Mr Michael Finn August 17 2007 Page 4 CONFIDENTIAL TREATMENT REQUESTED further requests that if notwithstanding the foregoing the OTS should determine preliminarily to make available to the public any of the information contained in this Submission it will Inform the Association prior to any such release If you have any questions regarding this letter please call Robert Monheit at 212 3266104 or me at 206 5004149 hn F Robinson Executive Vice President Corporate Risk Management CONFIDENTIAL Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00010
427
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Washington Mutual (WMI) - Attachments/Exhibits to the Final Report of the Examiner (Part 8/10)
In re Washington Mutual, Inc., Case No. 08-12229 (MFW) United States Bankruptcy Court, District of Delaware FINAL REPORT OF THE EXAMINER JOSHUA R. HOCHBERG http://www.mckennalong.com/news-advisories-2411.html
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Transcript
Mr Michael Finn
August 17 2007
Page 4
CONFIDENTIAL TREATMENT REQUESTED
further requests that
if notwithstanding the foregoing the OTS should determine
preliminarily to make available to the public any of the information contained in this
Submission
it
will Inform the Association prior to any such release
If you have any questions regarding this letter please call Robert Monheit at
212 3266104 or me at 206 5004149
hn F Robinson
Executive Vice President
Corporate Risk Management
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00010
Office of Thrift Supervision
SEP d 2007
Department of the Treasury West Region
101 Stewart Street Suite 1010 Seattle WA 981012419 Seattle Area Once
Telephone 206 8292600 Fax 206 8292620
September 20 2007
Mr John F Robinson Executive Vice President
Corporate Risk Management
Washington Mutual
1301 Second Avenue WMC 3201
Seattle WA 98101
Dew Mr Robinson
This responds to your August 17 2007 letter advising that Washington Mutual Bank WMB plans to issue
an additional class of preferred securities LLC Preferred Securities IV through Washington Mutual
Preferred Funding LLC WMPF and requesting OTS confirmation that such securities are eligible for
inclusion in core capital of WMB The LLC Preferred Securities IV will be issued to WMB in exchange for
not more than
$1 billion in cash
On February 24 2006 December 4 2006 and February 24 2007 this office confirmed that the three prior
classes of LLC Preferred Securities issued by WMPF could be included in WMBs capital subject to certain
representations and undertakings Similarly please be advised that OTS will not exercise its supervisory
authority and discretion to exclude the LLC Preferred Securities IV fromcore capital under 12 CFR
5675a1 footnote 4 or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and we hereby confirm that the preferred securities will qualify for inclusion in WMB core capital This
decision is based on the representations made in your August 17 letter
Notwithstanding the above the OTS reserves the right in its sole discretion to exclude the Preferred
Securities or prospective issuances of Preferred Securities if the terms are revised or it otherwise ceases to
provide meaningful capital support and a realistic ability to absorb losses or otherwise raises supervisory
concerns This may include OTS concerns about the capital mix or asset structure of the WMPF orWMB
If you have any questions regarding this letter please contact me at 206 8292603
cc FDIC
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00011
CONFIDEI ALTREATMENTREQ ESTER
I
February 23 2006
Darrel Dodliow
Deputy Regional DirectorWest Region
Office of Thrift Supervision
101 Stewart Street Suite 1010
Seattle WA 981011048
Washington Mutual
John F Robinson
Executive Vice President
Corporbte Risk Manegeinenl
Re Washington Mutual BattkDocket Number 08551Requestforconfitmatid ofcapital treatment of two classes ofpreferred stock
DeaaMr Dochow
On behalf of Washingtari Mutual • WMIn I a•mwriting with reference to the riotice
filed January 30 2006 by Washington Mutual tank WMB toesstablish°a new
subsidiary Washington Mutual Preferred Fpding LC`°WMPF for the purposeof
issuing two classes of preferredsecurities to be eligibleforinclesiein in corecapital of
WMB the `Notice You provided notice of thenonobjectionof the Office of Thrift
Supervision STS to the establishtnejat of WMPPby your letierdated February 9 2005
Asyou are aware inthe NotieeWMB requestedthe OTSoonfirstrthat the We of the
Cayman Co Preferred Securities and the Delaware Issuer Securities as defined in the
Noticeto outside investors constitutes thesale oftheLLC Preferred Securities as defined
in th6Notice to outside investors and that the LLC Preferred Securities qualify for
inclusion iii core capital ofWMB
In connection with thatrequesttWM herebytndertakes
that if asa result of aSupervisory Event as defined in the Notice WMI exchanges its
Holding Company Shares as defilned
run the Notice for Cayman Co Preferred Securities
andthe Delaware Issuer tecurities or if WMI subsequent to such exchange acquires the
LLC Preferred Securities W7vnwillcontribute1toWMB the Cayman Co Preferred
Securities and the Delaware Issuer Securities or as appropriate the LLC Pitferred
Securities
If you have anyquestions regarding this letterplease call Robert Monheit at
2123266104 or meat 206 4906100
Zl•35hn` F Robinson
ExecWve Vice President
Corporate Risk Management
1201 Thi�d Avenue
wMr166
Seattle WA98101
phone 7064905100
Fax 2053775316
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00001
N
Office of Thrift Supervision
Departmentofthe Trc4sw7 • wane Regina
lot S wzt 5tecd W
is l01Q SeMk WA 981012419 Sedde Arw Qfjlr
Telaphce 216 3292600 Fac 205 $29200
February 24 2006
Mr John FRobinson
Execultivc Vice President
Corporate Risk Manageunaat
Washington Mutual W1201 ThirdAvenun WMT 1601
Seattle WA 981 or
FEB 2 8 2006
LEGAL DEPARTMENT
Dear Mr Robinson
This letter further responds to the notice filed January 3020 advising that Washington Mutual
Bark rWMB plans to establish
it now subsidiary Washington Mutual Preferred Funding YYC
CVb9n for the purpose of issuing two classes of Preferred Secxnities to be eligible for
inclusion in cm capital ofWMB By letter dated February 92006 we took no objection to thr
establishment of the new operating subsidiary and the issuance of secsvities by WMPF
Please be advised that OTS will not exercise its supervisory authority and discretion to exclude
the Prefrsod Securities from core capital under 12 CFR 5675al footnote 4 or the
resaYation of authority provision 12 CFR 56711 of the OTS capital rule and we hereby
confirm thalthc Proffered Securities will qualify for inclusion in WMB core capital This
decision is based on the representations in theNotice attachment thereto and commitment
detailed in your confidential letter dated February 23 2006
Notwithstanding the above the OTS reserves the right in its sole dis tion to exchrdc the
Preferred Securities or prospective issuances ofPrefesred Securities if the teems are revised or
it otherwise ceases to provide meaningful capital support and a realistic ability to absorb losses
orotherwise raises supevisorp ccncems This may include OTS cancers about the capital mix
or asset structure of the Subsidiary or WMB
If you have any questions regarding this letter please contact me at 206 8292601
Sincerely
Darrel W Dochow
Regional Deputy Director
cc William L Lynch Secretary Washington Mutual
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00002
Washington Mutual
CONFIDENTIAL TREATMENT REQUESTED
November 14 2006
Darrel Dochow
Deputy Regional Director West Region
Office of Thrift Supervision
101 Stewart Street Suite 1010
Seattle WA 981011048
Re Washington Mutual Bank Docket Number 08551 Request for
confirmation of capital treatment of additional class of preferred stock
am
Dear Mr Dochow
On behalf of Washington Mutual Inc WMI and Washington Mutual Bank the
Association I am writing with reference to the notice filed January 30 2006 bythe Association to establish a new subsidiary Washington Mutual Preferred
Funding LLC WMPF for the purpose of issuing two classes of preferred
securities collectively the LLC Preferred Securities to be eligible for inclusion in
core capital of WMB the Notice You provided notice of the nonobjection of the
Office of Thrift Supervision OTS to the establishment of WMPF by your letter
dated February 9 2006
As you are aware in the Notice the Association requested the OTS confirm that the
sale of the Cayman Co Preferred Securities and the Delaware Issuer securities
as defined in the Notice to outside investors constitutes the sale of the LLC
Preferred Securities as defined
in
the Notice to outside investors and that the LLC
Preferred Securities qualify for inclusion in core capital of the Association You
advised 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 CFR 5675a1footnote 4 or the reservation of authority
provision 12 CFR 56711 of the OTS capital rule and confirmed that the LLC
Preferred Securities will qualify for inclusion
in
the Associations core capital
WMPF is planning to issue an additional class of LLC Preferred Securities the
FixedtoFloating Rate Perpetual Noncumulative Preferred Securities Series
2006C LLC Preferred Securities II The LLC Preferred Securities II will
include terms substantially the same as the LLC Variable Rate Preferred
Securities as defined in the Notice including the requirement for the prior
approval of the OTS for any proposed redemption Like the LLC Variable Rate
Preferred Securities the LLC Preferred Securities II will have a stated amount to
be determined based upon market conditions and will pay distributions on anoncumulativebasis at a fixed rate for a period to be determined and thereafter will
pay distributions based on a variable rate of interest plus an applicable spread
However the dividend rates dividend payment dates and redemption dates and
prices will be different than the LLC Variable Rate Preferred Securities
Corporate Execatlve Offices
1301 Second Avenue
Seattla WA 98101
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00003
Mr Darrel Dochow
November 14 2006
Page 2
CONFIDENTIAL TREATMENT REQUESTED
The LLC Preferred Securities II will be issued to the Association in exchange for
not more than approximately $10 billion in assets consisting of a pool of option
ARMs originated by the Association Simultaneously the Association will then sell
the LLC Preferred Securities 11 to a new entity Washington Mutual Preferred
Funding Trust
II Delaware Issuer III for not more than approximately $10 billion
in cash Delaware Issuer 11
will be a trust formed 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 in 12 CFR § 55911 Delaware Issuer
II will own all of
the LLC Preferred Securities1
1 which will be the sole asset of the Delaware Issuer
II
Delaware Issuer II will issue a single class of securities Delaware Issuer Il
Securities which will represent undivided beneficial ownership interests in the LLC
Preferred Securities 11 held by Delaware Issuer II Delaware Issuer 11 willpassthroughany distributions or payments upon redemption or upon liquidation with
respect to the LLC Preferred Securities II to be holders of the Delaware Issuer II
Securities Delaware Issuer
11 Securities will be sold solely to US persons who are
qualified institutional buyers within the meaning of Rule 144A under the
Securities Act of 1933 as amended Securities Act who are also qualified
purchasers within the meaning of the Investment Company act of 1940
Investment Company Act in a transaction exempt from the registration
requirements of the Securities Act pursuant to Rule 144A thereunder
In the Notice 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 the
Associations core capital including the LLC Preferred Securities and any future
subsidiary preferred securities issuances The issuance of LLC Preferred
Securities 11 will not cause the Association to exceed this limit On a pro forma
basis based upon an October 10 2006 forecast the amount of LLC Preferred
Securities and LLC Preferred Securities II will constitute no more than
approximately 1402 percent of the Associations core capital as of December 312006
In connection with the request In
the Notice regarding the capital treatment of the
LLC Preferred Securities WMI by letter to you dated February 23 2006 stated
i
In addition to the creation of Delaware Issuer
II a new asset trust Washington Mutual Option ARM
Trust I Asset Trust l1 will be formed Asset Trust It will be a trust formed under the laws of the
State of Delaware pursuant to a trust agreement between WMPF as depositor and a trustee
unaffiliated with the Association as Delaware Trustee Asset Trust II will own approximately $30billion of first lien closedend optionARM home loans the Asset Trust I
f Assets acquired from
the Association WMPF and from university Street Inc REIT any property that secured a loan
that Asset Trust Il acquires by foreclosure or deed in lieu of foreclosure as well as other assets
authorized for federal savings associations under federal law
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00004
Mr Darrel Dochow
November 14 2006
Page 3
CONFIDENTIAL TREATMENT REQUESTED
that it will undertake that if as a result of a Supervisory Event as defined in the
Notice WMI exchanges its Holding Company Shares as defined in the Notice for
Cayman Co Preferred Securities and the Delaware Issuer Securities or if WMI
subsequent to such exchange acquires the LLC Preferred Securities WMI will
contribute to WMB the Cayman Co Preferred Securities and the Delaware Issuer
Securities or as appropriate the LLC Preferred Securities On behalf of WMI I
hereby extend that undertaking to the issuance of LLC Preferred Securities li and
the Delaware Issuer II Securities
Based on the foregoing the Association respectfully requests the OTS to confirm
that the OTS will not exercise its supervisory authority and discretion to exclude the
LLC Preferred Securities II from corecapital under 12 CFR 5675a1footnote 4
or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and confirm that the LLC Preferred Securities 11 will qualify for inclusion in the
Associations core capital
Request for Confidential Treatment Consistent with the standards of the Freedom
of
Information Act 5 USC § 552b the Association hereby requests confidential
treatment of the information contained in this letter the Submission The
Submission contains information that is commercial or financial information
obtained from a person and privileged and confidential thatis exempt from
disclosure under paragraph b4 of the Freedom of Information Act 5 USC
§552b4 and the applicable regulations of the Department of the Treasury 31
CFR §§ 12c1 and 16a The information is proprietary compiled for internal
use only and is made available to regulatory authorities only upon request The
Association requests that the information contained in this document be treated as
confidential indefinitely because the basis for confidential treatment will continue to
exist after the issues presented by this Submission are resolved The Association
further requests that
if notwithstanding the foregoing the OTS should determine
preliminarily to make available to the public any of the information contained in this
Submission it will inform the Association prior to any such release
If you have any questions regarding this letter please call Robert Monheit at
212 3266104 or me at 206 5004149
ohn F Robinson
Executive Vice President
Corporate Risk Management
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00005
U
M
Office of Thrift Supervision
Department of the Treasury
1551 Nottb T ssda Avenue Suits 1050 Santa Ana CA 927058635
TeScpltone 714 7964700 FAX 714 7964710
December 4 2006
Mr John F Robinson
Executive Vice President
Corporate Risk Management
Washington mutual
1301 Second Avenue
Seattle WA 98101
bear Mr Robinson
W4VVL
West lzs toh
Santa Ana Area Offim
Prist1t brand tax transmittal memo 7671 Ff popes r
•
To ro
Dept phone
TaTi
This responds to your November 142006 letter advising that Washington Mutual Bank hWNB plate to
issue an additional class ofpicferred securities C LLC PreierrrdSecurities 11 Rough Washington
Mutual Professed Funding LLC WMPF and requcatin OTS confirmation that such securities are
eligible for inclusion in core capital of WMB The LLC Pre1 red securities 11 wil bo issued to WMB in
exchange for not more than $1 billion is assets consisting of a pool of option ABMs origiuate+l by WMIB
By letter dated February 24 2006 this office con niad that the initial two classes of LLC Preferred
Securities issued by WMPF could be included inWW Is capital subject to certain representations and
=krWdngs Similarly please be advised that OTS will not exercise its atpe rvisory authority and
discretion to exclude the LLC Preferred Securities 11 timmcore capital under 12 CFR $675a1 footnote 4
or the reservation of authority provision 12 CFR 56711 of the OTS capital zuie and we hereby confirm
that the preferred securities will qualify for inclusion in WMB core capital This decision is based on the
r esentations made in your November 141etter
Notwiibatanding the above the OTS reserves the right in its cote discretion to exclude she Pr+efeured
Securities or prospective issuances of Preferred Securities if the terms are revised or it otherwise ceases
to provide meaningibl capital support and a realistic ability to absorb losses or otherwise raises
supervisory concerns This may include OTS concerns about the capital mix or asset struttwc ofthe
Subsidiary or WMB
If you have any questions regarding this letter please contact we at 206 8292603
Sincercly
Darrel W Doehow
Regional Deputy Director
cc FDIC
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00006
CONFIDENTIAL TREATMENT REQUESTED
August 17 2007
Michael Finn
Regional Director West Region
Office of Thrift Supervision
101 Stewart Street Suite 1010
Seattle WA 981011048
John P Rabhnaan
Executive V ce President
Corporate Risk Management
1301 Second Avenue
WMC3Z01
Seattle WA 98101
206 500 4149 phone
206 377 3018 fax
Re Washington Mutual Bank Docket Number 08551 Request for
confirmation of capital treatment of additional class of preferred stock
Dear Mr Finn
On behalf of Washington Mutual Inc WMI and Washington Mutual Bank the
Association I am writing with reference to the notice filed January 30 2006 by
the Association to establish a new subsidiary Washington Mutual Preferred
Funding LLC WMPF for the purpose of issuing two classes of preferred
securities collectively the LLC Preferred Securities to be eligible for inclusion in
core capital of WMB the Notice The Office of Thrift Supervision COTSprovided notice of Its nonobjection to the establishment of WMPF by letter dated
February 9 2006 All capitalized terms used but not otherwise defined herein shall
have the same meaning ascribed to them in the Notice
As you are aware in the Notice the Association requested that the OTS confirm
that the sale of the Cayman Co Preferred Securities and the Delaware Issuer
Securities to outside investors constitutes the sale of the LLC Preferred Securities
to outside investors and that the LLC Preferred Securities qualify for inclusion incore capital of the Association The OTS advised by letter dated February 242006 that it will not exercise its supervisory authority and discretion to exclude the
LLC Preferred Securities 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 qualify for inclusion in the Associations
core capital
Subsequently the Association by letter dated November 14 2006 requested the
OTS confirm the capital treatment of an issuance of an additional class of LLC
Preferred Securities the Fixed toFloating Rate Perpetual Noncumulative
Preferred Securities Series 2006C LLC Preferred Securities 11 The OTS
advised by letter dated December 4 2006 that it will not exercise its supervisory
authority and discretion to exclude the LLC Preferred Securities II from core capital
under 12 CFR 5675a1footnote 4 or the reservation of authority provision 12CFR 56711 of the OTS capital rule and confirmed that the LLC Preferred
Securities It qualify for inclusion
in
the Associations core capital
QEqual Honing Lander
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00007
Mr Michael Finn
August 17 2007
Page 2
CONFIDENTIAL TREATMENT REQUESTED
Following that issuance the Association by letter dated February 7 2007
requested the OTS confirm the capital treatment of an issuance of another
additional class of LLC Preferred Securities the Fixedto Floating Rate Perpetual
Noncumulative Preferred Securities Series 2007A LLC Preferred Securities
Ill The OTS indicated it consent by return of the letter stamped No Objection
as of February 24 2007
WMPF
is now planning to issue an additional class of LLC Preferred Securities theLLC Preferred Securities IV The LLC Preferred Securities IV will be fixed rate
and will include terms substantially the same as the LLC Fixed Rate Preferred
Securities as defined in the Notice including the requirement for theprior approval
of the OTS for any proposed redemption Like the LLC Fixed Rate Preferred
Securities the LLC Preferred Securities IV will have a stated amount to be
determined based upon market conditions and will pay distributions on anoncumulativebasis However the dividend rates and redemption dates and prices will
be different than the LLC Fixed Rate Preferred Securities Also the LLC Preferred
Securities IV will not be callable during the first five years following issuance and
then may be called at any time thereafter in the discretion of WMPF subject to
prior approval of the OTS
The LLC Preferred Securities IV will be issued to the Association in exchange for
not more than approximately $10 billion in cash Simultaneously the Association
will then sell the LLC Preferred Securities IV to a new entity Washington Mutual
Preferred Funding Trust IV Delaware Issuer IV for not more than approximately
$10 billion in cash2 Delaware Issuer IV will be a trust formed under the laws of
the State of Delaware and will not be a subsidiary of the Association for purposesof the notice requirement set forth in 12 CFR § 55911 Delaware Issuer IV will
own all of the LLC Preferred Securities IV which will be the sole asset of the
Delaware Issuer IV
Delaware Issuer IV will issue a single class of securities Delaware Issuer IV
Securities which will represent undivided beneficial ownership interests
in
the LLC
Preferred Securities IV held by Delaware Issuer IV Delaware Issuer IV will pass
through any distributions or payments upon redemption or upon liquidation with
respect to the LLC Preferred Securities 1V to the holders of the Delaware Issuer IV
Securities Delaware Issuer IV Securities will be sold solely to US persons whoare qualified institutional buyers within the meaning of Rule 144A under the
Securities Act of 1933 as amended Securities Act who are also qualified
1 At the time the letter was submitted WMPF had not determined whether the LLC Preferred
Securities
III would be fixedtofloating rate or fixed rate
2Alternatively WMPF may sell the LLC Preferred Securities
III
directly to Delaware Issuer IV for
$10 billion in cash The Association undertakes to advise the OTS If this alternative is selected
prior to the launch date of the issuance
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00008
Mr Michael Finn
August 17 2007
Page 3
CONFIDENTIAL TREATMENT REQUESTED
purchasers within the meaning of the Investment Company act of 1940
Investment Company Act in a transaction exempt from the registration
requirements of the Securities Act pursuant to Rule 144A thereunder
In
the Notice 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 the
Associations core capital including the LLC Preferred Securities and any future
subsidiary preferred securities issuances The issuance of LLC Preferred
Securities IV will not cause the Association to exceed this limit On a pro forma
basis based upon a forecast dated August 9 2007 the amount of LLC Preferred
Securities LLC Preferred Securities
II LLC Preferred Securities
III and LLC
Preferred Securities IV will constitute no more than approximately 1821 percent of
the Associations core capital at September 30 2007
In connection with the request in the Notice regarding the capital treatment of the
LLC Preferred Securities WMI by letter to the OTS dated February 23 2006stated that
it
will undertake that
if as a result of a Supervisory Event WMI
exchanges its Holding Company Shares for Cayman Co Preferred Securities and
the Delaware Issuer Securities or if WMI subsequent to such exchange acquires
the LLC Preferred Securities WMI will contribute to WMB the Cayman CoPreferred Securities and the Delaware Issuer Securities or as appropriate the LLC
Preferred Securities On behalf of WMI I hereby extend that undertaking to the
issuance of LLC Preferred Securities IV and the Delaware Issuer IV Securities
Based on the foregoing the Association respectfully requests the OTS to confirm
that the OTS will not exercise its supervisory authority and discretion to exclude the
LLC Preferred Securities IV from core capital under 12 CFR 5675a1footnote 4or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and confirm that the LLC Preferred Securities IV will qualify for inclusion in the
Associations core capital
Request for Confidential Treatment Consistent with the standards of the Freedomof Information Act 5 USC § 552b the Association hereby requests confidential
treatment of the information contained in this letter the Submission TheSubmission contains information that is commercial or financial information
obtained from a person and privileged and confidential that is exempt from
disclosure under paragraph b4 of the Freedom of Information Act 5 USC§552b4 and the applicable regulations of the Department of the Treasury 31
CFR §§ 12c1 and 16a The information
is proprietary compiled for internal
use only and is made available to regulatory authorities only upon request TheAssociation requests that the information contained
in
this document be treated as
confidential indefinitely because the basis for confidential treatment will continue to
exist after the issues presented by this Submission are resolved The Association
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00009
Mr Michael Finn
August 17 2007
Page 4
CONFIDENTIAL TREATMENT REQUESTED
further requests that
if notwithstanding the foregoing the OTS should determine
preliminarily to make available to the public any of the information contained in this
Submission
it
will Inform the Association prior to any such release
If you have any questions regarding this letter please call Robert Monheit at
212 3266104 or me at 206 5004149
hn F Robinson
Executive Vice President
Corporate Risk Management
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00010
Office of Thrift Supervision
SEP d 2007
Department of the Treasury West Region
101 Stewart Street Suite 1010 Seattle WA 981012419 Seattle Area Once
Telephone 206 8292600 Fax 206 8292620
September 20 2007
Mr John F Robinson Executive Vice President
Corporate Risk Management
Washington Mutual
1301 Second Avenue WMC 3201
Seattle WA 98101
Dew Mr Robinson
This responds to your August 17 2007 letter advising that Washington Mutual Bank WMB plans to issue
an additional class of preferred securities LLC Preferred Securities IV through Washington Mutual
Preferred Funding LLC WMPF and requesting OTS confirmation that such securities are eligible for
inclusion in core capital of WMB The LLC Preferred Securities IV will be issued to WMB in exchange for
not more than
$1 billion in cash
On February 24 2006 December 4 2006 and February 24 2007 this office confirmed that the three prior
classes of LLC Preferred Securities issued by WMPF could be included in WMBs capital subject to certain
representations and undertakings Similarly please be advised that OTS will not exercise its supervisory
authority and discretion to exclude the LLC Preferred Securities IV fromcore capital under 12 CFR
5675a1 footnote 4 or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and we hereby confirm that the preferred securities will qualify for inclusion in WMB core capital This
decision is based on the representations made in your August 17 letter
Notwithstanding the above the OTS reserves the right in its sole discretion to exclude the Preferred
Securities or prospective issuances of Preferred Securities if the terms are revised or it otherwise ceases to
provide meaningful capital support and a realistic ability to absorb losses or otherwise raises supervisory
concerns This may include OTS concerns about the capital mix or asset structure of the WMPF orWMB
If you have any questions regarding this letter please contact me at 206 8292603
cc FDIC
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00011
CONFIDEI ALTREATMENTREQ ESTER
I
February 23 2006
Darrel Dodliow
Deputy Regional DirectorWest Region
Office of Thrift Supervision
101 Stewart Street Suite 1010
Seattle WA 981011048
Washington Mutual
John F Robinson
Executive Vice President
Corporbte Risk Manegeinenl
Re Washington Mutual BattkDocket Number 08551Requestforconfitmatid ofcapital treatment of two classes ofpreferred stock
DeaaMr Dochow
On behalf of Washingtari Mutual • WMIn I a•mwriting with reference to the riotice
filed January 30 2006 by Washington Mutual tank WMB toesstablish°a new
subsidiary Washington Mutual Preferred Fpding LC`°WMPF for the purposeof
issuing two classes of preferredsecurities to be eligibleforinclesiein in corecapital of
WMB the `Notice You provided notice of thenonobjectionof the Office of Thrift
Supervision STS to the establishtnejat of WMPPby your letierdated February 9 2005
Asyou are aware inthe NotieeWMB requestedthe OTSoonfirstrthat the We of the
Cayman Co Preferred Securities and the Delaware Issuer Securities as defined in the
Noticeto outside investors constitutes thesale oftheLLC Preferred Securities as defined
in th6Notice to outside investors and that the LLC Preferred Securities qualify for
inclusion iii core capital ofWMB
In connection with thatrequesttWM herebytndertakes
that if asa result of aSupervisory Event as defined in the Notice WMI exchanges its
Holding Company Shares as defilned
run the Notice for Cayman Co Preferred Securities
andthe Delaware Issuer tecurities or if WMI subsequent to such exchange acquires the
LLC Preferred Securities W7vnwillcontribute1toWMB the Cayman Co Preferred
Securities and the Delaware Issuer Securities or as appropriate the LLC Pitferred
Securities
If you have anyquestions regarding this letterplease call Robert Monheit at
2123266104 or meat 206 4906100
Zl•35hn` F Robinson
ExecWve Vice President
Corporate Risk Management
1201 Thi�d Avenue
wMr166
Seattle WA98101
phone 7064905100
Fax 2053775316
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00001
N
Office of Thrift Supervision
Departmentofthe Trc4sw7 • wane Regina
lot S wzt 5tecd W
is l01Q SeMk WA 981012419 Sedde Arw Qfjlr
Telaphce 216 3292600 Fac 205 $29200
February 24 2006
Mr John FRobinson
Execultivc Vice President
Corporate Risk Manageunaat
Washington Mutual W1201 ThirdAvenun WMT 1601
Seattle WA 981 or
FEB 2 8 2006
LEGAL DEPARTMENT
Dear Mr Robinson
This letter further responds to the notice filed January 3020 advising that Washington Mutual
Bark rWMB plans to establish
it now subsidiary Washington Mutual Preferred Funding YYC
CVb9n for the purpose of issuing two classes of Preferred Secxnities to be eligible for
inclusion in cm capital ofWMB By letter dated February 92006 we took no objection to thr
establishment of the new operating subsidiary and the issuance of secsvities by WMPF
Please be advised that OTS will not exercise its supervisory authority and discretion to exclude
the Prefrsod Securities from core capital under 12 CFR 5675al footnote 4 or the
resaYation of authority provision 12 CFR 56711 of the OTS capital rule and we hereby
confirm thalthc Proffered Securities will qualify for inclusion in WMB core capital This
decision is based on the representations in theNotice attachment thereto and commitment
detailed in your confidential letter dated February 23 2006
Notwithstanding the above the OTS reserves the right in its sole dis tion to exchrdc the
Preferred Securities or prospective issuances ofPrefesred Securities if the teems are revised or
it otherwise ceases to provide meaningful capital support and a realistic ability to absorb losses
orotherwise raises supevisorp ccncems This may include OTS cancers about the capital mix
or asset structure of the Subsidiary or WMB
If you have any questions regarding this letter please contact me at 206 8292601
Sincerely
Darrel W Dochow
Regional Deputy Director
cc William L Lynch Secretary Washington Mutual
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00002
Washington Mutual
CONFIDENTIAL TREATMENT REQUESTED
November 14 2006
Darrel Dochow
Deputy Regional Director West Region
Office of Thrift Supervision
101 Stewart Street Suite 1010
Seattle WA 981011048
Re Washington Mutual Bank Docket Number 08551 Request for
confirmation of capital treatment of additional class of preferred stock
am
Dear Mr Dochow
On behalf of Washington Mutual Inc WMI and Washington Mutual Bank the
Association I am writing with reference to the notice filed January 30 2006 bythe Association to establish a new subsidiary Washington Mutual Preferred
Funding LLC WMPF for the purpose of issuing two classes of preferred
securities collectively the LLC Preferred Securities to be eligible for inclusion in
core capital of WMB the Notice You provided notice of the nonobjection of the
Office of Thrift Supervision OTS to the establishment of WMPF by your letter
dated February 9 2006
As you are aware in the Notice the Association requested the OTS confirm that the
sale of the Cayman Co Preferred Securities and the Delaware Issuer securities
as defined in the Notice to outside investors constitutes the sale of the LLC
Preferred Securities as defined
in
the Notice to outside investors and that the LLC
Preferred Securities qualify for inclusion in core capital of the Association You
advised 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 CFR 5675a1footnote 4 or the reservation of authority
provision 12 CFR 56711 of the OTS capital rule and confirmed that the LLC
Preferred Securities will qualify for inclusion
in
the Associations core capital
WMPF is planning to issue an additional class of LLC Preferred Securities the
FixedtoFloating Rate Perpetual Noncumulative Preferred Securities Series
2006C LLC Preferred Securities II The LLC Preferred Securities II will
include terms substantially the same as the LLC Variable Rate Preferred
Securities as defined in the Notice including the requirement for the prior
approval of the OTS for any proposed redemption Like the LLC Variable Rate
Preferred Securities the LLC Preferred Securities II will have a stated amount to
be determined based upon market conditions and will pay distributions on anoncumulativebasis at a fixed rate for a period to be determined and thereafter will
pay distributions based on a variable rate of interest plus an applicable spread
However the dividend rates dividend payment dates and redemption dates and
prices will be different than the LLC Variable Rate Preferred Securities
Corporate Execatlve Offices
1301 Second Avenue
Seattla WA 98101
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00003
Mr Darrel Dochow
November 14 2006
Page 2
CONFIDENTIAL TREATMENT REQUESTED
The LLC Preferred Securities II will be issued to the Association in exchange for
not more than approximately $10 billion in assets consisting of a pool of option
ARMs originated by the Association Simultaneously the Association will then sell
the LLC Preferred Securities 11 to a new entity Washington Mutual Preferred
Funding Trust
II Delaware Issuer III for not more than approximately $10 billion
in cash Delaware Issuer 11
will be a trust formed 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 in 12 CFR § 55911 Delaware Issuer
II will own all of
the LLC Preferred Securities1
1 which will be the sole asset of the Delaware Issuer
II
Delaware Issuer II will issue a single class of securities Delaware Issuer Il
Securities which will represent undivided beneficial ownership interests in the LLC
Preferred Securities 11 held by Delaware Issuer II Delaware Issuer 11 willpassthroughany distributions or payments upon redemption or upon liquidation with
respect to the LLC Preferred Securities II to be holders of the Delaware Issuer II
Securities Delaware Issuer
11 Securities will be sold solely to US persons who are
qualified institutional buyers within the meaning of Rule 144A under the
Securities Act of 1933 as amended Securities Act who are also qualified
purchasers within the meaning of the Investment Company act of 1940
Investment Company Act in a transaction exempt from the registration
requirements of the Securities Act pursuant to Rule 144A thereunder
In the Notice 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 the
Associations core capital including the LLC Preferred Securities and any future
subsidiary preferred securities issuances The issuance of LLC Preferred
Securities 11 will not cause the Association to exceed this limit On a pro forma
basis based upon an October 10 2006 forecast the amount of LLC Preferred
Securities and LLC Preferred Securities II will constitute no more than
approximately 1402 percent of the Associations core capital as of December 312006
In connection with the request In
the Notice regarding the capital treatment of the
LLC Preferred Securities WMI by letter to you dated February 23 2006 stated
i
In addition to the creation of Delaware Issuer
II a new asset trust Washington Mutual Option ARM
Trust I Asset Trust l1 will be formed Asset Trust It will be a trust formed under the laws of the
State of Delaware pursuant to a trust agreement between WMPF as depositor and a trustee
unaffiliated with the Association as Delaware Trustee Asset Trust II will own approximately $30billion of first lien closedend optionARM home loans the Asset Trust I
f Assets acquired from
the Association WMPF and from university Street Inc REIT any property that secured a loan
that Asset Trust Il acquires by foreclosure or deed in lieu of foreclosure as well as other assets
authorized for federal savings associations under federal law
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00004
Mr Darrel Dochow
November 14 2006
Page 3
CONFIDENTIAL TREATMENT REQUESTED
that it will undertake that if as a result of a Supervisory Event as defined in the
Notice WMI exchanges its Holding Company Shares as defined in the Notice for
Cayman Co Preferred Securities and the Delaware Issuer Securities or if WMI
subsequent to such exchange acquires the LLC Preferred Securities WMI will
contribute to WMB the Cayman Co Preferred Securities and the Delaware Issuer
Securities or as appropriate the LLC Preferred Securities On behalf of WMI I
hereby extend that undertaking to the issuance of LLC Preferred Securities li and
the Delaware Issuer II Securities
Based on the foregoing the Association respectfully requests the OTS to confirm
that the OTS will not exercise its supervisory authority and discretion to exclude the
LLC Preferred Securities II from corecapital under 12 CFR 5675a1footnote 4
or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and confirm that the LLC Preferred Securities 11 will qualify for inclusion in the
Associations core capital
Request for Confidential Treatment Consistent with the standards of the Freedom
of
Information Act 5 USC § 552b the Association hereby requests confidential
treatment of the information contained in this letter the Submission The
Submission contains information that is commercial or financial information
obtained from a person and privileged and confidential thatis exempt from
disclosure under paragraph b4 of the Freedom of Information Act 5 USC
§552b4 and the applicable regulations of the Department of the Treasury 31
CFR §§ 12c1 and 16a The information is proprietary compiled for internal
use only and is made available to regulatory authorities only upon request The
Association requests that the information contained in this document be treated as
confidential indefinitely because the basis for confidential treatment will continue to
exist after the issues presented by this Submission are resolved The Association
further requests that
if notwithstanding the foregoing the OTS should determine
preliminarily to make available to the public any of the information contained in this
Submission it will inform the Association prior to any such release
If you have any questions regarding this letter please call Robert Monheit at
212 3266104 or me at 206 5004149
ohn F Robinson
Executive Vice President
Corporate Risk Management
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00005
U
M
Office of Thrift Supervision
Department of the Treasury
1551 Nottb T ssda Avenue Suits 1050 Santa Ana CA 927058635
TeScpltone 714 7964700 FAX 714 7964710
December 4 2006
Mr John F Robinson
Executive Vice President
Corporate Risk Management
Washington mutual
1301 Second Avenue
Seattle WA 98101
bear Mr Robinson
W4VVL
West lzs toh
Santa Ana Area Offim
Prist1t brand tax transmittal memo 7671 Ff popes r
•
To ro
Dept phone
TaTi
This responds to your November 142006 letter advising that Washington Mutual Bank hWNB plate to
issue an additional class ofpicferred securities C LLC PreierrrdSecurities 11 Rough Washington
Mutual Professed Funding LLC WMPF and requcatin OTS confirmation that such securities are
eligible for inclusion in core capital of WMB The LLC Pre1 red securities 11 wil bo issued to WMB in
exchange for not more than $1 billion is assets consisting of a pool of option ABMs origiuate+l by WMIB
By letter dated February 24 2006 this office con niad that the initial two classes of LLC Preferred
Securities issued by WMPF could be included inWW Is capital subject to certain representations and
=krWdngs Similarly please be advised that OTS will not exercise its atpe rvisory authority and
discretion to exclude the LLC Preferred Securities 11 timmcore capital under 12 CFR $675a1 footnote 4
or the reservation of authority provision 12 CFR 56711 of the OTS capital zuie and we hereby confirm
that the preferred securities will qualify for inclusion in WMB core capital This decision is based on the
r esentations made in your November 141etter
Notwiibatanding the above the OTS reserves the right in its cote discretion to exclude she Pr+efeured
Securities or prospective issuances of Preferred Securities if the terms are revised or it otherwise ceases
to provide meaningibl capital support and a realistic ability to absorb losses or otherwise raises
supervisory concerns This may include OTS concerns about the capital mix or asset struttwc ofthe
Subsidiary or WMB
If you have any questions regarding this letter please contact we at 206 8292603
Sincercly
Darrel W Doehow
Regional Deputy Director
cc FDIC
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00006
CONFIDENTIAL TREATMENT REQUESTED
August 17 2007
Michael Finn
Regional Director West Region
Office of Thrift Supervision
101 Stewart Street Suite 1010
Seattle WA 981011048
John P Rabhnaan
Executive V ce President
Corporate Risk Management
1301 Second Avenue
WMC3Z01
Seattle WA 98101
206 500 4149 phone
206 377 3018 fax
Re Washington Mutual Bank Docket Number 08551 Request for
confirmation of capital treatment of additional class of preferred stock
Dear Mr Finn
On behalf of Washington Mutual Inc WMI and Washington Mutual Bank the
Association I am writing with reference to the notice filed January 30 2006 by
the Association to establish a new subsidiary Washington Mutual Preferred
Funding LLC WMPF for the purpose of issuing two classes of preferred
securities collectively the LLC Preferred Securities to be eligible for inclusion in
core capital of WMB the Notice The Office of Thrift Supervision COTSprovided notice of Its nonobjection to the establishment of WMPF by letter dated
February 9 2006 All capitalized terms used but not otherwise defined herein shall
have the same meaning ascribed to them in the Notice
As you are aware in the Notice the Association requested that the OTS confirm
that the sale of the Cayman Co Preferred Securities and the Delaware Issuer
Securities to outside investors constitutes the sale of the LLC Preferred Securities
to outside investors and that the LLC Preferred Securities qualify for inclusion incore capital of the Association The OTS advised by letter dated February 242006 that it will not exercise its supervisory authority and discretion to exclude the
LLC Preferred Securities 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 qualify for inclusion in the Associations
core capital
Subsequently the Association by letter dated November 14 2006 requested the
OTS confirm the capital treatment of an issuance of an additional class of LLC
Preferred Securities the Fixed toFloating Rate Perpetual Noncumulative
Preferred Securities Series 2006C LLC Preferred Securities 11 The OTS
advised by letter dated December 4 2006 that it will not exercise its supervisory
authority and discretion to exclude the LLC Preferred Securities II from core capital
under 12 CFR 5675a1footnote 4 or the reservation of authority provision 12CFR 56711 of the OTS capital rule and confirmed that the LLC Preferred
Securities It qualify for inclusion
in
the Associations core capital
QEqual Honing Lander
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00007
Mr Michael Finn
August 17 2007
Page 2
CONFIDENTIAL TREATMENT REQUESTED
Following that issuance the Association by letter dated February 7 2007
requested the OTS confirm the capital treatment of an issuance of another
additional class of LLC Preferred Securities the Fixedto Floating Rate Perpetual
Noncumulative Preferred Securities Series 2007A LLC Preferred Securities
Ill The OTS indicated it consent by return of the letter stamped No Objection
as of February 24 2007
WMPF
is now planning to issue an additional class of LLC Preferred Securities theLLC Preferred Securities IV The LLC Preferred Securities IV will be fixed rate
and will include terms substantially the same as the LLC Fixed Rate Preferred
Securities as defined in the Notice including the requirement for theprior approval
of the OTS for any proposed redemption Like the LLC Fixed Rate Preferred
Securities the LLC Preferred Securities IV will have a stated amount to be
determined based upon market conditions and will pay distributions on anoncumulativebasis However the dividend rates and redemption dates and prices will
be different than the LLC Fixed Rate Preferred Securities Also the LLC Preferred
Securities IV will not be callable during the first five years following issuance and
then may be called at any time thereafter in the discretion of WMPF subject to
prior approval of the OTS
The LLC Preferred Securities IV will be issued to the Association in exchange for
not more than approximately $10 billion in cash Simultaneously the Association
will then sell the LLC Preferred Securities IV to a new entity Washington Mutual
Preferred Funding Trust IV Delaware Issuer IV for not more than approximately
$10 billion in cash2 Delaware Issuer IV will be a trust formed under the laws of
the State of Delaware and will not be a subsidiary of the Association for purposesof the notice requirement set forth in 12 CFR § 55911 Delaware Issuer IV will
own all of the LLC Preferred Securities IV which will be the sole asset of the
Delaware Issuer IV
Delaware Issuer IV will issue a single class of securities Delaware Issuer IV
Securities which will represent undivided beneficial ownership interests
in
the LLC
Preferred Securities IV held by Delaware Issuer IV Delaware Issuer IV will pass
through any distributions or payments upon redemption or upon liquidation with
respect to the LLC Preferred Securities 1V to the holders of the Delaware Issuer IV
Securities Delaware Issuer IV Securities will be sold solely to US persons whoare qualified institutional buyers within the meaning of Rule 144A under the
Securities Act of 1933 as amended Securities Act who are also qualified
1 At the time the letter was submitted WMPF had not determined whether the LLC Preferred
Securities
III would be fixedtofloating rate or fixed rate
2Alternatively WMPF may sell the LLC Preferred Securities
III
directly to Delaware Issuer IV for
$10 billion in cash The Association undertakes to advise the OTS If this alternative is selected
prior to the launch date of the issuance
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00008
Mr Michael Finn
August 17 2007
Page 3
CONFIDENTIAL TREATMENT REQUESTED
purchasers within the meaning of the Investment Company act of 1940
Investment Company Act in a transaction exempt from the registration
requirements of the Securities Act pursuant to Rule 144A thereunder
In
the Notice 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 the
Associations core capital including the LLC Preferred Securities and any future
subsidiary preferred securities issuances The issuance of LLC Preferred
Securities IV will not cause the Association to exceed this limit On a pro forma
basis based upon a forecast dated August 9 2007 the amount of LLC Preferred
