be provided
for a period
of ninety
90 days
for
any
Loss involving a Claim for a Wrongful Act Company Wrongful Act or
Employment
Practices Wrongful
Act that occurred after the transaction has been consummated
Coverage beyond
the ninety 90 day period
will be provided only i
f
a
the Insurer receives written notice containing
full details of the transactions
and
b
the Insurer at its sole discretion agrees
to provide
such additional coverage upon
such terms
conditions limitations and additional
premium
that
i
t deems appropriate
3
With respect to the acquisition assumption merger
consolidation or otherwise of
any entity asset
Subsidiary
or liability as described
i
n 01 and 2 above there will be no coverage
available under
this Policy for Claims made against
the acquired assumed merged
or consolidated entity asset
Subsidiary liability or Insured Person for a Wrongful Act Company Wrongful Act or Employment
Practices Wrongful
Act committed
any
time during
which such entity asset liability
or Subsidiary i
s
not an Insured
4 I
f
during the Policy
Period
any entity ceases to be a Subsidiary
the
coverage provided under this
Policy shall continue to apply to the Insured Persons who because of their service with such
Subsidiary
were covered under this Policy
but
only
with respect to a Claim for a Wrongful Act
Company Wrongful
Act or Employment
Practices Wrongful
Act that occurred or allegedly
occurred
prior
to the time such Subsidiary
ceased to be a Subsidiary of the Company
5
I
f during
the Policy Period there
i
s a Change
In Control the coverage provided
under this Policy
shall continue to apply but only
with
respect t
o a Claim against an Insured for a Wrongful Act
Company Wrongful
Act or Employment
Practices Wrongful
Act committed or allegedly
committed
up
to the time of the
Change
In Control and
a coverage
will cease with respect
to
any
Claim for a Wrongful Act Company Wrongful
Act
or Employment
Practices Wrongful
Act committed subsequent
to the Change In Control
and
DO 71 00 09 99
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E
b
the entire premium
for the Policy will be deemed to be fully
earned
immediately upon
the
consummation of a Change
In Control
CANCELLATION AND RENEWAL OF COVERAGE
1 Except
for the
nonpayment
of
premium
as set forth
i
n E2 below the Parent Company has the
exclusive right
to cancel this Policy
Cancellation
may
be effected by mailing to the Insurer written
notice when such cancellation shall be effective provided
the date of cancellation
i
s not later than the
Expiration
Date set forth
i
I
n such event the Insurer shall retain the
customary short rate portion
of the earned
premium
Return or tender of the unearned premium i
s not a
condition of cancellation
2
The Insurer
may only cancel this Policy for nonpayment of premium
The Insurer will
provide
not less
than twenty 20 days
written notice stating the reason for cancellation and when the Policy will be
canceled Notice of cancellation will be sent to the Parent Company and the agent
of record for the
Insured i
f
applicable
3
The Insurer
i
s under no obligation to renew this Policy upon
its
expiration
Once the Insurer chooses to
nonrenew this Policy the Insurer will deliver or mail to the Parent Company
written notice stating
such at least
sixty 60 days
before the Expiration Date set forth i
F
OPTIONAL EXTENSION PERIOD
G
1 i
f either the Parent Company or the Insurer does not renew this Policy the Parent Company shall
have the
right upon payment
of an additional premium set forth
i
n ITEM 5 of the Declarations to an
extension of the
coverage provided by
this
Policy
with
respect only
to
any
Claim first made during the
period
of time set forth
i
n ITEM 5 of the Declarations after the Policy Expiration Date but only with
respect
to a Wrongful Act Company Wrongful Act or Employment
occurring prior to the Policy Expiration Date
2
As a condition precedent to the
right
to
purchase
the Optional Extension Period the total
premium
for
this Policy must have been
paid i
n full The right of the ParentCompany to purchase the Optional
Extension Period will be immediately terminated
i
f the Insurer does not receive written notice
by
the
Parent
Company advising i
t wishes to purchase the Optional
Extension Period together with full
payment
of the premium for the Optional
Extension Period within thirty 30 days after the Policy
Expiration Date
3 I
f the Parent Company elects to purchase
the
Optional
Extension Period as set forth i
n
F1and 2
above the entire premium for the Optional
Extension Period will be deemed to be
fully
earned at the
Inception Date for the Optional
Extension Period
4 The purchase
of the
Optional
Extension Period will not
i
n any way increase the Limit Of
Liability
set
forth i
n ITEM 3 of the Declarations and the Limit of
Liability
with
respect
to Claims made during the
Optional
Extension Period shall be part
of and not
i
n addition to the Limit of Liability for all Claims
made during the Policy
Period
ASSISTANCE COOPERATION AND SUBROGATION
1
The Insured agrees
to
provide
the Insurer with all information assistance and cooperation
that the
Insurer
may reasonably request and further agree
that
they
will do nothing which
i
n
any way
increases
the Insurers
exposure
under this
Policy or i
n
any way prejudices the Insurers potential or actual rights
of
recovery
2 I
n the event of
any payment
under this Policy the Insurer shall be
subrogated
to all of the potential or
actual rights
of
recovery
of the Insured The Insured shall execute all
papers required and will do
everything necessary
to secure such rights including