Securities LLC Preferred Securities
II LLC Preferred Securities
III and LLC
Preferred Securities IV will constitute no more than approximately 1821 percent of
the Associations core capital at September 30 2007
In connection with the request in the Notice regarding the capital treatment of the
LLC Preferred Securities WMI by letter to the OTS dated February 23 2006stated that
it
will undertake that
if as a result of a Supervisory Event WMI
exchanges its Holding Company Shares for Cayman Co Preferred Securities and
the Delaware Issuer Securities or if WMI subsequent to such exchange acquires
the LLC Preferred Securities WMI will contribute to WMB the Cayman CoPreferred Securities and the Delaware Issuer Securities or as appropriate the LLC
Preferred Securities On behalf of WMI I hereby extend that undertaking to the
issuance of LLC Preferred Securities IV and the Delaware Issuer IV Securities
Based on the foregoing the Association respectfully requests the OTS to confirm
that the OTS will not exercise its supervisory authority and discretion to exclude the
LLC Preferred Securities IV from core capital under 12 CFR 5675a1footnote 4or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and confirm that the LLC Preferred Securities IV will qualify for inclusion in the
Associations core capital
Request for Confidential Treatment Consistent with the standards of the Freedomof Information Act 5 USC § 552b the Association hereby requests confidential
treatment of the information contained in this letter the Submission TheSubmission contains information that is commercial or financial information
obtained from a person and privileged and confidential that is exempt from
disclosure under paragraph b4 of the Freedom of Information Act 5 USC§552b4 and the applicable regulations of the Department of the Treasury 31
CFR §§ 12c1 and 16a The information
is proprietary compiled for internal
use only and is made available to regulatory authorities only upon request TheAssociation requests that the information contained
in
this document be treated as
confidential indefinitely because the basis for confidential treatment will continue to
exist after the issues presented by this Submission are resolved The Association
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00009
Mr Michael Finn
August 17 2007
Page 4
CONFIDENTIAL TREATMENT REQUESTED
further requests that
if notwithstanding the foregoing the OTS should determine
preliminarily to make available to the public any of the information contained in this
Submission
it
will Inform the Association prior to any such release
If you have any questions regarding this letter please call Robert Monheit at
212 3266104 or me at 206 5004149
hn F Robinson
Executive Vice President
Corporate Risk Management
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00010
Office of Thrift Supervision
SEP d 2007
Department of the Treasury West Region
101 Stewart Street Suite 1010 Seattle WA 981012419 Seattle Area Once
Telephone 206 8292600 Fax 206 8292620
September 20 2007
Mr John F Robinson Executive Vice President
Corporate Risk Management
Washington Mutual
1301 Second Avenue WMC 3201
Seattle WA 98101
Dew Mr Robinson
This responds to your August 17 2007 letter advising that Washington Mutual Bank WMB plans to issue
an additional class of preferred securities LLC Preferred Securities IV through Washington Mutual
Preferred Funding LLC WMPF and requesting OTS confirmation that such securities are eligible for
inclusion in core capital of WMB The LLC Preferred Securities IV will be issued to WMB in exchange for
not more than
$1 billion in cash
On February 24 2006 December 4 2006 and February 24 2007 this office confirmed that the three prior
classes of LLC Preferred Securities issued by WMPF could be included in WMBs capital subject to certain
representations and undertakings Similarly please be advised that OTS will not exercise its supervisory
authority and discretion to exclude the LLC Preferred Securities IV fromcore capital under 12 CFR
5675a1 footnote 4 or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and we hereby confirm that the preferred securities will qualify for inclusion in WMB core capital This
decision is based on the representations made in your August 17 letter
Notwithstanding the above the OTS reserves the right in its sole discretion to exclude the Preferred
Securities or prospective issuances of Preferred Securities if the terms are revised or it otherwise ceases to
provide meaningful capital support and a realistic ability to absorb losses or otherwise raises supervisory
concerns This may include OTS concerns about the capital mix or asset structure of the WMPF orWMB
If you have any questions regarding this letter please contact me at 206 8292603
cc FDIC
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00011
Office of Thrift Supervision
Department of the Treasury
101 Stewart Street Suite 1010 Seattle WA 981011048
Telephone 206 8292600 + Fax 206 8292620
February 9 2006
Mr John F Robinson
Executive Vice President
Corporate Risk Management
Washington Mutual Bank
1201 Third Avenue WMT 1601
Seattle Washington 98101
Dear Mr Robinson
West Region
Seattle Area Office
This responds to the notice filed January 30 2006 advising that Washington Mutual Bank WMBplans to establish a new subsidiary Washington Mutual Preferred Funding LLC WMPF for the
purpose of issuing two classes of preferred securities to be eligible for inclusion in core capital of WMBBased upon the representations made in the notice we do not object to establishment of the new operating
subsidiary or to the issuance of securities by WMPF Notwithstanding please be advised that this letter
should not be construed as authorizing the proposed capital treatment of the SI5 billion in LLC Preferred
Securities to be issued by WMPF That issue remains under review and we will provide an answer when
our review is
completedInthe future we will expect that WMB will plan appropriately so as to allow for the full thirtyday review
by OTS of notices of this type
Please contact me at 206 8292601 if you have any questions
Sincerely
DarrelW Dochow
Regional Deputy Director
cc William L Lynch Secretary Washington Mutual
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002025.00001
Washington Mutual
CONFIDENTIAL TREATMENT QUESTEDSohn F Robinson
Executive Vice President
Corporate RiiskManagement
February 23 2006
Darrel Dochow
Deputy Regional Director West Region
Office ofThrift Supervision
101 Stewart Street Suite 10 10
Seattle WA 981041048
Re Washington Mutual Bank Docket Number 08551 Request for
confirmation of capital treatment of two classes ofpreferred stock
Dear Mr Dochow
fin behalf of Washington Mutual Inc I I I am writing with reference to the notice
filed January 30 2006 by Washington Mutual Bank WMB to establish a new
subsidiary Washington Mutual Preferred Funding LLC VilMPF for the purpose of
issuingtwo classes of preferred securities to be eligible far inclusion in core capital of
WMB the Notice You provided notice of the nonobjection of the Office of Thrift
Supervision OTS to the establishment of WMPP by your letter dated February 9 2006
As you are aware in the Notice WMB requested the OTS confirm that the sale of the
Cayman Co Preferred Securities and the Delaware Issuer Securities as defined in the
Notice to outside investors constitutes the sale of the LLCPreferred Securities as defined
in the Notice to outside investors and that the LLC Preferred Securities qualify for
inclusion in core capital ofWMB In connection wit=h thatrequest WM1 hereby undertakes
that if as a result of Supervisory Event as defined inthe Notice WMI exchanges its
Holding Company Shares as defined in the Notice for Cayman Co Preferred Securities
and the l ielaware Issuer Securities or if WTI subsequent to such exchange a quires the
LLC Preferred Securities W IIWill contribute to VMB the Cayman Co Preferred
Securities and the Delaware IssuerSecurities or as appropriate the LLC Preferred
Securities
If you have any questions regarding this letter please call RobertMonheit at
212 3266104 or me at 206 4906100
SiereI
oho F Robinson
Executive Vice President
Corporate Risk Management
12111 Third Avenue
Seattle WA 981
2064906€3Ephone
fax 206 3 5I8
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002025.00002
Office of Thrift Supervision
Department ofthe Treasury
101 Stewart Street Suite 3010 Seattle WA 981012419
Telephone 206 8292600 Fax 206 8292620
February 24 2006
West Region
Seattle Area oft e
Mr John F Robinson
Executive Vice President FEB 2 8 2006c
Corporate Risk Management
Washington Mutual Inc LEGAL DEPARTMENT
1201 Third Avenue WMT 1601
Seattle WA 98101
Dear Mr Robinson
This letter further responds to the notice filed January 30 2006 advising that Washington Mutual
Bank WMB plans to establish a new subsidiary Washington Mutual Preferred Funding LLC
WMPF for the purpose of issuing two classes of Preferred Securities to be eligible for
inclusion in core capital of WMB By letter dated February 9 2006 we took no objection to the
establishment of the new operating subsidiary and the issuance of securities by WMPF
Please be advised that OTS will not exercise its supervisory authority and discretion to exclude
the Preferred Securities from core capital under 12 CFR 5675a1 footnote 4 or the
reservation of authority provision 12 CFR 56711 ofthe OTS capital rule and we hereby
confirm that the Preferred Securities will qualify for inclusion in WMB core capital This
decision is based on the representations in the Notice attachment thereto and commitment
detailed in yourconfidential letter dated February 23 2006
Notwithstanding the above the 0TS reserves The right in its sole discretion to exclude the
Preferred Securities or prospective issuances of Preferred Securities if the terms are revised or
it otherwise ceases to provide meaningful capital support and a realistic ability to absorb losses
or otherwise raises supervisory concerns This mayinclude OTS concerns about the capital mix
or asset structure of the Subsidiary or WMB
If you have any questions regarding this letter please contact me at 206 8292601
Sincerely
•WA W•LDarrel W Dochow
Regional Deputy Director
cc William L Lynch Secretary Washington Mutual
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002025.00003
Mailstop WMC 3301
1301 Second Avenue
Seattle WA 98101
Via Electronic Mail
September 25 2008
Office of Thrift Supervision
Examinations
Attn John Bisset
Attn Benjamin Franklin
2065008302 direct phone
steverotellawamunet
WMI will issue a press release on September 26 2008 announcing that each Conditional Exchange will
occur at 800 am New York time on September 26 2008 Pursuant to Section 2 of each Exchange
Agreement the Conditional Exchange will then occur automatically at that time and WMI will become
the owner of all the Delaware issuer trust securities and all the Preferred Securities issued by
Washington Preferred Funding Cayman I Ltd the Cayco Preferred Securities The occurrence of the
Conditional Exchange has the effect of dissolving each of the Delaware issuer trusts so that the WMPF
Preferred Securities held by the trusts will be owned by WMl as a result of such dissolution In any event
lawardth Dt t eo eeffective September25 2008 WMI has assigned to WMB all of its right title and interes
i tpthe Cayco Preferred Securities and the WMPF Preferred Securities and upon rece
trust securities
the Delaware trust securities the Cayco Preferred Securities and the WMPF Preferred Securities WM
will immediately contribute and transfer same to WMB and such contribution and transfer will occur
regardless of any events which may occur prior to such contribution and transfer
Sincerely
WASHINGTON MUTUAL INC
ByName Steve Rotella
Title President and Chief Operating Officer
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002025.00004
ASSIGNMENT AGREEMENT
between
WASHINGTON MUTUAL BANKas Assignee
and
WASHINGTON MUTUAL INCas Assignor
Effective as of September 25 2008
17535196 05129267
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002025.00005
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT as amended modified or supplemented
from time to time after the date hereof the Agreement is effective as of September 25
2008 and is made by and between WASHINGTON MUTUAL BANK afederallychartered
savings association as Assignee the Assignee and WASHINGTON
MUTUAL INC a Washington corporation as Assignor the Assignor
RECITALS
A Assignor wishes to assign to Assignee certain securities and Assignee
wishes to accept such assignment which Securities shall be assigned upon the
execution of this Agreement
AGREEMENT
In consideration of the premises and the mutual agreements hereinafter set forth
and for other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged the Assignee and Assignor agree as follows
ARTICLE I
DEFINITIONS GENERAL INTERPRETIVE PRINCIPLES
Section 101 Definitions
Whenever used in this Agreement the following words and phrases unless the
context otherwise requires shall have the following meanings
Agreement This Assignment Agreement including all exhibits hereto and all
amendments hereof and supplements hereto
Certificate Any instrument constituting evidence of ownership of a Security
Effective Date September 25 2008
Code The Internal Revenue Code of 1986 as amended and the regulations
promulgated thereunder and rulings issued thereunder Section references to the Code
are to the Code as in
effect as the date of this Agreement and any subsequent
provisions of the Code amendatory thereof supplemental thereto or substituted
therefore
Assignment The assignment to Assignee by Assignor of Securities pursuant to
this Agreement
Delive Is deemed to occur as of September 25 2008
WMBNWI Master Securities
Assignment Agreement
17535196 05129267
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002025.00006
Person Any individual corporation limited liability company partnership joint
venture association jointstock company trust unincorporated organization or
government or any agency or political subdivision thereof
Assignee Washington Mutual Bank a federallychartered savings association
and its successors and assigns
Securities The securities listed in
Exhibit A that are the subject of this
Agreement The term Securities includes without limitation such securities any
Certificates corresponding to such securities and all other rights benefits proceeds and
obligations of the owner of such securities arising from or in connection with such
securities whether now owned or hereafter acquired
Assignor Washington Mutual Inc a Washington corporation and its successors
and assigns
Section 102 General Interpretive Principles
For purposes of this Agreement except as otherwise expressly provided or
unless the context otherwise requires
a the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular and the
use of any gender herein shall be deemed to include the other gender
b accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles
references herein to Articles Sections Subsections Paragraphs
and other subdivisions without reference to a document are to designated
Articles Sections Subsections Paragraphs and other subdivisions of this
Agreement
d a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which
the reference appears and this rule shall also apply to Paragraphs and
other subdivisions
e the words herein hereof hereunder and other words of similar
import refer to this Agreement as a whole and not to any particular
provision and
f the term include or including shall mean without limitation by reason of
enumeration
2
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ARTICLE II
ASSIGNMENT OF SECURITIES
Section 201 Assignment of Securities
With respect to the Securities listed on Exhibit A attached hereto Assignor
hereby contributes transfers assigns sets over and conveys to Assignee without
recourse but subject to the terms of this Agreement all of Assignors right title and
interest whether now owned or hereafter acquired in
and to the Securities
Upon execution and delivery of this Agreement by Assignor and Assignee all
rights and benefits arising out of the Securities which come into the possession of
Assignor including but not limited to funds which may be received by Assignor on or in
connection with the Securities and the ownership of all records and documents with
respect to the Securities which are prepared by or which come into the possession of
Assignor shall immediately vest in Assignee
Assignee acknowledges that the assignment by Assignor to Assignee under this
Agreement are intended to qualify as taxfree transactions under Section 351 of the
Code
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 301 Mutual Representations and Warranties Each party hereby
represents and warrants to the other that it has all requisite power and authority to enter
into and perform its obligations under this Agreement
It is understood and agreed that the representationsand warranties set forth in
this Article V shall survive delivery of the respective Securities to the Assignee and shall
continue throughout the term of this Agreement
ARTICLE IV
COSTS
Section 401 Costs
Each partyshall bear its own costs and expenses All other costs and expenses
incurred in
connection with the transfer and delivery of the Securities including without
limitation recording and filing fees shall be paid by Assignee
Each remittance or distribution made pursuant to this Agreement shall be made
in the manner agreed to by the parties To the extent that the amount of a remittance or
distribution made pursuant to this Agreement is greater than the amount that was
supposed to be made each party agrees to give prompt written notice thereof to the
other party after discovery thereof including the amount of such remittance or
distribution that was paid in error and to refund such overpayment immediately
3
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ARTICLE V
MISCELLANEOUS PROVISIONS
Section 501 Amendment
This Agreement may be amended from time to time only by written agreement
signed by Assignor and Assignee
Section 502 Governing Law
This Agreement shall be construed in accordance with the internal laws of the
State of Washington except to the extent preempted by federal law and without
reference to the choice of law doctrine of such state and the obligations rights and
remedies of the parties hereunder shall be determined in
accordance with such laws
Section 503 Notices
All demands notices and communications hereunder shall be in writing and shall
be deemed to have been duly given if personallydelivered at or mailed by registered or
certified mail postage prepaid to a in the case of Assignor
Washington Mutual Inc
1301 Second Avenue WMC 1411
Seattle Washington 98101
Attention Corporate Secretary
or such other address as may hereafter be furnished by Assignor to Assignee in writing
and
b in the case of Assignee
Washington Mutual Bank
1301 Second Avenue WMC 1411
Seattle Washington 98101
Attention Corporate Secretary
or such other address as may hereafter be furnished by Assignee to Assignor in writing
Section 504 Merger Severability of Provisions
This Agreement and the documents and instruments referred to herein
constitute the entire agreement of and is the final and complete expression of the parties
relating to the subject matter of this Agreement and supersedes all prior or
contemporaneous negotiations and agreements whether oral or written relating to the
subject matter hereof
If any one or more of the covenants agreements provisions or terms of this
Agreement shall be held invalid for any reason whatsoever then such covenants
4
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agreements provisionsor terms shall be deemed severable from the remaining
covenants agreements provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisionsof this Agreement If the invalidity of
any part provision representation or warranty of this Agreement shall deprive any party
of the economic benefit intended to be conferred by this Agreement the parties shall
negotiate in good faith to develop a structure the economic effect of which is nearly as
possible the same as the economic effect of this Agreement without regard to such
inability
Section 505 Execution Successors and Assicros
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts each of which when so executed
shall be deemed to be an original such counterparts together shall constitute one and
the same agreement This Agreement shall inure to the benefit of and be binding upon
Assignor and Assignee and their respective successors and assigns
Signatures on Following Page
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IN WITNESS WHEREOF the parties have caused this Agreement to be
executed by their respective duly authorized officers on the dates shown below to be
effective as of the effective date first set forth above
WASHINGTON MUTUAL BANK
By$
Name zht irTitlet jA
r1WASHINGTONMUTUAL INC
ByName1tTitle VVj f vol
s
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EXHIBITA
SECURITIES
I Washington Mutual Preferred Cayman I Ltd 725 Perpetual Noncumulative
Preferred Securities Series A1
ii Washington Mutual Preferred Cayman I Ltd 725 Perpetual Noncumulative
Preferred Securities Series A2iii Washington Mutual Preferred Funding Trust FixedtoFloating Rate Perpetual
Noncumulative Trust Securities
iv Washington Mutual Preferred Funding Trust II FixedtoFloating Rate Perpetual
Noncumulative Trust Securities
v Washington Mutual Preferred Funding Trust Ill FixedtoFloating Rate Perpetual
Noncumulative Trust Securities
vi Washington Mutual Preferred Funding Trust IV FixedtoFloating Rate Perpetual
Noncumulative Trust Securities
vii Washington Mutual Preferred Funding LLC FixedtoFloating Rate Perpetual
Noncumulative Preferred Securities Series 2006A
viii Washington Mutual Preferred Funding LLC 725 Perpetual Noncumulative
Preferred Securities Series 2006B
ix Washington Mutual Preferred Funding LLC FixedtoFloating Rate Perpetual
Noncumulative Preferred Securities Series 2006C
x Washington Mutual Preferred Funding LLC FixedtoFloating Rate Perpetual
Noncumulative Preferred Securities Series 2007A
xi Washington Mutual Preferred Funding LLC FixedtoFloating Rate Perpetual
Noncumulative Preferred Securities Series 2007B
ii Any and all right title and interest of the Washington Mutual Inc in and to
Washington Mutual Preferred Cayman I Ltd WaMu Cayman Washington
Mutual Preferred Funding Trust WaMu Delaware I Washington Mutual
Preferred Funding Trust II WaMu Delaware Iln Washington Mutual Preferred
Funding Trust
III WaMu Delaware Ill and Washington Mutual Preferred
Funding Trust IV WaMu Delaware IV and together with WaMu Cayman
VJaMu Delaware I WaMu Delaware 11 and WaMu Delaware III the Trusts
including any interests of the Trusts in any of the Securities
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Washington Mutual
CONFIDENTIAL TREATMENT QUESTEDSohn F Robinson
Executive Vice President
Corporate RiiskManagement
February 23 2006
Darrel Dochow
Deputy Regional Director West Region
Office ofThrift Supervision
101 Stewart Street Suite 10 10
Seattle WA 981041048
Re Washington Mutual Bank Docket Number 08551 Request for
confirmation of capital treatment of two classes ofpreferred stock
Dear Mr Dochow
fin behalf of Washington Mutual Inc I I I am writing with reference to the notice
filed January 30 2006 by Washington Mutual Bank WMB to establish a new
subsidiary Washington Mutual Preferred Funding LLC VilMPF for the purpose of
issuingtwo classes of preferred securities to be eligible far inclusion in core capital of
WMB the Notice You provided notice of the nonobjection of the Office of Thrift
Supervision OTS to the establishment of WMPP by your letter dated February 9 2006
As you are aware in the Notice WMB requested the OTS confirm that the sale of the
Cayman Co Preferred Securities and the Delaware Issuer Securities as defined in the
Notice to outside investors constitutes the sale of the LLCPreferred Securities as defined
in the Notice to outside investors and that the LLC Preferred Securities qualify for
inclusion in core capital ofWMB In connection wit=h thatrequest WM1 hereby undertakes
that if as a result of Supervisory Event as defined inthe Notice WMI exchanges its
Holding Company Shares as defined in the Notice for Cayman Co Preferred Securities
and the l ielaware Issuer Securities or if WTI subsequent to such exchange a quires the
LLC Preferred Securities W IIWill contribute to VMB the Cayman Co Preferred
Securities and the Delaware IssuerSecurities or as appropriate the LLC Preferred
Securities
If you have any questions regarding this letter please call RobertMonheit at
212 3266104 or me at 206 4906100
SiereI
oho F Robinson
Executive Vice President
Corporate Risk Management
12111 Third Avenue
Seattle WA 981
2064906€3Ephone
fax 206 3 5I8
CONFIDENTIAL
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By:Name: Steve RotellaTitle: President and Chief Operating Officer
CONFIDENTIAL
WaMue
Mailstop: WMC 33011301 Second AvenueSeattle, WA 98101
Office of Thrift SupervisionExaininationsAttn: John BissetAttn: Benjamin Franklin
WMI will Issue a press release on September 26, 2008 announcing that each Conditional Exchange willoccur at 8:00 am. New York time on September 26, 2008. Pursuant to Section 2 of each ExchangeAgreement, the Conditional Exchange will then occur automatically at that time, and WMI will becomethe owner of all the Delaware issuer trust securities, and all the Preferred Securities issued byWashington Preferred Funding (Cayman) I Ltd. (the "Cayco Preferred Seciiritles") The occurrence of theConditional Exchange has the effect of dissolving each of the Delaware issuer trusts, so that the WMPFPreferred Securities held by the trusts will be owned by WMI as a result of such dissolution. In any event,effective September 25, 2008, WMI has assigned to WMB all of its right, title and interest to the Delawatrust securities, the Cayco Preferred Securities and the WMPF Preferred Securities, and upon receiptthe Delaware trust securities, the Cayco Preferred Securities and the WMPF Preferred Securities,will immediately contribute and transfer same to WMB, and such contribution and transfer will occurregardless of any events which may occur prior to such contribution and transfer.
Sincerely,
WASHINGTON MUTUAL, INC.
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Ilia Electronic Mall
Se,,!en,h.r 25, 2008
Office of Thrift Supervision Examinations Attn: John Bisset Attn: Benjamin Franklin
CONFIDENTIAL
Mailstop: WMC 3301 1301 Second Avenue Seatile, WA 98101
WMf wm Issue a press release on 2008 announcing that each Conditional will
occur at 8:00 am. New York time on 2008 .. Pul'Su.ntto Section 2 of each Exc;hal1Qe
Agr.emen~ lhe Conditional then occur at that time, and WMI will become
the owner of all the Delaware and all the Securities Issued by
Washington Preferred Funding (Cayman) I Ltd; (lhe Preferred Securities"). The occurrence afth.
Condmonal has the effecl of dissolving each Delaware Issuer trusts, so that the WMPF
Preferred Securities by the trusts WIll be owned by WMI .s a re5uft of such dl .. ". lulion. In .ny~ven~
effeclive September 25, 2008, WMI has to WMB all of its right, titie and interest to the Delawa 1I.JlJ.\ trust securitie., the Cayco Preferred and the WMPF Preferred Securities, end recelp!
the Delaware trust securlH.s, the Cayco Preferred Securities and the WMPF Preferred Se"uritle.,
will contribute and transfer .ame to WMB, and such contribution and !ransfer WIll occur
regardless of any events which may occur plior to such contrtbull"n and transfer. '
Sincerely,
WASHINGTON MUTUAL, INC.
Title: President and Chief 'Op,''''!ing Officer I I I I I I I I I
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ASSIGNMENT AGREEMENT
between
WASHINGTON MUTUAL BANK,as Assignee
and
WASHINGTON MUTUAL, INC.,as Assignor
Effective as of September 25, 2008
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ASSIGNMENT AGREEMENT
175351% 05129267
between
WASHINGTON MUTUAL as A$.,ign,~e
and
WASHINGTON as As"lallor
Effective as
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ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (as amended, modified or supplementedfrom time to time after the date hereof, the "Agreement') is effective as of September 25,2008, and is made by and between WASHINGTON MUTUAL BANK, a federally-chartered savings association, as Assignee (the "Assignee), and WASHINGTONMUTUAL, INC., a Washington corporation, as Assignor (the 4Assignor').
RECITALS
(A) Assignor wishes to assign to Assignee certain securities, and Assigneewishes to accept such assignment, which Securities shalt be assigned upon theexecution of this Agreement.
AGREEMENT
In consideration of the premises and the mutual agreements hereinafter set forth,and for other good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Assignee and Assignor agree as follows:
ARTICLE I
DEFINITIONS: GENERAL INTERPRETIVE PRINCIPLES
Section 1.01 Definitions.
Whenever used in this Agreement, the following words and phrases, unless thecontext otherwise requires, shall have the following meanings:
Agreement: This Assignment Agreement, including all exhibits hereto, and all,amendments hereof and supplements hereto.
Certificate: Any instrument constituting evidence of ownership of a Security.
Effective Date: September 25, 2008.
Code: The Internal Revenue Code of 1986, as amended, and the reguiationspromulgated thereunder and rulings issued thereunder. Section references to the Codeare to the Code, as in effect as the date of this Agreement and any subsequentprovisions of the Code, amendatory thereof, supplemental thereto or substitutedtherefore.
Assignment The assignment to Assignee by Assignor of Securities pursuant tothis Agreement
Delivery: Is deemed to occur as of September 25, 2008.
WMIIIINMI Mester SecuritiesAssignment Agreement
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17535196 05129267
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. THIS ASSIGNMENT AGREEMENT (as modified or supplemented
from time 10 time Ihe dale hereof, the "Agreemenf') is as of September
2008, and is made and between WASHINGTON MUTUAL BANK, a federally-
chartered savings as Assignee and WASHINGTON
MUTUAL, INC., a corporation, as Assignor
RECITALS
(Al wishes 10 execution
10 assign to Assignee certain s:,~~:;~~,s~ and A.,,10;1ee
such assignment, which Securities shall be a upon the
Agreement.
AGREEMENT
In consideralion of the premises and the mutual hereinafter sel forth,
and for other good and valuable the and suffiCiency of which are
aclmc1wlildgled, the and Assignor agree as follows:
ARTICLE I
Section 1,01.
Whenever Ilsed in this Acree,mlmt.the follOWing words and ohlrases. unless the
context otherwise the foll"wi"9 m,,,arlinos:
ame'nd;~~~~~ This Assignment Agreement including all exhibits supplements hereto.
"ndall
!&!!i!i!;;l!!J,,: Any instrument constituting evidence of ownership of a Security.
2008.
The Internal Revenue Code of 1986, as amoencled, and the regulations
prctmLllgalted !.hereLlndler and rulings issued thereunder. Section references to the Cod"
are to as in effect as the date of this and any subsequent
amendatory thereof, thereto or substituted
Agr~::~Jl: The "J>."innm"nt to A.,.i"""" by Assignor of SecurHies pun~ua'n!to
this
Is deemed to occur as of $e'JIs,nb<" 25, 2008.
WMSMMI Master Sooulitl .. Asslgnment Agreement
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Person: Any individual, corporation, limited liability company, partnership, jointVenture, association, joint-stock company, trust, unincorporated organization orgovernment or any agency or political subdivision thereof.
Assignee: Washington Mutual Bank, a federally-chartered savings association,and its successors and assigns.
Securities: The securities listed in Exhibit A that are the subject of thisAgreement. The term 'Securities" includes, without limitation, such securities, anyCertificates corresponding to such securities, and all other rights, benefits,-proceeds andobligations of the owner of such securities arising from or in connection with suchsecurities, whether now owned or hereafter acquired.
Assignor. Washington Mutual, Inc, a Washington corporation, and its successorsand assigns.
Section 1.02. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided orunless the context otherwise requires:
a) the terms defined in this Agreement have the meanings assigned to themin this Agreement and include the plural as well as the singular, and theuse of any gender herein shall be deemed to include the other gender;
b) accounting terms not otherwise defined herein have the meaningsassigned to them In accordance with generally accepted accountingprinciples;
c) references herein to "Articles," "Sections," 'Subsections,' "Paragraphs,"and other subdivisions without reference to a document are to designatedArticles, Sections, Subsections, Paragraphs and other subdivisions of thisAgreement;
d) a reference to a Subsection without further reference to a Section Is areference to such Subsection as contained in the same Section in whichthe reference appears, and this rule shall also apply to Paragraphs andother subdivisions;
e) the words "herein," hereof," °hereunder,' and other words of similarimport refer to this Agreement as a whole and not to any particularprovision; and
f) the term 'include or "including" shall mean without limitation by reason ofenumeration.
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. govemment or any agency or political subdivision "'"""".
&;;illl!!~: Washington Mutual and Hs successors and assigns.
a federally"chartered saviinos aSll'ociation,
The securities listed in Exhibit A that are the of this 'Securiti",,' includes. without limitation, such sacurfties. any
to such and all other rights. benefits. proceeds and of the owner such securities from or in connection with such
whelher now owned or hereafter ar .. ,ui!-ed .
• ;~~!Q.[: Washington Mutual. Inc:. a Washington corporation, and its successors and a,
Section 1.02.
For "l!!'nn, .. ,~ of this Agreement, as othelWise expressly prc,vidied or unless the otherwise requires:
al
b)
0)
d)
e)
the lenns defined in this have Ihe meanings assigned to them In this Agreement and the plural as well as Ihe singular, and the use of any gender herein shall be deemed to include the other gender;
"~;~~~:;:;:~ terms not otherwise defined herein have the meanings a them in accordance WITh generally accounting
references herein 10 'Articles," • 'SllbseotJon,s, 'f:~~a3~::~~;;ed and other subdivisions without reference to II document are to Articles, and other subdivisions of Ihls Agreement;
a reference to a Subsection without further reference to a Section Is a reference to such Subsection as oontained in the same Section in which the reference appears, and Ihis rule shall also apply to and other subdivisions;
words " 'hereof," 'hereunder," and other words ofsimilar refer to this Agreement as a whole and not to any particular
prc.vlsllon; and
l) the tSI111 "include" or "including' shall mean vAthoutlimilaiion by reason of enumeration,
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ARTICLE II
ASSIGNMENT OF SECURITIES
Section 2.01. Assignment of Securities.
With respect to the Securities listed on Exhibit A attached hereto, Assignor• hereby contributes, transfers, assigns, sets over and conveys to Assignee, withoutrecourse, but subject to the terms of this Agreement, all of Assignor's right, title andinterest, whether now owned or hereafter acquired, In and to the Securities.
Upon execution and delivery of this.Agreement by Assignor and Assignee, allrights and benefits arising out of the Securities which come into the possession ofAssignor, including but not limited to funds which may be received by Assignor on or inconnection with the Securities, and the ownership of all records and documents withrespect to the Securities which are prepared by or which come into the possession ofAssignor, shall immediately vest in Assignee,
Assignee acknowledges that the assignment by Assignor to Assignee under thisAgreement are intended to qualify as tax-free transactions under Section 351 of theCode.
ARTICLE III
REPRESENTAT!QNS AND WARRANTIES
Section 3.01. Mutual Representations and Warranties,. Each party herebyrepresents and warrants to the other that it has all requisite power and authority to enterinto and perform its obligations under this Agreement.
It is understood and agreed that the representations and warranties set forth Inthis Article V shall survive delivery of the respective Securities to the Assignee, and shallcontinue throughout the term of this Agreement.
ARTICLE IV
COSTS
Section 4.01. Costs.
Each party shall bear its own costs and expenses. All other costs and expensesincurred in connection with the transfer and delivery of the Securities, Including withoutlimitation recording and filing fees, shall be paid by Assignee.
Each remittance or distribution made pursuant to this Agreement shall be madein the manner agreed to by the parties. To the extent that the amount of a remittance ordistribution made pursuant to this Agreement is greater than the amount that wassupposed to be made, each party agrees to give prompt written notice thereof to theother party after discovery thereof, including the amount of such remittance ordistribution that was paid in error, and to refund such overpayment immediately.
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ARTICLE II
With respect to the Securilies listed on Exhibft A a!!ached hereto, Assignor
contributes, assigns, over and conveys to Assignee, without .
recourse, but to the terms of this all of Assigl1o~s right,ltlle and
interest, whether now owned or hereafter acquired, and to the Securities,
execution and delivery of this Agreement by As,siol'Of
rights out of the Securities which rome ;nt" t"A
Assignor, including but limited to funds which may be
connection with the Securities, and the ownership of all records
re!lpect to the Secumies which are or which come inlo the
Assigrlor, shall immediately vest in As,sigrlee.
all of on orin with
of
Aor,,~rr~:i~::~ acknowledges that the a::~~~~~~~~~~ are intended to qualify as tax-free
Asl;;grlee underthis oflhe
ARTICLE III
enter
It is understood and that the representations and warranties set forth In
this Article V shall survive del'iverv of the respective Securi!ies to the and shall
continue throughout the term
ARTICLE IV
Section 4.01.
Each shall bear fts own costs and expens .. s. All other costs and exp,emsoo
Incurred In with the transfer and delivery of the Including
limitation recording and filing shall be by Assignee.
Eaoh remillance or distribution made pursuant to this shall be made
in the To the extent that Ihe amount of a remittance or
distrtbution Agreement the amount that was
SUI)P~sed to be nro,mo" wriit"n noliee thereof to
after discoII'ery Ihe",,,,f, 1I10,a{""" the of such remittance or
distribution that was such overpayment imlllediately.
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CONFIDENTIAL
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Amendment.
This Agreement may be amended from time to time only by written agreementsigned by Assignor and Assignee.
Section 5.02. Governing Law. ..
This Agreement shall be construed In accordance with the internal laws of theState of Washington, except to the extent preempted by federal law and withoutreference to the choice of law doctrine of such state, and the obligations, rights andremedies of the parties hereunder shall be determined in accordance with such laws.
Section 5.03. Notices.
All demands, notices and communications hereunder shall be in writing and shallbe deemed to have been duly given if personally delivered at or mailed by registered orcertified mail, postage prepaid, to (a) in the case of Assignor,
Washington Mutual, Inc.1301 Second Avenue, WMC 1411Seattle, Washington 98101Attention: Corporate Secretary
or such other address as may hereafter be furnished by Assignor to Assignee in writing;and
b) in the case of Assignee,
Washington Mutual Bank1301 Second Avenue, WMC 1411Seattle, Washington 98101Attention: Corporate Secretary
or such other address as may hereafter be furnished by Assignee to Assignor in writing.
Section 5.04. Merger: Severability of Provisions.
This Agreement, and the documents and instruments referred to herein,constitute the entire agreement of and is the final and complete expression of the partiesrelating to the subject matter of this Agreement, and supersedes all prior orcontemporaneous negotiations and agreements, whether oral or written, relating to thesubject matter hereof.
If any one or more of the covenants, agreements, provisions or terms of thisAgreement shall be held invalid for any reason whatsoever, then such covenants,
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ARTICLE V
SectionS.01. llmruJf!l!:!lE!l1
This Aoreement be amended from time to time only written agreement
signed As"lgn,orand
Section 5.02 . .\2Q'l§LolDJaklM,·.
This Agreemenl shall be In the intemallaws of the
Slate of Washington, 10 the eldent by federal law and without
reference to the choice of doctrine of such and the and
remedies of the hereunder shall be determined In accordance such laws.
Section 5.03. Nolices.
All notices and communications hereunder shall be in writing and shall
be deemed to have been if personally delivered at or mailed by registered or
certified (a) in the case of Assignor.
W"shing'lon Mutual. Inc. 1301 Second Avenue. WMC 1411 "",,:me. Washington 98101 Attention: Corporate Se,orelary
or such oth"r address as may hereafter be furnished by Assignor to ASJ<im1M in writing;
and
b) in the Case
Washington MlJlual Bank 1301 Second WMC 1411 ",",ame. Washington Atten!ion: COlJXlI·ate Se,eret:ary
or such other address asmay hereafter be furnished by As"ig"ss!" Assignor in writing.
Section 5.04.
This and the documents and instruments referred 10 herein,
constitu1e entire agreement of and is the and expression of the
rel,alir,,, to the subject malter and all plior or
contemporaneous agreements. oral or written, rab,tinlg to the
subject malle,
one or more of the provisions or terms of this
be held invalid for any reason whatsoever, then such co,'en,.nbs.
4 17535196 ()Sl29261
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agreements, provisions or terms shall be deemed severable from the remainingcovenants; agreements, provisions or terms of this Agreement and shall in no way affectthe validity or enforceability of the other provisions of this Agreement. If the invalidity ofany part, provision, representation or warranty of this Agreement shall deprive any partyof the economic benefit intended to be conferred by this Agreement, the parties shallnegotiate in good faith to develop a structure the economic effect of which is nearly aspossible the same as the economic effect of this Agreement without regard to suchinability.
Section 5,05. Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by thedifferent parties hereto on separate counterparts, each of which, when so executed,shall be deemed to be an original; such counterparts, together, shall constitute one andthe same agreement. This Agreement shall inure to the benefit of and be binding uponAssignor and Assignee and their respective successors and assigns.
[Signatures on Following Page]
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17535196 05/232675
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provisions·orterms shall be deemed severable from the ren1ai"ino
covenants, or ielTllS cif this Agreement and shall in no way affect
the validity Or of the other provisions of this If the Invalidity of .
any part, provision, or warranty althis Agreementshail deprive any party
of the economic Intended to be conferred Ihls Agreement, Ihe parties shall
negoliale in good faith to develop a structure Ihe economic effect of which is Meany as
fn~~~i~~ the same as Ihe economic effect of this Agreement without regard 19 such
Aareement may be executed In one Of more counterparts and by the
different hereto on counterparts, each afwhlch, when so "x"cU""U,
shall bede"m.,d to be an such together, shall constitute one and
the same This shall inure 10 the benefit of and be binding upon
Assignee respective successors and a .. ,ians.
[Signatures on Following
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IN WITNESS WHEREOF, the parties have caused this Agreement to beexecuted by their respective duly authorized officers on the dates shown below, to beeffective as of the effective date first set forth above.
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-.",.:
IN WITNESS WHEREOF, the parties have caused Ihis Agreement to be executed by their respective duly authorized officers on the dates shollln below, to be effective as of the effective date first set forth above.
WASHINGTON MUTUAL, INC.
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CONFIDENTIAL
EXHIBIT A
SECURITIES
(i) Washington Mutual Preferred (Cayman)] Ltd. 7.25% Perpetual Non-cumulativePreferred Securities, Series A-1
(ii) Washington Mutual Preferred (Cayman) I Ltd. 7.25% Perpetual Non-cumulativePreferred Secirrities, Series A-2
(iv) Washington Mutual Preferred Funding Trust II Fixed-to-Floating Rate PerpetualNon-cumulative Trust Securities
(v) Washington Mutual Preferred Funding Trust III Fixed-to-Floating Rate PerpetualNon-cumulative Trust Securities
(vi) Washington Mutual Preferred Funding Trust IV Fixed-to-Floating Rate PerpetualNon-cumulative Trust Securities
(vii) Washington Mutual Preferred Funding LLC Fixed-to-Floating Rate PerpetualNon-cumulative Preferred Securities, Series 2006-A
(viii) Washington Mutual Preferred Funding LLC 7.25% Perpetual Non-cumulativePreferred Securities, Series 2005-B
(ix) Washington Mutual Preferred Funding LLC Fixed-to-Floating Rate PerpetualNon-cumulative Preferred Securities, Series 2006-C
(x) Washington Mutual Preferred Funding LLC Fixed-to-Floating Rate PerpetualNon-cumulative Preferred Securities, Series 2007-A
(xi) Washington Mutual Preferred Funding LLC Fixed-to-Floating Rate PerpetualNon-cumulative Preferred Securities, Series 2007-B
(xii) Any and all right, title and interest of the Washington Mutual, Inc. in and toWashington Mutual Preferred (Cayman) I Ltd. ("WaMu Cayman"), WashingtonMutual Preferred Funding Trust ("WaMu Delaware Washington MutualPreferred Funding Trust II ("WaMu Delaware 111, Washington Mutual PreferredFunding Trust ill ("WaMu Delaware III") and Washington Mutual PreferredFunding Trust IV ("WaMu Delaware IV' and, together with WaMu Cayman,WaMu Delaware I, WaMu Delaware II and WaMu Delaware Ill, the 'Trusts"),including any interests of the Trusts In any of the Securities
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002025.00012
17535196 05129267
Restricted For
CONFIDENTIAL
EXHIBIT A
SECURITIES
(i) Washington Mutual Preferred (Cayman) I Ltd. 7.25% Perpetual Non-cumulative Preferred Securities, Series A-l
Iii) Washington Mulual Preferred (Cayman) I Ltd. 7.25% Perpetual Non-cumulative Preferred Series A-2
(v) Washington Mutual Preferred F'lf1dir,n Trust III Rate Perpetual Non-cumulative Trust Securities
(vi) Washington Mutual Preferred Trust IV Rale Perpetual Non-cumulalive Trust Securities
(vii) Washington Mutual Preferred F'ul,di"n Rate peillel:ual Non-cumulalive Preferred 2006-A
(viii) Washington Mutual Preferred Funding LLC 7.25% PA,mel:ual Non-cumulative Preferred Series 2006-8
Ox) Washington Mutual Non-cumulative Preferred !,:,,,,,, "III".
(x) Washington Millu,,1 Preferred Funding lLC Rate Perpe:lual . Non-cumulative Preferred Securities, Series 2007-A Washington Mutual Preferred Funding LLC Fixed-to-Floating Rale Perpetual Non-cumulative Preferred Securities, Series 2007-8
(xli) and all right, tille and Inlerest oflhe Washington Mutual, Inc. in and to Washington Mutual Preferred (Cayman) I ltd. ("WaMu Cayman"), Washington Mutual Preferred Funding Trust (WaMu Delaware Washington Mutual Preferred Funding Trust II rwaMu Delaware 11"), Mutual Preferred
Trusllll (WaMu Delaware III') and Washington Preferred ",,,,,.H,,~ Trust IV (WaMu Delaware IV' and, togetharwith WaMu Cayman, WaMu I, WaMu Delaware II and WaMu Delaware III, the "Trusts"), including any interests of the Trusts In any of the Securtties
17535196051:29261
I I I I ' I I I I
[ I I
r I I
I ~
in with Plan Confirmation Only WM I PC _ 500002025 00012
CONFIDENTIAL
Office of Thrift SupervisionDepartment of the Treasury West Region
Seattle Office • (206) 829-2600 • Fax: (206) 829-2620101 Stewart Street, Suite 1010Seattle, WA 98101
September 25, 2008
Board of DirectorsMr. Steve Frank, ChairmanMr. Alan Fishman, Chief Executive OfficerWashington Mutual, Inc.1301 Second AvenueSeattle, WA 98101
Members of the Board or their Representative:
The deposit outflows from Washington Mutual Bank over the past two weeks and reduction in availability ofalternative funding sources have created significant liquidity pressures for the institution. The September 7,2008 OTS Memoranda of Understanding ("MOU") the bank entered into with OTS requires WaMu to provideOTS with an analysis of the earnings, profitability and stability of all existing and projected business lines. Inaddition, the MOU places limitations on the ability of the bank to pay dividends.
Pursuant to the conditional exchange provision in the prospectus of the REIT preferred offerings of the bank,OTS concludes an "Exchange Event" has occurred and therefore directs an exchange of WaMu REITPreferred Securities to a like amount of preferred stock in Washington Mutual Incorporated.
Please let me know if you have any questions,
Sincerely,
\ Cus.#4Darrel W. DochowRegional Director
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002026.00001Restricted
Seplemb,er 25, 2008
Board of Directors
CONFIDENTIAL
Thrift SUlpervision the
Senttle Ofnce l1li (206) 829·2600 I!II Fax: (206) 829-2620 ! 0 I Stew.lIt Street, Suite 1 D! 0 SeaUle. WA 98LOI
Me. Steve Frank, Chairman Me. Alan Fishman, Chief Executive Officer Washington ~1utt.lal~ Inc. 1301 Second Avenue SeaUle, W A 98 I 0 I
Members of the Board or their Representative:
WeSf
The deposit outflows from Washington Mutual Bank over thep.st two weeks and reduction ill availability of altemative funding sources have created significant liquidity pressures for the institution, The 7, 2008 OTS Memoranda of Understanding ("MOU") the bank entered into with OTS requires WaM" to pre.Y,,!" OTS with an analysis of the e!IInings, profitability and stability of all existing and projected business lincs. In addition, ,he MOU places limitations on the ability of the bank 10 pay dividends.
Pursuant to the conditional exchange provision ill the prospectus of ,he REIT of the bank, OTS concludes all "Exchange Event" has occurred and therefore directs an of WaMu REIT Preferred Securities to a like amount of stock in Washington Mutual Incorporated.
Please let me know if you have any qUl"tioll".
Sincerely,
Darrel W, Dochow Regional Director
Use in Connection with Plan Confirmation Only WM I PC _ 500002026.00001
CONFIDENTIAL
Washington
Mutual$750,000,000
Washington Mutual Preferred Funding Cayman) I Ltd.
Automatically Exchangeable in Specified Circumstances into
Depositary Shares representing Preferred Stock of
Washington Mutual, Inc.
Washington Mutual Preferred Funding Cayman) I Ltd., a Cayman Islands exempted company limited by shares WaMu
Cayman"), will invest the proceeds of
its 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1, liquidation
preference $100,000 per security the Series A-1 WaMu Cayman Preferred Securities"), and
its 7.25% Perpetual Non-
cumulative Preferred Securities, Series A-2, liquidation preference $10,000 per security the Series A-2 WaMu Cayman
Preferred Securities" and, together with the Series A-1 WaMu Cayman Preferred Securities, the WaMu Cayman Preferred
Securities") offered hereby
in
a like amount
of 7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference
$1,000 per security the Fixed Rate Company Preferred Securities"), of Washington Mutual Preferred Funding LLC, a Delaware
limited liability company the Company"). The terms of
the Series A-1 WaMu Cayman Preferred Securities and the Series A-2
WaMu Cayman Preferred Securities are identical except for their per security liquidation preference. WaMu Cayman will have
no material assets other than the Fixed Rate Company Preferred Securities. The financial entitlements of
each WaMu Cayman
Preferred Security will be substantially the same as
the financial entitlements of
a like amount of
Fixed Rate Company Preferred
Securities, with the consequence that dividends and the redemption price
on the WaMu Cayman Preferred Securities will
be
payable on the same dates and in the same amounts as
the corresponding dividends and redemption price, as
applicable, on a
like amount
of
Fixed Rate Company Preferred Securities. The Company's initial material assets will consist
of
indirect interests
in mortgages and mortgage-related assets originated by Washington Mutual Bank as
described herein.
Dividends on the Fixed Rate Company Preferred Securities will be payable
if, when and as
declared by
the Company's
Board of
Managers out of
legally available funds, on a non-cumulative basis at
an annual rate of
7.25% on the liquidation
preference per security, quarterly
in
arrears
on March 15, June 15, September
15 and December
15
of each year,
commencing
on June 15, 2006 each, a Dividend Payment Date"),
or
the next Business Day
if
any such day
is
not a
Business Day.
If the Office
of
Thrift Supervision together with any successor regulator, the OTS") so directs following the
occurrence of
an Exchange Event as
described herein, each WaMu Cayman Preferred Security will be automatically
exchanged for depositary shares representing a like amount
of Washington Mutual, Inc.'s Series J Perpetual Non-
cumulative Fixed Rate Preferred Stock.
See Risk Factors" beginning on page for a description of
the risk factors you should consider before you invest in the
securities offered hereby.Continued o
n next page)
Offering price: $100,000.00 per Series A-1 WaMu Cayman Preferred Security
$ 10,000.00 per Series A-2 WaMu Cayman Preferred Security
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED THE SECURITIES ACT"). THE SERIES A-1 WAMU CAYMAN PREFERRED SECURITIES AREBEING OFFERED AND SOLD ONLY
IN
THE UNITED STATES AND ONLY TO U.S. PERSONS THAT ARE BOTH QUALIFIED
INSTITUTIONAL BUYERS" WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND QUALIFIED
PURCHASERS" WITHIN THE MEANING OF SECTION 2(a)(51) OF THE U.S. INVESTMENT COMPANY ACT OF 1940, AS
AMENDED THE INVESTMENTCOMPANY ACT"» IN RELIANCE ON AN EXEMPTION FROM REGISTRATION PURSUANT TORULE 144A. THE SERIES A-2 WAMU CAYMAN PREFERRED SECURITIES ARE BEING OFFERED AND SOLD ONLY TONON-U.S. PERSONS
IN
TRANSACTIONS OUTSIDE THE UNITED STATES
IN
RELIANCE ON AN EXEMPTION FROMREGISTRATION PURSUANT TO REGULATION S UNDER THE SECURITIES ACT. PROSPECTIVE PURCHASERS OF SERIES A-1
WAMU CAYMAN PREFERRED SECURITIES ARE HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A.
THE SECURITIES ARE NOT TRANSFERABLE EXCEPT
IN
ACCORDANCE WITH THE RESTRICTIONS DESCRIBED UNDER
NOTICE TO INVESTORS."
The Initial Purchasers expect to deliver the Series A-1 WaMu Cayman Preferred Securities through the facilities of
The
Depository Trust Company and the Series A-2 WaMu Cayman Preferred Securities through the facilities
of
Clearstream
Banking, societe anonyme, and Euroclear Bank S.A./N.V.,
as operator
of
the Euroclear System,
as participants
in
The
Depository Trust Company, in each case, against payment in New York, New York on
or
about March 7,
2006.
Goldman, Sachs Co.
Senior Co-Manager
Offering Circular dated February 24, 2006.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00001
Continued from previous page)
The Fixed Rate Company Preferred Securities will not
be redeemable
at
the option
of
the Company prior
to
the
Dividend Payment Date in March 2011, except upon the occurrence of
a Tax Event, an Investment Company Act Event
or a Regulatory Capital Event each
as described herein). Upon the occurrence
of a Tax Event,
an Investment
Company Act Event or
a Regulatory Capital Event, the Company may redeem the Fixed Rate Company Preferred
Securities in whole but not in part. On or
after the Dividend Payment Date in March 2011, the Company may redeem
the Fixed Rate Company Preferred Securities
in
whole
or
in
part. Any redemption will
be subject
to
the prior approval
of
the OTS and will
be
at a redemption price equal
to
the liquidation preference per Fixed Rate Company Preferred
Security, plus declared but unpaid dividends, if any, plus a U.S. Treasury-based make whole" amount if the
redemption occurs prior
to
the Dividend Payment Date
in
March 2011.
The WaMu Cayman Preferred Securities will be issued only in book-entry form. Each individual purchaser or
group of
affiliated purchasers that acquires Series A-1 WaMu Cayman Preferred Securities in the initial offering must
acquire at
least three Series A-1 WaMu Cayman Preferred Securities having an aggregate liquidation preference of
$300,000.
The Initial Purchasers are offering the Series A-2 WaMu Preferred Securities, which are being offered outside the
United States to non-U.S. persons in reliance upon Regulation S under the Securities Act, through their respective
selling agents.
Application will
be made
to
list the Series A-2 WaMu Cayman Preferred Securities
on the Euro MTF market
of
the
Luxembourg Stock Exchange. The Series A-1 WaMu Cayman Preferred Securities will not
be listed
on any securities
exchange or
automated dealer quotation system.
The securities offered hereby are not insured
or
guaranteed
by the U.S. Federal Deposit Insurance
Corporation.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00002
This offering circular is confidential. You are authorized to use this offering circular solely for
the purpose of
considering the purchase of
the securities described in the offering circular. WMI,
Washington Mutual Bank WMB"), University Street, Inc. University Street"), the Company,
WaMu Cayman, Washington Mutual Home Equity Trust I the Asset Trust"), Washington Mutual
Preferred Funding Trust I WaMu Delaware") and other sources identified herein have provided
the information contained in this offering circular. The Initial Purchasers named herein make no
representation or
warranty, express or
implied, as
to the accuracy or completeness of such
information, and nothing contained in this offering circular is,
or
shall be
relied upon as, a promise
or
representation by the Initial Purchasers. You may not reproduce or
distribute this offering
circular, in whole or
in part, and you may not disclose any of
the contents of
this offering circular
or use any information herein for any purpose other than considering the purchase of
the notes.
You agree to the foregoing by accepting delivery of
this offering circular.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY UNITED
STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY ORDETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The distribution of
this offering circular and the offering and sale of
the securities offered
hereby in certain jurisdictions may be restricted by law. WMI, WMB, University Street, the
Company, WaMu Cayman, the Asset Trust, WaMu Delaware and the Initial Purchasers require
persons in whose possession this offering circular comes to inform themselves about and to
observe any such restrictions. This offering circular does not constitute an
offer of,
or
an
invitation to purchase, any of
the securities offered hereby in any jurisdiction in which such offer
or
invitation would be unlawful.
Notwithstanding anything herein to the contrary, each investor and each employee,
representative, or
agent of
any investor) may disclose to any and all persons, without limitation
of any kind, the tax treatment and tax structure of
the transactions contemplated herein and
all
materials of any kind including opinions or
other tax analyses) that are provided to the
investors relating to such tax treatment and tax structure. However, any information relating tothe United States Federal income tax treatment o
r
tax structure will remain confidential and the
foregoing sentence will not apply) to the extent reasonably necessary to enable any person to
comply with applicable securities laws. For this purpose, tax treatment" means United States
Federal or
state income tax treatment, and tax structure" means any facts relevant to the
United States Federal or
state income tax treatment of
the transactions contemplated herein but
does not include information relating to the identity of
the issuer of
the securities, the issuer of
any assets underlying the securities, or
any of
their respective affiliates that are offering the
securities.
No person has been authorized to give any information or
to make any representations
other than those contained in this offering circular, and, if given or
made, such information or
representations must not be relied upon as having been authorized by any of WMI, WMB,
University Street, the Company, WaMu Cayman or
the Asset Trust. Neither the delivery of
this
offering circular nor any sale hereunder will create, under any circumstances, any implication that
there has been no change in the affairs of WMI, WMB, the Company, WaMu Cayman, University
Street or
the Asset Trust since the date hereof or
that the information contained herein is correct
as
of any time subsequent to its date.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00003
NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER
ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR
CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
NO INVITATION TO SUBSCRIBE FOR WAMU CAYMAN PREFERRED SECURITIES IS
BEING MADE TO THE PUBLIC IN THE CAYMAN ISLANDS.
IN CONNECTION WITH THIS OFFERING, GOLDMAN, SACHS CO. AND ITS AFFILIATES,
ON BEHALF OF THE INITIAL PURCHASERS, MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY
AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED
PERIOD OF TIME AFTER THE ISSUE DATE. HOWEVER, THERE MAY BE NO OBLIGATION ONGOLDMAN, SACHS CO. TO DO THIS. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME, AND MUST BE BROUGHT TO AN END AFTER A LIMITEDPERIOD.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00004
NOTICE TO INVESTORS
the following restrictions, purchasers are advised to consult legal counsel prior to
making any offer, purchase, resale, pledge or
other transfer the securities offered hereby.
Series A-1 WaMu Cayman Preferred Securities
qualified institutional buyer"
qualified purchaser"
employee benefit plan"
ERISA"),
plan"
Code"),
plan
Benefit Plan
Investor"),
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00005
F) the certificates evidencing the Series A-1 WaMu Cayman Preferred Securities will
bear a legend to the following effect:
THIS SECURITY IS ONE OF THE 7.25% PERPETUAL NON-CUMULATIVE PREFERRED
SECURITIES, SERIES A-1 SERIES A-1 WAMU CAYMAN PREFERRED SECURITIES")
ISSUED BY WASHINGTON MUTUAL PREFERRED FUNDING CAYMAN) I LTD. WAMUCAYMAN"). THE ISSUER OF THIS SECURITY HAS NOT BEEN REGISTERED AS ANINVESTMENT COMPANY UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS
AMENDED THE INVESTMENT COMPANY ACT"), AND THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED THESECURITIES ACT"), AND NEITHER THIS SECURITY NOR ANY BENEFICIAL INTERESTS
HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
TO A PERSON WHO IS BOTH A QUALIFIED INSTITUTIONAL BUYER" WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT QUALIFIED INSTITUTIONAL
BUYER") AND A QUALIFIED PURCHASER" WITHIN THE MEANING OF SECTION 2(a)(51)
OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUN-
DER QUALIFIED PURCHASER") ACQUIRING FOR ITS OWN ACCOUNT OR THE
ACCOUNT OF A PERSON WHO IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A
QUALIFIED PURCHASER AN ELIGIBLE PURCHASER") AND EACH SUCH PERSON AND
ACCOUNT FOR WHICH SUCH PERSON IS PURCHASING A) IS NOT A BROKER-DEALER
THAT OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS THAN US$25 MILLION IN
SECURITIES OF ISSUERS THAT ARE NOT ITS AFFILIATED PERSONS, B) IS NOT A PLAN
REFERRED TO IN PARAGRAPH a) 1) i) D) OR a) 1) i) E) OF RULE 144A, OR A
TRUST FUND REFERRED TO IN PARAGRAPH a) 1) F) OF RULE 144A THAT HOLDSTHE ASSETS OF SUCH A PLAN, IF INVESTMENT DECISIONS WITH RESPECT TO THE
PLAN ARE MADE BY THE BENEFICIARIES OF SUCH PLAN, C) WAS NOT FORMED FOR
THE PURPOSE OF INVESTING IN WAMU CAYMAN, D) WILL HOLD AND TRANSFER AT
LEAST $100,000 LIQUIDATION PREFERENCE OF SERIES A-1 WAMU CAYMAN PRE-
FERRED SECURITIES AT LEAST ONE SERIES A-1 WAMU CAYMAN PREFERRED
SECURITY), AND E) UNDERSTANDS THAT WAMU CAYMAN MAY RECEIVE A LIST OFPARTICIPANTS HOLDING POSITIONS IN THIS SECURITY FROM ONE OR MORE BOOK-
ENTRY DEPOSITARIES. EACH PURCHASER OF THIS SECURITY OR ANY BENEFICIAL
INTERESTS HEREIN WILL BE DEEMED TO REPRESENT THAT IT AGREES TO COMPLY
WITH THE TRANSFER RESTRICTIONS SET FORTH HEREIN AND IN THE MEMORANDUM
AND ARTICLES OF ASSOCIATION OF WAMU CAYMAN AS AMENDED, THE ARTICLES
OF ASSOCIATION"), AND WILL NOT TRANSFER THIS SECURITY OR ANY BENEFICIAL
INTERESTS HEREIN EXCEPT TO AN ELIGIBLE PURCHASER WHO CAN MAKE THE SAME
REPRESENTATIONS AND AGREEMENTS ON BEHALF OF ITSELF AND EACH ACCOUNT
FOR WHICH IT IS PURCHASING. ANY PURPORTED TRANSFER OF THIS SECURITY ORANY BENEFICIAL INTERESTS HEREIN THAT IS IN BREACH, AT THE TIME MADE, OF ANY
TRANSFER RESTRICTIONS SET FORTH HEREIN OR IN THE ARTICLES OF ASSOCIATION
WILL BE VOID AB INITIO. IF AT ANY TIME WAMU CAYMAN DETERMINES IN GOOD FAITH
THAT A HOLDER OR BENEFICIAL OWNER OF THIS SECURITY OR BENEFICIAL
INTERESTS HEREIN IS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE TRANSFER
RESTRICTIONS SET FORTH HEREIN, WAMU CAYMAN SHALL CONSIDER THE ACQUISI-
TION OF THIS SECURITY OR SUCH BENEFICIAL INTERESTS VOID, OF NO FORCE AND
EFFECT AND WILL NOT, AT THE DISCRETION OF WAMU CAYMAN, OPERATE TO
TRANSFER ANY RIGHTS TO THE TRANSFEREE NOTWITHSTANDING ANY INSTRUCTIONS
TO THE CONTRARY TO WAMU CAYMAN, ITS AGENT FOR REGISTRATION OF TRANS-
FER, EXCHANGE OR PAYMENT THE TRANSFER AGENT"), OR ANY OTHER INTERME-
DIARY. IN ADDITION, WAMU CAYMAN OR ITS TRANSFER AGENT MAY REQUIRE SUCH
ACQUIRER OR BENEFICIAL OWNER TO SELL THIS SECURITY OR SUCH BENEFICIAL
INTERESTS TO AN ELIGIBLE PURCHASER.
iv
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00006
NO SECURITY MAY BE PURCHASED OR TRANSFERRED TO: I) AN EMPLOYEE
BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED WHETHER OR NOT
SUBJECT TO ERISA AND INCLUDING, WITHOUT LIMITATION, FOREIGN OR GOVERN-
MENTAL PLANS, II) A PLAN" WITHIN THE MEANING OF SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED THE OR III) ANY
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS" OF ANY OF THE
FOREGOING BY REASON OF INVESTMENT BY AN EMPLOYEE BENEFIT PLAN OR
OTHER PLAN IN SUCH ENTITY EACH OF THE FOREGOING, A BENEFIT PLAN
INVESTOR"), EXCEPT FOR AN INSURANCE COMPANY GENERAL ACCOUNT THAT
REPRESENTS, WARRANTS AND COVENANTS THAT, AT THE TIME OF ACQUISITION
AND THROUGHOUT THE PERIOD IT HOLDS THE SECURITIES, I)
IT IS ELIGIBLE FOR
AND MEETS THE REQUIREMENTS OF THE DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60, II) LESS THAN 25% OF THE ASSETS OF
SUCH GENERAL ACCOUNT ARE OR REPRESENT) ASSETS OF A BENEFIT PLAN
INVESTOR AND III) IT IS NOT A PERSON WHO HAS DISCRETIONARY AUTHORITY OR
CONTROL WITH RESPECT TO THE ASSETS OF WAMU CAYMAN OR ANY PERSON WHOPROVIDES INVESTMENT ADVICE FOR A FEE DIRECT OR INDIRECT) WITH RESPECT
TO SUCH ASSETS, OR ANY AFFILIATE OF SUCH A PERSON AND WOULD NOTOTHERWISE BE EXCLUDED UNDER 29 C.F.R. 2510.3-101 F) 1).
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OFTHE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION DTC"), TO
WAMU CAYMAN OR THE TRANSFER AGENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS
MADE TO CEDE CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFULINASMUCH AS THE REGISTERED OWNER HEREOF, CEDE CO., HAS AN INTEREST
HEREIN.
G) the purchaser and each account for which it is purchasing:
i) is not a broker-dealer that owns and invests on a discretionary basis less
than $25 million in securities of
unaffiliated issuers;
is not a participant-directed employee plan, such as a 401(k) plan, as
referred to in paragraph a) 1) i) D) or
a) 1) i) E) of
Rule 144A, or
a trust fund
referred to in paragraph a) 1) i) F) of
Rule 144A that holds the assets of such a
plan;
was not formed for the purpose of
investing in WaMu Cayman;
iv) will hold at
least $300,000 liquidation preference of
Series A-1 WaMu
Cayman Preferred Securities i.e., at
least three Series A-1 WaMu Cayman Preferred
Securities) in the case of each initial investor, and will hold and transfer $100,000
liquidation preference of
Series A-1 WaMu Cayman Preferred Securities i.e., at
least
one Series A-1 WaMu Cayman Preferred Security) in the case of
each subsequent
investor;
v)
will provide notice of
the transfer restrictions described in this Notice to
Investors" to any subsequent transferees;
vi) acknowledges that WaMu Cayman may receive a list of
participants holding
positions in the Series A-1 WaMu Cayman Preferred Securities from one or more
book-entry depositaries; and
v
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00007
vii) may not transfer the Series A-1 WaMu Cayman Preferred Securities or
beneficial interests therein except to a transferee who can make the same representa-
tions and agreements as set forth in this Notice to Investors" and vyaMu Cayman's
Memorandum and Articles of
Association as
in effect on the issue date of
the WaMuCayman Preferred Securities together, a
s amended,
on behalf of
itself and each account for which it is purchasing.
The purchaser acknowledges that the Series A-1 WaMu Cayman Preferred Securities are
being offered only in a transaction not involving any public offering within the meaning of
the
Securities Act. The Series A-1 WaMu Cayman Preferred Securities have not been and will not be
registered under the Securities Act and WaMu Cayman has not been and will not be registered
under the Investment Company Act, and, if in the future the purchaser decides to offer, resell,
pledge or
otherwise transfer the Series A-1 WaMu Cayman Preferred Securities, such Series A-1
WaMu Cayman Preferred Securities may be offered, resold, pledged or
otherwise transferred
only in accordance with the legend on such Series A-1 WaMu Cayman Preferred Securities
described above. The purchaser acknowledges that no representation is made by WaMu
Cayman, the Company or
the Initial Purchasers as
to the availability of
any exemption under the
Securities Act or any state securities laws for resale of
the Series A-1 WaMu Cayman Preferred
Securities.
Reminder Notices
Whenever WaMu Cayman sends an annual report or
other periodic report to holders of
the
Series A-1 WaMu Cayman Preferred Securities, it will also send a reminder notice each, a
to the holders of
the Series A-1 WaMu Cayman Preferred Securities. Each
Reminder Notice will state that i) each holder of a Series A-1 WaMu Cayman Preferred Security
or an interest in a Series A-1 WaMu Cayman Preferred Security) that is a U.S. person must be
able to make the representations set forth above in paragraphs B) and G) iv) under
Series A-1 WaMu Cayman Preferred Securities Representations of
Purchasers" the
7) ii) the Series A-1 WaMu Cayman Preferred Securities or
interests in the Series A-1 WaMu Cayman Preferred Securities) are transferable only to
purchasers deemed to have made the 3(c) 7) Representations and to have satisfied the other
transfer restrictions applicable to the securities, iii) if any prospective transferee of
the
Series A-1 WaMu Cayman Preferred Securities or an interest in the Series A-1 WaMu Cayman
Preferred Securities) that is a U.S. person is determined not to be a qualified purchaser, then
WaMu Cayman will have the right exercisable in its sole discretion) to refuse to honor such
transaction, and iv) if any security holder or any holder of
an
interest in a security) that is a
U.S. person is determined not to be a qualified purchaser, then WaMu Cayman will have the right
exercisable in its sole discretion) to treat the transfer to such purchaser as null and void and
require such purchaser to sell all
of
its securities and all
interests therein) to a transferee
designated by WaMu Cayman at
the then current market price therefor. WaMu Cayman will send
a copy of each annual or
other periodic reports and each Reminder Notice) to DTC with a
request that participating organizations in DTC forward them to the security
holders or
holders of
an interest in Series A-1 WaMu Cayman Preferred Securities.
CUSIP
WaMu Cayman will cause each CUSIP" obtained for a 144A Global Security to have an
attached fixed field" that contains GRLS" and 144A" indicators.
Series A-2 WaMu Cayman Preferred Securities
Each purchaser of
Series A-2 WaMu Cayman Preferred Securities including the registered
holders and beneficial owners of
the Series A-2 WaMu Cayman Preferred Securities, as
they
vi
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00008
exist from time to time, including as a result of
transfers, in each case as
of
the time of
purchase) will be deemed to have represented and agreed as follows:
A) the purchaser is i) a non-U.S. person within the meaning of
Rule 902 of
the
Securities Act purchasing the Series A-2 WaMu Cayman Preferred Securities in an offshore
transaction in accordance with Regulation S under the Securities Act and
ii) aware that the
sale of
the Series A-2 WaMu Cayman Preferred Securities to it is being made in reliance on
Regulation S or
another exemption from the registration requirements of
the Securities Act;
B) either i) the purchaser is not a Benefit Plan Investor or
ii) the purchaser is an
insurance company general account that represents, warrants and covenants that, at
the
time of
acquisition and throughout the period it holds the securities, x)
it is eligible for and
meets the requirements of
the Department of
Labor Prohibited Transaction Class
Exemption 95-60, less than 25% of
the assets of such general account are or
represent) assets of
a Benefit Plan Investor and z) it is not a person who has
discretionary authority or
control with respect to the assets of WaMu Cayman or any person
who provides investment advice for a fee direct or
indirect) with respect to such assets, or
any affiliate of such a person and would not otherwise be excluded under
29 C.F.R. 2510.3-101 f)(1).
C) the purchaser is not purchasing the Series A-2 WaMu Cayman Preferred
Securities with a view to the resale, distribution or
other disposition thereof in violation of
the Securities Act;
D) neither the purchaser nor any account for which the purchaser is acquiring the
Series A-2 WaMu Cayman Preferred Securities will hold such Series A-2 WaMu Cayman
Preferred Securities for the benefit of any other person and the purchaser and each such
account will be the sole beneficial owners thereof for all purposes and will not sell
participation interests in the Series A-2 WaMu Cayman Preferred Securities or
enter into
any other arrangement pursuant to which any other person will be entitled to an interest in
the distributions on the Series A-2 WaMu Cayman Preferred Securities;
E) the certificates evidencing the Series A-2 WaMu Cayman Preferred Securities will
bear a legend to the following effect:
THIS SECURITY IS ONE OF THE 7.25% PERPETUAL NON-CUMULATIVE PREFERREDSECURITIES, SERIES A-2 SERIES A-2 WAMU CAYMAN PREFERRED SECURITIES")
ISSUED BY WASHINGTON MUTUAL PREFERRED FUNDING CAYMAN) I LTD. WAMUCAYMAN"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED THE SECURITIES ACT"), AND NEITHER
THIS SECURITY NOR ANY BENEFICIAL INTERESTS HEREIN MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT 1) IN AN OFFSHORE TRANSAC-
TION MEETINGTHE REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT
TO A PERSON OTHER THAN A U.S. PERSON, OR 2) IN RELIANCE UPON RULE 144A
UNDER THE SECURITIES ACT IN A TRANSACTION INVOLVING AN EXCHANGE OF THIS
SECURITY FOR A LIKE AMOUNT OF 7.25% PERPETUAL NON-CUMULATIVE PREFERRED
SECURITIES, SERIES A-1, OF WAMU CAYMAN, WHICH IS ALSO THE ISSUER OF THIS
SECURITY, BUT ONLY UPON RECEIPT BY WAMU CAYMAN'S TRANSFER AGENT OF A
WRITTEN CERTIFICATE ON BEHALF OF THE TRANSFEROR TO THE EFFECT THAT
SUCH TRANSFER IS BEING MADE TO A PERSON WHO THE TRANSFEROR REASONA-
BLY BELIEVES IS BOTH A QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT QUALIFIED INSTITUTIONAL BUYER")
AND A QUALIFIED PURCHASER" WITHIN THE MEANING OF SECTION 2(a) 51) OF
THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED QUALIFIED PUR-
CHASER"), ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER WHO IS ALSO A QUALIFIED PURCHASER AN ELIGIBLE
vii
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00009
PURCHASER") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE LAWS OF
THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. EACH PURCHASEROF THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN WILL BE DEEMED TO
REPRESENT THAT IT AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET
FORTH HEREIN AND IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF
WAMU CAYMAN AS AMENDED, THE ARTICLES OF ASSOCIATION"), AND WILL NOTTRANSFER THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN EXCEPT TO A
PURCHASER WHO CAN MAKE THE SAME REPRESENTATIONS AND AGREEMENTS ON
BEHALF OF ITSELF AND EACH ACCOUNT FOR WHICH IT IS PURCHASING. ANY
PURPORTED TRANSFER OF THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN
THAT IS IN BREACH, AT THE TIME MADE, OF ANY TRANSFER RESTRICTIONS SET
FORTH HEREIN OR IN THE ARTICLES OF ASSOCIATION WILL BE VOID AB INITIO. IF AT
ANY TIME WAMU CAYMAN DETERMINES IN GOOD FAITH THAT A HOLDER ORBENEFICIAL OWNER OF THIS SECURITY OR BENEFICIAL INTERESTS HEREIN IS IN
BREACH, AT THE TIME GIVEN, OF ANY OF THE TRANSFER RESTRICTIONS SET FORTH
HEREIN, WAMU CAYMAN SHALL CONSIDER THE ACQUISITION OF THIS SECURITY ORSUCH BENEFICIAL INTERESTS VOID, OF NO FORCE AND EFFECT AND WILL NOT, AT
THE DISCRETION OF WAMU CAYMAN, OPERATE TO TRANSFER ANY RIGHTS TO THE
TRANSFEREE NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO WAMUCAYMAN, ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT
THE TRANSFER AGENT"), OR ANY OTHER INTERMEDIARY. IN ADDITION, WAMUCAYMAN OR ITS TRANSFER AGENT MAY REQUIRE SUCH ACQUIRER OR BENEFICIAL
OWNER TO SELL THIS SECURITY OR SUCH BENEFICIAL INTERESTS TO AN ELIGIBLE
PURCHASER.
NO SECURITY MAY BE PURCHASED OR TRANSFERRED TO: I) AN EMPLOYEE
BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ERISA"), WHETHER OR NOTSUBJECT TO ERISA AND INCLUDING, WITHOUT LIMITATION, FOREIGN OR GOVERN-
MENTAL PLANS, II) A PLAN" WITHIN THE MEANING OF SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED THE CODE"), OR III) ANY
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS" OF ANY OF THE
FOREGOING BY REASON OF INVESTMENT BY AN EMPLOYEE BENEFIT PLAN OR
OTHER PLAN IN SUCH ENTITY EACH OF THE FOREGOING, A BENEFIT PLAN
INVESTOR"), EXCEPT FOR AN INSURANCE COMPANY GENERAL ACCOUNT THAT
REPRESENTS, WARRANTS AND COVENANTS THAT, AT THE TIME OF ACQUISITION
AND THROUGHOUT THE PERIOD IT HOLDS THE SECURITIES, I)
IT IS ELIGIBLE FOR
AND MEETS THE REQUIREMENTS OF THE DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60, II) LESS THAN 25% OF THE ASSETS OFSUCH GENERAL ACCOUNT ARE OR REPRESENT) ASSETS OF A BENEFIT PLAN
INVESTOR AND III) IT IS NOT A PERSON WHO HAS DISCRETIONARY AUTHORITY ORCONTROL WITH RESPECT TO THE ASSETS OF WAMU CAYMAN OR ANY PERSON WHOPROVIDES INVESTMENT ADVICE FOR A FEE DIRECT OR INDIRECT) WITH RESPECT
TO SUCH ASSETS, OR ANY AFFILIATE OF SUCH PERSON AND WOULD NOT
OTHERWISE BE EXCLUDED UNDER 29 C.F.R. 2510.3-101 F) 1).
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION DTC"), TOWAMU CAYMAN OR THE TRANSFER AGENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS
MADE TO CEDE CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
viii
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00010
Forced Sale of
Securities
Investment Company Act
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00011
e.g.,
DTC Actions with respect to the WaMu Cayman Preferred Securities
Bloomberg Screens, etc.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00012
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00013
Purchasers will request that Bloomberg, L.P. include the following on each Bloomberg screen containing information about the securities as applicable:
• the bottom of the "Security Display" page describing the Series A-1 WaMu Cayman Preferred Securities should state: "Iss'd under 144A/3c7" and "GRLS";
• the "Security Display" page should have a flashing red indicator stating "Additional Note Pg";
• such indicator for the WaMu Cayman Preferred Securities should link to an "Additional Security Information" page, which should state that the Series A-1 WaMu Cayman Preferred Securities are being offered in reliance on the exception from registration under Rule 144A of the Securities Act of 1933, as amended (the "Securities Act") to persons that are (i) "qualified institutional buyers" as defined in Rule 144A under the Securities Act, and (ii) with respect to U.S. Persons, "qualified purchasers" as defined under Section 2(a) (51) of the Investment Company Act of 1940, as amended; and
• the "Disclaimer" pages for the WaMu Cayman Preferred Securities should state that the securities have not been and will not be registered under the Securities Act of 1933, as amended, and Washington Mutual Preferred Funding (Cayman) I Ltd. has not been registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and the WaMu Cayman Preferred Securities may not be offered or sold in the United States absent an applicable exemption from registration requirements and any such offer and sale of these securities must be in accordance with Section 3 (c) (7) of the Investment Company Act.
Legends
WaMu Cayman will not remove the legend set forth in "- Series A-1 WaMu Cayman Preferred Securities" or "- Series A-2 WaMu Cayman Preferred Securities" at any time.
Exchanges Between Rule 144A Global Security Evidencing Series A-1 WaMu Cayman Preferred Securities and Regulation S Global Security Evidencing Series A-2 WaMu Cayman Preferred Securities
The Series A-1 WaMu Cayman Preferred Securities will be evidenced by the Rule 144A Global Security and the Series A-2 WaMu Cayman Preferred Securities will be evidenced by the Regulation S Global Security, in each case, as described under "Book-Entry Issuance." An investor (including a beneficial owner) in Series A-1 WaMu Cayman Preferred Securities may sell such securities to a non-U.S. person who takes delivery in the form of an interest in the Regulation S Global Security only if the certifications described under "Book-Entry Issuance" are made and, in connection with such sale, the transferor's interest in the Series A-1 WaMu Cayman Preferred Securities evidenced by the Rule 144A Global Security is exchanged by the transferee for Series A-2 WaMu Cayman Preferred Securities evidenced by the Regulation S Global Security. Similarly, an investor (including a beneficial owner) in Series A-2 WaMu Cayman Preferred Securities may sell such securities in the United States or to a U.S. person who takes delivery in the form of an interest in the Rule 144A Global Security only if the certifications described under "Book-Entry Issuance" are made and, in connection with such sale, the transferor's interest in the Series A-2 WaMu Cayman Preferred Securities evidenced by the Regulation S Global Security is exchanged by the transferee for Series A-1 WaMu Cayman Preferred Securities evidenced by the Rule 144A Global Security.
xi
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00014
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This offering circular and the documents incorporated herein by reference contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, and other matters. Statements in this offering circular, including those incorporated herein by reference, that are not historical facts are "forward-looking statements" for the purpose of the safe harbor provided by Section 21 E of the Exchange Act and Section 27 A of the Securities Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words, such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or words of similar meaning, or future or conditional verbs, such as "will", "should", "could" or "may".
Forward-looking statements provide WMl's or WMB's (as applicable) expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature forward-looking statements are subject to risks and uncertainties. These statements speak only as of the date they are made. WMI and WMB do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made. There are a number of factors, many of which are beyond WMl's or WMB's (as applicable) control, that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The factors are generally described in WMl's or WMB's (as applicable) most recent Form 10-K and Form 10-0 under the caption "Risk Factors."
xii
WHERE YOU CAN FIND MORE INFORMATION
http://www.wamu.com
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00015
document that was filed later. WMB incorporates herein by reference the documents listed below
and any documents it files with the OTS in the future under Sections 13(a), 13(c), 14 or
15(d)
of
the Exchange Act or
regulations of
the OTS to substantially similar effect untjl the Offering is
completed:
Annual Report on Form 10-K for the year ended December 31, 2004; and
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2005,
June 30,2005 and September 30, 2005.
This offering circular also incorporates herein by reference certain other information that
WMB submits to the OTS. WMB submits to the OTS quarterly reports regarding WMB's financial
condition and operations on OTS Form 1313 entitled Thrift Financial Report" each, a Thrift
Financial Report" and collectively, the Thrift Financial Reports"). Each Thrift Financial Report
consists of a Consolidated Statement of
Condition, Consolidated Statement of
Operations,
Consolidated Cash Flow Information, Consolidated Capital Requirements and other supporting
schedules as
of
the end of
the period to which the report relates. The Thrift Financial Reports
are prepared in accordance with regulatory instructions issued by
the OTS. These regulatory
instructions in most, but not all, cases follow generally accepted accounting principles in the
United States GAAP") or
the opinions and statements of
the Accounting Principles Board or
the Financial Accounting Standards Board. While the Thrift Financial Reports are supervisory and
regulatory documents, not previously accounting documents, and do not provide a complete
range of
financial disclosure about WMB, the reports nevertheless provide important information
concerning WMB's financial condition and operating results. In addition, WMB's Thrift Financial
Reports are not audited. The non-confidential portions of
Thrift Financial Reports filed by WMB
are on file with, and are publicly available upon written request to the Office of
Thrift Supervision,
FOIA, 1700 G Street, N.W., Washington, D.C. 20552, Attention: Dissemination Branch and are
also available at
the U.S. Federal Deposit Insurance Corporation's the web site at
http://www.fdic.gov.
You may request a copy of
these filings, other than an exhibit to a filing unless that exhibit
is specifically incorporated by reference into that filing, at no cost, by writing to or
telephoning
WMI
at:
1201 Third Avenue
Seattle, Washington 98101
206) 461-3187
ENFORCEMENT OF CIVIL LIABILITIES
WaMu Cayman has been advised by Maples and Calder,
its Cayman Island counsel, that the
courts of
the Cayman Islands should not be expected to i) enforce judgments of
U.S. courts
obtained in actions against WaMu Cayman's directors who are non-residents of
the United
States predicated upon the civil liability provisions of
the U.S. federal securities laws or
ii) entertain original actions brought in the Cayman Islands against such persons or WaMu
Cayman predicated solely upon U.S. federal securities laws. There is no treaty in effect between
the United States and the Cayman Islands providing for such enforcement, and there are grounds
upon which the Cayman Islands courts may not enforce judgments of
U.S. courts.
INDEX OF TERMS
An index of
terms used in this offering circular with specific meanings appears on the inside
back cover of
this offering circular.
xiv
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OFFERING CIRCULAR SUMMARY
The fol/owing summary is qualified in its entirety by the detailed information appearing
elsewhere in this offering circular, in particular, the information under the headings. Description of
the WaMu Cayman Preferred Securities" and Description of
the Fixed Rate Company Preferred
Securities," which describe the terms and conditions of
the securities offered hereby.
Introduction
The 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1, liquidation preference
$100,000 per security the Series A-1 WaMu Cayman Preferred Securities"), and the
7.25% Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference $10,000
per security the Series A-2 WaMu Cayman Preferred Securities" and, together with the
Series A-1 WaMu Cayman Preferred Securities, the WaMu Cayman Preferred Securities"), are
being issued by Washington Mutual Preferred Funding Cayman) I Ltd. WaMu Cayman") in a
financing transaction that raises capital for Washington Mutual Bank WMB"). WMB is a
subsidiary of Washington Mutual, Inc. WMI"). WMI and
Fixed Rate Company Preferred Securities. The Fixed
Rate Company Preferred Securities will rank pari passu
with the Fixed-to-Floating Rate Company Preferred Securi-
ties and senior to the Company Common Securities in
terms of
dividends and liquidation payments.
During a Dividend Period, the Company may not declare or
pay any. dividends on any of
its Junior Equity Securities,
other than dividends payable in Junior Equity Securities, or
repurchase, redeem or
otherwise acquire for consideration,
directly or
indirectly, any Junior Equity Securities other
than as a result of
reclassification of
Junior Equity
Securities for or
into other Junior Equity Securities, or
the
exchange or
conversion of
Junior Equity Securities for or
into other Junior Equity Securities), unless dividends for
such Dividend Period on all outstanding Company Pre-
ferred Securities have been declared and paid in full, or
declared and set aside for payment, as the case may be.
The Company may from time to time issue additional Parity
Equity Securities without the consent of
the holders of
the
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00026
provided
pro forma
pro forma
Fixed Rate Depositary Shares").
Exchange Event"
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00027
pari passu
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00028
Voting Rights and Certain Covenants ...................... .
that limits the payment of dividends, as applicable, by WMB, and in connection therewith, directs such exchange.
The Fixed Rate WMI Preferred Stock will have substantially equivalent terms as to dividends, redemption and liquidation preference as the Fixed Rate Company Preferred Securities, except that the Fixed Rate WMI Preferred Stock: (i) will not have the benefit of the covenants described under "Description of the Fixed Rate Company Preferred Securities - Voting Rights and Covenants;" (ii) will not be listed on any securities exchange or automated dealer quotation system; (iii) will be redeemable prior to the Dividend Payment Date occurring on March 15, 2011 only upon the occurrence of a Regulatory Capital Event (as described herein); (iv) Additional Amounts will not be payable with respect to the Fixed Rate WMI Preferred Stock; and (v) if WMI fails to pay, or declare and set aside for payment, full dividends on the Fixed Rate WMI Preferred Stock for six Dividend Periods, the authorized number of WMl's directors will increase by two, and the holders of Fixed Rate WMI Preferred Stock, voting together with the holders of any other equity capital securities of WMI having similar voting rights, including the Fixed-to-Floating Rate WMI Preferred Stock, will have the right to elect two directors in addition to the directors then in office at the next annual meeting of shareholders. The Fixed Rate WMI Preferred Stock will be subject to the Replacement Capital Covenant described under "- Redemption I Replacement Capital Covenant" above.
WMI will covenant in the Exchange Agreement in favor of the holders of the WaMu Cayman Preferred Securities that it will not issue any preferred stock that would rank senior to the Fixed Rate WMI Preferred Stock upon its issuance. Each share of Fixed Rate WMI Preferred Stock will, upon issuance, rank at least pari passu with the most senior preferred stock of WMI, if any, then outstanding.
Except as otherwise set forth below, the holders of the Fixed Rate Company Preferred Securities will not have voting rights.