but not limited to the execution of such documents
as are necessary
to enable the Insurer to
effectively bring suit
i
n their name and will provide all other
assistance and cooperation which the Insurer
may reasonably require
H
EXHAUSTION
I
f the Insurers Limit of
i
i
s exhausted
by
the
payment
of Loss
the premium as set forth I
n ITEM 8 of the Declarations will be fully earned all obligations
of the Insurer under
this Policy will be completely
fulfilled and exhausted and the Insurer will have no further
obligations
of
any
kind
DO 71 00 09 99 Page 8 of 9
CONFIDENTIAL
Return
DO71000999
I
J
whatsoever under this Policy
REPRESENTATION CLAUSE
The Insured represents
that the statements and
particulars
contained i
n the Application as well as any prior
application submitted to the Insurer are true
accurate and complete and
agree
that this
Policy i
s issued
i
n
reliance on the truth of that representation
and that such
particulars
and statements which are deemed to be
incorporated
into and constitute a part of this Policy are material to the risk assumed and form the basis of this
Policy
No knowledge or information possessed by any
Insured will be imputed to any other Insured except
for
material facts or information known to the persons
who
signed
the Application I
n the event that
any
of the
particulars
or statements i
n the Application are untrue this Policy will be void with respect to any
Insured
who knew of such untruth or to whom such knowledge i
s imputed
ACTION AGAINST THE INSURER ASSIGNMENT
AND CHANGES TO THE POLICY
No action
may
be taken against the Insurer unless as a condition precedent
thereto
1
a
b
there has been full compliance with all of the terms and conditions of this Policy
and
the amount of the
obligation
of the Insured has been finally
determined either by judgment
against the Insured after actual trial or by
written agreement of the Insured
the claimant and
the Insurer
2 Nothing
contained herein shall give any person or entity any right to join the Insurer as a party
to
any
Claim against
the Insurer to determine their liability nor may
the insured implead the Insurer
i
n
any
Claim
Assignment
of interest under this Policy shall not bind the Insurer unless its consent
i
s endorsed
hereon
3
4 Notice to
any agent or knowledge possessed by any agent or other
person acting on behalfof the
Insurer will not cause a waiver or change i
n
any part of this Policy or preventthe Insurer from asserting
any right
under the terms
The terms conditions and limitations
may only
be waived or changed by
written endorsement
K
AUTHORIZATION AND NOTICES
I
t
i
that the Parent Company
will act on behalf of the Company and the Insured
Persons with
respect
to
the payment
of the premiums
the receiving
of
any
return premiums
that
may
become due under this Policy
the giving of all notices to the Insurer as provided herein and
the receiving of all notices from the Insurer
L
ENTIRE AGREEMENT
The Insured agrees
that the Declarations Policy including the endorsements attachments and the Application shall
constitute the entire agreement
between the Insurer or any
of its
agents
and the Insured relating to this insurance
DO 71 00 09 99 Page 9 of 9
CONFIDENTIAL
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POLICYHOLDER DISCLOSUREJ
NOTICE OF TERRORISM
INSURANCE COVERAGE
Coverage for acts of terrorism is already Included in
your
current policy You are hereby
notified that under the Terrorism Risk Insurance Program
Reauthorization Extension Act
of 2007 the definition of act of terrorism has changed As defined in Section 1021 of
the Act The term act of terrorism means any
act that is certified
b
y the Secretary
of the
Treasury
in concurrence with the Secretary of the State and the Attorney
General of the
United Statesto be an act of terrorism to be a violent act or an act that is dangerous to
human life property or infrastructure
to have resulted in damage
within the United
States or outside the United States
I
n the case of certain air carriers or vessels or the
premises
of a United States mission
and to have been committed by
an individual or
individuals as part
of an effort to coerce the civilian population
of the United States or to
influence the policy or affect the conduct of the United States Government by
coercion
Under
your existing coverage any
losses caused
by
certified acts of terrorism
may
be
partially
reimbursed by the United States under a formula established by federal law
Under this formula the United States generally
reimburses 85 of covered terrorism
losses exceeding the statutorily established deductible paid by the insurance
company
providing the coverage However your policy may
contain other exclusions that may
affect your coverage
The Terrorism Risk Insurance Program Reauthorization Extension
Act contains a $100 billion cap that limits US Government reimbursement as well as
insurers liability
for losses resulting
from certified acts of terrorism when the amount of
such losses exceeds $100 billion in
any
one calendar year I
f the
aggregate
insured losses
for all insurers exceed $100 billion your coverage may
be reduced
The portion
of
your
annual premium
that
i
s attributable to coverage
for acts of terrorism is
$ waived Any premium
waiver
i
s only
valid for the current Policy Period
I ACKNOWLEDGE THAT I HAVE BEEN NOTIFIED THAT UNDER THE TERRORISM RISK
INSURANCE PROGRAM REAUTHORIZATION EXTENSION ACT OF 2007 ANY LOSSES
CAUSED BY CERTIFIED ACTS OF TERRORISM UNDER MY POLICY COVERAGE WILL BE
PARTIALLY REIMBURSED BY THE UNITED STATES AND I HAVE BEEN NOTIFIED OF THE