However, the LLC Agreement will provide that, except with the consent or affirmative vote of the holders of at least two-thirds of the Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Company Preferred Securities, voting together as a single class, the Company will not:
• effect a consolidation, merger or share exchange with or into another entity other than an entity controlled by, or under common control with, WMI;
• issue any securities of the Company ranking senior to the Company Preferred Securities in respect of pay-
12
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ments of dividends or on liquidation to the Company Preferred Securities ("Senior Equity Securities") ;
• incur any indebtedness for borrowed money;
• pay dividends on the Company's Junior Equity Securities unless the Company's FFO, for the four prior fiscal quarters equals or exceeds 150% of the amount that would be required to pay full annual dividends on all outstanding Company Preferred Securities, as well as any other Parity Equity Securities;
• amend or otherwise change the requirement that the Company make investments and distributions with the proceeds of the Company's assets such that the Company's FFO over any period of four fiscal quarters will equal or exceed 150% of the amount that would be required to pay full annual dividends on all outstanding Company Preferred Securities, as well as any other Parity Equity Securities;
• issue any additional Company Common Securities to any person, other than University Street or another affiliate ofWMI;
• amend or otherwise change the terms of any Asset Documentation in a manner which is materially adverse to WaMu Cayman or the holders of the WaMu Cayman Preferred Securities;
• remove or cause to be removed, as applicable, "Washington Mutual" from the Company's, WaMu Cayman's or WaMu Delaware's name unless the name of WMI changes and the Company makes a change to the Company's, WaMu Cayman's and WaMu Delaware's name to be consistent with the new group name;
• take any action or fail to take any action that would cause the Company to fail to be treated as a partnership (other than a publicly traded partnership taxable as a corporation) for United States Federal income tax purposes;
• amend or otherwise change the requirement that the Company not engage in a U.S. trade or business for United States Federal income tax purposes;
• amend or otherwise change the requirement that the Company hold only assets that qualify for the portfolio interest exemption under the Code and are exempt from gross basis United States withholding taxes;
• amend or otherwise change the requirement that the Company manage its affairs such that income with respect to the WaMu Cayman Preferred Securities does not constitute "unrelated business taxable income" for United States Federal income tax purposes; or
13
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• amend its Certificate of Formation or LLC Agreement in a manner that materially and adversely affects the terms of the Company Preferred Securities; provided, however, that, if such amendment affects only one class of Company Preferred Securities, such amendment will require only the class vote of the holders of at least twothirds of the applicable Company Preferred Securities of such class (voting separately and not as a single class with the other class) and, if such amendment affects both classes but affects them differently, then such amendment will require a class vote of each class of Company Preferred Securities, each voting separately.
In addition, the LLC Agreement will provide that, without the consent of all of the Managers, including the Independent Manager, the Company will not:
• terminate, amend, or otherwise change any Asset Documentation; or
• effect a consolidation, merger or share exchange (excluding the Conditional Exchange) that is not tax-free to the holders of the Fixed Rate Company Preferred Securities, and the related WaMu Cayman Preferred Securities, unless such transaction was approved by the consent or affirmative vote of the holders of at least twothirds of the Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Preferred Securities, voting together as a single class.
In addition, the LLC Agreement will provide that if (i) the Company fails to pay full dividends on the Company Preferred Securities on any Dividend Payment Date, (ii) WaMu Cayman fails to pay full dividends on the WaMu Cayman Preferred Securities on any Dividend Payment Date or (iii) a Bankruptcy Event occurs, the holders of the Fixed Rate Company Preferred Securities and the Fixed-toFloating Rate Company Preferred Securities, voting together as a single class, by majority vote, are entitled to remove the initial or any succeeding Independent Manager and to fill the vacancy created by such removal or any other vacancy existing in the office of the Independent Manager.
The voting rights described above with respect to the Fixed Rate Company Preferred Securities will be passed on to the holders of the related WaMu Cayman Preferred Securities and with respect to the Fixed-to-Floating Rate Company Preferred Securities will be passed through to the holders of the related Trust Securities of WaMu Delaware. See "Description of the WaMu Cayman Preferred Securities - Voting Rights."
Additional Amounts. . . . . . . . . . . . . . . If the Company or WaMu Cayman is required to pay any additional taxes, duties or other governmental charges as a result of an Additional Tax Event, the Company will pay as
14
additional amounts on the Fixed Rate Company Preferred
Securities such amounts as
will be required so that
dividends on the Fixed Rate Company Preferred Securities,
and accordingly on the WaMu Cayman Preferred Securi-
ties, will not be reduced as a result of
any such Additional
Taxes. See Description of
the Fixed Rate Company
Preferred Securities Additional Amounts." If investors
exchange their Fixed Rate Company Preferred Securities
for Fixed Rate WMI Preferred Stock upon a Conditional
Exchange, WMI will not be obligated to pay Additional
Amounts on the Fixed Rate WMI Preferred Stock.
Assets and the Asset Trust. The initial assets of
the Company will consist of
the
Class A Asset Trust Certificate representing its interest in
the Asset Trust. The Asset Trust is a Delaware statutory
trust formed pursuant to a trust agreement between the
Company, as depositor, and Deutsche Bank Trust Com-
pany Delaware, as Delaware Trustee. The Pooling and
Servicing Agreement among the Company, as depositor,
WMB, as
Servicer, Deutsche Bank Trust Company Dela-
ware, as Delaware Trustee, and Deutsche Bank National
Trust Company, as
Trustee, will restate the trust agree-
ment and will thereafter be the governing instrument of
the
Asset Trust. The Asset Trust will make a REMIC election
for federal tax purposes.
The initial assets of
the Asset Trust will consist of
a
portfolio including payments thereon received from and
after February 1,
2006) of
HELs and certain related assets
originated by WMB primarily through
its retail branches
between September 1,
2001 and September 30, 2005. As
of
January 31, 2006, the 56,090 HELs had an aggregate
unpaid principal balance of
approximately $5,389,459,150.
These loans typically are made for reasons such as home
purchases, home improvements, furniture and fixtures
purchases, purchases of
automobiles and debt consolida-
tion. These HELs are first lien, closed-end fixed rate home
equity loans and are generally repaid on a self-amortizing
basis.
From time to time, the Company may acquire Additional
Assets. All
Additional Assets acquired by
the Company will
be
Eligible Assets.
Listing Application will be made to list the Series A-2 WaMu
Cayman Preferred Securities on the Euro MTF market of
the Luxembourg Stock Exchange. The Series A-1 WaMuCayman Preferred Securities will not b
e listed on any
securities exchange or
automated dealer quotation system.
Use of
Proceeds. WaMu Cayman will use the proceeds of
the sale of
the
WaMu Cayman Preferred Securities to purchase a like
amount of
Fixed Rate Company Preferred Securities from
WMB, which the Company will issue to WMB in exchange
for the conveyance of a portfolio of HELs to the Company.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00031
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00032
The WMI Group will use the proceeds from the sale of the Fixed Rate Company Preferred Securities to WaMu Cayman and the Fixed-to-Floating Rate Preferred Securities to WaMu Delaware for general corporate purposes, which may include the repurchase of WMl's common stock.
Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . The WaMu Cayman Preferred Securities are expected to be assigned upon issuance ratings of "BBB" by Standard & Poor's Rating Services, a division of The McGraw Hill Companies, Inc., "Baa2" by Moody's Investors Services, Inc. and "A-" by Fitch, Inc. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organization.
Tax Consequences ............... It is anticipated that WaMu Cayman will be a passive foreign investment company ("PFIC") for United States Federal income tax purposes and that the WaMu Cayman Preferred Securities will be treated as equity interests therein.
The Company intends to qualify as a partnership (other than a publicly traded partnership taxable as a corporation) for United States Federal income tax purposes, and thus, the Company Preferred Securities held by WaMu Cayman are intended to constitute equity interests in such partnership.
WaMu Cayman and the Company intend to operate so as not to be engaged in a U.S. trade or business. Accordingly, WaMu Cayman intends that it will not be subject to United States Federal income taxes on its net income.
See "Certain Tax Considerations - United States Federal Income Tax Consequences."
ERISA Considerations. . . . . . . . . . . . . No WaMu Cayman Preferred Security may be purchased by or transferred to any Benefit Plan Investor, except for an insurance company general account that represents, warrants and covenants that, at the time of acquisition and throughout the period it holds the securities, (A) it is eligible for and meets the requirements of the Department of Labor Prohibited Transaction Class Exemption 95-60, ( B) less than 25% of the assets of such general account are (or represent) assets of a Benefit Plan Investor and ( C) it is not a person who has discretionary authority or control with respect to the assets of WaMu Cayman or any person who provides investment advice for a fee (direct or indirect) with respect to such assets, or any affiliate of such a person and would not otherwise be excluded under 29 C.F.R. 2510.3-101 (f) (1).
Governing Law... . . .. . . . . .. . .. ... WaMu Cayman's Articles of Association and the WaMu Cayman Preferred Securities will be governed by, and construed in accordance with, the laws of the Cayman Islands. The LLC Agreement and the Fixed Rate Company
16
Preferred Securities will be governed by, and construed in
accordance with, the laws of
the State of
Delaware. The
Fixed Rate WMI Preferred Stock will be governed by and
construed in accordance with the laws of
the State of
Washington. The Fixed Rate Depositary Shares will be
governed by, and construed in accordance with, the laws
of
the State of
New York.
CUSIP ISIN The CUSIP number for the Series A-1 WaMu Cayman
Preferred Securities is 93934V AA 5.
The ISIN number for the Series A-1 WaMu Cayman
Preferred Securities is US93934VAA52.
The CUSIP number for the Series A-2 WaMu Cayman
Preferred Securities is G9463G AA 6.
The ISIN number for the Series A-2 WaMu Cayman
Preferred Securities is USG9463GAA60.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00033
RISK FACTORS
Purchasers should carefully consider the following risk factors in conjunction with the other
information contained in this offering circular, as well as information that is incorporated by
reference in this offering circular, before purchasing any WaMu Cayman Preferred Securities, the
financial entitlements of
which will be
substantially similar to those of
a like amount of
Fixed Rate
Company Preferred Securities and which are conditionally exchangeable into Fixed Rate Depositary
Shares representing interests in Fixed Rate WMI Preferred Stock.
Risks Relating to the Terms of
the WaMu Cayman Preferred Securities and the Fixed Rate
Company Preferred Securities
WaMu Cayman's ability pay dividends the WaMu Preferred Securities depends
whether the Company will pay dividends on the Fixed Rate Company Preferred Securities.
The only material assets of WaMu Cayman will be the Fixed Rate Company Preferred
Securities. Consequently, WaMu Cayman's ability to pay dividends on the WaMu Cayman
Preferred Securities depends entirely on whether the Company pays dividends on the Fixed Rate
Company Preferred Securities held by WaMu Cayman. If the Company does not declare and pay
dividends on the Fixed Rate Company Preferred Securities, WaMu Cayman will not pay dividends
on the WaMu Cayman Preferred Securities.
Even if the Company pays dividends on the Fixed Rate Company Preferred Securities held
WaMu Cayman, it is possible that WaMu Cayman's Board of
Directors prevent
payment of
dividends on the WaMu Cayman Preferred Securities.
Even though WaMu Cayman's Articles of
Association provide that dividends on the WaMu
Cayman Preferred Securities will be automatically payable on each date on which the Company
pays to WaMu Cayman dividends on the Fixed Rate Company Preferred Securities owned by
WaMu Cayman, WaMu Cayman's Articles of
Association also provide that WaMu Cayman's
Board of
Directors, acting unanimously including the two directors who are also members of
the
Company's Board of
Managers one of
whom is the Independent Manager) may prevent the
payment of such dividends on the WaMu Cayman Preferred Securities. However, if full dividends
on the WaMu Cayman Preferred Securities for any Dividend Period have not been declared and
paid, then, as described under Description of
the Fixed Rate Company Preferred Securities-
Restrictions on Dividends by WMI," WMI will not declare or pay dividends with respect to any of
its equity capital securities during the next succeeding Dividend Period, except dividends in
connection with a shareholder's rights plan, if any, or
dividends in connection with benefits plans.
The level of
the Company's relative the aggregate liquidation preference of
the
Company Preferred Securities could shrink over time other things, dividends
paid the Company the Common Securities or
other Junior Equity Securities if
are issued future date.
The LLC Agreement includes provisions that limit the Company's ability to pay dividends on
the Company's Junior Equity Securities but, subject to satisfaction of
those limitations, does not
prohibit dividends that could cause the level of
the Company's assets relative to the aggregate
liquidation preference of
the Company Preferred Securities to shrink. These limitations are
described under Description of
the Fixed Rate Company Preferred Securities Ranking,"
Restrictions on Dividends" and Voting Rights and Covenants." They include the following:
during a Dividend Period, the Company may not pay dividends on Junior Equity
Securities, or
repurchase, redeem or
otherwise acquire for consideration directly or
indirectly with limited exceptions) Junior Equity Securities, unless dividends for such
Dividend Period on all outstanding Company Preferred Securities have been declared and
paid in full, or
set aside for payment, as the case may be; and
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00034
without the consent or
affirmative vote the holders of
at
least two-thirds of
the Fixed Rate
Company Preferred Securities and the Fixed-to-Floating Rate Company Securities, voting
together as a single class, the Company may not:
pay dividends on Junior Equity Securities unless the Company's FFO for the four
prior fiscal quarters equals or exceeds 150% of
the amount that would be
required to pay full dividends on the outstanding Company Preferred Securities,
as well as any other Parity Equity Securities; or
amend or
otherwise change the requirement that the Company make investments
and distributions with the proceeds of
the Company's assets such that the
Company's FFO for any period of
four fiscal quarters will equal or
exceed 150%
of
the amount that would be required to pay full annual dividends on
all
outstanding Company Preferred Securities, as
well as any other Parity Equity
Securities.
As HELs in the Asset Trust prepay or
repay principal and distributions with respect to such
principal payments are made by the Asset Trust to the Company on the Class A Asset Trust
Certificate, subject to the limitations referenced above, the Company may choose to apply such
amounts to pay dividends on the Company Common Securities or
reinvest such amounts in
additional Eligible Assets. Additionally, subject to the limitations referenced above, the Company
could distribute a portion of
the Class A Asset Trust Certificate as a dividend on the Company
Common Securities. The Company has no current intention to pay an extraordinary dividend, and
WMI has no current intention to cause or
permit the Company to pay such an extraordinary
dividend. Nevertheless, dividends paid by
the Company on the Company Common Securities could
result in a reduction in the Company's assets that could have the consequence, notwithstanding
its
compliance with the limitations referred to above, of
the Company not having funds available to
pay full dividends on the Company Preferred Securities in future periods or
loss by investors of
some or
all
of
the amount of
their investment were the Company to be liquidated.
The WaMu Cayman Preferred Securities may not be redeemed at
the option of
the holder
thereof under any circumstances, are perpetual and have no maturity date. While the WaMu
Cayman Preferred Securities may be redeemed at
the option of
the Company under certain
circumstances described herein, any such redemption is subject to the approval of
the OTS and
may be constrained by
operation of
the Replacement Capital Covenant. Investors in the WaMuCayman Preferred Securities will have no right to reclaim their initial investment from WaMuCayman and there can b
e no guarantee that the WaMu Cayman Preferred Securities will ever be
redeemed. If investors in the WaMu Cayman Preferred Securities choose to sell their WaMu
Cayman Preferred Securities in order to reclaim all
or
part of
their initial investment in the
absence of any redemption, there can be no guarantee that such investors would be able to sell
their securities in the secondary market, or
that if such sale occurred the sale price would at
or
above the initial price.
on
on
Dividends on the Fixed Rate Company Preferred Securities are not cumulative. Conse-
quently, if the Company's Board of
Managers does not declare a dividend on the Fixed Rate
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00035
Company Preferred Securities for any quarter, WaMu Cayman will not be entitled to receive
dividends for such quarter, and consequently holders of
the WaMu Cayman Preferred Securities
will not receive dividends with respect to their securities for that quarter. In addition, the
Company's Board of Managers may determine that it would be
in the Company's best interests
to pay less than the full amount of
the stated dividends on the Fixed Rate Company Preferred
Securities or no dividends for any quarter even though funds are available. Factors that would
generally be considered by the Company's Board of Managers in making this determination are
the amount of
available funds, the Company's financial condition and capital needs, the impact of
current and pending legislation and regulations, economic conditions, and tax considerations.
to on
itEven if the Company pays dividends on Fixed Rate Company Preferred Securities held b
y
WaMu Cayman, it is possible that WaMu Cayman may not be able to pay dividends because
WaMu Cayman may only pay dividends on the WaMu Cayman Preferred Securities out of
funds
legally available therefor. Although WaMu Cayman's Articles of
Association restrict its activities
as described under WaMu Cayman" and WaMu Cayman is otherwise precluded from incurring
any indebtedness for borrowed money and does not anticipate having any material liabilities, it is
possible that WaMu Cayman may incur involuntary liabilities that may, in turn, preclude it from
paying dividends on the WaMu Cayman Preferred Securities even if the Company has paid
dividends on the Fixed Rate Company Preferred Securities owned by WaMu Cayman.
a a
The returns from an investment in the WaMu Cayman Preferred Securities will be dependent
to a significant extent on the performance and capital of WMB due to the potential for a
Conditional Exchange. A decline in the performance and capital levels of WMB or
the placement
by
the OTS of WMB into conservatorship or
receivership could result in a Conditional Exchange
of
the WaMu Cayman Preferred Securities for Fixed Rate Depositary Shares representing Fixed
Rate WMI Preferred Stock. The Fixed Rate WMI Preferred Stock would represent an investment
in WMI and not in the Company or WaMu Cayman. Under these circumstances:
the WaMu Cayman Preferred Securities would be exchanged for a preferred equity
interest in WMI at a time when WMB's and, ultimately, WMl's financial condition has
deteriorated or
when WMB may have been placed into conservatorship or
receivership
and, accordingly, it is unlikely that WMI would be
in a financial position to make any
dividend payment on the amount of
Fixed Rate WMI Preferred Stock;
in the event of a liquidation of WMI, the claims of
creditors of WMI would be entitled to
priority in payment over the claims of
holders of
equity interests such as the Fixed Rate
Depositary Shares, and, therefore, the former holders of
the WaMu Cayman Preferred
Securities who would then hold the Fixed Rate Depositary Shares representing Fixed
Rate WMI Preferred Stock because of
the occurrence of
the Conditional Exchange may
receive substantially less than such holders would receive had the.WaMu Cayman
Preferred Securities not been exchanged for the Fixed Rate Depositary Shares. See
Risk Factors Applicable to Fixed Rate Depositary Shares Issued in a Conditional
Exchange The Fixed Rate WMI Preferred Stock will rank subordinate to the direct
indebtedness of WMI;"
for United States Federal income tax purposes, a Conditional Exchange would most likely
be a taxable event to holders of
the WaMu Cayman Preferred Securities, and in that
20
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00036
event such holders generally would incur a gain or
loss, as the case may be, measured
by
the difference between their adjusted tax basis in the WaMu Cayman Preferred
Securities and the fair market value of
the Fixed Rate Depositary Shares. In addition,
dividends, if any, paid to Foreign Holders of
Fixed Rate Depositary Shares received upon
a Conditional Exchange generally will be subject to a 30% United States withholding tax
unless the holder qualifies for a reduction from withholding tax under an applicable United
States income tax treaty; and
although the terms of
Fixed Rate Depositary Shares are substantially similar to the terms
of
the Fixed Rate Company Preferred Securities, there are differences that holders of
WaMu Cayman Preferred Securities might deem to be important, such as
the fact that
holders of
Fixed Rate Depositary Shares will not generally have voting rights, except as
required by
law or
in connection with the right to elect directors if dividends are missed
see Description of
the Fixed Rate WMI Preferred Stock Voting Rights"), or
benefit
from any protective covenants. In addition, neither the Fixed Rate WMI Preferred Stock
nor the Fixed Rate Depositary Shares will be listed on any securities exchange or
automated dealer quotation system, and the Initial Purchasers are under no obligation to
and do not intend to make a market in the Fixed Rate Depositary Shares.
Except as specified in WaMu Cayman's Articles of
Association or
in relation to the right to
direct the manner in which WaMu Cayman exercises its voting rights with respect to the Fixed
Rate Company Preferred Securities, holders of WaMu Cayman Preferred Securities are not
entitled to voting rights. Except as
specified in the LLC Agreement, WaMu Cayman, as
holder of
Fixed Rate Company Preferred Securities, is not entitled to voting rights. However, the Company
is prohibited by
the LLC Agreement from taking certain actions without the consent or
vote of
at
least two-thirds of
either the Fixed Rate Company Preferred Securities voting separately or
the
Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Company Preferred
Securities, voting together as a single class, as applicable. For a description of
the matters on
which the holders of
Fixed Rate Company Preferred Securities have a right to vote, see
Description of
the Fixed Rate Company Preferred Securities Voting Rights and Covenants."
no
of
a an
Subject to the Replacement Capital Covenant and the prior approval of
the OTS, the
Company may redeem the Fixed Rate Company Preferred Securities i) in whole but not in part
upon the occurrence of a Tax Event, an Investment Company Act Event or a Regulatory Capital
Event prior to March 15, 2011 and in whole or
in part, at any time on or
after March 15, 2011.
The redemption by the Company of
the Fixed Rate Company Preferred Securities will automatically
cause a redemption of
the WaMu Cayman Preferred Securities for which the redemption price will
be paid from the proceeds WaMu Cayman receives from the Company as a consequence of
the
redemption of
the Fixed Rate Company Preferred Securities. The occurrence of
a Tax Event, an
Investment Company Act Event or a Regulatory Capital Event will not, however, give a holder of
the WaMu Cayman Preferred Securities any right to request that the Fixed Rate Company
Preferred Securities or
the WaMu Cayman Preferred Securities be redeemed.
If the Company redeems the Fixed Rate Company Preferred Securities, the WaMu Cayman
Preferred Securities will be automatically redeemed, and the former holders of
the WaMu
21
CONFIDENTIAL
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Cayman Preferred Securities may not be able to invest their redemption proceeds in securities
with a dividend yield and other terms comparable to that of
the WaMu Cayman Preferred
Securities. A Treasury based make whole" amount will be payable only in connection with a
redemption prior to March 15, 2011.
The WaMu Cayman Preferred Securities will rank subordinate to claims of WaMu Cayman's
creditors.
Although WaMu Cayman is a special purpose vehicle and its activities will be
limited by
WaMu Cayman's Articles of
Association, the WaMu Cayman Preferred Securities will rank
subordinate to claims of WaMu Cayman's creditors, if any. Accordingly, if
WaMu Cayman does not have funds legally available to pay full dividends on the WaMuCayman Preferred Securities; o
r
in the event of WaMu Cayman's liquidation, dissolution or
winding up, WaMu Cayman
does not have funds legally available to pay the full liquidation value of
the WaMuCayman Preferred Securities,
in each case, because of
claims of
any such creditors, any funds that are legally available to pay
such amounts will be paid pro rata to the WaMu Cayman Preferred Securities.
The Fixed Rate Company Preferred Securities will rank subordinate to claims of
the Company's
creditors and on a parity with other series of
preferred securities issued the Company.
The Fixed Rate Company Preferred Securities will rank subordinate to all claims of
the
Company's creditors. The Fixed Rate Company Preferred Securities will rank pari passu as
to
dividends and upon liquidation with the Fixed-to-Floating Rate Company Preferred Securities and
other Parity Equity Securities that the Company may issue. The Company will issue the Fixed-to-
Floating Rate Company Preferred Securities to WaMu Delaware at
a time substantially
contemporaneous with this Offering and may issue additional Parity Equity Securities at any time
in the future, subject to certain conditions at
the time of
issuance, without the consent or
approval of
the holders of
the WaMu Cayman Preferred Securities. Accordingly, if
the Company does not have funds legally available to pay full dividends on the Fixed Rate
Company Preferred Securities and any Parity Equity Securities; or
in the event of
the Company's liquidation, dissolution or
winding up, the Company does
not have funds legally available to pay the full liquidation value of
the Fixed R"ate
Company Preferred Securities and any Parity Equity Securities,
any funds that are legally available to pay such amounts will be paid pro rata to the Fixed Rate
Company Preferred Securities and any other Parity Equity Securities then outstanding. See
Description of
Other Company Securities Fixed-to-Floating Rate Company Preferred
Securities."
There has never been a market for the WaMu Cayman Preferred Securities.
Prior to this Offering, there was no market for the WaMu Cayman Preferred Securities.
Although the Initial Purchasers intend to make a market in the WaMu Cayman Preferred
Securities, they are under no obligation to do so and, to the extent that such market making is
commenced, it may be discontinued at
any time. The Series A-1 WaMu Cayman Preferred
Securities will not be listed on any securities exchange or automated dealer quotation system,
and although WaMu Cayman will apply to list the Series A-2 WaMu Cayman Preferred Securities
on the Euro MTF market of
the Luxembourg Stock Exchange, there can be no assurance that an
active and liquid trading market for the WaMu Cayman Preferred Securities will develop or
be
sustained. If such a market were to develop, the prices at
which the WaMu Cayman Preferred
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00038
Securities trade would depend on many factors, including prevailing interest rates, the operating
results of
the Company, WMB and WMI, and the market for similar securities. Hqlders of WaMu
Cayman Preferred Securities may not be able to resell their WaMu Cayman Preferred Securities
at
or above the initial price. Furthermore, the WaMu Cayman Preferred Securities are not and will
not be registered under the Securities Act, will be deemed to be
restricted securities within the
meaning of
Rule 144 under the Securities Act and are subject to significant transfer restrictions
as
described in Notice to Investors." These restrictions on transfer may inhibit the development
of
an
active and liquid trading market for the WaMu Cayman Preferred Securities and may
adversely impact the market price of
the WaMu Cayman Preferred Securities.
of,
The WaMu Cayman Preferred Securities do not constitute obligations or
equity securities of
WMI, WMB, the Company, Marion Holdings Inc., an intermediate holding company between WMB
and University Street University Street, the Asset Trust, WaMu Delaware or
any
other entity, nor are WaMu Cayman's obligations with respect to the WaMu Cayman Preferred
Securities guaranteed by any other entity. In particular, neither WMI, WMB, the Company,
University Street, Marion, the Asset Trust, WaMu Delaware nor any other entity guarantees that
WaMu Cayman will declare or
pay any dividends, nor are they obligated to provide additional
capital or
other support to WaMu Cayman to enable WaMu Cayman to pay dividends in the event
the Company fails to pay dividends on the Fixed Rate Company Preferred Securities and WaMuCayman is thus unable to pay dividends on the WaMu Cayman Preferred Securities. The WaMu
Cayman Preferred Securities are not exchangeable for Fixed Rate Depositary Shares or
Fixed
Rate WMI Preferred Stock except upon a Conditional Exchange. No holder of WaMu Cayman
Preferred Securities will have the right to require WaMu Cayman to exchange the WaMu Cayman
Preferred Securities for Fixed Rate Depositary Shares.
of,
The Fixed Rate Company Preferred Securities do not constitute obligations or
equity
securities of
any entity other than the Company, including WMI, WMB, Marion, University Street,
WaMu Cayman, the Asset Trust and WaMu Delaware, nor are the Company's obligations with
respect to the Fixed Rate Company Preferred Securities guaranteed by any other entity. In
particular, neither WMI, WMB, Marion, University Street, WaMu Cayman, the Asset Trust, WaMu
Delaware nor any other entity, guarantees that the Company will declare or
pay any dividends to
WaMu Cayman, nor are they obligated to provide additional capital or
other support to the
Company to enable the Company to pay dividends on the Fixed Rate Company Preferred
Securities to WaMu Cayman in the event the Company's assets and results from operations are
insufficient for such purpose.
All
of
the Company's officers and certain of
the Company's managers are also officers of
WMI or WMB or
their affiliates. After this Offering, WMI, WMB and University Street will continue
to control
all
of
the Company's outstanding voting securities. WMI, WMB, and University Street
will have the right to elect
all
of
the Company's managers, including the Independent Manager.
WMB and University Street may have interests that are not identical to the Company's
interests. WMI, through
its subsidiary, New American Capital, Inc., is the ultimate owner of
WMB's and University Street's common stock, and may have investment goals and strategies
CONFIDENTIAL
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The Company is dependent on the officers and employees of WMI and WMB for the selection,
structuring and monitoring of
the loans in the Asset Trust and the Company's relationship with
WMI and/or WMB may create potential conflicts of
interest.
The Company is dependent on the officers and employees of WMB for the servicing of
the loans
in the Asset Trust and the Company's relationship with WMB may create potential conflicts
interest.
per annum
per annum.
Regulators may limit the Company's ability to implement the Company's business plan and mayrestrict the Company's ability to pay dividends.
24
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a on
25
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00041
which it conducts
its operations to avoid being required to register as
an investment company, or
to register as
an investment company, either of
which could have a material adverse effect
on the Company or
the Asset Trust, as the case may be, the Company's ability to make
payments in respect of
the Fixed Rate Company Preferred Securities and, accordingly, the
trading price of
the WaMu Cayman Preferred Securities. Further, in order to ensure that the
Company and the Asset Trust at
all times continues to qualify for the above exemption from the
Investment Company Act, the Company and the Asset Trust may be required at
times to adopt
less efficient methods of
financing certain of
the Company's and the Asset Trust's assets than
would otherwise be the case and may be precluded from acquiring certain types of
assets whose
yield is higher than the yield on assets that could be purchased in a manner consistent with the
exemption. The net effect of
these factors may be
to lower at
times the Company's net interest
income. Finally, if the Company or
the Asset Trust were an unregistered investment company,
there would be a risk that the Company or
the Asset Trust, as
the case may be, would be
subject to monetary penalties and injunctive relief in an action brought by the SEC, that the
Company or
the Asset Trust, as the case may be, would be unable to enforce contracts with
third parties and that third parties could seek to obtain rescission of
transactions undertaken
during the period the Company or
the Asset Trust was determined to be
an unregistered
investment company.
In addition, an
issuer that is organized outside the United States, such as WaMu Cayman, is
not permitted to register under the Investment Company Act without first obtaining an order from
the SEC permitting it to register as
an investment company under the Investment Company Act.
WaMu Cayman does not intend to seek such an order and could not satisfy some of
the
requirements of
the Investment Company Act e.g., limitations on the ratio of
preferred equity to
common equity) that would have to be satisfied for WaMu Cayman to obtain such an order.
Accordingly, WaMu Cayman has not and does not intend to register under the Investment
Company Act in reliance on the exemption from registration set forth in Section 3(c) thereof.
Were such an exemption no longer available, potential ramifications of
a failure by WaMu Cayman
to obtain an order permitting it to register, if such registration were in fact required, include, but are
not limited to,
an
injunctive or
administrative proceeding by
the SEC for disgorgement and/or
monetary penalties and an order prohibiting WaMu Cayman from committing or
causing future
violations of
the federal securities laws. In the event the Company, the Asset Trust or WaMu
Cayman is ever considered an investment company under the Investment Company Act as a result
of
an Investment Company Act Event, the Company would likely redeem the Fixed Rate Company
Preferred Securities. See above under Risks Relating to the Terms of
the WaMu Cayman
Preferred Securities and the Fixed Rate Company Preferred Securities Holders of WaMu
Cayman Preferred Securities and Fixed Rate Company Preferred Securities have no redemption
rights; however, the Company may but is not required to) redeem the Fixed Rate Company
Preferred Securities upon the occurrence of a Tax Event, an Investment Company Act Event or a
Regulatory Capital Event prior to March 15, 2011, and at
any time thereafter and such redemption
will cause an automatic redemption of
the WaMu Cayman Preferred Securities."
Additionally, the Company may from time to time have Asset Subsidiaries other than the
Asset Trust. The Company may not establish an Asset Subsidiary unless the establishment and
operation of
such Asset Subsidiary will not cause the Company to be
an investment company
which is required to register under the Investment Company Act and such Asset Subsidiary is not
itself an investment company which is required to register under the Investment Company Act. If
any such Asset Subsidiary were to be required to register as
an investment company, the results
would be similar to those described above in respect to the Asset Trust being required to register
as
an investment company.
Adverse Effect of
Determination of Company's Partnership Status
Prior to the issuance of
the Company Preferred Securities, the Company will receive an
opinion from Mayer, Brown, Rowe Maw LLP to the effect that, for United States Federal
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00042
income tax purposes, i) the Company will not be treated as
an association taxable as a
corporation and
ii) although no activities closely comparable to that contemplated by the
Company have been the subject of any U.S. Treasury regulation, revenue ruling or
judicial
decision, the Company will not be treated as a publicly traded partnership taxable as a
corporation. The opinions are based on certain assumptions and on certain representations and
agreements regarding restrictions on the future conduct of
the activities of
the Company.
Although the Company intends to conduct
its activities in accordance with such assumptions,
representations and agreements, if it were nonetheless determined that the Company was
taxable as a corporation for United States Federal income tax purposes, then the Company
would be subject under the Code to the regular corporate income tax. Such taxes would reduce
the amounts available to make payments on the Company Preferred Securities.
Adverse Effect of
Determination of
U.S. Trade or
Business Status
Prior to the issuance of
the WaMu Cayman Preferred Securities, WaMu Cayman will receive
an opinion from Mayer, Brown, Rowe Maw LLP to the effect that, for United States Federal
income tax purposes, although no activities closely comparable to that contemplated by WaMu
Cayman have been the subject of
any U.S. Treasury regulation, revenue ruling or
judicial
decision, WaMu Cayman will not be treated as engaged in the conduct of
a trade or
business
within the United States and, consequently, WaMu Cayman's profits will not be subject to United
States Federal income tax on a net income basis including the branch profits tax). The opinion
is based on certain assumptions and on certain representations and agreements regarding
restrictions on the future conduct of
the activities of WaMu Cayman and the Company. Although
WaMu Cayman intends to conduct its activities in accordance with such assumptions,
representations and agreements, if it were nonetheless determined that WaMu Cayman was
engaged in a United States trade or
business and had taxable income that is effectively
connected with such United States trade or
business, then WaMu Cayman would be subject
under the Code to the regular corporate income tax on such effectively connected taxable
income and possibly to the 30% branch profits tax as
well. Such taxes would reduce the amounts
available to make payments on the WaMu Cayman Preferred Securities.
The Company has control over changes in interest rates and such changes could negatively
impact the Company's financial condition, results of
operations, and ability to pay dividends.
Initially, the Company's income consists primarily of payments received on the HELs which
are the underlying assets supporting the Class A Asset Trust Certificate such underlying assets,
together with any collateral with respect to any Additional Assets, the Company's Portfolio"). At
January 31, 2006, 100% of
the HELs to be included in the Company's Portfolio bear interest at
fixed rates; however, in the future, the Company could acquire Additional Assets which include or
are secured by
adjustable rate loans. Adjustable-rate loans decrease the risks to a lender
associated with changes in interest rates but involve other risks. As interest rates rise, the
payment by
the borrower rises to the extent permitted by
the terms of
the loan, and the
increased payment increases the potential for default. At
the same time, the marketability of
the
underlying property may be adversely affected by higher interest rates. In a declining interest rate
environment, there may be
an increase in prepayments on the HELs or
other assets in the
Company's Portfolio as
the borrowers refinance their mortgages at
lower interest rates. Under
these circumstances, the Company may find it more difficult to acquire Additional Assets with
rates sufficient to support the payment of
the dividends on the Fixed Rate Company Preferred
Securities. A declining interest rate environment would adversely affect the Company's ability to
pay full, or even partial, dividends on the Fixed Rate Company Preferred Securities.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00043
The value of
the collateral underlying the Company's Portfolio and
lor
the results of
the
Company's operations could be affected by various conditions in the economy, such as:
local and other economic conditions affecting real estate and other collateral values;
sudden or
unexpected changes in economic conditions, including changes that might
result from terrorist attacks and the United States' response to such attaCks;
the continued financial stability of a borrower and the borrower's ability to make loan
principal and interest payments, which may be adversely affected by job loss, recession,
divorce, illness or
personal bankruptcy; and
interest rate levels and the availability of
credit to refinance loans at
or
prior to maturity.
At
January 31, 2006, more than 79% as a percentage of
loan principal balances) of
the
assets in the Company's Portfolio were located in Texas and California. Because of
the
concentration of
the Company's interest in those states, in the event of
adverse economic
conditions in those states, the Company would likely experience higher rates of
loss and
delinquency on the Company's Portfolio than if the underlying HELs were more geographically
diversified. Additionally, the HELs in the Company's Portfolio may be subject to a greater risk of
default than other comparable loans in the event of
adverse economic, political, or
business
developments or
natural hazards that may affect Texas and California, and the ability of
property
owners or
commercial borrowers in those states to make payments ofprincipal and interest on
the underlying loans. In the event of
any adverse development or
natural disaster in those states,
the Company's ability to pay dividends on the Fixed Rate Company Preferred Securities could be
adversely affected.
The Company has adopted policies with a view to ensuring that
all financial dealings
between WMB, University Street and the Company will be fair to each party and consistent with
market terms. However, there has been no third party valuation of
all
of
the Company's assets.
In addition, it is not anticipated that third party valuations will be obtained in connection with
future acquisitions or
dispositions of
assets even in circumstances where an affiliate of
the
Company.is selling the assets to the Company, or
purchasing the assets from the Company.
Accordingly, the Company cannot assure purchasers that the purchase price the Company paid
for all
of
the Company's assets was equal to the fair market value of
those assets. Nor can the
Company assure purchasers that the consideration to be paid by the Company
to,
or
received by
the Company from, WMB, University Street or any of
the Company's affiliates in connection with
future acquisitions or
dispositions of
assets will be equal to the fair market value of
such assets.
The Asset Trust or any other Asset Subsidiary may be forced to foreclose on an underlying
HEL or
other assets where the borrower has defaulted on
its obligation to repay the applicable
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00044
loan. It
is possible that the Asset Trust or
any other Asset Subsidiary, and therefore, the Company,
may be subject to environmental liabilities with respect to foreclosed property. The discovery of
these liabilities and any associated costs for removal of
hazardous substances, wastes,
contaminants or
pollutants, could have a material adverse effect on the fair value of such assets.
Substantial delays could be encountered in connection with the liquidation of
the collateral
securing defaulted loans in the Company's Portfolio, with corresponding delays in the Company's
receipt of
related proceeds. An action to foreclose on a mortgaged property or
repossess and
sell other collateral securing a loan is regulated by state statutes and rules. Any such action is
subject to many of
the delays and expenses of
lawsuits, which may impede the Company's ability
to foreclose on or
sell the collateral or
to obtain proceeds sufficient to repay
all amounts due on
the related loan in the Company's Portfolio.
Although the Company's Portfolio currently consists primarily of HELs held through the
Asset Trust, to the extent it acquires Additional Assets in the future, the Company is not required
to limit
its investments to assets of
the types currently in the Company's Portfolio. See TheCompany Business o
f
the Company Assets of
the Company." Assets such as second lien
closed end home equity loans, first or second lien home equity lines of
credit, mortgage loans on
single family or
multi-family residences, commercial mortgage loans or
other real estate assets
may involve different risks not described in this offering circular. Moreover, while the LLC
Agreement will call for maintaining specified levels of FFO coverage as
to expected dividends,
the Company is not required to maintain the levels of
asset coverage that currently exist.
The dependency of
the Company on WMI, University Street and WMB and the Company's
close relationship with WMI, University Street and WMB may create potential conflicts of
interest in
connection with the Company's acquisition of
Additional Assets. The Company will be dependent on
WMI, University Street and WMB to identify Additional Assets which it may acquire, but WMI,
University Street and WMB are not required to contribute or
sell Additional Assets to the Company. If
WMI, University Street and WMB are unable to identify, or
are unwilling to contribute or
sell, suitable
Additional Assets, then over time the Company's level of
FFO coverage as
to expected dividends will
decline. Moreover, conflicts of
interest may arise because the employees of WMI, University Street
and WMB Will, subject to.certain ~estrictions, make decisions on the amount, type and to the extent
the Company purchases Additional Assets) price of
future acquisitions by the Company of
Additional
Assets from University Street, WMB or
other members of
the WMI Group as well as future
dispositions of
assets to WMB, University Street or
third parties.
For United States Federal income tax purposes, a Conditional Exchange would most likely
be a taxable event to holders of WaMu Cayman Preferred Securities under the Code, and they
generally would incur a gain or
loss, as
the case may be, measured by
the difference between
their adjusted tax basis in the WaMu Cayman Preferred Securities and the fair market value of
the Fixed Rate Depositary Shares. In addition, dividends, if any, paid to Foreign Holders of
Fixed
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00045
to
30
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00046
Upon the occurrence of
a Conditional Exchange, the holders of
the Fixed Rate Depositary
Shares will not benefit from the same favorable covenants as
the Fixed Rate Company Preferred
Securities.
Dividends on the Fixed Rate WMI Preferred Stock are not cumulative. Consequently, if the
board of
directors of WMI of does not declare dividends on the Fixed
Rate WMI Preferred Stock for any quarterly period, the holders of
the Fixed Rate Depositary
Shares would not be
entitled to any such dividend whether or
not funds are or
subsequently
become available.
WMl's Board of
Directors may determine that it would be
in WMl's best interest to pay less
than the full amount of
the stated dividends on the Fixed Rate WMI Preferred Stock or no
dividends for any quarter even if funds are available. Factors that would be considered by WMl's
Board of
Directors in making this determination are WMl's financial condition and capital needs,
the impact of
current and pending legislation and regulations, economic conditions, tax
considerations, and such other factors as WMI's Board of
Directors may deem relevant.
The Fixed Rate WMI Preferred Stock and the Fixed Rate Depositary Shares will be new
issues of
securities. WMI does not intend to cause the listing or
quotation of
the Fixed Rate WMI
Preferred Stock or
the Fixed Rate Depositary Shares on any securities exchange or
automated
dealer quotation system, including any such securities exchange or automated dealer quotation
system on which the Series A-2 WaMu Cayman Preferred Securities are listed or
quoted. The
Initial Purchasers are under no obligation to and do not intend to make a market in the Fixed
Rate Depositary Shares. Consequently, it is unlikely that an
active and liquid trading public
market for the Fixed Rate Depositary Shares or
the underlying Fixed Rate WMI Preferred Stock
will develop or
be maintained. The lack of
liquidity and an active trading market could adversely
affect ability of
the holders of
Fixed Rate Depositary Shares to dispose of such shares.
In addition, neither the Fixed Rate Depositary Shares nor the Fixed Rate WMI Preferred
Stock represented by such shares have or
will be registered under the Securities Act and will be
deemed to be restricted securities within the meaning of
Rule 144 of
the Securities Act. Holders
of
Fixed Rate Depositary Shares will not be able to offer, sell, pledge or
otherwise transfer the
Fixed Rate Depositary Shares other than:
to a qualified institutional buyer within the meaning of
Rule 144A of
the Securities Act in a
transaction complying with Rule 144A;
to a non-U.S. person within the meaning of
Rule 902 of
Regulation S in a transaction
complying with Regulation S;
otherwise in accordance with an applicable exemption from the registration requirements
of
the Securities Act; or
to WMI or
one of
WMl's affiliates, and in any case, in accordance with exemptions from
any applicable state securities or
blue sky laws.
These restrictions on transfer may inhibit the development of
an
active and liquid trading market
for the Fixed Rate Depositary Shares and may adversely impact the market price of
such shares.
31
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00047
CERTAIN INFORMATION CONCERNING WMB
WMB") savings
various
savings
savings
savings
converted
Event:
corrective
conservatorship
dividends
quantitative
have
have leverage
savings
savings
exclusive servicing
servicing
32
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00048
lated gains losses) on certain available-for-sale securities and cash flow hedges. For purposes
of
determining risk-weighted assets for the risk-based capital ratios, the book value of each of
the savings association's on-balance sheet assets, and a portion of
certain off-bcl.lance sheet
items and exposures, are weighted from 0% to 100% based on broad categories. For instance,
U.S. government debt obligations are generally risk-weighted at
0%; certain qualifying residential
mortgage loans on one-to-four family dwellings are generally risk weighted at
50%; and
commercial loans and most other assets are generally risk-weighted at 100%. Off-balance sheet
items including letters of
credit, loan commitments, swaps and other derivatives) are converted
into on-balance sheet equivalent" amounts for risk-based capital purposes, then assigned a risk
weight like other assets. The capital risk weighting assigned to certain asset-backed securities
may vary from 20% to 200% depending on credit rating. Subordinated residual interests retained
in asset securitizations, credit enhancement and forms of
recourse" can result in higher capital
charges or
deductions from capital.
For purposes of
the OTS regulations, is defined as the sum of
core capital
and supplementary capital. generally includes: common shareholders' equity
which includes related surplus); non-cumulative perpetual preferred stock which includes
related surplus); and qualifying minority interests in the equity accounts of
consolidated
subsidiaries which may include such instruments as qualifying REIT preferred stock and the
Company Preferred Securities). generally includes subject to certain
limits and sub-limits): cumulative perpetual preferred stock; maturing capital instruments; Dutch
auction and money market preferred stock; hybrid capital instruments including certain
mandatory convertible notes); term subordinated debt; the savings association's allowance for
WMB has requested confirmation from the OTS that the Company Preferred Securities
constitute core capital of WMB under the OTS's applicable regulatory capital regulations and,
upon receipt of such confirmation, intends to treat the Company Preferred Securities accordingly.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00051
USE OF PROCEEDS
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00052
USE OF PROCEEDS
WaMu Cayman will use the proceeds of the sale of the WaMu Cayman Preferred Securities in this Offering, expected to be approximately $735,000,000, net of underwriting commissions, to purchase from WMB a like amount of Fixed Rate Company Preferred Securities, which the Company will issue to WMB in exchange for the conveyance from WMB of a portfolio of HELs. The WMI Group will use the proceeds from the sale of the Fixed Rate Company Preferred Securities to WaMu Cayman and the Fixed-to-Floating Rate Preferred Securities to WaMu Delaware for general corporate purposes, which may include the repurchase of WMl's common stock.
36
Washington Mutual Preferred Funding Cayman) I Ltd. WaMu Cayman") is a Cayman
Islands exempted company limited by
shares incorporated on February 23, 2006 under the
Companies Law 2004 Revision) of
the Cayman Islands the Companies Law") and
its
Memorandum and Articles of
Association together, as amended, WaMu Cayman's Articles of
Association")
WaMu Cayman's Articles of
Association limit
its activities to i) holding the 7.25% Perpetual
Non-Cumulative Preferred Securities, liquidation preference $1,000 per security the Fixed Rate
Company Preferred Securities"), ii) issuing the 7.25% Perpetual Non-cumulative Preferred
Securities, Series A-1, liquidation preference $100,000 per security and $302,300,000 in the
aggregate the Series A-1 WaMu Cayman Preferred Securities") and 7.25% Perpetual Non-
cumulative Preferred Securities, Series A-2, liquidation preference $10,000 per security and
$447,700,000 in the aggregate the Series A-2 WaMu Cayman Preferred Securities" and,
together with the Series A-1 WaMu Cayman Preferred Securities, the WaMu Cayman Preferred
Securities"), issuing the WaMu Cayman Ordinary Shares to the Cayman Trust and
iv) performing functions necessary or
incidental thereto. WaMu Cayman is prohibited from
issuing other equity or
any debt securities or
engaging in any other activities. Subject to the
limitations and assumptions described under Certain Tax Considerations," WaMu Cayman will
be treated as a corporation for United States Federal income tax purposes. The Fixed Rate
Company Preferred Securities will be the only assets of WaMu Cayman, other than the sum of
$1,000 representing the issued and paid-up share capital. The registered office of WaMu Cayman
is at PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman,
Cayman Islands. Copies of WaMu Cayman's Articles of
Association will be
available upon
request to WMI or
free of
charge at
the specified office of
the co-paying agent in Luxembourg
maintained by WaMu Cayman the Paying Agent in Luxembourg").
Capitalization
The authorized share capital of WaMu Cayman consists of
i) 3,023 Series A-1 WaMuCayman Preferred Securities par value $1.00 and liquidation preference $100,000 each,
all
of
which will be issued in connection with this Offering,
ii) 44,770 Series A-2 WaMu Cayman
Preferred Securities par value $1.00 and liquidation preference $10,000 each,
all
of
which will be
issued in connection with this Offering and iii) 1,000 ordinary shares, par value $1.00 each the
WaMu Cayman Ordinary Shares"),
all
of
which have been issued.
The WaMu Cayman Preferred Securities are described under Description of WaMu
Cayman Preferred Securities."
All
of
the issued WaMu Cayman Ordinary Shares are paid-up and
are held by Maples Finance Limited, as
share trustee in such capacity, the Share Trustee") of
a trust the Cayman Trust") established under the terms of a declaration of
trust the
Declaration of
Trust") dated February 23, 2006 under which the Share Trustee holds the WaMuCayman Ordinary Shares in trust until the termination o
f
the Cayman Trust. The Cayman Trust
will not terminate for so long as any WaMu Cayman Preferred Securities are outstanding. The
Cayman Trust may not dispose of
or
otherwise deal with the WaMu Cayman Ordinary Shares for
so long as
the WaMu Cayman Preferred Securities are outstanding. Prior to the termination of
the Cayman Trust, the Cayman Trust is an accumulation trust, and no distributions will be made
while any WaMu Cayman Preferred Security is outstanding. Following the termination of
the
Cayman Trust, the Share Trustee will wind up the Cayman Trust and make a final distribution to
charity. The Share Trustee has no beneficial interest in,
and derives no benefit other than its fee
for acting as Share Trustee) from, its holding of
the WaMu Cayman Ordinary Shares.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00053
The following table illustrates the expected capitalization of WaMu Cayman as
of
the closingof
this Offering, after giving effect to the issuance of
the WaMu Cayman Preferred Securities on
the closing date:
As of
the Closing Date
Unaudited)
Series A-1 WaMu Cayman Preferred Securities$302,300,000
Series A-2 WaMu Cayman Preferred Securities$447,700,000
WaMu Cayman Ordinary Shares$ 1,000
Total Capitalization$750,001,000
Business of WaMu Cayman
Assets of WaMu Cayman
WaMu Cayman's sole assets will be the Fixed Rate Company Preferred Securities and
$1,000 from the issuance of
the WaMu Cayman Ordinary Shares to the Cayman Trust.
Administration
Maples Finance Limited, a licensed trust company incorporated under the laws of
the
Cayman Islands, acts as
the administrator of WaMu Cayman the under the
Administration Agreement to be entered into on or
before the closing date the
between WaMu Cayman and Maples Finance Limited. The office of
the
Administrator serves as
the general business office of WaMu Cayman. Through this office and
pursuant to the terms of
the Administration Agreement, the Administrator performs various
management functions on behalf of WaMu Cayman, including the provision of
clerical,
administrative and other services.
The Administrator will serve until it resigns, is dissolved or
is removed by WaMu Cayman.
The Administrator may delegate
its duties under the Administration Agreement to other parties,
but doing so will not release the Administrator from any of
its obligations under the
Administration Agreement.
Under the Administration Agreement, WaMu Cayman may remove the Administrator at any
time, without paying any penalty, by giving at
least 30 days' written notice to the Administrator.
However, if the Administrator is dissolved or
commits an act of
bankruptcy, or
if it breaches the
Administration Agreement and the breach, if capable of
being cured, remains uncured for
30 days after receiving notice of
such breach from WaMu Cayman or
WMI), WaMu Cayman mayremove the Administrator on 14 days' notice to the Administrator.
The Administrator may resign at any time by giving at
least 30 days' written notice to WaMuCayman. Noresignation o
r
removal of
the Administrator will become effective while any WaMu
Cayman Preferred Securities are outstanding until a successor administrator has been appointed
and has accepted and assumed its duties. The Administration Agreement may be amended by
the Administrator and WaMu Cayman; that such amendment may not have a
material adverse affect on the rights and interests of
the holders of
the WaMu Cayman Preferred
Securities.
Under the Expenses Agreement, to be entered into on or
before the closing date the
among WaMu Cayman and WMB, all charges or
expenses of WaMu
Cayman other than payments required under the terms of
the WaMu Cayman Preferred
Securities, including the fees, charges and expenses of
the Administrator, the Registrar, the
Transfer Agent or any Paying Agent, will be paid or caused to be paid by WMB, that if
the Administrator incurs fees, charges or
expenses, for which they are not otherwise liable under
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00054
the Administration Agreement, at
the request of a holder of WaMu Cayman Preferred Securities
or
other person, such holder or
other person will be
liable for such fees, charges and expenses.
Management of
WaMu Cayman
Directors
WaMu Cayman will be managed by a Board of
Directors. WaMu Cayman's Articles of
Association will provide that WaMu Cayman's Board of
Directors will be composed of
five
members. Pursuant to WaMu Cayman's Articles of
Association, two of
the five directors will
automatically and at
all times consist of two of
the persons who are then currently serving as
members of
the Company's Board of
Managers the as
designated by the Company in a notice to WaMu Cayman. One of
the Company Designated
Directors will at
all times be the person who is the Company's Independent Manager, as
designated by the Company in a notice to WaMu Cayman. The person who is the Company's
Independent Manager will also be designated as WaMu Cayman's Independent Director the
The other three directors of WaMu Cayman will be appointed by the Share Trustee as
holder of
100% of
the WaMu Cayman Ordinary Shares. These persons will not be
or
have been
directors or employees of WMI or any affiliate of WMI. The directors of WaMu Cayman will serve
until their successors are duly appointed by
the Share Trustee as
holder of
100% of
the WaMuCayman Ordinary Shares, o
r
the Company in the case of
the Company Designated Directors
including the Independent Director), as applicable. Except in certain circumstances described
under Independent Director" below or
in connection with the prevention of
the dividend on
the WaMu Company Preferred Securities in circumstances where the Company has paid
dividends on the Fixed Rate Company Preferred Securities held by WaMu Cayman, action by the
WaMu Cayman's Board of
Directors will be
by majority vote.
The persons who will be the directors of
the Company upon completion of
this Offering are
as follows:
Wendy Ebanks Director
Carlos Fallajah Director
Guy Major Director
Robert Williams Director
Kenneth Uva Independent Director
Independent Director
As a consequence of
the WaMu Cayman's Independent Director being the same person as
the Company's Independent Manager, WaMu Cayman's Independent Director will be a person
who must not during the preceding five years have been a director or employee of WMI or any
affiliate of
WMI, other than a direct or
indirect financing subsidiary of
WMI. In addition, the
holders of
the WaMu Cayman Preferred Securities and the holders of
the Trust Securities, by
exercise of
their right to direct the manner in which WaMu Cayman and WaMu Delaware exercise
their voting rights with respect to the Fixed Rate Company Preferred Securities and Fixed-to-
Floating Rate Company Preferred Securities, respectively, voting together as a single class, will
be entitled to remove the initial or any succeeding Independent Manager of
the Company, and
consequently WaMu Cayman's Independent Director, and to fill the vacancies so created by such
removals or
any other vacancy existing in the office of WaMu Cayman's Independent Director
and Independent Manager of
the Company if i) the Company fails to pay full dividends on the
Fixed Rate Company Preferred Securities on any Dividend Payment Date, ii) WaMu Cayman
fails to pay full dividends on the WaMu Cayman Preferred Securities on any Dividend Payment
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00055
Compensation
of Directors
Additional Information
40
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00056
THE COMPANY
Washington Mutual Preferred Funding LLC the is a Delaware;limited liability
company formed on February 3, 2006 under the Delaware Limited Liability Company Act, as
amended the pursuant to an
initial limited liability company agreement and a
certificate of
formation filed with the Secretary of
State of
the State of
Delaware. The limited
liability company agreement will be amended and restated in its entirety on or
about March 7,
2006 as so amended and restated, the
The LLC Agreement generally limits the Company's activities to i) issuing the Fixed Rate
Company Preferred Securities, the Perpetual Non-cumulative Fixed-to-Floating Rate Preferred
Securities the and together with the
Fixed Rate Company Preferred Securities, the the common
securities of
the Company the and additional Parity Equity
Securities of
the Company acquiring and holding Eligible Investments, including the Class A
Asset Trust Certificate which will be the sole initial Eligible Investments of
the Company) in
accordance with the investment policy as described in Business of
the Company Assets of
the Company" and iii) performing functions necessary or
incidental thereto. Subject to the
limitations and assumptions described under Certain Tax Considerations United States
Federal Income Tax Consequences", the Company intends to be treated as a partnership for
United States Federal income tax purposes other than a publicly traded partnership taxable as a
corporation) and may not take any action, or
permit any action to be taken, that would cause the
Company to fail to be treated as a partnership for United States Federal income tax purposes for
so long as any Company Preferred Securities are outstanding, except with the consent or
affirmative vote of
the holders of
at
least two-thirds of
the Fixed Rate Company Preferred
Securities and the Fixed-to-Floating Rate Company Preferred Securities, voting together as a
single class. The principal executive office of
the Company is 1201 Third Avenue, Seattle,
Washington 98101. Copies of
the LLC Agreement will be
available upon request to WMI or
free
of
charge at
the specified office of
the Paying Agent in Luxembourg.
The Company will receive the opinion of
Mayer, Brown, Rowe Maw LLP to the effect that,
for United States Federal income tax purposes, the Company will not be treated as
an
association taxable as a corporation or
as a publicly traded partnership taxable as a corporation.
Capitalization
Upon completion of
this Offering, University Street, Inc., an indirect subsidiary of WMB
will hold
all
of
the Company Common Securities, representing 100% of
the
voting rights in the Company subject to the limited voting rights of
holders of
the Company
Preferred Securities described under Description of
Fixed Rate Company Preferred Securi-
ties"). Upon completion of
this Offering, WaMu Cayman will hold all
of
the Fixed Rate Company
Preferred Securities and WaMu Delaware will hold
all
of
the Fixed-to-Floating Rate Company
Preferred Securities.
41
CONFIDENTIAL
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As of
the Closing
Date
Unaudited)
Business of
the Company
Assets of
the Company
42
CONFIDENTIAL
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Additional Assets")
Eligible Assets"
provided, however,
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00059
Asset Documentation"
provided
Asset Subsidiary"
44
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00060
Asset Tax Opinion"
Asset Portfolio"
Eligible Investments"
Permitted Investments"
provided,
provided further,
provided,
provided,
provided.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00061
provided, however,
Rating Agencies"
Rating Agency Condition"
Administrative Services Agreement")
de minimis
Managers and Officers
Independent Manager").
46
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00062
Company's Board of Managers will be
by majority vote. The Company will have five officers upon
issuance of
the Fixed Rate Preferred Securities.
The persons who will be the managers and executive officers of
the Company upon
completion of
the Offering will include:
Name
Robert Williams. Manager and Senior Vice President
Peter Freilinger Manager and Senior Vice President
Kenneth Uva Independent Manager
Doreen Logan First Vice President and Assistant Secretary
Paul Phillips. Vice President
Chad Smith First Vice President and Secretary
Each of
the initial managers other than the Independent Manager) and officers of
the
Company are individuals who are officers or
employees of WMI or
one of
its
affiliates. The initial
Independent Manager is Kenneth Uva, who is an employee of
CT Corporation.
The Company will designate two of
the persons then currently serving as members of
the
Company's Board of
Managers to serve as members of WaMu Cayman's Board of
Directors in a
notice to WaMu Cayman. One of
the Company Designated Directors will at
all times be the
person who is the Company's Independent Manager, as
designated by
the Company in a notice
to WaMu Cayman. The person who is the Company's Independent Manager will also be
designated as WaMu Cayman's Independent Director. The Company Designated Directors will
serve as directors of WaMu Cayman until their successors are duly elected and qualified.
Independent Manager
Under the LLC Agreement, in order to be considered independent", a manager must not,
during the preceding five years, have been a director or employee of WMI or any affiliate of WMI,
other than a direct or
indirect financing subsidiary of
WMI.
The LLC Agreement will require that, in assessing the benefits to the Company of any
proposed action requiring his or
her consent, the Company's Independent Manager take into
account the interests of
holders of
both Company Common Securities and the Company
Preferred Securities. The LLC Agreement provides that in considering the interests of
the holders
of
the Company Preferred Securities, the Company's Independent Manager owes such holders
the same duties which the Independent Manager owes to the holders of Company Common
Securities.
The LLC Agreement will provide that, for so long as any Company Preferred Securities are
outstanding, certain actions by
the Company are subject to prior approval of
all Managers
including the Independent Manager. The Company will not be able, without the approval of
the
Independent Manager, to i) terminate, amend or
otherwise change any Asset Documentation or
ii) effect a consolidation, merger or
share exchange that is not tax-free to the holders of
the
Company Preferred Securities unless such consolidation, merger or
share exchange was
approved by the consent or
affirmative vote of
the holders of
at
least two-thirds of
the Fixed
Rate Company Preferred Securities and the Fixed-to-Floating Rate Company Preferred Securi-
ties, voting together as a single class. In addition, in the event that the Asset Trust fails to make
a payment to the Company or
any payments are not received with regard to any Additional Asset
in violation of
the terms of
the related Asset Documentation on any scheduled payment date, the
Independent Manager will have the authority to cause the Company, as the holder of
the
Series A Asset Trust Certificate or any Additional Asset, as applicable, to enforce
its rights in
such capacity until payments have been resumed and a year has passed since the date of
the
latest scheduled payment date with respect to which the Asset Trust or
the Additional Asset
failed to make a payment.
47
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00063
Bankruptcy Event"
de minimis.
provided, however,
48
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00064
Additional Information
49
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00065
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00066
THE ASSET TRUST
General
Washington Mutual Home Equity Trust I (the "Asset Trust") is a statutory trust formed under the laws of the State of Delaware pursuant to a trust agreement between the Company, as depositor, and Deutsche Bank Trust Company Delaware, as Delaware trustee. The Pooling and Servicing Agreement among the Company, as depositor, WMB, as servicer (the "Servicer") , Deutsche Bank Trust Company Delaware, as Delaware trustee (the "Delaware Trustee") and Deutsche Bank National Trust Company, as trustee (the "Trustee"), will restate the trust agreement and will be the governing instrument of the Asset Trust.
The Asset Trust will not own any assets other than the HELs and the other assets described below. The Asset Trust will not have any liabilities other than those incurred in connection with the Pooling and Servicing Agreement and any related agreement. The Asset Trust will not have any directors, officers or other employees. No equity contribution will be made to the Asset Trust by WMB, the depositor or any other party, except for a de minimis contribution made by the depositor pursuant to the initial trust agreement, and the Asset Trust will not have any other capital. The fiscal year end of the Asset Trust will be December 31. The Asset Trust will act through the Trustee and the Delaware Trustee, whose fees and reasonable expenses will be paid or reimbursed by the Servicer.
For purposes of this offering circular with respect to the underwriting, origination and servicing of the HELs in the Asset Trust, references to WMB include WMB, originators acquired by WMB and WMB's subsidiaries.
General Description of Assets
The assets of the Asset Trust will consist of HELs having, as of the Cut-Off Date, a value of approximately $5,389,459,150, payments received thereon and certain other investments. The HELs were originated by WMB primarily through its retail branches between September 1,2001 and September 30, 2005. As of January 31, 2006, the HELs transferred into the Asset Trust had an aggregate unpaid principal balance of approximately $5,389,459,150.
The assets of the Asset Trust will consist of 56,090 HELs that had an aggregate unpaid principal balance as of the Cut-Off Date, of approximately $5,389,459,150. The HELs have a weighted average gross interest rate of 6.076% and range from a gross interest rate of 4.00% to 11.315%. The weighted average current, unpaid principal balance of the HELs is $96,086 with a minimum current, unpaid principal balance of $25,002 and a maximum current, unpaid principal balance of $965,000. Assets in the Asset Trust have various original maturities ranging from 5 years to 40 years and were, on average, originated within the last 25.46 months. The current average loan-to-value ratio is 53.48% and the average loan-to-value ratio at origination was 57.51%. The HELs have a weighted average Credit Score (as defined below) of 757. Most of the properties underlying the HELs are owner occupied with 3.86% of the properties non-owner occupied. The HELs are geographically concentrated in Texas (49.01%), California (30.59%), Florida (7.17%), and New York (5.08%). HELs are typically made for reasons such as home purchases, home improvements, furniture and fixtures purchases, purchases of automobiles and debt consolidation. The HELs are generally repaid on a fully-amortizing basis.
Acquisition of the Portfolio and Related Transactions
In anticipation of the transactions described in this offering circular, WMB contributed a pool of HELs to the Company in exchange for a corresponding amount of the Company's Fixed Rate Company Preferred Securities and Fixed-to-Floating Rate Company Preferred Securities. In addition, University Street contributed a pool of HELs to the Company in exchange for all of the
50
A Trust Certificate")
R Trust Certificate").
Cut-Off Date").
Description of
the Portfolio
General
51
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00067
The following tables represent information as
of
January 31, 2006 with respect to the HELs
included in the portfolio of
the Asset Trust:
$0-$49,999 11,198 $ 432,387,414 8.02%
$50,000-$74,999 13,561 853,233,512 15.83
$75,000-$99,999 11,231 976,769,683 18.12
$100,000-$199,999 17,073 2,313,001,283 42.92
$200,000-$299,999 2,322 539,701,841 10.01
$300,000-$499,999 644 236,692,050 4.39
Greater than $500,000 61 37,673,368 0.70
56,090 $5,389,459,150 100.00%
4.00-4.99% $ 1,977,067 0.04%
5.00-5.99 26,026 2,624,484,236 48.70
6.00-6.99 27,509 2,571,843,320
7.00-7.99 2,277 173,421,367 3.22
8.00-8.99 209 14,243,687 0.26
9.00-9.99 1,654,510 0.03
10.00-10.99 1,658,731 0.03
11.00-11 99 176,232 0.00
56,090 $5,389,459,150 100.00%
Single Family 51,667 $4,958,055,897 92.00%
Townhouse 2,071 253,335,974 4.70
Condominium 2,269 171,618,855 3.18
Manufactured Housing 6,448,424 0.12
56,090 $5,389,459,150 100.00%
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00068
Texas 28,652 $2,641,385,492 49.01%
California 15,288 1,648,481,206 30.59
Florida 4,943 386,598,404 7.17
New York 2,486 273,920,738 5.08
Washington 1,181 110,746,674 2.05
New Jersey 694 76,275,944
Oregon 788 74,128,630 1.38
Georgia 446 38,773,740 0.72
Idaho334 27,517,454 0.51
Arizona 305 26,256,800 0.49
Other973 85,374,067 1.58
56,090 $5,389,459,150 100.00%
Less than 600 900 $ 80,943,626 1.50%
600-649 1,786 169,408,159 3.14
650-699 5,866 566,608,998 10.51
700-749 11,759 1,160,863,350 21.54
750-799 21,633 2,144,571,619 39.79
800-849 14,146 1,267,063,398 23.51
56,090 $5,389,459,150 100.00%
53
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00069
Distribution by Current Loan-to-Value Ratio
Percent of
Number of
Current Principal Overall Portfolio
Current Loan-to-Value Ratio(1) Balance Balance
Total
Distribution by Remaining Months to Maturity
Percent of
Number of
Current Principal Overall Portfolio
Remaining Months to Maturity Loans Balance Balance
Total
Distribution by Year of
Origination
Percent of
Number of
Current Principal Overall Portfolio
Year of
Origination Loans Balance Balance
Total
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00070
General
Evaluation the Borrower's Credit Standing
Evaluation the Borrower's Repayment Ability
Evaluation the Adequacy the Collateral
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00071
lor
lor
alternative services".
Documentation Programs
Exceptions Program Parameters
Automated Underwriting System
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00072
conditions, which may include the receipt of
additional documentation, ii) refers the loan
application to an underwriter for manual underwriting, or
declines the file based on
predetermined eligibility criteria. In making the underwriting decision, SUCCESS distinguishes
among different levels of
credit standing, based on a proprietary custom score model, the
borrower's Credit Score, and specific policies, application and loan characteristics. WMB has
developed these credit standing levels based on a statistical analysis of
the past performance of
its portfolio of
home equity loans. WMB has used analysis of
the past performance of
its
portfolio of home equity loans. WMB has used SUCCESS to underwrite HELs since May 2001.
WMB regularly evaluates and validates SUCCESS and to date has completed all required
compliance and fair lending evaluations in a satisfactory manner. WMB periodically upgrades
its
proprietary automated underwriting system. SUCCESS was last upgraded in November 2004.
Quality Control Review
WMB's credit risk oversight department conducts quality control reviews of
statistical
samplings of
previously originated HELs on a regular basis.
Credit Risk Management Policies
Credit risk within the WMI Group is managed by means of a broad set of
policies and
principles contained in its credit policy. The Chief Credit Officer is responsible for overseeing the
work of a credit policy committee, monitoring the quality of
the WMI Group's credit portfolio,
determining the reasonableness of
the WMI Group's allowance for loan losses, reviewing and
approving large credit exposures and setting underwriting criteria for credit-related products and
programs. Credit risk management is based on analyzing the creditworthiness of
the borrower,
the adequacy of
the underlying collateral given current events and conditions and the existence
and strength of any guarantor support.
Credit risk assessment is a process that requires the evaluation of
numerous factors, many
of
which are qualitative. Process integrity relies on the ability of
the WMI Group's lending
personnel to analyze all
risk elements. It also depends on maintaining risk rating accuracy by
recognizing changing elements of
credit risk and promptly initiating risk rating changes.
Conflicts of
Interest Policies
Pursuant to WMB's code of
ethics the Code of
Ethics"), WMB extends credit to
borrowers only when such extension of
credit is financially reasonable for both WMB and the
borrower in question. Pursuant to the Code of
Ethics, lending personnel cannot permit personal
relationships or
other considerations to influence lending decisions, and cannot approve
extensions of
credit to,
or
be involved in the funding or
auditing of
any loans made to family or
friends.
Servicing and the Servicers
General
All
of
the HELs owned by the Asset Trust will be serviced by WMB, as the Servicer,
pursuant to the Pooling and Servicing Agreement. WMB will have possession of
the mortgage
files Le., the credit reports, servicing documents, etc.) in its capacity as Servicer and the Loan
Documents as defined below) in its capacity as Custodian for the Asset Trust.
The Pooling and Servicing Agreement will provide that WMB may not resign from its
obligations and duties thereunder as Servicer except upon a determination that
its duties
thereunder are no longer permissible under applicable law. No such resignation will become
effective until a successor Servicer has assumed WMB's servicing obligations and duties under
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00073
the Pooling and Servicing Agreement. In the event of a Servicer resignation, the Company,
subject to the terms of
the Pooling and Servicing Agreement, shall appoint a successor Servicer.
The Servicer will receive a fee for
its services as Servicer under the Pooling and Servicing
Agreement. The servicing fee will be calculated as a per annum percentage for each HEL based
on the principal balance for such HEL. The servicing fee with respect to each such HEL will equal
0.125% per annum and will be paid monthly. This Servicer will be entitled to retain certain
ancillary fees and charges, including, but not limited
to,
any prepayment fees, insufficient funds
fees, modification fees, payoff statement fees and late charges with respect to the HELs as
additional servicing compensation and will also be entitled to certain income generated by
permitted investments made with collections on the HELs. The Servicer generally will pay all
expenses incurred in connection with
its responsibilities as Servicer under the Pooling and
Servicing Agreement subject to reimbursement for certain expenses and advances, including
those incurred by
it in connection with the liquidation of
defaulted HELs, the restoration of
damaged mortgaged properties, and payments by
the Servicer for taxes and insurance premiums
with respect to mortgaged properties).
Any person into which the Servicer may be merged, converted or
consolidated, or any
person resulting from any merger, conversion or
consolidation to which the Servicer is a party
will be the successor Servicer under the Pooling and Servicing Agreement.
The Servicer will outsource to third party vendors some servicing functions, as described
under The Servicer Servicing Procedures The Servicer's Third Party Vendors and
Service Providers" below.
The Servicer's Servicing Experience
WMB, including
its predecessors in interest, has been servicing loans secured by real estate
or
other property for over 115 years. The home equity loans serviced by WMB include closed-
end fixed and adjustable rate home equity loans and open-end home equity lines of
credit. The
HELs in WMB's portfolio have been originated by WMB.
The following table shows the number and aggregate unpaid principal balance of HELs
serviced by the Servicer as
of December 31 for each of
the most recent three years:
Closed-end Home Equity Loans Serviced by the Servicer
December 31,
Dollars in Thousands)
Number of Closed-End Home Equity Loans Serviced
by WMB 150,450 131,105 126,547
Aggregate Unpaid Principal Balance $9,851,722 $7,918,281 $6,364,840
Servicing Procedures
The functions to be performed by the Servicer under the Pooling and
Servicing Agreement will include, among other servicing functions, payment collection, payment
application, and default management. The Servicer will perform its servicing functions at
loan
servicing centers located in Melbourne, Florida; Houston, Texas; San Antonio, Texas; Stockton,
California; Chatsworth, California; Seattle, Washington; and Canyon Park, Washington.
Pursuant to the Pooling and Servicing
Agreement, the Servicer will be required to service the HELs owned by the Asset Trust,
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00074
Loan Servicing System.
Advanced Gonsumer Lending System" AGLS").
GAGS")
Collections and Distributions.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00075
Servicing of
Delinquent HELs; Foreclosure.
Insurance.
Limitations on the Servicer's Liability
60
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00076
Servicer Termination, Servicer Replacement.
The Servicer's Third Party Vendors and Service Providers.
The Servicer's Quality Control Procedures
61
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00077
62
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00078
reviewed and updated periodically. The Servicer is obligated to return to full system functionality within 48 hours of a reported system outage. The Servicer performs annual disaster recovery tests in which it reroutes data and servicing system operations to the designated back-up site, and then processes sample transactions from all servicing locations to ensure the functionality of such back-up site.
It is the Servicer's policy to require its other third party vendors to implement measures similar to those described above to ensure the accuracy and integrity of servicing records.
The Custodian
Washington Mutual Bank will act as custodian (the "Custodian") for the Asset Trust pursuant to a Custody Agreement to be entered into on or before the closing date (the "Custody Agreement"), among the Trustee, the Servicer and the Custodian. The Custodian will hold the notes, mortgages and other legal documents related to the HELs (collectively, the "Loan Documents") for the benefit of the Trustee. The Custodian will maintain the Loan Documents in secure and fire resistant facilities. The mortgage files held by the Servicer will not be physically segregated from Loan Documents in the Custodian's custody but will be kept in shared facilities. The Custodian will review the Loan Documents related to each HEL and deliver to the Trustee a certification to the effect that, except as noted in the certification, all required documents have been executed and received.
In the event of the termination of the Custody Agreement, the Custodian will be required to deliver the Loan Documents in the Custodian's custody to the Trustee or any successor Custodian appointed by the Company.
The Servicer may pay the Custodian a fee for its services under the Custody Agreement from time to time. Payment of this fee will not affect dividends to the Company.
62
General
WMI is a Washington corporation. It owns two federal savings associations as well as
numerous nonbank subsidiaries. WMI is a multiple savings and loan holding company. As a
savings and loan holding company, WMI is subject to regulation by the OTS.
WMI's federal savings associations are subject to extensive regulation and examination by
the OTS, their primary federal regulator, as well as the U.S. Federal Deposit Insurance
Corporation Prior to 2004, WMB had two sister depository institutions which were
both owned directly by WMI. WMB has since acquired both of
these sister institutions. One of
these institutions, Washington Mutual Bank fsb, a federal savings bank, became a wholly-owned
subsidiary of WMB on February 1,
2004. The other institution, Washington Mutual Bank, a
savings bank chartered under the laws of
the state of
Washington, converted into a federally
chartered savings bank and then was merged into WMB on January 1,
2005. Consequently, WMIno longer owns a state savings bank that is subject to regulation and supervision b
y the Director
of
Financial Institutions of
the State of Washington or
by the FDIC. WMl's nonbank financial
subsidiaries are also subject to various federal and state laws and regulations.
All
of WMl's banking subsidiaries are under the common control of WMI and are insured by
the FDIC. If
an insured institution fails, claims for administrative expenses of
the receiver and for
deposits in U.S. branches including claims of
the FDIC as subrogee ofthe failed institution)
have priority over the claims of
general unsecured creditors. In addition, the FDIC has authority
to require any of WMl's banking subsidiaries to reimburse it for losses it incurs in connection
either with the failure of
another of
WMI's banking subsidiaries or
with the FDIC's provision of
assistance to one of
WMl's banking subsidiaries that is in danger of
failure.
Holding Company Status and Acquisitions
WMI is a multiple savings and loan holding company, as defined by federal law, because it
owns more than one savings association. WMI is regulated as a unitary savings and loan holding
company, however, because the OTS deems WMl's federal savings associations to have been
acquired in supervisory transactions. Therefore, WMI is exempt from certain restrictions that
would otherwise apply under federal law to the activities and investments of a multiple savings
and loan holding company. These restrictions will apply to WMI if any of WMI's banking
institutions fails to meet a qualified thrift lender test established by
federal law. As of
December 31, 2004, WMI's banking subsidiaries were in compliance with qualified thrift lender
standards.
WMI may not acquire control of
another savings association without the prior approval of
the OTS. WMI may not be acquired by a company, other than a bank holding company, unless
the OTS approves such an acquisition, or
by
an individual unless the OTS does not object after
receiving notice. WMI may not be acquired by a bank holding company unless the Board of
Governors of
the Federal Reserve System the Federal Reserve") approves. In any case, the
public must have an opportunity to comment on the proposed acquisition, and the OTS or
Federal Reserve must complete an application review. Without prior approval from the OTS, WMI
may not acquire more than 5% of
the voting stock of
any savings institution that is not one of
WMI's subsidiaries.
The Gramm-Leach-Bliley Act generally restricts any non-financial entity from acquiring WMI
unless such non-financial entity was, or
had submitted an
application to become, a savings and
loan holding company as
of May 4,
1999. Because WMI was treated as a unitary savings and
loan holding company prior to that date, WMI may engage in non-financial activities and acquire
non-financial subsidiaries.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00079
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
de minimis.
64
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00080
DESCRIPTION OF THE WAMU CAYMAN PREFERRED SECURITIES
The following summary describes the materia! terms and provisions of
the WaMu Cayman
Preferred Securities. This description is qualified in its entirety by
reference to the terms and
provisions of WaMu Cayman's Articles of
Association. A copy of WaMu Cayman's Articles of
Association may be obtained upon request to WM! or
free of
charge at
the specified office of
the
Paying Agent in Luxembourg.
General
The WaMu Cayman Preferred Securities are preferred shares issued by WaMu Cayman, the
terms of
which are set forth in WaMu Cayman's Articles of
Association. When issued, the WaMu
Cayman Preferred Securities will be paid-up and non-assessable. The WaMu Cayman Preferred
Securities are perpetual and will not be
convertible into the WaMu Cayman Ordinary Shares and
will not be subject to any sinking fund or
other obligation of WaMu Cayman for their repurchase
or
retirement.
The WaMu Cayman Preferred Securities consist of
3,023 of
the 7.25% Perpetual Non-
cumulative Preferred Securities, Series A-1, liquidation preference $100,000 per security and
$302,300,000 in the aggregate the Series A-1 WaMu Cayman Preferred Securities"), and 44,770
of
the 7.25% Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference
$10,000 per security and $447,700,000 in the aggregate the Series A-2 WaMu Cayman
Preferred Securities"). The terms of
the Series A-1 WaMu Cayman Preferred Securities and the
Series A-2 WaMu Cayman Preferred Securities are identical except for their per security
liquidation preference. The aggregate liquidation preference of
the WaMu Cayman Preferred
Securities is $750,000,000.
WaMu Cayman will invest the proceeds of
the WaMu Cayman Preferred Securities offered
hereby in a like amount of
Fixed Rate Company Preferred Securities, liquidation preference
$1,000 per security and $750,000,000 in the aggregate.
The financial entitlements of each WaMu Cayman Preferred Security will be substantially the
same as
the financial entitlements of
a like amount of
Fixed Rate Company Preferred Securities,
with the consequence that dividends and the redemption price on each WaMu Cayman Preferred
Security will be payable on the same dates and in the same amounts as the corresponding
dividends and redemption price, as applicable, that are paid by the Company to WaMu Cayman
on a like amount of
Fixed Rate Company Preferred Securities; provided that if any such payment
of
dividends or
redemption price is received by WaMu Cayman after 2:00 P.M. New York time,
the related payment will instead by made by WaMu Cayman to the holders of
the WaMu Cayman
Preferred Securities on the next day that is a Business Day. The Dividend Payment Dates and
related Dividend Periods are the same for the WaMuCayman Preferred Securities and the Fixed
Rate Company Preferred Securities, and, accordingly, the terms Dividend Payment Date",
Dividend Period" and Business Day" have the same meanings as
applied to each of
those
securities.
The WaMu Cayman Preferred Securities are automatically exchangeable under certain
circumstances into a like amount of
Fixed Rate Depositary Shares. See Conditional
Exchange."
Under WaMu Cayman's Articles of
Association, WaMu Cayman is prohibited from issuing
any securities other than the WaMu Cayman Preferred Securities and the WaMu Cayman
Ordinary Shares without the consent of
the holders of 100% of
the WaMu Cayman Preferred
Securities. Accordingly, WaMu Cayman may not issue any additional securities ranking senior or
pari passu with the WaMu Cayman Preferred Securities as
to dividends or upon liquidation
without the consent of
the holders of 100% of
the WaMu Cayman Preferred Securities. The
holders of
the WaMu Cayman Preferred Securities will have no pre-emptive rights.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00081
The WaMu Cayman Preferred Securities are not obligations of,
or
guaranteed by, WMI,
WMB, Marion, the Company, University Street, WaMu Delaware or any of
their respective
affiliates or
any other entity. The WaMu Cayman Preferred Securities represent equity interests
solely in WaMu Cayman and do not represent an interest in any of
the foregoing entities.
Ranking
The WaMu Cayman Preferred Securities will rank senior to the WaMu Cayman Ordinary
Shares as
to dividends and upon liquidation.
Dividends
Dividends on the WaMu Cayman Preferred Securities will become payable on a non-
cumulative basis except in the limited circumstances described below), on each date on which
the Company pays dividends to WaMu Cayman on the Fixed Rate Company Preferred Securities
owned by WaMu Cayman, in an amount per WaMu Cayman Preferred Security equal to the
amount of
dividends received by WaMu Cayman on such date on a like amount of
Fixed Rate
Company Preferred Securities including with respect to Additional Taxes, if any), in each case
subject to WaMu Cayman having legally available funds for such purpose; provided that if any
such payment of
dividends is received by WaMu Cayman after 2:00 P.M. New York time, the
related payment will instead be made by WaMu Cayman to holders of
the WaMu Cayman
Preferred Securities on the next day that is a Business Day. Accordingly:
if the Company pays full dividends on a Dividend Payment Date for the Fixed Rate
Company Preferred Securities, WaMu Cayman will pay corresponding full dividends on
the WaMu Cayman Preferred Securities on such Dividend Payment Date;
if the Company pays partial dividends on a Dividend Payment Date for the Fixed Rate
Company Preferred Securities, WaMu Cayman will pay partial dividends in the same
proportionate amount on the WaMu Cayman Preferred Securities on such Dividend
Payment Date; and
if the Company pays no dividends on a Dividend Payment Date for the Fixed Rate
Company Preferred Securities, WaMu Cayman will pay no dividends on the WaMu
Cayman Preferred Securities on such Dividend Payment Date.
See Description of
the Fixed Rate Company Preferred Securities Dividends."
Under WaMu Cayman's Articles of
Association, WaMu Cayman's Board of
Directors is not
required to declare the payment of
dividends in order for dividends to be
paid. However, payment
of
dividends may be blocked by WaMu Cayman's Board of
Directors, but only by their unanimous
action including consent of
the Independent Director).
The record date for the payment of
dividends on the WaMu Cayman Preferred Securities
will be the first day of
the month in which the relevant Dividend Payment Date occurs or, if any
such day is not a Business Day, the next day that is a Business Day.
Dividends on the Fixed Rate Company Preferred Securities are non-cumulative. Dividends
on the WaMu Cayman Preferred Securities are non-cumulative, except to the extent that on a
Dividend Payment Date WaMu Cayman has received from the Company a payment of
dividends
on the Fixed Rate Company Preferred Securities but fails to pay the corresponding dividend on
the WaMu Cayman Preferred Securities.
If:
WaMu Cayman pays no dividends or
less than full dividends on the WaMu Cayman
Preferred Securities on a Dividend Payment Date because it received no dividend or
less
than full dividends on the Fixed Rate Company Preferred Securities, then holders of
WaMu Cayman Preferred Securities will have no right to receive, and WaMu Cayman will
have no obligation to pay, such unpaid dividends at a future date, whether or
not
66
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00082
dividends are paid on a future Dividend Payment Date on the WaMu Cayman Preferred
Securities or
the Ordinary Shares; and
WaMu Cayman pays no dividends or
less than full dividends on the WaMu Cayman
Preferred Securities on a Dividend Payment Date where the preceding clause does not
apply, but rather the directors have unanimously determined not to pay dividends or
to
pay less than full dividends on the WaMu Cayman Preferred Securities pursuant to their
authority to block dividends as described above, then holders of
the WaMu Cayman
Preferred Securities will have a cumulative right to receive such unpaid dividends and no
further dividends may be paid on WaMu Cayman Ordinary Shares until such unpaid
dividends have been paid on the WaMu Cayman Preferred Securities.
Restrictions on Dividends
During a Dividend Period, no dividends will be paid on any WaMu Cayman Ordinary Shares,
other than dividends payable in WaMu Cayman Ordinary Shares, and no WaMu Cayman Ordinary
Shares will be repurchased, redeemed or
otherwise acquired for consideration, directly or
indirectly, unless dividends for such Dividend Period on
all outstanding WaMu Cayman Preferred
Securities have been declared and paid in full, or
set aside for payment, as
the case may be.
Under certain circumstances, if the OTS determines that WMB is operating with an
insufficient level of
capital or
is engaged
in,
or
its relationship with the Company results
in,
an
unsafe and unsound banking practice, the OTS could restrict payment of
dividends by
the
Company on the Fixed Rate Company Preferred Securities, resulting in a corresponding
restriction in WaMu Cayman's payment of
dividends on the WaMu Cayman Preferred Securities.
Restrictions on Dividends by WMI
In the Exchange Agreement, WMI will covenant in favor of
the holders of
the WaMu Cayman
Preferred Securities and the Trust Securities, that if full dividends on i) the Company Preferred
Securities,
ii) the WaMu Cayman Preferred Securities or
the Trust Securities for any
Dividend Period have not been declared and paid, then, as
described under Description of
the
Fixed Rate Company Preferred Securities Restrictions on Dividends by WMI", WMI will not
declare or pay dividends with respect
to,
or
redeem, purchase or
acquire any of
its equity capital
securities during the next succeeding Dividend Period, except dividends in connection with a
shareholders' rights plan, if any, or
dividends in connection with benefits plans.