AMOUNT OF MY PREMIUM ATTRIBUTABLE TO SUCH COVERAGE
Name of Insurer XL
Specialty
Insurance Company
Policy
Number ELU10834508
Signature
of Insured
Print Name and Title
Date
CONFIDENTIAL
Return
IN WITNESS ENDORSEMENT
XL SPECIALTY INSURANCE COMPANY
ADMINISTRATIVE OFFICE SEAVIEW HOUSE
70 SEAVIEW AVENUE
STAMFORD CT 069026040
STATUTORY HOME OFFICE 1201 NORTH MARKET STREET
SUITE 501
WILMINGTON DE 19801
I
t
i
s
hereby agreed
and understood that the following
In Witness Clause supersedes any
and all other
I
n Witness clauses
i
n this policy
All other provisions
remain unchanged
IN WITNESS WHEREOF
the Company
has caused this policy
to be executed and attested and i
f
required by
state law this policy
shall not be valid unless countersigned by a duly authorized
representative
of the Company
John R Glancy
President
Kenneth P Meagher
Secretary
IL MP 9104 0405 XIS
CONFIDENTIAL
Return
NOTICE TO POLU YHOL U ERS
US TREASURY DEPARTMENTS
OFFICE OF FOREIGN ASSETS CONTROL
ÒFAC
No coverage i
s provided
b
y this Policyholder
Notice nor can i
t be construed to replace any provisions
of your policy
You should read
your policy
and review your
Declarations page
for complete
information on the coverages you
are provided
This Policyholder
Notice provides
information concerning possible impact
on
your
insurance
coverage
due to directives issued by
OFAC Please read this Policyholder
Notice
carefullyOFAC
administers and enforces sanctions policy
based on Presidential declarations of national
emergency
OFAC has identified and listed numerous
Foreign agents
Front organizations
Terrorists
Terrorist organizations
Narcotics traffickers
as Specially Designated
Nationals and Blocked Persons This list can be found on the United
States Treasurys
web site httpllwwwtreasgovofac
I
n accordance
with OFAC regulations i
f
i
t
i
s determined that
you
or any
other insured or
any person
or entity claiming
the benefits of this insurance has violated US sanctions law or i
s a Specially
Designated
National and Blocked Person as identified
b
y OFAC this insurance will be considered a
blocked or frozen contract and all
provisions
of this insurance will be immediately subject to OFAC
When an insurance policy i
s considered to be such a blocked or frozen contract neither payments
nor premium
refunds
may
be made without authorization from OFAC Other limitations on the
premiums
and payments
also apply
CONFIDENTIAL
Return
PRIVACY POLICY
The Xt America Inc insurance group We
or Our Group respects
the
privacy
of all
personal
information
Thus the information We collect from our customers or potential customers i
s treated with the highest degree of
privacy
We have developed
a Privacy Policy for Our Group
that
1 ensures the security
of
your
information and
2 complies with state and federal privacy laws
The term personal
information includes all information we obtain about a customer and maintain i
n our files All
persons
with access to personal
information are required
to follow this policy
Our Privac Promise
Your privacy rights are important to us Analysis
of
your private information allows us to
provide
to
you
excellent
service and products
Your trust i
n us depends upon
the security
and integrity
of our records Thus We promise
to
1
Follow strict security
standards This will protect any
information
you
share with us or that we receive about
you
2 Verify and exchange
data regarding your
credit and financial status only for the purposes
of underwting
policy administration or risk management
We will obtain only reputable
references and services
3
Collect and use the least amount of information necessary
to
a advise you
and deliver excellent service and products and
b conduct our business
4 Train our employees
to securely
handle private
information We will only permit authorized employees to
have access to such information
5
Not disclose data about you or your
business to
any organization
outside Our Group or to third
party
providers
unless
a we disclose to
you
our intent to do so or
b we are required to do so
b
y law
6
Not disclose medical information unless
a you give us written consent to do so or
b We disclose for any exception provided i
n the law
7 Attempt
to keep our records complete
and exact
8
Advise
you
how and where to access your
account unless prohibited by law
9
Advise you
how to correct errors or make changes to your
account
10 Inspect
our procedures
to ensure your privacy
Collection and Sources of Information
We collect only
the personal information needed to
1
determine suitability
for a product or service
2 manage
the product
or service and
3
advise customers about our products
and services
The information we collect comes from the following sources
Submission I
n
the application you provide your name address phone number
email address and
other
types
of private
information
Quotes We collect information to determine
1 your eligibility
for an insurance product and
2 your coverage
cost
The data we collect will vary
with the type
of insurance you
seek
Transactions
We maintain records of all transactions with Our Group
and our third party providers
Our records include
CONFIDENTIAL
Return
1 your coverage
choices
2 premiums billing and payment records
3 claims history
and
4
other data related to your
account
Claims We maintain records on any
claims that are made under
your policies The investigation of a
claim involves collection of a broad range of information
I
t also involves many issues some of which do
not directly involve you
We will share with you
facts that we collect about
your claim unless prohibited
by law The
process
of claim investigation