Redemption
The WaMu Cayman Preferred Securities will not be redeemable at
the option of
the holders
thereof. On each day on which the Company redeems Fixed Rate Company Preferred Securities,
WaMu Cayman will redeem a like amount of WaMu Cayman Preferred Securities for a
redemption price in the same amount as the corresponding redemption price on a like amount of
Fixed Rate Company Preferred Securities; provided that if any such payment of
redemption price
is received by WaMu Cayman after 2:00 p.m. New York time, the related payment will instead be
made by WaMu Cayman to holders of
the WaMu Cayman Preferred Securities on the next day
that is a Business Day. See Description of
the Fixed Rate Company Preferred Securities
Redemption."
If the redemption of
the Fixed Rate Company Preferred Securities is in part instead of
in
whole on any redemption date, then WaMu Cayman will allocate the partial redemption between
the Series A-1 WaMu Cayman Preferred Securities and the Series A-2 WaMu Cayman Preferred
Securities in proportion to their aggregate liquidation preferences, rounded by WaMu Cayman's
directors, if necessary, so that no WaMu Cayman Preferred Securities are redeemed in part and
not in whole no fractional shares). The particular WaMu Cayman Preferred Securities to be
redeemed will be selected not more than 60 days prior to the redemption date by WaMu
67
CONFIDENTIAL
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Cayman's Board of
Directors, from the outstanding WaMu Cayman Preferred Securities not
previously called for redemption, by such method as WaMu Cayman's Board of
Directors deems
fair and appropriate.
A notice of
redemption of
the WaMu Cayman Preferred Securities will be mailed by
first
class mail, postage prepaid, addressed to the holders of
record of
the securities to be redeemed
at
their respective last addresses appearing on the books and records of WaMu Cayman. Such
mailing will be
at
least 30 days but not more than 60 days before the date fixed for redemption.
Restriction on Redemption or
Repurchases
At
or
prior to the initial issuance of
the WaMu Cayman Preferred Securities, WMI will enter
into a Replacement Capital Covenant" relating to the WaMu Cayman Preferred Securities, the
Trust Securities, the Fixed Rate Company Preferred Securities, the Fixed Rate Depositary Shares
and related Fixed Rate WMI Preferred Stock), the Fixed-to-Floating Rate Company Preferred
Securities and the Fixed-to-Floating Depositary Shares and related Fixed-to-Floating Rate WMI
Preferred Stock) that may be issued upon a Conditional Exchange collectively, the Replace-
ment Covenant Covered Securities WMl's covenants in the Replacement Capital Covenant run
only to the benefit of
holders of
Covered Debt as defined below), and are not enforceable by
holders of WaMu Cayman Preferred Securities or
of any other Replacement Covenant Covered
Securities. However, those covenants could preclude WMI from redeeming or
repurchasing
Replacement Covenant Covered Securities at a time WMI might otherwise wish to do so.
In the Replacement Capital Covenant, WMI covenants to redeem or
repurchase Replace-
ment Covenant Covered Securities only if and to the extent that the total redemption or
repurchase price is equal to or
less than the sum, as
of
the date of
redemption or
repurchase, of
i) 133.33% of
the aggregate net cash proceeds WMI or
its subsidiaries have received during the
180 days prior to such date from the issuance and sale of
common stock of WMI plus ii
) 100%
of
the aggregate net cash proceeds WMI or
its subsidiaries have received during the 180 days
prior to such date from the issuance of
securities that, among other things:
are, with limited exceptions including for certain hybrid securities that are in the form of
debt), pari passu with or
junior to the Fixed Rate WMI Preferred Stock upon WMl's
liquidation, dissolution or
winding up;
are perpetual, or have a mandatory redemption or
maturity date that is not less than forty
years after the date of
initial issuance of such securities; and
provide for dividends or
other distributions that are either non-cumulative or, if cumulative,
are subject to certain optional or
mandatory deferral provisions and certain explicit
replacement provisions.
WMl's ability to raise proceeds from qualifying securities during the 180 days prior to a
proposed redemption or
repurchase sufficient to allow such redemption or
repurchase to
proceed without violating the Replacement Capital Covenant will depend on, among other things,
market conditions at such times as well as the acceptability to prospective purchasers of
the
terms of
such qualifying securities.
WMl's covenants in the Replacement Capital Covenant will run in favor of
persons that buy,
hold or
sell WMl's indebtedness during the period that such indebtedness is Covered Debt",
which is currently comprised of
WMl's 4.625% Subordinated Notes due 2014, which have CUSIP
No. 939322AN3. Other debt will replace WMI Covered Debt under the Replacement Capital
Covenant on the earlier to occur of
i) the date two years prior to the maturity of such existing
Covered Debt, or
ii) the date WMI gives notice of
a redemption of
such existing Covered Debt
such that the date such existing Covered Debt is repurchased in such an amount that, the
outstanding principal amount of
such existing Covered Debt is or
will become less than
$100 million.
68
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00084
The Replacement Capital Covenant is subject to various additional terms and conditions and
this description is qualified in its entirety by reference to the Replacement Capital Covenant, a
copy of
the form of
which is available upon request from WMI. The ReplacementCapital
Covenant may be terminated if the holders of
at
least 51% by principal amount of each of
the
Covered Debt so agree, or
if WMI no longer has outstanding any long-term indebtedness that
qualifies as Covered Debt, without regard to whether such indebtedness is rated by a nationally
recognized statistical rating organization.
Subject to the Replacement Capital Covenant and the terms of any outstanding debt
instruments, WMI or
its affiliates may from time to time purchase any outstanding WaMu Cayman
Preferred Securities by tender, in the open market or
by private agreement.
Rights Upon Liquidation
In the event WaMu Cayman voluntarily or
involuntarily liquidates, dissolves or
winds up, the
holders of WaMu Cayman Preferred Securities at
the time outstanding will be
entitled to receive
liquidating dividends in the amount of $100,000 per security and $302,300,000 in the aggregate,
in the case of
the Series A-1 WaMu Cayman Preferred Securities, and $10,000 per security and
$447,700,000 in the aggregate, in the case of
the Series A-2 WaMu Cayman Preferred Securities,
in each case, plus the amount of
any dividends theretofore received by WaMu Cayman on a like
amount of
Fixed Rate Company Preferred Securities but not yet distributed as a dividend on the
WaMu Cayman Preferred Securities plus the amount of
dividends on a like amount of
Fixed Rate
Company Preferred Securities that WaMu Cayman is entitled to receive from the Company but
has not yet received because for example, the Company's Board of
Managers has declared but
not yet paid such dividends) before any distribution of
assets is made to holders of WaMu
Cayman Ordinary Shares and subject to the rights of
general creditors.
After payment of
the full amount of
the liquidating distributions to which they are entitled,
the holders of WaMu Cayman Preferred Securities will have no right or
claim to any of WaMu
Cayman's remaining assets. In the event that, upon any such voluntary or
involuntary liquidation,
dissolution, or
winding up, the available assets are insufficient to pay the amount of
the
liquidation distributions on all outstanding WaMu Cayman Preferred Securities, then the holders
of WaMu Cayman Preferred Securities will share ratably in any such distribution of
assets in
proportion to the full liquidating distributions to which they would otherwise be respectively
entitled.
Voting Rights
Except as
expressly required by
applicable law and as
set forth below, the holders of WaMu
Cayman Preferred Securities will have no voting rights. In the event holders of WaMu Cayman
Preferred Securities are entitled to vote on a matter together as a single class or
together with
the holders of
the WaMu Cayman Ordinary Shares, the holders of
the Series A-1 WaMu Cayman
Preferred Securities will be entitled to ten votes per security and the holders of
the Series A-2
WaMu Cayman Preferred Securities will be entitled to one vote per security.
In the event that WaMu Cayman is entitled to exercise its voting rights with respect to the
Fixed Rate Company Preferred Securities, each holder of WaMu Cayman Preferred Securities will
have the right to direct the manner in which WaMu Cayman exercises such voting rights with
respect to a like amount of
Fixed Rate Company Preferred Securities on a proportionate basis. If
WaMu Cayman receives notice from the Company that WaMu Cayman as holder of
Fixed Rate
Company Preferred Securities is entitled to vote on any matter, promptly after learning of such
entitlement WaMu Cayman shall cause to be mailed to each holder of WaMu Cayman Preferred
Securities, by
first class mail, postage prepaid, notice of
such vote including a description of
the
subject matter of
the vote and related circumstances to the extent known to WaMu Cayman),
along with a copy of
any notice or
other written communication received by WaMu Cayman from
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00085
the Company with respect to such vote and related matters. In each such notice WaMu Cayman
shall request direction from each holder of WaMu Cayman Preferred Securities as
to how WaMuCayman a
s a holder of
Fixed Rate Company Preferred Securities shall vote on the matter at
issue a like amount of
Fixed Rate Company Preferred Securities that correspond to such holder's
WaMu Cayman Preferred Securities. Each holder of WaMu Cayman Preferred Securities shall
have the right to direct the manner in which WaMu Cayman exercises such voting rights with
respect to a like amount of
Fixed Rate Company Preferred Securities.
So long as any WaMu Cayman Preferred Securities are outstanding, WaMu Cayman will
not, without the consent or
vote of
the holders of WaMu Cayman Preferred Securities entitled to
at
least two-thirds of
the total voting rights of
all outstanding WaMu Cayman Preferred Securities,
voting together as a single class, i) amend, alter or
repeal or
otherwise change any provision of
WaMu Cayman's Articles of
Association including the terms of
the WaMu Cayman Preferred
Securities) if such amendment, alteration, repeal or
change would materially and adversely affect
the rights, preferences, powers or
privileges of
the WaMu Cayman Preferred Securities, or
merge, convert, consolidate, reorganize or
effect any other business combination involving
WaMu Cayman. WaMu Cayman's Articles of
Association will also provide that so long as any
WaMu Cayman Preferred Securities are outstanding, WaMu Cayman will not, without the consent
of
the holder of
each outstanding WaMu Cayman Preferred Security, authorize, create or
increase the authorized amount of
or
issue any class or
series of
any equity shares of WaMu
Cayman, or any warrants, options or
other rights convertible or
exchangeable into any class or
series of any equity shares of WaMu Cayman, ranking pari passu or
senior to the WaMu Cayman
Preferred Securities, either as
to dividend rights, redemption rights or
rights on dissolution,
liquidation or
winding up of WaMu Cayman.
Independent Director Approval
WaMu Cayman's Articles of
Association will require that, for as long as any WaMu Cayman
Preferred Securities are outstanding, certain actions by WaMu Cayman are subject to prior
approval by the Independent Director as well as
by a majority of
the entire Board of
Directors of
WaMu Cayman. See WaMu Cayman Management of WaMu Cayman Independent Direc-
tor." In order to be considered independent", a director must not during the preceding five
years have been a director or
employee of WMI or
any affiliate of
WMI, other than a direct or
indirect financing subsidiary of
WMI.
The actions that require approval of
the Independent Director include i) redemption or
repurchase of any WaMu Cayman Ordinary Shares and
ii)
to the extent within the power of
the
directors, any action to convert or
approve the conversion of WaMu Cayman into any other type
of
entity or
the consolidation or merger of WaMu Cayman with or
into any other entity, the
consolidation or
merger of
any other entity with or
into WaMu Cayman, or
the sale by WaMu
Cayman of any of
its assets. Additionally, the Independent Director, acting alone and without the
vote or
consent of
the other members of
the Board of
Directors, has the right on behalf of WaMu
Cayman to enforce WaMu Cayman's rights as a holder of
Fixed Rate Company Preferred
Securities, including related rights under the LLC Agreement.
Conditional Exchange
Each WaMu Cayman Preferred Security will be exchanged automatically for a like amount of
newly issued Fixed Rate Depositary Shares, each representing a 1/1 OOOthinterest in one share
of
Fixed Rate WMI Preferred Stock, if the OTS so directs in writing upon or
after the occurrence
of
an Exchange Event. An Exchange Event" will occur when:
WMB becomes undercapitalized" under the OTS' prompt corrective action" regulations;
WMB is placed into conservatorship or
receivership; or
70
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the OTS, in its sole discretion, anticipates WMB becoming undercapitalized" in the near
term or
takes a supervisory action that limits the payment of
dividends by WMB and in
connection therewith, directs an exchange.
For purposes of
this offering circular, this exchange is referred to as
the Conditional
Exchange"
If the OTS so
directs following the occurrence of
an Exchange Event, each holder of WaMu
Cayman Preferred Securities will be unconditionally obligated to surrender to WMI or
its agent
any certificates representing the WaMu Cayman Preferred Securities owned by such holder, and
WMI will be unconditionally obligated to issue to such holder in exchange for each such WaMu
Cayman Preferred Security a depositary receipt representing a like amount of
Fixed Rate
Depositary Shares for Fixed Rate WMI Preferred Stock. Any WaMu Cayman Preferred Securities
purchased or redeemed by WMI or any of
its affiliates prior to the time of exchange will not be
deemed outstanding and will not be subject to Conditional Exchange.
The Conditional Exchange will occur as
of
8:00 A.M., New York time, on the date for such
exchange set forth in the applicable OTS directive, or, if such date is not set forth in the directive,
as
of
8:00 A.M., New York time, on the earliest possible date such exchange could occur
consistent with the directive, as
evidenced by
the issuance by WMI of
a press release prior to
such time. As of
the time of
exchange,
all
of
the WaMu Cayman Preferred Securities will be
transferred to WMI without any further action by WaMu Cayman,
all rights of
the holders of
WaMu Cayman Preferred Securities as WaMu Cayman's shareholders will cease, and such
persons will be, for all purposes, the holders of
Fixed Rate Depositary Shares.
WMI will mail notice of
the issuance of
an OTS directive after the occurrence of
an
Exchange Event to each holder of WaMu Cayman Preferred Securities within 30 days, and WMI
will deliver or cause to be delivered) to each such holder, depositary receipts for Fixed Rate
Depositary Shares upon surrender of
the WaMu Cayman Preferred Securities. Until such
depositary receipts are delivered or
in the event such depositary receipts are not delivered, any
certificates previously representing WaMu Cayman Preferred Securities will be deemed for
all
purposes to represent Fixed Rate Depositary Shares. All
corporate authorization necessary for
WMI to issue the Fixed Rate Depositary Shares and the Fixed Rate WMI Preferred Stock as
of
the time of exchange will be completed prior to or upon completion of
this Offering. Accordingly,
once the OTS directs a Conditional Exchange after the occurrence of
an Exchange Event, no
action will be required to be taken by
holders of WaMu Cayman Preferred Securities, by WMI, by
WMB other than to inform the OTS), by the Company, or
by WaMu Cayman in order to effect
the automatic exchange as
of
the time of
exchange. After the occurrence of
the Conditional
Exchange, the WaMu Cayman Preferred Securities will be owned by WMI.
Holders of WaMu Cayman Preferred Securities, by purchasing such securities, whether in
this Offering or
in the secondary market after this Offering, will be deemed to have agreed to be
bound by the unconditional obligation to exchange such WaMu Cayman Preferred Securities for
Fixed Rate Depositary Shares if the OTS so
directs following the occurrence of
an Exchange
Event. WaMu Cayman's Articles of
Association provide that the holders of WaMu Cayman
Preferred Securities will be unconditionally obligated to surrender such preferred securities. Prior
to issuance of
the WaMu Cayman Preferred Securities, WMI will enter into an Exchange
Agreement on or
before the closing date the Exchange Agreement"), among WMI, WaMuCayman, WaMu Delaware and Mellon Investor Services LLC, a
s depositary the Depositary"),
to implement the Conditional Exchange.
Holders of WaMu Cayman Preferred Securities cannot exchange their WaMu Cayman
Preferred Securities for Fixed Rate Depositary Shares voluntarily. Absent an OTS directive after
the occurrence of
an Exchange Event, no exchange of
the WaMu Cayman Preferred Securities
for Fixed Rate Depositary Shares will occur. Upon the issuance of
an OTS directive on or
following the occurrence of
an Exchange Event, the Fixed Rate WMI Preferred Stock and related
71
CONFIDENTIAL
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pari passu
Form, Transfer and Book-Entry Procedures
Payments and Paying Agents
Nominee")
Principal Paying Agent")
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00088
WTCCayman")
Paying Agents")
event
Series A-2 WaMu Cayman Preferred Securities, Paying Agent in Luxembourg
Paying Agent
in Luxembourg"),
Registrar") Transfer
Agent")
cover
have
lor
Luxemburger Wort).
73
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00089
Governing Law
Restrictions on Transfer
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00090
Governing Law
WaMu Cayman's Articles of Association and the WaMu Cayman Preferred Securities will be governed by and construed in accordance with the laws of the Cayman Islands.
Restrictions on Transfer
For information regarding restrictions on ownership of the WaMu Cayman Preferred Securities, see "Notice to Investors."
74
DESCRIPTION OF THE FIXED RATE COMPANY PREFERRED SECURITIES
The following summary describes the material terms and provisions of
the Fixed Rate
Company Preferred Securities. This description qualified in entirety by reference to the terms
and provisions of
the LLC Agreement. A copy of
the LLC Agreement may be obtained upon request
to WMI or
free of
charge at
the specified office of
the Paying Agent in Luxembourg.
General
The 7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference $1,000 per
security and $750,000,000 in the aggregate the Fixed Rate Company Preferred Securities"), are
limited liability company interests in the Company, the terms of
which are set forth in the LLC
Agreement. When issued, the Fixed Rate Company Preferred Securities will be validly issued,
and no additional payments will be required pursuant to the LLC Act for such securities to
represent limited liability company interests in the Company. The holders of
the Fixed Rate
Company Preferred Securities will have no pre-emptive rights with respect to any limited liability
company interests in the Company or any other securities of
the Company convertible into or
carrying rights or
options to purchase any such securities. The Fixed Rate Company Preferred
Securities are perpetual and will not be
convertible into Company Common Securities or
any
other class or
series of
limited liability company interests in the Company and will not be subject
to any sinking fund or
other obligation of
the Company for their repurchase or
retirement.
The Fixed Rate Company Preferred Securities will be issued in certificated form only.
The Fixed Rate Company Preferred Securities are not obligations
of,
or
guaranteed by,
WMI, WMB, Marion, University Street, or
any of
their respective affiliates or
any other entity. The
Fixed Rate Company Preferred Securities solely represent an interest in the Company and do not
represent an
interest in any of
the foregoing entities.
The Fixed Rate Company Preferred Securities are not insured or
guaranteed by the FDIC.
Ranking
The Fixed Rate Company Preferred Securities will rank senior to the Company Common
Securities and will rank pari passu with the Company's other preferred securities, including the
Fixed-to-Floating Rate Preferred Company Securities, in terms of payment of
dividends and on
liquidation.
The Company's Board of Managers has the power to create and issue Junior Equity
Securities and additional equity securities ranking pari passu with the Fixed Rate Company
Preferred Securities in terms of payment of
dividends or on liquidation or
redemption any such
securities, together with the Fixed-to-Floating Rate Company Preferred Securities, the Parity
Equity Securities") without the consent of
the holders of
the Company Preferred Securities,
provided, that i) after giving effect to the issuance of
any Parity Equity Securities, the pro forma
net book value of
the Company's assets after giving effect to any assets acquired by the
Company in connection with the issuance of
such Parity Equity Securities Assets") will
equal or exceed 1.5 times the sum of
the aggregate liquidation preference of
the preferred
securities of
the Company then outstanding and any such Parity Equity Securities that the
Company proposes to issue,
ii) after giving effect to such issuance, the Company's pro forma
FFO for the four fiscal quarters beginning with the fiscal quarter in which such Parity Equity
Securities are proposed to be issued calculated A) assuming that such proposed Parity Equity
Securities are issued and that, if outstanding or proposed new Parity Equity Securities bear
dividends based on a floating rate, the applicable dividend rate will not change during such four
fiscal quarters from the rate in effect on the applicable date of
determination and B) as
adjusted to reflect any New Assets) equals or exceeds 150% of
the amount that would be
required to pay full annual dividends on
all preferred securities of
the Company then outstanding
75
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plus
Dividends
CONFIDENTIAL
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and any such Parity Equity Securities that the Company proposes to issue, and (iii) the Company is not otherwise in breach of any of its covenants set forth in the LLC Agreement. Funds from operations, or "FFO", means net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.
The LLC Agreement provides that, so long as any Fixed Rate Company Preferred Securities remain outstanding, the Company may not except with the consent of at least two-thirds of the Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Company Preferred Securities, voting together as a single class, issue Senior Equity Securities.
Dividends
For purposes of this offering circular, we refer to distributions payable by the Company on its securities as "dividends". Dividends on the Fixed Rate Company Preferred Securities will be payable if, when and as declared by the Company's Board of Managers out of its legally available funds, on a non-cumulative basis at an annual rate of • % on the liquidation preference thereof, which is $1,000 per security. Dividends on the Fixed Rate Company Preferred Securities, if, when and as declared by the Company's Board of Managers, will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year (the "Dividend Payment Date"), commencing on June 15, 2006. If any Dividend Payment Date is not a Business Day, then dividends will be payable on the first Business Day following such Dividend Payment Date with the same force and effect as if payment were made on the date such payment was originally payable. Each period from and including a Dividend Payment Date (or the date of issuance of the Fixed Rate Company Preferred Securities) to but excluding the following Dividend Payment Date is referred to herein as a "Dividend Period". Dividends on the Fixed Rate Company Preferred Securities will accrue as follows: (i) from March 7, 2006 in the case of the Fixed Rate Company Preferred Securities offered hereby, and (ii) if additional Fixed Rate Company Preferred Securities are issued at a future date, from (A) March 7, 2006 if such date is before June 15, 2006, (B) the date of issue if such date is a Dividend Payment Date and (C) the immediately preceding Dividend Payment Date or the date of issue (as determined by the Company) if the date of issue is other than a Dividend Payment Date and is after June 15, 2006. The record date for the payment of dividends, if declared, will be the first day of the month in which the relevant dividend payment occurs or, if any such day is not a Business Day, the next day that is a Business Day. Dividends payable on the Fixed Rate Company Preferred Securities for any period greater or less than a full Dividend Period will be computed on the basis of twelve 30-day months, a 360-day year, and the actual number of days elapsed in the period. No interest will be paid on any dividend payment of Fixed Rate Company Preferred Securities, WaMu Cayman Preferred Securities or Fixed Rate Depositary Shares.
"Business Day" means any day other than a Saturday, Sunday or any other day on which banks in New York, New York, Seattle, Washington or Georgetown, Grand Cayman are generally required or authorized by law to be closed.
Dividends on the Fixed Rate Company Preferred Securities are non-cumulative. If the Company's Board of Managers does not declare a dividend on the Fixed Rate Company Preferred Securities or declares less than a full dividend in respect of any Dividend Period, holders of the Fixed Rate Company Preferred Securities will have no right to receive any dividend or a full dividend, as the case may be, for that Dividend Period, and the Company will have no obligation to pay any dividends or full dividends on the Fixed Rate Company Preferred Securities for that Dividend Period, whether or not dividends are declared and paid for any future Dividend Period with respect to any of the Fixed Rate Company Preferred Securities, the Fixed-to-Floating
76
Rate Company Preferred Securities, any other series of
Parity Equity Securities, any Junior
Equity Securities or
the Company Common Securities.
Restrictions on Dividends
During a Dividend Period, no dividends will be declared or
paid on any securities of
the
Company ranking junior to the Company Preferred Securities in respect of payments of
dividends
or
on liquidation Junior Equity Securities"), other than dividends payable in Junior Equity
Securities, and no Junior Equity Securities will be repurchased, redeemed or
otherwise acquired
for consideration, directly or
indirectly other than as a result of
reclassification of
Junior Equity
Securities for or
into other Junior Equity Securities, or
the exchange or
conversion of
Junior
Equity Securities for or
into other Junior Equity Securities), unless dividends for such Dividend
Period on
all outstanding Company Preferred Securities have been declared and paid in full, or
declared and set aside for payment, as the case may be.
When dividends are not paid in full on, or a sum sufficient for such full payment is not set
apart for, the Fixed Rate Company Preferred Securities, the Fixed-to-Floating Rate Company
Preferred Securities and any other Parity Equity Securities, if any,
all dividends declared upon the
Fixed Rate Company Preferred Securities, the Fixed-to-Floating Rate Company Preferred
Securities and any other Parity Equity Securities, if any, will be declared pro rata. Thus, the
amount of
dividends declared per Fixed Rate Company Preferred Security, the Fixed-to-Floating
Rate Company Preferred Securities and such other Parity Equity Securities, if any, will in all
cases bear to each other the same ratio that i) full dividends per Fixed Rate Company
Preferred Security for the then-current Dividend Period, which will not include any accumulation
in respect of
unpaid dividends for prior Dividend Periods, and ii) full dividends, which will not
include any accumulation in respect of
unpaid dividends for prior Dividend Periods, on such other
capital securities, bear to each other.
Under certain circumstances, if the OTS determines that WMB is operating with an
insufficient level of
capital or
is engaged in,
or
its relationship with the Company results in,
an
unsafe and unsound banking practice, the OTS could restrict the Company's ability to pay
dividends, including dividends to the holders of
the Fixed Rate Company Preferred Securities.
See The Company Business of
the Company."
Restrictions on Dividends by
WMI will covenant in the Exchange Agreement for the benefit of
the holders of
the WaMu
Cayman Preferred Securities and the Trust Securities that if full dividends on i) the Company
Preferred Securities,
ii) the WaMu Cayman Preferred Securities or
the Trust Securities for
any Dividend Period have not been declared and paid, WMI will not declare or
pay dividends with
respect
to,
or
redeem, purchase or
acquire, any of
its equity capital securities during the next
succeeding Dividend Period, except dividends in connection with a shareholders' rights plan, if
any, or
dividends in connection with benefits plans.
Redemption
The Fixed Rate Company Preferred Securities will not be redeemable at
the option of
the
holders thereof. Subject to a covenant in favor of
certain of WMl's debtholders limiting WMl's
and its subsidiaries' right to repurchase or
redeem the Fixed Rate Company Preferred Securities
or
the WaMu Cayman Preferred Securities among others) as described under Description of
the WaMu Cayman Preferred Securities Restriction on Redemption or
Repurchases," and
subject to the Company having received the prior approval of
the OTS for any proposed
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00093
redemption of
Fixed Rate Company Preferred Securities, the Company may, at
its option redeem
the Fixed Rate Company Preferred Securities:
in whole but not in part, prior to the Dividend Payment Date in March 2011, upon the
occurrence of a Tax Event, an Investment Company Act Event or a Regulatory Capital
Event, at
a cash redemption price equal to the greater of:
i) $1,000 per Fixed Rate Company Preferred Security, or
ii) the sum of
present values of
$1,000 per Fixed Rate Company Preferred Security
and
all undeclared dividends for the Dividend Period from the redemption date to
and including the Dividend Payment Date in March 2011, discounted to the
redemption date on a quarterly basis assuming a 360-day year consisting of
twelve 3D-day months) at
the Treasury Rate, as calculated by
an Independent
Investment Banker, plus 0.40%,
plus any declared but unpaid dividends to the redemption date; or
in whole or
in part, on or
after the Dividend Payment Date in March 2011, at
a cash
redemption price of
$1,000 per Fixed Rate Company Preferred Security, plus any declared
and unpaid dividends to the redemption date, without accumulation of any undeclared
dividends.
The Fixed-to-Floating Rate Company Preferred Securities will be separately redeemable on
similar terms and conditions.
Comparable Treasury Issue" means the United States Treasury security selected by the
Independent Investment Banker as having a maturity comparable to the term remaining to the
Dividend Payment Date on March 15, 2011 that would be
utilized, at
the time of
selection and in
accordance with customary financial practice, in pricing new issues of
perpetual preferred
securities having similar terms as
the Fixed Rate Company Preferred Securities with respect to
the payment of
dividends and distributions of
assets upon liquidation, dissolution or
winding-up
of
the issuer of such preferred stock.
Comparable Treasury Price" means with respect to any redemption date for the Fixed Rate
Company Preferred Securities the average of
the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest of
such Reference Treasury Dealer
Quotations, or
if the Independent Investment Banker obtains fewer than five such Reference
Treasury Dealer Quotations, the average of
all such quotations.
Independent Investment Banker" means an independent investment banking institution of
national standing appointed by
the Company.
An Investment Company Act Event" occurs when the Company determines, based upon
receipt of
an opinion of
counsel, that there is a significant risk that the Company, the Asset Trust
or
any other Asset Subsidiary, WaMu Cayman or WaMu Delaware is or
will be considered an
investment company" that is required to be registered under the Investment Company Act, as a
result of
a change in applicable laws, regulations or
related interpretations.
Reference Treasury Dealer" means each of
three primary U.S. government securities
dealers each a Primary Treasury Dealer"), as
specified by
the Company; provided that if any
Primary Treasury Dealer as specified by the Company ceases to be a Primary Treasury Dealer,
the Company will substitute for such Primary Treasury Dealer another Primary Treasury Dealer
and if the Company fails to select a substitute within a reasonable period of
time, then the
substitute will be a Primary Treasury Dealer selected by the Independent Investment Banker after
consultation with the Company.
Reference Treasury Dealer Quotations" means, with respect to the Reference Treasury
Dealer and any redemption date, the average, as
determined by
the Independent Investment
78
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00094
Regulatory Capital Event"
Tax Event"
Hi)
Treasury Rate"
Restrictions on Redemption or
Repurchases
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Rights upon Liquidation
plus
Voting Rights and Covenants
80
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00096
amend or
otherwise change the terms of any Asset Documentation in a manner which is
materially adverse to WaMu Cayman, WaMu Delaware or
the holders of
the WaMu
Cayman Preferred Securities or
Trust Securities;
remove or cause to be removed, as applicable, Washington Mutual" from the
Company's, WaMu Cayman's or WaMu Delaware's name unless the name of WMI
changes and the Company makes a change to the Company's, WaMu Cayman's and
WaMu Delaware's name to be consistent with the new group name;
take or
fail to take any action that would cause the Company to fail to be treated as a
partnership other than a publicly traded partnership taxable as a corporation) for United
States Federal income tax purposes;
amend or
otherwise change the requirement that the Company not engage in a U.S. trade
or
business for United States Federal income tax purposes;
amend or
otherwise change the requirement that the Company hold only assets that
qualify for the portfolio interest exemption under the Code and are exempt from United
States Federal withholding taxes;
amend or
otherwise change the requirement that the Company manage
its affairs such
that its income does not constitute unrelated business taxable income" within the
meaning of
Section 512 of
the Code; or
amend its Certificate of
Formation or
LLC Agreement in a manner that materially and
adversely affects the terms of
the Company Preferred Securities provided, however, that,
if such amendment affects only one class of
Company Preferred Securities, such
amendment will require only the class vote of such class voting separately and not as a
single class with the other class) and, if such amendment affects both classes but affects
them differently, then such amendment will require a class vote of each class of Company
Preferred Securities, each voting separately.
In addition, the LLC Agreement provides that, except with the consent of
all
of
the
Company's managers, including its Independent Manager, the Company will not:
terminate, amend or
otherwise change any Asset Documentation; or
effect a consolidation, merger or
share exchange excluding the Conditional Exchange)
that is not tax-free to the holders of
the Fixed Rate Company Preferred Securities, and
the related WaMu Cayman Preferred Securities, unless such transaction was approved by
the consent or
affirmative vote of
the holders of
at
least two-thirds of
the Fixed Rate
Company Preferred Securities and Fixed-to-Floating Rate Company Preferred Securities,
voting together as
a.single class.
In addition, the LLC Agreement will provide that if i) the Company fails to pay full
dividends on the Company Preferred Securities on any Dividend Payment Date,
ii) WaMu
Cayman fails to pay full dividends on the WaMu Cayman Preferred Securities on any Dividend
Payment Date, or Hi) a Bankruptcy Event occurs, the holders of
the Fixed Rate Company
Preferred Securities and the Fixed-to-Floating Rate Company Preferred Securities, voting
together as a single class, by majority vote, are entitled to remove the initial or any succeeding
Independent Manager and to fill the vacancy created by such removal or any other vacancy
existing in the office of
the Independent Manager.
The LLC Agreement requires that, in assessing the benefits to the Company of any
proposed action requiring his or
her consent, the Company's Independent Manager take into
account the interests of
holders of
both Company Common Securities and the Company
Preferred Securities. The LLC Agreement provides that in considering the interests of
the holders
of
the Company Preferred Securities, the Company's Independent Manager owes the same
81
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duties to such holders which the Independent Manager owes to the holders of Company
Common Securities.
As a condition to effecting any consolidation, merger or
share exchange described above,
the Company will mail to the holders of
record of
the Fixed Rate Company Preferred Securities a
notice of such consolidation, merger or
share exchange. The notice will be mailed at
least
15 days prior to such transaction becoming effective and will contain a description of such
transaction together with a certificate of one of
the Company's officers stating that such
transaction complies with the requirements set forth in the LLC Agreement and that
all conditions
precedent provided therein relating to such transaction have been fulfilled.
As described under Description of
the WaMu Cayman Preferred Securities Voting
Rights," each holder of WaMu Cayman Preferred Securities will have the right to direct the
manner in which WaMu Cayman exercises
its voting rights as
to a like amount of
Fixed Rate
Company Preferred Securities held by WaMu Cayman with respect to any of
the matters on
which a holder of
Fixed Rate Company Preferred Securities is entitled to vote.
WMl's articles of
incorporation do not contain similar covenants regarding the Fixed Rate
WMI Preferred Stock following an exchange of
the WaMu Cayman Preferred Securities.
Therefore, following a Conditional Exchange, holders of
the Fixed Rate Depositary Shares would
no longer have any voting rights, except as provided by Washington law or
in connection with the
right to elect directors if dividends are skipped or
not paid in full. See below under Description
of
the Fixed Rate WMI Preferred Stock Voting Rights."
Additional Amounts
If the Company or WaMu Cayman is required to pay any Additional Taxes as a result of
an
Additional Tax Event, the Company will pay as
additional amounts on the Fixed Rate Company
Preferred Securities such amounts as
will be required so that dividends on the Fixed Rate
Company Preferred Securities or
the WaMu Cayman Preferred Securities, as
applicable, will not
be reduced as a result of
any such Additional Taxes
means the sum of any additional taxes, duties and other governmental
charges to which a WaMu Cayman has become subject from time to time as a result of
an
Additional Tax Event.
An means the determination by
the Company, based upon receipt of
an opinion of
counsel, rendered by a law firm experienced in such matters, in form and
substance reasonably satisfactory to the Company and WMI, to the effect that, as a result of any
amendment to,
or
change including any announced proposed change) in,
the laws or any
regulations thereunder) of
the United States or
the Cayman Islands or
of any political subdivision
or
taxing. authority thereof or
therein, or
as a result of any official administrative pronouncement
or
judicial decision interpreting or
applying such laws or
regulations, which amendment or change
is effective or
which proposed change, pronouncement or
decision is announced on or
after the
date of
issuance of
the WaMu Cayman Preferred Securities, there is a significant risk that i) the
Company or WaMu Cayman
is,
or
will be within 90 days of
the date of such opinion of
counsel,
required by a relevant jurisdiction to withhold amounts from payments to the holders of
the Fixed
Rate Company Preferred Securities or WaMu Cayman Preferred Securities, respectively, for any
taxes, duties and other governmental charges, WaMu Cayman is,
or
will be
within 90 days of
the date of
such opinion of
counsel, subject to United States Federal income tax with respect to
income received or
accrued on the like amount of
Fixed Rate Company Preferred Securities held
by
it,
or WaMu Cayman is,
or
will be
within 90 days of
the date of
such opinion of
counsel,
subject to more than a amount of
other taxes, duties or
other governmental charges.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00098
Amendments and Termination of
the LLC Agreement
provided,
provided
Governing Law
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00099
Amendments and Termination of the LLC Agreement
University Street may, at any time and from time to time, without the consent of the holders of the Fixed Rate Company Preferred Securities, amend the LLC Agreement: (i) (A) to correct or supplement any provision in the LLC Agreement that may be defective or inconsistent with any other provision therein, or (B) to make any other provisions with respect to matters or questions arising under the LLC Agreement, provided, that any such action taken under this clause (i) will not materially adversely affect the interests of the holders of Fixed Rate Company Preferred Securities, as set forth in an officer's certificate; or (ii) to cure any ambiguity or inconsistency or correct any manifest error. Any other amendment of the LLC Agreement must be approved by vote of holders of two-thirds (by aggregate liquidation preference) of the Fixed Rate Company Preferred Securities and Fixed-to-Floating Rate Company Preferred Securities, voting together as a single class (see "-Voting Rights and Covenants"); provided that, for the purpose of such approval, a like amount of Company Preferred Securities as any WaMu Cayman Preferred Securities or Trust Securities that are directly or indirectly held or beneficially owned by any member of WMI Group will be treated as if they were not outstahding. The Company will notify the Paying Agents and the holders of the WaMu Cayman Preferred Securities of any such amendment of the LLC Agreement within a reasonable period of time.
The LLC Agreement will terminate upon the termination of the Company under the LLC Act.
Governing Law
The LLC Agreement and the Fixed Rate Company Preferred Securities will be governed by, and construed in accordance with, the laws of the State of Delaware.
83
DESCRIPTION OF OTHER COMPANY SECURITIES
The following summary of
the terms of
the other Company securities does not purport to be
complete and is subject in all respects to the applicable provisions of
the LLC Act and the LLC
Agreement. A copy of
the LLC Agreement may be obtained upon request to WMI and free of
charge
at
the specified office of
the Paying Agent in Luxembourg.
General
Voting
Dividends
84
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00100
outstanding Company Preferred Securities, as
well as on all
Parity Equity Securities, if any;
provided, that, for the purpose of such approval, a like amount of
Fixed Rate Company Preferred
Securities as any WaMu Cayman Preferred Securities that are directly or
indirectly held or
beneficially owned by any member of WMI Group will be treated as
if they were not outstanding.
Liquidation Rights
The Company Common Securities will rank junior to the Company Preferred Securities upon
liquidation. In the event of any voluntary or
involuntary dissolution of
the Company, after
all
of
the
Company's debts and liabilities have been satisfied and there have been paid or
set aside for the
holders of
the Company Preferred Securities the full preferential amounts to which such holders
are entitled, the holders of
Company Common Securities will be
entitled to share equally and
ratably in any assets remaining.
Fixed-to-Floating Rate Company Preferred Securities
The Fixed-to-Floating Rate Company Preferred Securities rank pari passu with the Fixed
Rate Company Preferred Securities offered hereby as
to dividends and upon liquidation of
the
Company. The terms of
the Fixed-to-Floating Rate Company Preferred Securities are substan-
tially identical to the Fixed Rate Company Preferred Securities other than with respect to the rate
applicable to dividends thereon. The Fixed-to-Floating Rate Company Preferred Securities will,
if,
when and as
declared by
the Company's Board of
Managers, pay dividends at
an annual rate of
6.534% until the Dividend Payment Date in March 2011 and an annual rate equal to three-month
L1BOR plus 1.4825% for the Dividend Period starting on such Dividend Payment Date and each
Dividend Period thereafter. The Fixed-to-Floating Rate Company Preferred Securities will be held
by WaMu Delaware, which will issue a like amount of
Trust Securities to investors in a separate
offering contemporaneous to the Offering. The Fixed-to-Floating Rate Company Preferred
Securities will not be
listed on any securities exchange or
automated dealer quotation system.
Ability to Issue Additional Preferred Securities
Pursuant to the LLC Agreement, the Company may not issue any Senior Equity Securities
or
incur indebtedness except with the consent or
affirmative vote of
holders of
at
least two-thirds
of
the Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Company
Preferred Securities, voting together as a single class, as
described under Description of
the
Fixed Rate Company Preferred Securities Voting Rights and Covenants." The Company may
issue additional Parity Equity Securities without the consent of
the holders of Company Preferred
Securities only if the tests described under Description of
the Fixed Rate Company Preferred
Securities Ranking" are satisfied.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00101
DESCRIPTION OF THE FIXED RATE WMI PREFERRED STOCK
The following summary describes the material terms and provisions of
the Fixed Rate WMI
Preferred Stock. The description is qualified in its entirety by
reference to the terms and provisions
of WMl's Articles of
Incorporation and Articles of Amendment establishing the Fixed Rate WMI
Preferred Stock. A copy of
WMl's Articles of
Incorporation and such articles of
amendment may be
obtained free of
charge at
the specified office of
the Paying Agent in Luxembourg.
General
Fixed Rate WMI Preferred Stock").
Fixed Rate Depositary Shares"),
1/1000th
WMI Parity Stock"
Dividend Payment Date" Dividend Period"
Business Day",
86
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00102
Ranking
WMI will covenant in the Exchange Agreement in favor of
the holders of thewaMu Cayman
Preferred Securities and the Trust Securities, as applicable, that prior to the issuance of
the
Fixed Rate WMI Preferred Stock upon a Conditional Exchange, WMI will not issue any preferred
stock that would rank senior to the Fixed Rate WMI Preferred Stock or
the Fixed-to-Floating
Rate WMI Preferred Stock upon
its issuance.
The Fixed Rate WMI Preferred Stock will, upon issuance, rank senior to WMl's common
stock and at
least pari passu with the most senior preferred stock of WMI, if any, then
outstanding, and to any other preferred stock that WMI may issue in the future. WMI may
authorize and issue additional shares of
preferred stock that may rank junior to or
pari passu
with the Fixed Rate WMI Preferred Stock as
to dividends and upon liquidation, winding up, or
dissolution without the consent of
the holders of
the Fixed Rate WMI Preferred Stock.
Dividends
Dividends on the Fixed Rate WMI Preferred Stock will be payable
if, when and as declared
by WMI's Board of
Directors out of
its legally available funds, on a non-cumulative basis at
an
annual rate of 7.25% on the liquidation preference thereof, which is $1,000,000 per share.
Dividends on the Fixed Rate WMI Preferred Stock, if, when and as
declared by WMI's Board of
Directors, will be payable quarterly in arrears on March 15, June 15, September 15, and
December 15 of
each year, commencing on the first such day after issuance of
the Fixed Rate
WMI Preferred Stock. If any Dividend Payment Date is not a Business Day, then dividends will be
payable on the first Business Day following such Dividend Payment Date with the same force and
effect as
if payment were made on the date such payment was originally payable. The record
date for the payment of
dividends, if declared, will be the first day of
the month in which the
relevant Dividend Payment Date occurs or, if any such day is not a Business Day, the next day
that is a Business Day. Dividends payable on the Fixed Rate WMI Preferred Stock for any period
greater or
less than a full Dividend Period will be computed on the basis of
twelve 30-day
months, a 360-day year, and the actual number of
days elapsed in the period. No interest will be
paid on any dividend payment of
Fixed Rate WMI Preferred Stock or
Fixed Rate Depositary
Shares. Holders of
Fixed Rate Depositary Shares will receive 1/1OOOthof any such dividend
payment on the Fixed Rate WMI Preferred Stock.