also involves advice opinions and comments from
many
people
These
may
include attorneys
and experts
This will help us determine how best to handle
your
claim To protect the legal
and privileged aspects of opinions and advice we will not disclose this
information to
you
Credit and Financial Reports We mayreceive your
credit history
This
i
s to support information you
provided during
the submission and quote processes
This history
will help to underwrite your coverage
Retention and Correction of Personal Information
We retain personal
information only as long as required by law or as required by our business methods
I
f we
become aware that any
information
may
be incorrect we will make reasonable effort to correct
i
t
Storage
of Personal Information
Safeguards are i
n
place
to protect data and
paper
files containing personal
information
SharingDisclosing
of Personal Information
We do not share personal information with a third party outside of Our Group for marketing purposes
This
i
s true
unless such sharing is permitted
b
y law Information may
be shared with a third
party
for necessary servicing of
the product I
t
may
also be disclosed for other business reasons as permitted
b
y law
We do not share personal data outside of Our Group
for servicing or joint marketing reasons We will only
disclose such data when a contract containing
nondisclosure language
has been signed by us and the third
party
Unless a consumer consents we do not disclose consumer credit report type
information outside
o
f
Our Group
Consumer credit report type information means such things as net worth credit worthiness hobbies piloting
boating etc solvency etc
We also do not disclose outside of Our Group personal
information for use i
n marketing
We
may
share
information within Our Group regarding our experience
and dealings
with the customer
We may disclose private
information about a customer as allowed or otherwise required by
taw The law allows
us to share a customers financial data within Our Group for marketing purposes The law does not allow
customers to limit or prevent such disclosures
We
may
also disclose personal
information about you
or
your
business to
your independent agent or broker
an independent
claim adjuster investigator attorney or expert
persons
or groups
that conduct scientific studies This includes actuaries and accountants
a medical care facility or professional to verify coverage
for a covered person
an insurance
support group
another insurer i
f to prevent fraud
another insurer to properly
underwrite a risk
insurance regulators
governmental authorities pursuant
to law
an authority i
n
response
to a valid administrative or judicial
order This includes a warrantor subpoena
a party for the following purposes
regarding a book of business sale transfer merger or consolidation
This applies whether the transaction i
s
proposed or complete
CONFIDENTIAL
Return
a professional peer
review group
This includes reviewing
the service or conduct of medical care facilities
or personnel
a covered
person
for providing
the status of a transaction or
any of the following a lienholder mortgagee assignee lessor or other person
of record having a legal
interest
i
n the policy
Policy for Personal Information Relatin to Nonpublic
Personal Health information
We do not disclose nonpublic personal
health information about a customer unless consent
i
s obtained from that
customer However such consent shall not be prohibited
limited or sought for certain insurance functions This
includes but i
s not limited to
a claims administration
b fraud prevention
c underwriting policy placement or issuance loss control or auditing
Access to Your Information
The following persons
will have access to personal
information we collect
employees of Our Group
and third party
service providers
Information will only
be collected as i
s needed i
n
transactions with
you
Violation of the Privac Paiic
Any person violating
this Policy
will be subject
to discipline
This may
include termination
For questions
regarding this privacy
statement please
contact your
broker
CONFIDENTIAL
Return
Endorsement No I
Named Insured Washington Mutual Inc
Policy
No EL1110834508
1
XL 82 00 07 07
Effective September 26 2008
insurer XL Specialty
Insurance Company
CHANGE OF INSURER
ADDRESS AND PREAMBLE
ENDORSEMENT
The Declarations
of the Policy are amended as follows
Notices required
to be given
to the Insurer must be addressed to
Notice to Claim Dept
All other Notices
XL Professional
XL Professional
One Hundred Constitution Plaza 18th Floor
One Hundred Constitution Plaza 17th Floor
Hartford CT 06103
Hartford CT 06103
Attn Claim Dept
Attn Underwriting
All references i
n the policy to other addresses for Notice to the Insurer shall be deemed amended
2
The preamble
to this Policy i
s amended to read i
n its entirety as follows
In consideration of the payment of the premium
and in reliance on all statements made and
information furnished to the insurer identified in the Declarations hereinafter
the Insurer
including the Application
and subject to all of the terms
conditions and limitations of all of the
provisions
of this Policy
the Insurer the Insured Persons and the Company agree
as follows
XL 82 00 07 07
Page
1 of I
CONFIDENTIAL
Return
XL 80 24 03 03
Endorsement No 2
Effective September 26 2008
Policy
No ELU10834508
Insurance Company
TERRORISM PREMIUM ENDORSEMENT
Please note The portion
of
your
annual premium
set forth
i
n Item 8 of the Declarations that i
s attributable to
coverage
for acts of terrorism is $ waived
XL 80 24 03 03
Page
1 of I
CONFIDENTIAL
Return