Dividends on the Fixed Rate WMI Preferred Stock are non-cumulative. If WMI's Board of
Directors does not declare a dividend on the Fixed Rate WMI Preferred Stock or
declares less
than a full dividend in respect of any Dividend Period, the holders of
the Fixed Rate WMIPreferred Stock will have no right to receive any dividend o
r a full dividend, as the case may be,
for the Dividend Period, and WMI will have no obligation to pay a dividend or
to pay full dividends
for that Dividend Period, whether or
not dividends are declared and paid for any future Dividend
Period with respect to the Fixed Rate WMI Preferred Stock, WMl's common stock or any other
class or
series of WM s preferred stock.
Redemption
The Fixed Rate WMI Preferred Stock will not be redeemable at
the option of
the holders
thereof. Subject to a covenant in favor of
certain of WMI's debtholders limiting WMl's and
its
subsidiaries' right to repurchase or
redeem the Fixed Rate WMI Preferred Stock among others)
as described under Description of
the WaMu Cayman Preferred Securities Restriction on
CONFIDENTIAL
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plus 0.40%,
plus
plus
Replacement
Rights upon Liquidation
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00104
Voting Rights
Voting Parity
Stock")
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90
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shares of a class or series are entitled to vote as a separate voting group if shareholder voting is otherwise required by Washington law and if the amendment would:
• increase the aggregate number of authorized shares of the class or series;
• effect an exchange or reclassification of all or part of the issued and outstanding shares of the class or series into shares of another class or series, thereby adversely affecting the holders of the shares so exchanged or reclassified;
• change the rights, preferences, or limitations of all or part of the issued and outstanding shares of the class or series, thereby adversely affecting the holders of shares of the class or series;
• change all or part of the issued and outstanding shares of the class or series into a different number of shares of the same class or series, thereby adversely affecting the holders of shares of the class or series;
• create a new class or series of shares having rights or preferences with respect to dividends or other distributions or to dissolution that are, or upon designation by the board of directors may be, prior, superior, or substantially equal to the shares of the class or series;
• increase the rights or preferences with respect to distributions, or on liquidations or dissolution, or the number of authorized shares of any class or series that, after giving effect to the amendment, has rights or preferences with respect to distributions, or on liquidations or dissolution that are, or upon designation by the board of directors may be, prior, superior, or substantially equal to the shares of the class or series;
• limit or deny an existing pre-emptive right of all or part of the shares of the class or series;
• cancel or otherwise adversely affect rights to distributions that have accumulated but not yet been declared on all or part of the shares of the class or series; or
• effect a redemption or cancellation of all or part of the shares of the class or series in exchange for cash or any other form of consideration other than shares of the corporation.
WMI will covenant in the Exchange Agreement that in the event WMI, prior to the Conditional Exchange, effects, or is, the subject of a merger, consolidation, statutory share exchange, sale of all or substantially all of its assets or other form of business combination, (i) in which WMI is not the surviving, resulting or receiving corporation thereof or (ii) if WMI is the surviving or resulting corporation, shares representing a majority of WMl's total voting power are either converted or exchanged into securities of another person or into cash or other property (any such transaction in either (i) or (ii) being a "Business Combination"), then WMI (i) shall not enter into such Business Combination unless the Successor Entity agrees, effective upon the consummation of such Business Combination, to abide by all of WMl's obligations under the provisions of the Exchange Agreement restricting the payment of dividends by WMI in the event dividends are not paid with respect to the Company Preferred Securities and (ii) may, at the election of the Board of Directors of WMI prior to the effectiveness of such Business Combination, assign, effective upon the consummation of such Business Combination, all of its other obligations under the Exchange Agreement to a Successor Entity that has both Fixed Rate Substitute Preferred Stock and Fixed-to-Floating Rate Substitute Preferred Stock and, as a result of such assignment, all references to WMI, Fixed Rate WMI Preferred Stock, Fixed-to-Floating Rate WMI Preferred Stock, Fixed Rate Depositary Share and Fixed-to-Floating Rate Depositary Share shall become and be deemed to be references to such Successor Entity, to such Fixed Rate Substitute Preferred Stock, to such Fixed-to-Floating Rate Substitute Preferred Stock, to a Fixed Rate Successor Depositary Share and to a Fixed-to-Floating Rate Successor Depositary Share, respectively.
Fixed-to-Floating Rate Successor Depositary Share"
Exchange
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DESCRIPTION OF THE FIXED RATE DEPOSITARY SHARES
The following summary describes the material terms and provisions of
the Fixed Rate
Depositary Shares. This description is qualified in its entirety by reference to the terms and
provisions of
the Deposit Agreement, the form of
depositary receipts, which contain the terms and
provisions of
the Fixed Rate Depositary Shares, and WM/'s articles of
incorporation and articles of
amendment. Copies of
each of
the foregoing documents may be obtained upon request to WMI or
free of
charge at
the specified office of
the Paying Agent in Luxemburg.
1/1000th
Fixed Rate Depositary Shares").
Deposit Agreement"),
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Dividends and Other Distributions
The Depositary will distribute
all cash dividends, dividends paid in Fixed Rate Depositary
Shares representing paid-up and non-assessable shares of
Fixed Rate WMI Preferred Stock or
other cash distributions received in respect of
the Fixed Rate WMI Preferred Stock to the record
holders of
Fixed Rate Depositary Shares in proportion to the numbers of such Fixed Rate
Depositary Shares owned by such holders on the relevant record date. In the event of
a
distribution other than in cash, the Depositary will distribute property received by
it to the record
holders of
Fixed Rate Depositary Shares entitled thereto, unless the Depositary determines that it
is not feasible to make such distribution, in which case the Depositary may, after consultation
with WMI, sell such property and distribute the net proceeds from such sale to such holders.
Redemption of
Fixed Rate Depositary Shares
If the Fixed Rate WMI Preferred Stock underlying the Fixed Rate Depositary Shares are
redeemed, the Fixed Rate Depositary Shares will be redeemed with the proceeds received by the
Depositary resulting from the redemption, in whole or
in part, of such Fixed Rate WMI Preferred
Stock held by the Depositary. The redemption price per Fixed Rate Depositary Share will be
equal to the applicable redemption price per share payable with respect to such Fixed Rate WMI
Preferred Stock. If less than
all the Fixed Rate Depositary Shares are to be redeemed, the Fixed
Rate Depositary Shares to be redeemed will be selected by
lot
or
in WMl's sole
discretion.
After the date fixed for redemption which will be the same date as the redemption date, if
any, for the Fixed Rate WMI Preferred Stock), the Fixed Rate Depositary Shares so
called for
redemption will no longer be deemed to be outstanding and
all rights of
the holders of
the Fixed
Rate Depositary Shares will cease, except the right to receive the moneys payable upon such
redemption and any money or
other property to which the holders of such Fixed Rate Depositary
Shares were entitled upon such redemption upon surrender to the Depositary of
the depositary
receipts evidencing such Fixed Rate Depositary Shares.
Amendment of
Deposit Agreement
The form of
depositary receipt evidencing the Fixed Rate Depositary Shares and any
provision of
the Deposit Agreement may at
any time be amended by agreement between WMI
and the Depositary. However, any amendment which materially and adversely alters the rights of
the holders of
depositary receipts will not be effective unless such amendment has been
approved by
the holders of
at
least a majority of
the Fixed Rate Depositary Shares then
outstanding. Every holder of
an outstanding depositary receipt at
the time any amendment
becomes effective will be deemed, by
continuing to hold such depositary receipt, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended thereby.
Charges of
Depositary
WMI will pay the charges of
the Depositary in connection with the initial deposit of
the Fixed
Rate WMI Preferred Stock and the initial issuance of
the Fixed Rate Depositary Shares upon the
occurrence of
a Conditional Exchange, and any redemption of
the Fixed Rate WMI Preferred
Stock. Holders of
Fixed Rate Depositary Shares will pay
all other transfer and other taxes and
governmental charges and, in addition, such other charges as are expressly provided in the
Deposit Agreement to be
for their accounts. All
other charges and expenses of
the Depositary
and of any registrar incident to the performance of
their respective obligations arising from the
depositary arrangements will be paid by WMI only after prior consultation and agreement
between the Depositary and WMI and consent by WMI to the incurrence of such expenses, which
consent will not be unreasonably withheld.
93
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Miscellaneous
Resignation and Removal of
Depositary; Termination of
Deposit Agreement
94
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DESCRIPTION OF THE OTHER WMI CAPITAL STOCK
As of
the date hereof, the authorized capital stock of WMI consists of1 600)000,000 shares
of WMI common stock and 10,000,000 shares of
preferred stock, no par value. As of
the close of
business on February 15, 2006, there were 994,380,908 shares of WMI common stock
outstanding and no shares of
preferred stock of WMI outstanding. As of
the close of
business on
February 15, 2006, 700,000 shares of
preferred stock of WMI were authorized, but unissued, as
contemplated by WMl's Rights Agreement, dated as
of
December 20, 2000, entered into by and
between WMI and Mellon Investor Services LLC The shares of WMI preferred stock to be issued
upon the occurrence of
a Conditional Exchange have been duly authorized and when and if
issued will be validly issued, fully paid, nonassessable and free of
preemptive rights, with no
personal liability attaching to the ownership thereof.
WMI has authorized for issuance in connection with the offering of
the Trust Securities and
the related issuance by the Company of
its Fixed-to-Floating Rate Company Preferred Securities
up to 1,250 shares of
its Series I Perpetual Non-cumulative Fixed-to-Floating Rate Preferred
Stock, no par value, and liquidation preference of
$1,000,000 per share the Fixed-to-Floating
Rate WMI Preferred Stock"). The shares of
Fixed-to-Floating WMI Preferred Stock will be issued
by WMI solely upon the occurrence of
a Conditional Exchange. The shares of
Fixed-to-Floating
Rate WMI Preferred Stock, if and when issued upon the occurrence of
a Conditional Exchange,
will be represented by
Fixed-to-Floating Rate Depositary Shares of WMI the Fixed-to-Floating
Rate Depositary Shares"), each of
which will represent a 1/1 OOOthof a share of
Fixed-to-Floating
Rate WMI Preferred Stock.
The Fixed-to-Floating Rate WMI Preferred Stock will rank pari passu with the Fixed Rate
WMI Preferred Stock as
to dividends and upon liquidation of WMI. The terms of
the Fixed-to-
Floating Rate WMI Preferred Stock are substantially identical to the Fixed Rate WMI Preferred
Stock other than with respect to the rate applicable to dividends thereon. The Fixed-to-Floating
Rate WMI Preferred Stock will, if, when and as
declared by WMl's Board of
Directors, pay
dividends at
an annual rate of 6.534% until March 15, 2011 and at
an annual rate equal to three-
month L1BOR plus 1.4825% for the Dividend Period starting on such Dividend Payment Date and
each Dividend Period thereafter. The Fixed-to-Floating Rate WMI Preferred Stock will not be
listed on any securities exchange or
automated dealer quotation system.
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BOOK-ENTRY ISSUANCE
Form, Denomination, Transfer and Book-Entry Procedures
General
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BOOK-ENTRY ISSUANCE
Form, Denomination, Transfer and Book-Entry Procedures
General
The Series A-1 WaMu Cayman Preferred Securities are being offered and sold only in the United States and only to U.S. persons who are both qualified institutional buyers within the meaning of Rule 144A under the Securities Act and qualified purchasers within the meaning of Section 2 (a) (51) of the Investment Company Act in reliance on an exemption from registration pursuant to Rule 144A under the Securities Act (the "Rule 144A Offering").
The Series A-1 WaMu Cayman Preferred Securities will be issued only in fully registered form. Each initial purchaser in the Offering and each account for which it is purchasing will hold at least $300,000 liquidation preference of Series A-1 WaMu Cayman Preferred Securities (i.e., at least three Series A-1 WaMu Cayman Preferred Securities) and each subsequent purchaser and each account for which it is purchasing will hold and transfer at least $100,000 liquidation preference of Series A-1 WaMu Cayman Preferred Securities (i.e., at least one Series A-1 WaMu Cayman Preferred Security). Any transfer, sale or other disposition of Series A-1 WaMu Cayman Preferred Securities having a liquidation preference of less than $100,000 or which result in a beneficial owner holding Series A-1 WaMu Cayman Preferred Securities having an aggregate liquidation preference of less than $100,000, will be deemed to be null and void ab initio and of no legal effect whatsoever. Any such transferee will be deemed not to be the beneficial owner of such Series A-1 WaMu Cayman Preferred Securities for any purpose, including, but not limited to, the receipt of dividends on such Series A-1 WaMu Cayman Preferred Securities, and such transferee will be deemed to have no interest whatsoever in such Series A-1 WaMu Cayman Preferred Securities.
Each purchaser of Series A-1 WaMu Cayman Preferred Securities pursuant to the Rule 144A Offering, and each purchaser who holds a beneficial interest in the Rule 144A Global Security at any time, will be deemed to have represented to WaMu Cayman that it is both a qualified institutional buyer within the meaning of Rule 144A under the Securities Act and a qualified purchaser within the meaning of Section 2 (a) (51) under the Investment Company Act. If a beneficial owner of Series A-1 WaMu Cayman Preferred Securities who is required to be a "qualified purchaser" within the meaning of Section 2(a) (51) under the Investment Company Act is at any time not a qualified purchaser, WaMu Cayman may (i) require such beneficial owner to sell its Series A-1 WaMu Cayman Preferred Securities to a person who is a non-U.S. person within the meaning of Rule 902 of Regulation S under the Securities Act or who is a U.S. person that is also a qualified purchaser within the meaning of Section 2 (a) (51) under the Investment Company Act and who is otherwise qualified to purchase such Series A-1 WaMu Cayman Preferred Securities in a transaction exempt from registration under the Securities Act or (ii) require the beneficial owner to sell such Series A-1 WaMu Cayman Preferred Securities to WaMu Cayman or an affiliate thereof at a price equal to the least of (A) the purchase price paid by the holder for such Series A-1 WaMu Cayman Preferred Securities, (B) 100% of the liquidation preference thereof or (C) the fair market value thereof.
The Series A-2 WaMu Cayman Preferred Securities are being offered and sold only to non-U.S. persons within the meaning of Rule 902 of Regulation S under the Securities Act in transactions outside the United States in reliance on an exemption from registration pursuant to Regulation S under the Securities Act (the "Regulation S Offering").
Each purchaser of Series A-2 WaMu Cayman Preferred Securities pursuant to the Regulation S Offering will be deemed to have represented to WaMu Cayman that it is a non-U.S. person within the meaning of Rule 902 of Regulation S under the Securities Act and is not acquiring WaMu Cayman Preferred Securities for the account or benefit of such a U.S. person.
96
The Series A-1 WaMu Cayman Preferred Securities initially will be represented by one or
more securities in registered, global form the The Series A-2
WaMu Cayman Preferred Securities initially will be represented by one or
more securities in
registered, global form the S and together with the Rule 144A
Global Security, the The Global Securities will be deposited upon issuance
with the Registrar as custodian for The Depository Trust Company in New York, New
York, and registered in the name of DTC or
its nominee the in each case for credit
to an account of a DTC Participant, as described below. Through and including the 40th day after
the latter of
the commencement of
the offering and the original issue date of
the Series A-2
WaMu Cayman Preferred Securities such period through and including the 40th day, the
beneficial interests in the Regulation S Global Security may be held only
through the Euroclear System or
Clearstream as indirect participants in DTC), unless
transferred to a person that takes delivery through the Rule 144A Global Security in accordance
with the certification requirements described below. Beneficial interests in the Rule 144A Global
Security may not be exchanged for beneficial interest in the Regulation S Global Security or
vice
versa at
any time except in accordance with the transfer and certification requirements described
below. See Exchanges between Regulation S Global Securities and Rule 144A Global
Securities."
As an
indirect holder, a purchaser's rights relating to a Global Security will be governed by
the account rules of
the purchaser's financial institution and of
DTC, as
well as
the general laws
relating to securities transfers. WaMu Cayman will not recognize the purchaser as a holder of
WaMu Cayman Preferred Securities and instead will deal only with DTC or
its nominee. See
The DTC System."
Purchasers should be aware that because WaMu Cayman Preferred Securities are issued
only in the form of
Global Securities:
they cannot get WaMu Cayman Preferred Securities registered in their name;
they cannot receive physical certificates for their interest in the WaMu Cayman Preferred
Securities;
they will be Street Name" holders and must look to their own bank or
broker for
payments on the WaMu Cayman Preferred Securities and the protection of
their legal
rights relating to the WaMu Cayman Preferred Securities;
they may not be able to sell interests in the WaMu Cayman Preferred Securities to some
insurance companies and other institutions that are required by law to own securities in
the form of
physical certificates; and
DTC's policies will govern payments, transfers, exchanges and other matters relating to
the purchaser's interest in the Global Security. See The DTC System." WaMuCayman, the Company and the Registrar have no responsibility for any aspect o
f DTC's
actions or
for
its records of
ownership interests in the Global Security. WaMu Cayman,
the Company and the Registrar also do not supervise DTC in any way.
In a few special situations, the Global Securities will terminate and interests in them will be
exchanged for physical certificates representing WaMu Cayman Preferred Securities. After that
exchange, the choice of
whether to hold WaMu Cayman Preferred Securities directly or
in Street
Name" will be up to the beneficial owner. Purchasers must consult their own bank or
broker to
97
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The DTG
98
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interests, as
is the case with the WaMu Cayman Preferred Securities held for the account of
customers registered in Street Name". However, payments will be the responsibility of
the OTC
Participants and not of
OTC, the Securities Registrar, WaMu Cayman or
the Company.
Except for trades involving only Euroclear and Clearstream Participants, interests in the
WaMu Cayman Preferred Securities will trade in OTC's settlement system, and secondary market
trading activity in such interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of OTC and
its participants. Transfers between participants in
OTC will be effected in accordance with OTC's procedures, and will be settled in same-day
funds. Transfers between participants in Euroclear and Clearstream will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer and exchange provisions applicable to the WaMuCayman Preferred Securities described elsewhere in this offering circular, cross-market transfers
between OTC Participants, on the one hand, and Euroclear or
Clearstream Participants, on the
other hand, will be effected by OTC in accordance with OTC's rules on behalf of
Euroclear or
Clearstream, as the case may be, by
its respective depositary; however, such cross-market
transfers will require delivery of
instructions to Euroclear or
Clearstream, as
the case may be, by
the counter-party in such system in accordance with the rules and procedures and within the
established deadlines Brussels time) of
such system. Euroclear or
Clearstream, as
the case
may be, will, if the transaction meets
its settlement requirements, deliver instructions to its
respective depositary to take action to elect final settlement on its behalf by
delivering or
receiving interests in the relevant Global Security in OTC, and making or
receiving payment in
accordance with normal procedures for same-day funds settlement applicable to OTC. Euroclear
Participants and Clearstream Participants may not deliver instructions directly to the depositaries
for Euroclear or
Clearstream.
Because of
time zone differences, the securities account of a Euroclear or
Clearstream
participant purchasing an
interest in a Global Security from a OTC Participant will be
credited,
and any such crediting will be reported to the relevant Euroclear or
Clearstream Participant,
during the securities settlement processing day which must be a business day for Euroclear and
Clearstream) immediately following the OTC settlement date. Cash received in Euroclear or
Clearstream as a result of
sales of
interests in a Global Security by
or
through a Euroclear or
Clearstream Participant to a OTC Participant will be received with value on the OTC settlement
date but will be
available in the relevant Euroclear or
Clearstream cash account only as
of
the
business day for Euroclear or
Clearstream following the OTC settlement date.
OTC has advised WaMu Cayman that it will take any action permitted to be taken by a
holder of
the WaMu Cayman Preferred Securities including the presentation of
the WaMu
Cayman Preferred Securities for exchange as described below) only at
the direction of one or
more OTC Participants to whose account in the Global Securities are credited and only in respect
of
such portion of
the aggregate principal amount of
the WaMu Cayman Preferred Securities as
to which such participant or
participants has or have given such direction.
Although OTC, Euroclear and Clearstream have agreed to the foregoing procedures in order
to facilitate transfers of
beneficial ownership interests in the Global Security among OTCParticipants, Euroclear Participants and Clearstream Participants, they are under no obligation to
perform or
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither the Company, WaMu Cayman, the Securities Registrar, or any of
their
representative agents will have any responsibility for the performance by OTC, Euroclear,
Clearstream or
their participants or
indirect participants, of
their respective obligations under the
rules and procedures governing their operations, including maintaining, supervising or
reviewing
the records relating to,
or
payments made on account of,
beneficial ownership interests in the
Global Security.
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Luxembourg limited liability company formed in January 2000 through the merger of
Cedel
International and Deutsche Boerse Clearing, a subsidiary of
Deutsche Boerse AG. In July 2002,
Deutsche Boerse AG acquired Cedel International and
its 50% ownership of
Clearstream
International.
Clearstream is registered as a bank in Luxembourg, and as such is subject to supervision
by
the Luxembourg Financial Sector Supervisory Commission, which supervises Luxembourg
banks.
Clearstream holds securities for its customers and facilitates
the clearance and settlement of
securities transactions by electronic book-entry transfers
between their accounts. Clearstream provides various services, including safekeeping, adminis-
tration, clearance and settlement of
internationally traded securities and securities lending and
borrowing. Clearstream also deals with domestic securities markets in several countries through
established depository and custodial relationships. Clearstream has established an electronic
bridge with Euroclear Bank as the Euroclear Operator in Brussels to facilitate
settlement of
trades between systems. Clearstream currently accepts over 200,000 securities for
clearance.
Clearstream International's customers are world-wide financial institutions including under-
writers, securities brokers and dealers, banks, trust companies and clearing corporations.
Clearstream International's United States customers are limited to securities brokers and dealers
and banks. Currently, Clearstream International has over 2,500 customers located in over 94
countries, including
all major European countries, Canada and the United States. Indirect access
to Clearstream is available to other institutions which clear through or
maintain custodial
relationship with an account holder of
Clearstream.
The Euroclear System was created in 1968 to hold securities for
its
participants and to clear and settle transactions between Euroclear
Participants through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of
certificates and any risk from lack of
simultaneous
transfers of
securities and cash. Transactions may be settled in a variety of
currencies, including
United States dollars. Euroclear includes various other securities, including securities lending and
borrowing and interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear is operated by
Euroclear Bank the
All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts
are accounts with the Euroclear Operator. Euroclear pic establishes policy for Euroclear on
behalf of
Euroclear Participants. Euroclear Participants include banks including central banks),
securities brokers and dealers and other professional financial intermediaries. Indirect access to
Euroclear is also available to other firms that clear through or
maintain a custodial relationship
with a Euroclear Participant, either directly or
indirectly.
Securities clearance accounts and cash accounts with the Euroclear Operator are governed
by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures
of
the Euroclear System and applicable Belgian law collectively, the
The Euroclear Terms and Conditions govern transfers of
securities and cash within
Euroclear, withdrawals of
securities and cash from Euroclear, and receipts of payments with
respect to securities in Euroclear. All
securities in Euroclear are held on a fungible basis without
attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Euroclear Terms and Conditions only on behalf of
Euroclear Participants,
and has no record
of,
or
relationship with, persons holding through Euroclear Participants.
100
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Exchanges between Regulation S Global Securities and Rule 144A Global Securities
Transfers of WaMu Cayman Preferred Securities
A purchaser (including a beneficial owner) of Series A-1 WaMu Cayman Preferred Securities may sell such securities to a non-U.S. person only if the certifications described below are made and, in connection with such sale, the transferor's interest in the Series A-1 WaMu Cayman Preferred Securities evidenced by the Rule 144A Global Security is exchanged by the transferee for Series A-2 WaMu Cayman Preferred Securities evidenced by the Regulation S Global Security.
Similarly, a purchaser (including a beneficial owner) of Series A-2 WaMu Cayman Preferred Securities may sell such securities in the United States or to a U.S. person only if the certifications described below are made and, in connection with such sale, the transferor's interest in the Series A-2 WaMu Cayman Preferred Securities evidenced by the Regulation S Global Security is exchanged by the transferee for Series A-1 WaMu Cayman Preferred Securities evidenced by the Rule 144A Global Security.
Exchanges between Global Securities
Beneficial interests in the Rule 144A Global Security may be exchanged for beneficial interests in the Regulation S Global Security only in connection with a transfer of such interests or an exchange by the beneficial owner who makes the certifications described below. Beneficial interests in the Regulation S Global Security may be exchanged for beneficial interests in the Rule 144A Global Security only in connection with a transfer of such interests or an exchange by the beneficial owner who makes the certifications described below. Such transfers and exchanges are subject to compliance with the certification requirements described below.
A beneficial interest in the Rule 144A Global Security may be transferred to a person who takes delivery in the form of an interest in the Regulation S Global Security, whether before or after the expiration of the Restricted Period, only upon receipt by the Securities Registrar of a written certificate on behalf of the transferor to the effect that the transferee is a non-U .S. person within the meaning of Rule 902 of Regulation S under the Securities Act, such transfer is being made in accordance with Rule 904 of Regulation S under the Securities Act and that, if such transfer occurs prior to the expiration of the Restricted Period, the interest transferred will be held immediately thereafter through Euroclear or Clearstream.
A beneficial interest in the Regulation S Global Security may be transferred in the United States or to a U.S. person who takes delivery in the form of an interest in the Rule 144A Global Security, whether before or after the expiration of the Restricted Period, only upon receipt by the Securities Registrar of a written certificate on behalf of the transferor to the effect that such transfer is being made to a person who the transferor reasonably believes is both a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and a "qualified purchaser" within the meaning of Section 2 (a) (51) of the Investment Company Act, purchasing for its own account or the account of a "qualified institutional buyer" who is also a "qualified purchaser" in a transaction meeting the requirements of Rule 144A under the Securities Act and in accordance with all applicable securities laws of the states of the United States and other jurisdictions.
Any beneficial interest in one of the Global Securities that is exchanged for an interest in the other Global Security will cease to be an interest in such Global Security and will become an interest in the other Global Security. Accordingly, such interest will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Security for as long as it remains such an interest.
Any exchange of a beneficial interest in the Regulation S Global Security for a beneficial interest in the Rule 144A Global Security or vice versa will be effected in DTC by means of an
101
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instruction originated by the Securities Registrar through the DTC Deposit/Withdraw at Custodian ("DWAC") system. Accordingly, in connection with any such exchange, appropriate adjustments will be made in the records of the Securities Registrar to reflect a decrease in the liquidation preference of such Regulation S Global Security and a corresponding increase in the liquidation preference of such Rule 144A Global Security or vice versa, as applicable.
102
CERTAIN TAX CONSIDERATIONS
United States Internal Revenue Service Circular 230 Notice: To ensure compliance with
Internal Revenue Service Circular 230, prospective investors are hereby notified that: i) any
discussion of
U.S. Federal tax issues contained or
referred to in this offering circular or any
document referred to herein is not intended or
written to be used, and cannot be used, by
prospective investors for the purpose of
avoiding penalties that may be imposed on them under the
U.S. Internal Revenue Code; such discussion is written for use in connection with the
promotion or
marketing of
the transactions or
matters addressed herein; and prospective
investors should seek advice based on their particular circumstances from an independent tax
advisor.
General
The following discussion summarizes the United States Federal income taxation of WaMu
Cayman and the principal United States Federal income tax and Cayman Islands tax
consequences to holders of WaMu Cayman Preferred Securities. This discussion is of a general
nature and is not intended to be, nor should it be construed as, tax advice to any holder.
Purchasers should consult their own tax advisor regarding the tax consequences of
acquiring,
owning and disposing of WaMu Cayman Preferred Securities.
The discussion addresses only purchasers that hold WaMu Cayman Preferred Securities as
capital assets and does not purport to be a comprehensive description of
all the tax
considerations that may be relevant to particular holders in light of a purchaser's personal
circumstances. In addition, the discussion is not addressed to any U.S. Holder that beneficially
owns actually or
constructively, within the meaning of Code Section 958) 10% or more the
WaMu Cayman Preferred Securities. The discussion also does not describe
all aspects of
taxation that may be
relevant to certain types of
purchasers to which special provisions of
United
States Federal income tax law may apply, including:
dealers in securities and currencies;
regulated investment companies
traders in securities;
tax-exempt organizations;
banks and insurance companies;
persons that hold WaMu Cayman Preferred Securities as
part of
a hedge, straddle or
conversion transaction;
persons whose functional currency is not the United. States dollar; and
U.S. expatriates.
The summary is based on United States Federal and Cayman Islands tax law, including the
Code, existing and proposed U.S. Treasury regulations, administrative rulings and judicial
decisions
all
as currently in effect. These legal sources are subject to change or
differing
interpretations at
any time, which change or
interpretation could apply retroactively and could
affect the validity of
the discussion below. There can be no assurance that the Internal Revenue
Service IRS") will take the same view of
the United States Federal income tax consequences
of
an investment in the Preferred Securities as described herein.
Each purchaser is urged to consult its own tax advisor as
to the tax consequences of
acquiring, owning and disposing of WaMu Cayman Preferred Securities, including the United
States Federal, state, local, Cayman Islands and any other tax consequences of
acquiring,
owning and disposing of
the WaMu Cayman Preferred Securities and the Fixed Rate WMI
Preferred Stock.
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As used in this discussion, the term means a beneficial owner of
a WaMuCayman Preferred Security that
is,
for United States Federal income tax purposes, a citizen or
resident of
the United States, a corporation or
partnership created or
organized in or
under the
laws of
the United States or any State, an estate the income of
which is includible in gross
income for United States Federal income tax purposes regardless of
its source, or
a trust if a
court within the United States is able to exercise primary supervision over
its administration and
one or more United States persons have authority to control
all substantial decisions of
the trust.
The term means a beneficial owner of a WaMu Cayman Preferred Security that
is not a U.S. Holder.
United States Federal Income Tax Consequences
Tax Treatment of WaMu Cayman and its Investment in Company Preferred Securities
Classification of WaMu Cayman and the Company. WaMu Cayman will be treated as a
foreign corporation for Federal income tax purposes.
All
of
its material assets are expected to
consist of
Fixed Rate Company Preferred Securities. The Company intends to be
classified as a
U.S. domestic partnership for United States Federal income tax purposes, and the Fixed Rate
Company Preferred Securities acquired by WaMu Cayman are expected to constitute equity
interests in such partnership.
An entity that is classified as a partnership for United States Federal income tax purposes
generally is not a taxable entity and incurs no United States Federal income tax liability. Instead,
each partner is required to take into account
its allocable share of
income, gains, losses,
deductions and credits of
the partnership in computing its United States Federal income tax
liability, if any, even if no cash distributions are made by the partnership to the partner. An entity
that is classified as a partnership for United States Federal income tax purposes nevertheless
will be taxable as a corporation if it is a publicly traded partnership" and fails to satisfy a
90% qualifying income" test, within the meaning of
Code Section 7704.
On the date of
the initial issuance of
the WaMu Cayman Preferred Securities, the Company
will receive an opinion from Mayer, Brown, Rowe Maw LLP to the effect that, for United States
Federal income tax purposes, although no activities closely comparable to that contemplated by
the Company have been the subject of
any U.S. Treasury regulation, revenue ruling or
judicial
decision, the Company will not be treated as
an association or
publicly traded partnership taxable
as a corporation. The opinions are based on certain assumptions and on certain representations
and agreements regarding restrictions on the future conduct of
the activities of
the Company.
Although the Company intends to conduct its activities in accordance with such assumptions,
representations and agreements, if it were nonetheless determined that the Company was
taxable as a corporation for United States Federal income tax purposes, then cash available for
distribution to WaMu Cayman in respect of
the Company Preferred Securities would be reduced
on account of
taxes payable by
the Company. A determination by
the Company, based on receipt
of
an opinion of
counsel, that there is a significant risk that the Company is or
will be subject to
federal income tax would constitute a Tax Event see Description of
Fixed Rate Company
Preferred Securities." The remainder of
this discussion assumes that the Company is treated as
a partnership, and not as
an association or
publicly traded partnership taxable as a corporation,
for United States Federal income tax purposes, and that the Fixed Rate Company Preferred
Securities owned by WaMu Cayman will constitute equity interests in such partnership.
U.S. Trade or Business Status. WaMu Cayman intends to conduct
its affairs so
as
to not
be engaged in a trade or
business in the United States or
be subject to taxation on a net income
basis in the United States. On the date of
the initial issuance of
the WaMu Cayman Preferred
Securities, WaMu Cayman will receive an opinion from Mayer, Brown, Rowe Maw LLP to the
effect that, for United States Federal income tax purposes, although no activities closely
comparable to that contemplated by WaMu Cayman have been the subject of any U.S. Treasury
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regulation, revenue ruling or
judicial decision, it will not be treated as engaged in the conduct of
a
trade or
business within the United States and, consequently, WaMu Cayman's income will not
be subject to United States Federal income tax on a net income basis including the U.S. branch
profits tax). Mayer, Brown, Rowe Maw LLP's opinion is not binding on the IRS or
the courts,
and no ruling will be sought from the IRS regarding this, or
any other, aspect of WaMu Cayman's
United States Federal income tax treatment. Accordingly, no assurance can be given that the IRS
will not assert positions contrary to those stated in Mayer, Brown, Rowe Maw LLP's opinion or
that a court would not entertain any such assertions.
Mayer, Brown, Rowe Maw LLP's opinion is based on certain assumptions and on certain
representations and agreements regarding restrictions on the future conduct of WaMu Cayman's
activities. Although WaMu Cayman intends to conduct
its activities in accordance with such
assumptions, representations and agreements, if it were nonetheless determined to be engaged
in a trade or
business in the United States and had taxable income that was effectively
connected with such United States trade or
business including as a result of a determination
that
its distributive share of income derived from the Company in respect of
the Fixed Rate
Company Preferred Securities constituted taxable income effectively connected with a trade or
business carried on in the United States by the Company), then WaMu Cayman would be subject
to United States Federal income tax on such income at
regular United States corporate income
tax rates and possibly to a 30% United States branch profits tax as well. Moreover, in the event
WaMu Cayman were to derive effectively connected income in respect of
its ownership of
the
Fixed Rate Company Preferred Securities the United States corporate income tax imposed
thereon would be required to be
collected in the first instance through a withholding by
the
Company of such tax at a rate of 35% on WaMu Cayman's distributive share of
the income. A
determination by WaMu Cayman, based on receipt of
an opinion of
counsel, that there is a
significant risk that it is or
will be treated as engaged in a trade or
business within the United
States, would constitute a Tax Event see Description of
Fixed Rate Company Preferred
Securities." The remainder of
this discussion assumes that WaMu Cayman will not be considered
to be engaged in a trade or
business within the United States.
United States Withholding Tax. Interest that constitutes portfolio interest" within the
meaning of
the Code is generally exempt from United States withholding tax. As a partner in the
Company, WaMu Cayman will be treated as earning directly
its share of
the income earned by
the Company. Company's material assets will initially consist of
the regular interest" the
Class A Asset Trust Certificate) issued in registered form by the Asset Trust, which will be
treated as a real estate mortgage investment conduit" under the Code a REMIC"). REMIC
regular interests are generally treated as indebtedness for United States Federal income tax
purposes that qualifies for the portfolio interest exemption. Accordingly, WaMu Cayman expects
that
its distributive share of
interest paid on the Asset Trust regular interest will constitute
portfolio interest" under the Code, and thus, will not be subject to United States withholding tax.
In addition, during the term of
the transaction, Company expects, pursuant to its investment
guidelines, to invest cash on hand from time to time in short term debt instruments and other
debt securities that qualify for the portfolio interest exemption.
Tax Consequences U.S. Holders WaMu Cayman Preferred Securities
WaMu Cayman will treat the WaMu Cayman Preferred Securities as equity for United States
Federal income tax purposes. In general, the characterization as
of
the time of
issuance of
an
instrument by
an
issuer as
debt or
equity is binding for United States Federal income tax
purposes on
all holders but not the IRS), unless a holder discloses on
its tax return that it is
treating the instrument in a manner inconsistent with the issuer's characterization. In addition,
because WaMu Cayman is a foreign corporation, special rules described below apply to certain
U.S. Holders of
the Preferred Securities.
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a WaMu Cayman will constitute a
passive foreign investment company" under the Code Except as
provided below,
U.S. Holders of
the WaMu Cayman Preferred Securities will be considered U.S. Holders in a PFIC. In
general, U.S. Holders in a PFIC may desire to make an
election to treat WaMu Cayman as a
qualified electing fund" Generally, a QEF election should be made on or
before the due
date for tiling a U.S. Holder's Federal income tax return for the first taxable year for which it held
Preferred Securities. If a timely QEF election is made for WaMu Cayman, a U.S. Holder will be
required to include in gross income
its pro rata share of WaMu Cayman's ordinary earnings and to
include as long-term capital gain
its pro rata share of
our net capital gain as defined in applicable
Treasury regulations), if any, whether or
not any cash is distributed. In certain cases in which a QEFdoes not distribute
all
of
its earnings in a taxable year, U.S. Holders may also be permitted to elect
to defer payment of some or
all
of
the taxes on the QEF's income subject to an interest charge on
the deferred amount. WaMu Cayman will provide, upon request, all information that a U.S. Holder
making a QEF election is required to obtain for Federal income tax purposes the U.S. Holder's
pro rata share of
ordinary income and net capital gain, if any), and will provide, upon request, a
PFIC Annual Information Statement" as described in Treasury regulation Section 1.1295-1 or in
any successor Treasury regulation), including all representations and statements required by such
statement, and will take any other reasonable steps to facilitate such election.
If a U.S. Holder does not make a timely QEF election, it will be subject to a special United
States Federal tax on so-called excess distributions", which includes both certain distributions
on the Preferred Securities and gain on any disposition of
the Preferred Securities. The amount
of
United States Federal tax on excess distributions will be increased by
an interest charge
reflecting the deemed amount of
tax deferral that the taxpayer has experienced. In many cases,
the application of
the tax on excess distributions will be substantially more onerous than the
treatment applicable if a timely QEF election is made. U.S. Holders should consult with their tax
counsel regarding the United States Federal income tax consequences of
investing in a PFIC and
the desirability of making a QEF election.
U.S. HOLDERS OF WAMU CAYMAN PREFERRED SECURITIES SHOULD CONSIDER
CAREFULLY WHETHER TO MAKE A QEF ELECTION AND THE CONSEQUENCES OF NOTMAKING SUCH AN ELECTION.
on to U.S. The treatment of
actual distributions
of cash on the Preferred Securities, in very general terms, will vary depending on whether a
U.S. Holder has made a timely QEF election as
described above. See Tax Consequences to
U.S. Holders of WaMu Cayman Preferred Securities Investment in a Passive Foreign
Investment Company." If a timely QEF election has been made, distributions should be allocated
first to amounts previously taxed pursuant to the QEF election and to this extent would not be
taxable to U.S. Holders. Distributions in excess of
such previously taxed amounts will be taxable
to such U.S. Holders as ordinary income upon receipt, to the extent of any remaining amounts of
WaMu Cayman's current and accumulated earnings and profits. Distributions in excess of
previously taxed amounts and any remaining current and accumulated earnings and profits will
be treated by such U.S. Holders first as a nontaxable return of
capital and then as
capital gain.
In the event that a U.S. Holder does not make a timely QEF election some or
all
of any
dividends distributed with respect to its Preferred Securities may constitute excess distributions,
taxable as previously described. See Tax Consequences to U.S. Holders of WaMu Cayman
Preferred Securities Investment in a Passive Foreign Investment Company."
of
In general, a U.S. Holder of
a WaMu Cayman Preferred Security will recognize gain or
loss upon the sale or exchange of
the
Preference Share equal to the difference between the amount realized and such holder's
adjusted tax basis in the Preference Share. Initially, the tax basis of a U.S. Holder should equal
the amount paid for a WaMu Cayman Preferred Security. Such basis will be increased by
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Tax Treatment of
Tax-Exempt U.S. Holders of
Preferred Securities
Tax-Exempt U.S. Holder"
Tax Treatment of
Foreign Holders of
Preferred Securities
Certain Reporting Requirements to U.S. Holders
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Information Reporting and Backup Withholding
Tax Return Disclosure Requirements
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Foreign, State, and Local Taxes
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ERISA CONSIDERATIONS
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ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA "J and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") prohibit pension, profit-sharing or other retirement plans and accounts subject to ERISA or Section 4975 of the Code and entities that are deemed to hold "plan assets" of any of the foregoing (each, a "Plan") from engaging in certain transactions with persons that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to such Plan. A violation of these "prohibited transaction" rules may result in an excise tax or other penalties and liabilities under ERISA and the Code for such persons or the fiduciaries of the Plan. In addition, Title I of ERISA also requires fiduciaries of a Plan subject to ERISA to make investments that are prudent, diversified and in accordance with the governing plan documents.
Certain transactions involving WaMu Cayman might be deemed to constitute prohibited transactions under ERISA and the Code with respect to a Plan that purchased WaMu Cayman Preferred Securities or Fixed Rate Company Preferred Securities if assets of WaMu Cayman were deemed to be assets of the Plan. Under a regulation issued by the United States Department of Labor (the "Regulation"), the assets of WaMu Cayman would be treated as plan assets of a Plan for the purposes of ERISA and the Code only if the Plan acquired an "equity interest" in WaMu Cayman and none of the exceptions to plan assets contained in the Regulation was applicable. An equity interest is defined under the Regulation as an interest other than an instrument that is treated as indebtedness under applicable local law and that has no substantial equity features. The WaMu Cayman Preferred Securities and the Fixed Rate Company Preferred Securities are not likely to be treated as indebtedness for purposes of the Regulation. As such, WaMu Cayman intends to prohibit the acquisition and holding of any WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security or any interest in a WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security by or on behalf of a Benefit Plan Investor (as defined below).
For the purposes of the Regulation, the term "Benefit Plan Investor" includes all employee benefit plans, regardless of whether or not they are subject to ERISA (such as, for example, governmental plans), individual retirement accounts, Keogh Plans and other plans subject to Section 4975 of the Code, and entities whose underlying assets are deemed to include plan assets by reason of the investment in that entity by Benefit Plan Investors, such as group trusts, bank collective investment trusts, insurance company separate accounts, and certain insurance company general accounts.
By acquiring a WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security (or any interest therein), each purchaser and transferee will be deemed to represent, warrant and covenant that, from the date of acquisition throughout the period of holding such WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security (or interest therein), it is not, and it is not acquiring such WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security (or interest therein) with the assets of a Benefit Plan Investor, except for an insurance company general account that represents, warrants and covenants that, at the time of acquisition and throughout the period it holds the securities, (i) it is eligible for and meets the requirements of the Department of Labor Prohibited Transaction Class Exemption 95-60, (ii) less than 25% of the assets of such general account are (or represent) assets of a Benefit Plan Investor and (iii) it is not a person who has discretionary authority or control with respect to the assets of WaMu Cayman or any person who provides investment advice for a fee (direct or indirect) with respect to such assets, or any affiliate of such a person and would not otherwise be excluded under 29 C.F.R. 2510.3-101 (f) (1).