Washington Mutual (WMI) - Attachments/Exhibits To The Final Report of The Examiner (Part 6/10)

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Washington Mutual (WMI) - Attachments/Exhibits To The Final Report of The Examiner (Part 6/10)

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Confidential

PRIVILEGED AND CONFIDENTIAL

WMI_PC_08788123.00002 Restricted For Use in Connection with Plan Confirmation Only

WMI_PC_08788123.00004 Restricted For Use in Connection with Plan Confirmation Only

Customers may be offered lease extensions

Rates tied to sales volume

Provides dealer with working

Typical real estate loans are fixed

Financing for Dealer Rent- A-

Currently integrated with DC Truck

Fleet companies manage all customer

Dealer: Floorplan, Capital

Dealer: Floorplan, Capital

Small Business: Fleet

Carco) provides subvention programs exclusively

National Union Fire Insurance Co of Pittsburgh

AUT ORIZED REPR EN ATIVE

WMI_PC_08788139.00003 Restricted For Use in Connection with Plan Confirmation Only

Customers may be offered lease extensions

Rates tied to sales volume

Provides dealer with working

Typical real estate loans are fixed

Financing for Dealer Rent- A-

Currently integrated with DC Truck

Fleet companies manage all customer

Dealer: Floorplan, Capital

Dealer: Floorplan, Capital

Small Business: Fleet

Carco) provides subvention programs exclusively

Equal Housing Lender

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