110
RATINGSIt
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RATINGS
It is expected that the WaMu Cayman Preferred Securities will be rated "Baa2" by Moody's Investor Services, Inc. ("Moody's"), "BBB" by Standard & Poors Rating Services, a division of the McGraw Hill Companies, Inc. ("S&P"), and "A-" by Fitch, Inc. ("Fitch"). The ratings of the WaMu Cayman Preferred Securities are not recommendations to purchase, hold or sell shares of Preferred Stock, inasmuch as the ratings do not comment as to the market price or suitability for a particular purchaser. Nor do the ratings described above address the likelihood that a holder of WaMu Cayman Preferred Securities will be able to sell such securities. The ratings are based on current information furnished to S&P, Moody's and Fitch by WMI, WMB, the Company and WaMu Cayman and information obtained from other sources. The ratings may be changed, suspended or withdrawn at any time as a result of changes in, or the unavailability of, such information.
111
PLAN OF DISTRIBUTION
The Company, WaMu Cayman, WMI and the Initial Purchasers have enterEld into a purchase
agreement with respect to the WaMu Cayman Preferred Securities. Subject to certain conditions,
each Initial Purchaser has severally agreed to purchase the amount by liquidation preference)
of WaMu Cayman Preferred Securities indicated in the following tables.
The Initial Purchasers are committed to take and pay for
all
of
the securities being offered
hereby, if any are taken. The initial offering price is set forth on the cover page of
this offering
circular. After the securities are released for sale, the Initial Purchasers may change the offering
price and other selling terms. The Initial Purchasers have agreed to reimburse WMI and its
affiliates for certain expenses incurred in connection with this Offering.
The securities offered hereby have not been and will not be registered under the Securities
Act. The Initial Purchasers have agreed that they will only offer or
sell i) the Series A-1 WaMu
Cayman Preferred Securities in the United States and only to U.S. persons who are both qualified
institutional buyers" within the meaning of
Rule 144A under the Securities Act and qualified
purchasers" within the meaning of
Section 2(a) 51) under the Investment Company Act in
transactions meeting the requirements of
Rule 144A and the Series A-2 WaMu Cayman
Preferred Securities outside the United States to non-U.S. persons" within the meaning of
Regulation S under the Securities Act) in offshore transactions in reliance on Regulation S.
In connection with sales of
the Series A-2 WaMu Cayman Preferred Securities outside the
United States, the Initial Purchasers have agreed that they will not offer, sell or
deliver the
securities
to,
or
for the account or
benefit
of, U.S. persons" within the meaning of
Rule 902 of
Regulation S under the Securities Act i) as
part of
the Initial Purchasers' distribution at
any time
or
ii) otherwise until 40 days after the later of
the commencement of
the Offering or
the date
the securities were originally issued. The Initial Purchasers will send to each dealer to whom they
112
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sell such Series A-2 WaMu Cayman Preferred Securities during such 40-day period a
confirmation or
other notice setting forth the restrictions on offers and sales of
the securities
within the United States or
to,
or
for the account or
benefit
of, U.S. persons.
In addition, with respect to Series A-2 WaMu Cayman Preferred Securities initially sold
pursuant to Regulation S,
until 40 days after the period referred to above, an offer or
sale of
such securities within the United States by a dealer that is not participating in the Offering may
violate the registration requirements of
the Securities Act.
In connection with the Offering, the Initial Purchasers may purchase and sell securities in
the open market. These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the sale by the Initial
Purchasers of
a greater number of
securities than they are required to purchase in the Offering.
Stabilizing transactions consist of
certain bids or
purchases made for the purpose of
preventing
or
retarding a decline in the market price of
the securities while the Offering is in progress.
These activities by
the Initial Purchasers may stabilize, maintain or
otherwise affect the
market price of
the securities. As a result, the price of
the securities may be higher than the price
that otherwise might exist in the open market. If these activities are commenced, they may be
discontinued by the Initial Purchasers at any time. These transactions may be effected in the
over-the-counter market or
otherwise.
Each of
the underwriters has represented and agreed that:
It has not made or
will not make an offer of
the securities being offered hereby to the
public in the United Kingdom within the meaning of
section 1026 of
the Financial Services
and Markets Act 2000 as amended) except to legal entities which are
authorized or
regulated to operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in securities or
otherwise in
circumstances which do not require the publication by the company of a prospectus
pursuant to the Prospectus Rules of
the Financial Services Authority
It has only communicated or caused to be communicated and will only communicate or
cause to be communicated an invitation or
inducement to engage in investment activity
within the meaning of
section 21 of FSMA) to persons who have professional
experience in matters relating to investments falling within Article 19(5) of
the Financial
Services and Markets Act 2000 Financial Promotion) Order 2005 or
in circumstances in
which section 21 of FSMA does not apply to the company; and
It has complied with, and will comply with
all applicable provisions of FSMA with respect
to anything done by
it in relation to the shares in,
from or
otherwise involving the United
Kingdom.
In relation to each Member State of
the European Economic Area which has implemented
the. Prospectus Directive each, a each Initial Purchaser has
represented and agreed that with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State the it
has not made and will not make an offer of
the securities being offered hereby to the public in
that Relevant Member State prior to the publication of a prospectus in relation to the securities
which has been approved by
the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the competent authority
in that Relevant Member State, all
in accordance with the Prospectus Directive, except that it
may, with effect from and including the Relevant Implementation Date, make an offer of
securities
to the public in that Relevant Member State at any time:
to legal entities which are authorized or
regulated to operate in the financial markets or, if
not so authorized or
regulated, whose corporate purpose is solely to invest in securities;
113
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• to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000; and (iii) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or
• in any other circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer of securities to the public" in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
The securities offered hereby may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571 ) of Hong Kong and any rules made thereunder.
This offering circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or, (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the securities offered hereby are subscribed or purchased under Section 275 by a relevant person which is: (i) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the Trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust will not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (A) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275 (1 A), and in accordance with the conditions, specified in Section 275 of the SFA; (B) where no consideration is given for the transfer; or (C) by operation of law.
The securities offered hereby have not been and will not be registered under the Securities and Exchange Law of Japan (the "Japan Securities and Exchange Law") and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant
114
to an exemption from the registration requirements
of, and otherwise in compliance with, the
Securities and Exchange Law and any other applicable laws, regulations and ministerial
guidelines of
Japan.
WMI and the Company have agreed in the purchase agreement, subject to certain
exceptions, that for a period of 180 days after the date of
this offering circular, neither they, nor
any of
their subsidiaries or
other affiliates over which they exercise management or
voting
control, nor any person acting on their behalf will, without the prior written consent of Goldman,
Sachs Co., offer, sell, contract to sell or
otherwise dispose of any securities that are
substantially similar to the securities.
WMl, the Company and WaMu Cayman have agreed to indemnify the Initial Purchasers
against certain liabilities, including liabilities under the Securities Act.
Certain of
the Initial Purchasers and their respective affiliates have, from time to time,
performed, and may in the future perform, various financial advisory and investment banking
services for the company, for which they received or
will receive customary fees and expenses.
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VALIDITY OF SECURITIES
The validity of
the WaMu Cayman Preferred Securities will be passed upon for WMI and the
Initial Purchasers by Maples and Calder, George Town, Grand Cayman. The validity of
the Fixed
Rate Company Preferred Securities will be passed upon for the Company by
Richards, Layton
Finger, P.A., special Delaware counsel for the Company, for WMI by Mayer, Brown, Rowe Maw
LLP, New York, New York, and for the Initial Purchasers by
Sullivan Cromwell LLP, New York,
New York. The validity of
the Fixed Rate Depositary Shares and of
the Fixed Rate WMI Preferred
Stock will be passed upon for WMI by
Heller Ehrman LLP, Seattle, Washington, and by
Mayer,
Brown, Rowe Maw LLP, and for the Initial Purchasers by Sullivan Cromwell LLP. Mayer,
Brown, Rowe Maw LLP and Sullivan Cromwell LLP will rely upon the opinion of
Richards,
Layton Finger, P.A., as
to matters of
Delaware law, and upon the opinion of
Heller Ehrman LLP
as
to matters of Washington law.
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GENERAL INFORMATION
Listing
Application will be made to list the Series A-2 WaMu Cayman Preferred Securities offered
hereby to non-U.S. persons in reliance on an exemption from registration pursuant to
Regulation S,
on the Euro MTF market of
the Luxembourg Stock Exchange, in accordance with
the rules thereof. The Series A-1 WaMu Cayman Preferred Securities will not be
listed on any
securities exchange or automated dealer quotation system. Prior to such listing, a legal notice
relating to the issue of
the Series A-2 WaMu Cayman Preferred Securities will be
filed with the
Chief Registrar of
the District Court of
Luxembourg Greffier en Chef du Tribunal
d'Arrondissement de
et Luxembourg) where such legal notice will be available for inspection
free of
charge and where copies of
such documents will be obtainable upon request.
Upon such listing, the Series A-2 WaMu Cayman Preferred Securities will be
freely
transferable on the Euro MTF Market of
the Luxembourg Stock Exchange. Once executed,
transactions carried out on the Euro MTF Market may not be cancelled.
Authorization
The issuance of
the Series A-2 WaMu Cayman Preferred Securities was authorized by
WaMu Cayman's Board of
Directors on February 23, 2006. The issuance of
the Fixed Rate
Company Preferred Securities was authorized by the Company's Board of Managers on
February 23, 2006. The issuance of
the Fixed Rate WMI Preferred Stock was authorized by
WMl's Board of
Directors on January 17, 2006 and February 21,2006.
Independent Accountants
The independent registered public accountants of
the Company will be
Deloitte Touche
LLP. WaMu Cayman will engage a nationally recognized accounting firm to act as
its independent
registered public accountant. Deloitte Touche LLP are also the independent registered public
accountants for WMI and WMB.
Documents
Copies of
the LLC Agreement and WaMu Cayman's Articles of
Association will, so long as
any Series A-2 WaMu Cayman Preferred Securities are outstanding, be
available free of
charge
for inspection during usual business hours at
the specified office of
the Paying Agent in
Luxembourg.
For so long as
the Series A-2 WaMu Cayman Preferred Securities are listed on the Euro
MTF Market of
the Luxembourg Stock Exchange, a copy of WMl's Restated Articles of
Incorporation, as amended, and Restated Bylaws, as amended, will be available for inspection at
the specified office of
the Paying Agent in Luxembourg.
For so long as the Series A-2 WaMu Cayman Preferred Securities are listed on the Euro
MTF Market of
the Luxembourg Stock Exchange, copies of
the audited annual consolidated
financial statements and the unaudited consolidated interim financial statements for the quarters
ending March 31, June 30 and September 30 of WMI, of WaMu Cayman and the Company will
be available, free of
charge, at
the specified office of
the Paying Agent in Luxembourg.
No Material Adverse Change
Except as disclosed in this offering circular, there has been no adverse change in the
financial position of
the Company, WaMu Cayman, WMB or WMI since December 31,2005, or
their respective dates of
establishment which was February 3, 2006 in the case of
the Company
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and February 23, 2006 in the case of WaMu Cayman), that would be deemed material in the
context of
the issue and sale of
the WaMu Cayman Preferred Securities in this Offering.
Legal Proceedings
Neither the Company nor WaMu Cayman are involved in any litigation, arbitration or
administrative proceeding relating to claims or amounts that are material in the context of
the
issue and sale of
the WaMu Cayman Preferred Securities or
the Fixed Rate Company Preferred
Securities to which the Company or WaMu Cayman are a party, nor to the best of
the
Company's or WaMu Cayman's knowledge, is there any threatened litigation, arbitration or
administrative proceedings relating to claims or amounts that are material in the context of
the
issue and sale of
the WaMu Cayman Preferred Securities or
the Fixed Rate Company Preferred
Securities that would in either case jeopardize the Company's or WaMu Cayman's ability to
discharge the Company's or WaMu Cayman's respective obligations in respect of
the issue and
sale of
the WaMu Cayman Preferred Securities or
the Fixed Rate Company Preferred Securities.
Neither the Company nor the Asset Trust is the subject of
any litigation. None of
the
Company, WMI or WMB is currently involved in or, to WMB's knowledge, currently threatened
with, any material litigation with respect to the assets included in the Asset Trust's portfolio,
other than routine litigation arising in the ordinary course of
business. Based on information
currently available, advice of
counsel, available insurance coverage and established reserves,
WMB believes that the eventual outcome of
the actions with respect to the assets included in the
Asset Trust's portfolio will not, in the aggregate, have a material adverse effect on the
Company's consolidated financial position or
results of
operations. However, in the event of
unexpected future developments, it is possible that the ultimate resolution of
those matters, if
unfavorable, may be material to the Company's results of
operations for any particular period.
WMB, the Company, the Asset Trust, WaMu Cayman and WaMu Delaware have not been
named as defendants in any of
the following lawsuits and, on that basis they do not expect such
lawsuits to materially affect their respective operations or
financial results.
South Ferry L.P. v.
Killinger et
a/., No. CV04-1599C W.D. Wa., Filed Jul. 19,2004) the
Securities Action"). This class action lawsuit is currently pending against WMI and certain of
its
senior executives in the U.S. District Court, Western Division of
Washington. On behalf of
a
putative class of
purchasers of WMI securities from April 15, 2003 through June 28, 2004, lead
plaintiffs allege that in various public statements the defendants purportedly made misrepresenta-
tions and failed to disclose material facts concerning, among other things, alleged internal
systems problems and hedging issues.
The defendants moved to dismiss the Securities Action on May 17, 2005. After briefing, but
without oral argument, the Court on November 17, 2005 denied the motion in principal part;
however, the Court dismissed the claims against certain of
the individual defendants, dismissed
claims pleaded on behalf of
sellers of
put options on WMI stock, and concluded that the plaintiffs
could not rely on supposed violations of
generally accepted accounting principles to support their
claims. The remaining defendants subsequently moved for reconsideration or, in the alternative,
certification of
the opinion for interlocutory appeal to the United States Court of
Appeals for the
Ninth Circuit. The District Court denied the motion for reconsideration, but the motion for
certification remains pending.
Lee Family Investments, by and through
its Trustee W.B. Lee, Derivatively and on behalf of
Nominal Defendant Washington Mutual, Inc. v.
Killinger et
aI, No. CV05-2121C W.o. Wa., Filed
Nov. 29, 2005) the Derivative Action"). On November 29,2005,12 days after the Court denied
the motion to dismiss the Securities Action, a separate plaintiff filed in Washington State Superior
Court a derivative shareholder lawsuit purportedly asserting claims for the benefit of WMI. The
defendants include those individuals remaining as
defendants in the Securities Action, as
well as
those of WMl's current independent directors who were directors at any time from April 15, 2003
118
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00134
through June 2004. The allegations in the Derivative Action mirror those in the Securities Action,
but seek relief based on claims that the independent director defendants failed to take action to
respond to the misrepresentations alleged in the Securities Action and that the filing of
that
action has caused WMI to expend sums to defend itself and the individual defendants and to
conduct internal investigations related to the underlying claims. The defendants have not yet
responded to the complaint in the Derivative Action.
Governing Law
The LLC Agreement and the Fixed Rate Company Preferred Securities will be governed by,
and construed in accordance with, the laws of
the State of
Delaware. WaMu Cayman's Articles of
Association and the WaMu Cayman Preferred Securities will be governed by, and construed in
accordance with, the laws of
the Cayman Islands. The Rxed Rate WMI Preferred Stock will be
governed by and construed in accordance with the laws of
tile State of
Washington. The Fixed
Rate Depositary Shares will be governed by, and construed in accordance with, the laws of
the
State of New York.
CONFIDENTIAL
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Washington Mutual, Inc.
1201 Third Avenue
Seattle, WA 98101
WMB WAMUCAYMAN THE COMPANYWashington Mutual Bank Washington Mutual Preferred Washington Mutual Preferred
1201 Third Avenue Funding Cayman) I Ltd. Funding LLCSeattle, WA 98101 c10 M&C Corporate Services 1201 Third Avenue
Limited Seattle, WA 98101
P.O. Box 309GT
Ugland House, South Churcfl'>.Street
George Town, Grand Cayman,
Cayman Islands
SOLE GLOBAL COORDINATOR AND SOLE STRUCTURING COORDINATOR
Goldman, Sachs Co."
85 Broad Street
New York, NY 10004
LEGAL ADVISORS TO INITIAL PURCHASERS
As to U.S. Federal and New York law:
Sullivan Cromwell LLP
125 Broad Street
New York, NY 10004-2498
LEGAL ADVISORS TO WMI, WMB AND THE COMPANYAs
to U.S. Federal and New York law:
Mayer, Brown, Rowe Maw LLP
1675 Broadway
New York, NY 10019
As to Washington law:
Heller Ehrman LLP
701 Fifth Avenue, Suite 6100
Seattle, WA 98104-7098
SPECIAL LEGAL ADVISORS TO WASHINGTON MUTUAL PREFERRED FUNDING CAYMAN) I LTD
As to Delaware law: As
to
Cayman Islands law:
Richards, Layton Finger, P.AMaples and Calder
One Rodney Square P.O. Box 309GTWilmington, DE 19801
Ugland House, South Church Street
George Town, Grand Cayman
Cayman Islands
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Wilmington Trust Cayman), Ltd.
4 Floor, Century Yard
Cricket Square, Elgin Avenue
George Town, Grand Cayman
Cayman Islands
LUXEMBOURG LISTING AGENT AND PAYING AGENT DEPOSITORYJPMorgan Bank Luxembourg S.A.
Mellon Investor Services LLC
6,
route de Treves 480 Washington Blvd.
L-2633 SenningerbergJersey City, NJ 07310
TRUSTEE DELAWARE TRUSTEEDeutsche Bank National Trust Company
Deutsche Bank Trust Company Delaware
1761 East Saint Andrew Place1011 Centre Road, Suite 200
Santa Ana, CA 92705 Wilmington, DE 19805
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00137
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INDEX OF TERMS
3(c) 7) Representations vi
Declaration of
Trust 37
Additional Amounts 82 Delaware Trustee 5,
50
Additional Assets 43 Deposit Agreement 92
Additional Tax Event 82 Depositary 71
Additional Taxes 82 Derivative Action 118
Administration Agreement Dividend Payment Date cover, 65, 76,
86
Dividend Period 65, 76,
86
Administrative Services
DTC 97
Agreement
Administrator DTC Participants
Advanced Consumer Lending DWAC 102
System
or ACLS Eligible Assets 43
alternative services 56 Eligible Investments
Asset Documentation 44 employee benefit plan
Asset Portfolio 45 ERISA
iii, 110
Asset Subsidiary 44 Euroclear 100
Asset Tax Opinion 45 Euroclear Operator 100
Asset Trust Euroclear Participants 100
Euroclear Terms and
back-end ratioConditions 100
Bankruptcy Event 48 Exchange Agreement 71
Benefit Plan Investor iii, 110 Exchange Event 11,70
Business Combination 90 Expenses Agreement
Business Day 65, 76, 86 FDiC xiv, 63
CACS Federal Reserve
Cayman Trust FFO 11,76
Fitch 111Class A Asset Trust
Certificate 51 Fixed Rate Company
Preferred Securities cover, 1,
37, 75
Class R Asset Trust
Certificate 51 Fixed Rate Depositary
Clearstream 100 Shares 11,86,92
Clearstream International 100 Fixed Rate Substitute
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00139
Global Securities REMIC
5, 105
HELsReminder Notice
vi
Independent DirectorReplacement Capital
Independent InvestmentCovenant
BankerReplacement Covenant
Independent Manager
5,
46
Covered Securities
Indirect ParticipantsRestricted Period
97
Investment Company Act cover,
xi, 1 Rule 144A Global Security
Investment Company ActRule 144A Offering
Event
78
S&P 111IRS 103 SEC
xiii
Japan Securities andSection3(c)(7) x
Exchange Law 114 Securities Act. cover,
xi, 1
Junior Equity Securities 77 Securities Action
like amountSenior Equity Securities
LLC Act
41
Series A-1 WaMu CaymanLLC Agreement
41
Preferred Securities cover,
1,
37,
65
Loan DocumentsSeries A-2 WaMu Cayman
MarionPreferred Securities cover,
1,
37,
65
Moody's 111 Servicer
New AssetsServicer Indemnified Parties
60Nominee SFA
114Offering
Share Trustee
37
OTS cover, 2,32 SUCCESSParity Equity Securities
Successor Entity
91
Paying Agent
in
Luxembourg 37,
73
supplementary capital
Paying Agent s)Tax Event
Permitted InvestmentsTax-Exempt U.S. Holder 107
PFIC 16, 106Thrift Financial Report s)
xiv
plan
iii
total capital
Plan 110 Transfer Agent
plan assetsTreasury Rate
Pooling and ServicingTrust Securities
AgreementTrustee
Primary Treasury DealerUBTI 107
Principal Paying AgentUniversity Street
i, 4,
41
QEF 106 U.S. Holder 104qualified institutional
Voting Parity Stock
buyer s)
iii, 1 WaMu Cayman cover, 1,37
qualified purchaser s) WaMu Cayman Ordinary
Qualifying InterestsShares 4,37
Rating Agencies WaMu Cayman Preferred
Rating Agency ConditionSecurities cover, 1,37
Reference Treasury Dealer WaMu Cayman's Articles
of
Reference Treasury DealerAssociation 10, 3
7
Quotations WaMu Delaware
Registrar
73 WMB
i,
1,32
Regulation 110 WMI cover, 1Regulation S Global Security WMI GroupRegulation S Offering
WMl's Board of
Directors
Regulatory Capital Event WMI Parity Stock
Relevant Implementation Date 113 WTC CaymanRelevant Member State 113
124
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00140
$750,000,000
Washington Mutual
Preferred Funding
Cayman) I Ltd.
7.25% Perpetual Non-cumulative
Preferred Securities Automatically
Exchangeable Specified
Circumstances into Depositary
Shares representing Preferred
Stock of Washington Mutual, Inc.
Washington
Goldman, Sachs Co.Sole Global Coordinator and
Sole Structuring Coordinator
Citigroup
Credit Suisse
HSBC
Morgan Stanley
Senior Co-Manager
UBS Investment Bank
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00141
CONFIDENTIAL
CONFIDENTIAL
WashingtonMutual
$750,000,000Washington Mutual Preferred Funding (Cayman) I Ltd.
7.25% Perpetual Non-cumulative Preferred SecuritiesAutomatically Exchangeable in Specified Circumstances into
Depositary Shares representing Preferred Stock of Washington Mutual, Inc.
Washington Mutual Preferred Funding (Cayman) I Ltd., a Cayman Islands exempted company limited by shares ("Wa MuCayman"), will invest the proceeds of its 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1, liquidationpreference $100,000 per security (the "Series A-1 WaMu Cayman Preferred Securities"), and its 7.25% Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference $10,000 per security (the "Series A-2 WaMu CaymanPreferred Securities" and, together with the Series A-1 WaMu Cayman Preferred Securities, the "WaMu Cayman PreferredSecurities") offered hereby in a like amount of 7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference$1,000 per security (the "Fixed Rate Company Preferred Securities"), of Washington Mutual Preferred Funding LLC, a Delawarelimited liability company (the "Company"). The terms of the Series A-1 WaMu Cayman Preferred Securities and the Series A-2WaMu Cayman Preferred Securities are identical except for their per security liquidation preference. WaMu Cayman will haveno material assets other than the Fixed Rate Company Preferred Securities. The financial entitlements of each WaMu CaymanPreferred Security will be substantially the same as the financial entitlements of a like amount of Fixed Rate Company PreferredSecurities, with the consequence that dividends and the redemption price on the WaMu Cayman Preferred Securities will bepayable on the same dates and in the same amounts as the corresponding dividends and redemption price, as applicable, on alike amount of Fixed Rate Company Preferred Securities. The Company's initial material assets will consist of indirect interestsin mortgages and mortgage-related assets originated by Washington Mutual Bank as described herein.
Dividends on the Fixed Rate Company Preferred Securities will be payable if, when and as declared by the Company'sBoard of Managers out of legally available funds, on a non-cumulative basis at an annual rate of 7.25% on the liquidationpreference per security, quarterly in arrears on March 15, June 15, September 15 and December 15 of each year,commencing on June 15, 2006 (each, a "Dividend Payment Date"), or the next Business Day if any such day is not aBusiness Day.
If the Office of Thrift Supervision (together with any successor regulator, the "OTS") so directs following theoccurrence of an Exchange Event as described herein, each WaMu Cayman Preferred Security will be automaticallyexchanged for depositary shares representing a like amount of Washington Mutual, Inc.'s ("WMJ") Series J Perpetual Non-cumulative Fixed Rate Preferred Stock.
See "Risk Factors" beginning on page 18 for a description of the risk factors you should consider before you invest in thesecurities offered hereby,
(Continued on next page)
Offering price: $100,000.00 per Series A-1 WaMu Cayman Preferred Security$ 10,000.00 per Series A-2 WaMu Cayman Preferred Security
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIESACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE SERIES A-1 WAMU CAYMAN PREFERRED SECURITIES AREBEING OFFERED AND SOLD ONLY IN THE UNITED STATES AND ONLY TO U.S. PERSONS THAT ARE BOTH "QUALIFIEDINSTITUTIONAL BUYERS" (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND "QUALIFIEDPURCHASERS" (WITHIN THE MEANING OF SECTION 2(a)(51) OF THE U.S. INVESTMENT COMPANY ACT OF 1940, ASAMENDED (THE "INVESTMENT COMPANY ACT")) IN RELIANCE ON AN EXEMPTION FROM REGISTRATION PURSUANT TORULE 144A. THE SERIES A-2 WAMU CAYMAN PREFERRED SECURITIES ARE BEING OFFERED AND SOLD ONLY TONON-U.S. PERSONS IN TRANSACTIONS OUTSIDE THE UNITED STATES IN RELIANCE ON AN EXEMPTION FROMREGISTRATION PURSUANT TO REGULATION S UNDER THE SECURITIES ACT. PROSPECTIVE PURCHASERS OF SERIES A-1WAMU CAYMAN PREFERRED SECURITIES ARE HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BERELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A.THE SECURITIES ARE NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS DESCRIBED UNDER"NOTICE TO INVESTORS."
The Initial Purchasers expect to deliver the Series A-1 WaMu Cayman Preferred Securities through the facilities of TheDepository Trust Company and the Series A-2 WaMu Cayman Preferred Securities through the facilities of ClearstrearnBanking, societe anonyme, and Euroclear Bank S.A./N.V., as operator of the Euroclear System, as participants in TheDepository Trust Company, in each case, against payment in New York, New York on or about March 7, 2006.
Goldman, Sachs & Co.Sole Global Coordinator and Sole Structuring Coordinator
Citigroup Credit Suisse HSBC Morgan Stanley UBS investment BankSenior Co-Manager
Offering Circular dated February 24, 2006.
Restricted For Use in Connection with Plan Confirmation Only WMIPC__500002044.00001
CONFIDENTIAL
CONFIDENTIAL
$750,000,000 ( ) I
7.25% Perpetual Non-cumulative Preferred Securities Automatically Exchangeable in Specified Circumstances into
Shares representing Preferred Stock of Washington Mutual, Inc.
Washington Mutual Preferred Funding (Cayman) 1 Ltd., a Cayman lslands exempted company Hmited by shares ("WaMu Cayman"), will [nvest the proceods of Its 7.25"'/"" Perpetual Non-cumulative Preferred Securities, Series A-1, !iquldation preference $100,000 per security (the "Series A-1 WaMu Cayman Preferred Securities"), and its 7.25% Perpetual Noncumulative Preferred Securities, Series AM2, liquidation preference $10,000 per security (the "Series A-2 WaMu Cayman Preferred Securities" and, together w!th the Series A~1 WaMu Cayman Preferred Securities, the ''WaMu Cayman Preferred Securities") offered hereby in a like amount of 7.25% Perpetual Non-cumurative Preferred Securities, liquidation preference $1,000 per security (the "Fixed Rate Company Preferred Securities"), of Washington Mutua~ Preferred Funding llC, a Delaware Hmlted liability company (the "Company"). The terms of the Series A~1 WaMu Cayman Preferred Securities and the Sertes A-2 WaMu Cayman Preferred Secudtles are identical except lor theIr per security liqutdatlon preference. WaMu Cayman wi1l have no materiaJ assets other than the Fixed Rate Company Preferred Sccurittes. The financial entitlements of each WaMu Cayman Preferred Securlty will be substantially the same as the financial entitlements of a like amount of Fixed Rate Company Preferred Securities, with the consequence that dividends and the redemption prtce on the WaMu Cayman Preferred Secur!t[es wi!! be payable on the same dates and [n the same amounts as the corresponding dividends and redemption price, as appljcable, on a like amount of Fixed Rate Company Preferred Securities. The Company's initial material assets wilt consist of indlrect interests in mortgages and mortgage-related assets orlginated by Washington Mutual Bank as described herein.
Dividends on the Fixed Rate Company Preferred Securities will be payable [f, when and as declared by the Company's Board of Managers out of legaHy available funds, on a mlll-cumulative basis at an annual rate of 7.25°/¢ on the liquidation preference per security, quarterly In arrears on March 15, June i5, September i5 and 08t:ember i5 of each year, commencing on June 15,2006 (each, a "Dividend Payment Date"), or the next Business Day if any such day 1s not a Business Day,
!f the Office of Thrift Supervision (together with any successor regulator, the "OTS") so directs foHow[ng the occurrence of an Exchange Event as described herein, each WaMu Cayman Preferred Security wlli be automatically exchanged for depositary shares representing a llke amount of Washington Mutual, lnc.'s ("WM1") Series J Perpetual Noncumulative Fjxed Rate Preferred Stock.
See "Risk Factors" beginning on page 18 for a description of the n:<{k factors you should consider before yot! invest in the securities offered hereby.
(Continued on next page)
Offering price: $100,000.00 per Series A-1 WaMu Cayman Preferred Security $ 10)000.00 per Series A-2 WaMu Cayman Preferred Security
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES THE SERIES 1'-1 WAMU CAYMAN PREFERRED SECURITIES ARE BEING OFFERED AND SOLD ONLY IN THE UNITED AND ONLY TO U,S. PERSONS THAT ARE BOTH "QUALIFIED INSTITUTIONAL BUYERS" (WITHIN THE MEANING OF 144A UNDER THE SECURITIES ACT) AND "QUALIFIED PURCHASERS" (WITHIN THE MEANING OF SECTION 2(8)(51) OF THE U.S. INVESTMENT COMPANY ACT AS AMENDED (THE "INVESTMENT COMPANY ACT"» IN RELIANCE AN EXEMPTION FROM REGISTRATION TO RULE 1441\. THE SERIES A-2 WAMU CAYMAN PREFERRED ARE BEING OFfERED AND SOLD ONLY TO NON-U.S. PERSONS IN TRANSACTIONS OUTSIDE THE UNITED STATES IN REliANCE ON AN EXEMPTION fROM REGISTRATION PURSUANT TO REGULATION S UNDER THE SECURiTIES ACT. PROSPECTIVE OF SERIES A-1 WAMU PREFERRED SECURITIES ARE HEREBY THAT THE SELLER OF MAY BE RELYING THE EXEMPTION FROM THE PROVISIONS Of 5 Of THE SECURITIES ACT BY RULE 144A. THE SECURITIES ARE NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS DESCRIBED UNDER "NOTICE TO INVESTORS."
The Inltial Purchasers Bxpcct to deliver lhe Serjes A-1 WaMu Cayman Preferred Securities through the fac1!ities of The Depository Trust Company and the Series A~2 WaMu Cayman Preferred Securities through the facUlties of Clearstream Banking. societe anonyme, and Euroclear Bank S.A,IN.V" as operator of the Euroclear System, as part[cipants In The Depository Trust Company, in each case, against payment in New York, New York on or about March 7. 2006.
Sole
Credit Suisse HSBC Morgan Slalnle,y UBS Investment Bank Senior Co-Maflti'ger
---Offering Circular dated February 24. 2006.
R",,,tridpri For Use in Connection Plan ~nn'firml"tir'n Only WMIPC_500002044.00001
CONFIDENTIAL
(Continued from previous page)
The Fixed Rate Company Preferred Securities will not be redeemable at the option of the Company prior to theDividend Payment Date in March 2011, except upon the occurrence of a Tax Event, an Investment Company Act Eventor a Regulatory Capital Event (each as described herein). Upon the occurrence of a Tax Event, an InvestmentCompany Act Event or a Regulatory Capital Event, the Company may redeem the Fixed Rate Company PreferredSecurities in whole but not in part. On or after the Dividend Payment Date in March 2011, the Company may redeemthe Fixed Rate Company Preferred Securities in whole or in part. Any redemption will be subject to the prior approvalof the OTS and will be at a redemption price equal to the liquidation preference per Fixed Rate Company PreferredSecurity, plus declared but unpaid dividends, if any, plus a U.S. Treasury-based "make whole" amount if theredemption occurs prior to the Dividend Payment Dale in March 2011.
The WaMu Cayman Preferred Securities will be issued only in book-entry form. Each individual purchaser orgroup of affiliated purchasers that acquires Series A-1 WaMu Cayman Preferred Securities in the initial offering mustacquire at least three Series A-1 WaMu Cayman Preferred Securities having an aggregate liquidation preference of$300,000.
The Initial Purchasers are offering the Series A-2 WaMu Preferred Securities, which are being offered outside theUnited States to non-U.S. persons in reliance upon Regulation S under the Securities Act, through their respectiveselling agents.
Application will be made to list the Series A-2 WaMu Cayman Preferred Securities on the Euro MTF market of theLuxembourg Stock Exchange. The Series A-1 WaMu Cayman Preferred Securities will not be listed on any securitiesexchange or automated dealer quotation system.
The securities offered hereby are not insured or guaranteed by the U.S. Federal Deposit InsuranceCorporation.
Restricted For Use in Connection with Plan Confirmation Only VVM1PC 500002044.00002Restricted
CONFIDENTIAL
(Continued frorn previous page)
The Fixed Rate Company Preferred Securitles wi![ not be redeemable at the option of the Company prior to the Dlvldend Payment Date in March 2011, except upon tile occurrence of a Tax Event, an Investment Company Act Event or a Regulatory Capita! Event (each as described herern). Upon the occurrence of a Tax Event, an Investment Cornpany Act Event or a Regulatory Capltal Event, the Company may redeem the Fixed Rate Company Preferred Securities in whole but not in part. On or after the Dividend Payment Date in March 2011, the Company may rsdeem the Fixed Rate Company Preferred Securities in whole or in part. Any redemption wlll be subject to the prior approval of ihe OTS and will be at a redemptjon price equa! to the liquidation preference per Fixed Rate Company Preferred Security, plus declared but unpard dMdends, if any, plus a U.S. Treasury~based "make who!e" amount if the redemption occurs prior to the DivIdend Payment Dale in March 2011.
The WaMu Cayman Preferred Securities will be issued only in book-entry form. Each jndfvlduai purchaser or group of affiHated purchasers that acquires Series A~ 1 WaMu Cayman Preferred Securities in the inmal offering must acquire at least three Series A~ 1 WaMu Cayman Preferred Securities having an aggregate liquidation preference of $300,000.
The Initral Purchasers are offering the SerIes A~2 WaMu Preferred Securitres, whlch are being offered outside the United States to non-U.s. persons in reliance upon Regu!atlon S under the Securities Act, through thejr respective selling agents.
ApplicatIon wi!! be made to fist the Series A-2 WaMu Cayman Preferred SecuritIes on the Euro MTF market of the Luxembourg Stock Exchange, The Series A-1 WaMu Cayman Preferred Securities wlH not be listed on any securities eXChange or automated dealer quotation system.
The securlties offered hereby are not insured or guaranteed by the U.S. Federal Deposit Insurance Corporation.
in :nn,npr.tirln with :nn'firrr,,,ti()n Only WMIPC _500002044.00002
CONFIDENTIAL
OFFERING CIRCULAR SUMMARY
The following summary is qualified in its entirety by the detailed information appearingelsewhere in this offering circular, in particular, the information under the headings' "Description ofthe WaMu Cayman Preferred Securities" and "Description of the Fixed Rate Company PreferredSecurities," which deScribe the terms and conditions of the securities offered hereby.
Introduction
The 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1, liquidation preference$100,000 per security (the "Series A-1 WaMu Cayman Preferred Securities"), and the7.25% Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference $10,000per security (the "Series A-2 WaMu Cayman Preferred Securities" and, together with theSeries A-1 WaMu Cayman Preferred Securities, the "WaMu Cayman Preferred Securities"), arebeing issued by Washington Mutual Preferred Funding (Cayman) I Ltd. ("WaMu Cayman") in afinancing transaction that raises capital for Washington Mutual Bank ("WMB"). WMB is asubsidiary of Washington Mutual, Inc. ("WM/"). WMI and its affiliates are referred to herein asthe "WMI Group".
WaMu Cayman will invest the proceeds of the WaMu Cayman Preferred Securities in a likeamount of 7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference$1,000 per security (the "Fixed Rate Company Preferred Securities"), of Washington MutualPreferred Funding LLC, a Delaware limited liability company (the "Company"). WaMu Caymanwill have no material assets other than the Fixed Rate Company Preferred Securities. Thefinancial entitlements of each WaMu Cayman Preferred Security will be substantially the same asthe financial entitlements of a like amount of Fixed Rate Company Preferred Securities, with theconsequence that dividends and the redemption price on each WaMu Cayman Preferred Securitywill be payable on the same dates and in the same amounts as the corresponding dividends andredemption price, as applicable, on a like amount of Fixed Rate Company Preferred Securities.The Company's initial material assets will consist of direct or indirect interests in mortgages ormortgage-related assets originated by WMB as described under "The Company — Business ofthe Company --Assets of the Company" and "The Asset Trust."
The terms of the Series A-1 WaMu Cayman Preferred Securities and the Series A-2 WaMuCayman Preferred Securities are identical except for their per security liquidation preference. TheSeries A-1 WaMu Cayman Preferred Securities are being offered in reliance upon Rule 144Aunder the U.S. Securities Act of 1933, as amended (the "Securities Act") only in the UnitedStates and to persons who are "qualified institutional buyers" within the meaning of 144A and"qualified purchasers" within the meaning of Section 2(a) (51) of the U.S. Investment CompanyAct of 1940, as amended (the "investment Company. Act"). The Series A-2 WaMu CaymanPreferred Securities are being offered and sold in reliance upon Regulation S under theSecurities Act only to non-U.S. persons in transactions outside the. United States. Resales ofSeries A-1 WaMu Cayman Preferred. Securities to non-U.S. persons and of Series A-2 WaMuCayman Preferred Securities in the United States or to U.S. persons are subject to restrictions asdescribed under "Notice to investors — Exchanges Between Rule 144A Global SecurityEvidencing Series A-1 WaMu Cayman Preferred Securities and Regulation S Global SecurityEvidencing Series A-2 WaMu Cayman Preferred Securities," in each case subject to thecertification requirements described under "Book-Entry Issuance."
By a separate offering circular dated the same date as this offering circular, WashingtonMutual Preferred Funding Trust I, a Delaware statutory trust established by the Company asgrantor ("WaMu Delaware"), is offering $1,250,000,000 of its Perpetual Exchangeable Non-cumulative Trust Securities (the "Trust Securities"). WaMu Delaware will invest the proceeds ofthe Trust Securities in a like amount of the Company's Perpetual Non-cumulative Fixed-to-Floating Rate Preferred Securities (the "Fixed-to-Floating Rate Company Preferred Securities"
Restricted For Use in Connection with Plan Confirmation Only VVMIPC_500002044.00017
1
CONFIDENTIAL
OFFERING CIRCULAR SUMMARY
The {o!fawing summary is qualified in its entirety by the detailed information appearing elsewhere in this offering circular, in particular, the information under the headings· "Description of the WaMu Cayman Preferred Securities" and "Description of the Fixed Rate Company Preferred Securities," which describe the ferms and conditions of the securities offered hereby.
Introduction
The 7.25°/" Perpetual Non-cumulative Preferred Securities, Series A-1, liquidation preference $100,000 per security (the "Series A-1 WaMu Cayman Preferred Securities"), and the 7.25"/<1 Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference $10,000 per securlty (the "Series A-2 WaMu Cayman Preferred Securities" and, together with the Series A-1 WaMu Cayman Preferred Securities, tho "WaMu Cayman Preferred Securities"), are being issued by Washington Mutual Preferred Funding (Cayman) I Ltd, ("WaMu Cayman") in a financing transaction that raises capital for Washington Mutual Bank ("WMB"). WMB is a subsidiary of Washington Mutual, Inc. ("WMI"). WMI and lts affitlates are referred to herein as the "WMI Group",
Wa.Mu Cayman will invest the proceeds of the WaMu Cayman Preferred Securities in a like amount of 7.250/0 Perpetual Non-cumUlative Preferred Securitles, ]rquidation preference $1,000 per security (tl18 "FIxed Rate Company Preferred Securities"), of Wasrtington Mutual Preferred Funding LL.C, a Delaware limited liabill1y company (the "Company"), WaMu Cayman wi!! have no material assets other than the Fixed Rate Company Preferred Securities. The financial entitlements of each WaMu Cayman Preferred Security wlH be substantially the same as the flnandal entitlements of a Ilke amount of Fixed Rate Company Preferred Securities, with the consequence that dividends and the redemption price on each WaMu Cayman Preferred Security w1l! be payable on the same dates and in the same amounts as the corresponding dividends and redemption price, as app!icab!e, on a like amount of Fixed Rate Company Preferred Securities. The Company's inmal material assets will consist of direct or indirect interests in mortgages or mortgage-related assets originated by WMB as described under "The Company - Business of the Company - Assets of the Company" and "The Asset Trust,"
The terms of the Series A-1 WaMu Cayman Preferred Securities and the Series A-2 WaMu Cayman Preferred Securities are Identical except for their per security llquldation preference. The Series A-1 WaMu Cayman Preferred Securities are being offered in reliance upon Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act") only in the Unite~ States and to persons who are "quafitied institutional buyers" within the meaning of 144A and "qualifIed purchasers" within the mcan[ng of Section 2(a) (51) of the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"). The SElries A-2 WaMu Cayman Preferred Securities are being offered and sold in reliance upon Regulation S' under the Securities'Act only to non,..U .. S. persons in-transactions outside the United States. Resales of Series A-1 WaMu Cayman Preferred Securities to non-U.S. persons and of Series A-2 WaMu Cayman Preferred Securlties in the Unlted States or to U.K persons are subject to restrictions as described under "Notice to Investors - Exchanges Between Rule 144A Globa! Security Evidencing Sertes A-1 WaMu Cayman Preferred Securities and Regu!ation S Global Security EvidenCing Sories A-2 WaMu Cayman Preferred Securities," in each case subject to the certification requirements described under "Book-Entry Issuance."
By a separate offering cirCUlar dated the same date as this offering circular, Washington Mutua! Preferred Funding Trust I, a Delaware statuto!), trust established by the Company as grantor ("WaMu Delaware"), is offering $1,250,000,000 of its Perpetual Exchangeable NoncumUlative Trust Securities (the "Trust Securities"), WaMu Delaware wi!! invest the proceeds of the Trust Securities in a like amount of the Company's Perpetual Non-cumulative Fixed-toFloating Rate Preferred Securities (the "Fixed-to-Floating Rate Company Preferred Securities"
Restricted For Use in Connection with Confirmation Only WMIPC_500002044,00017
CONFIDENTIAL
and, together with the Fixed Rate Company Preferred Securities, the "Company PreferredSecurities"). The terms of the Fixed-to-Floating Rate Company Preferred Securities aresubstantially identical to the Fixed Rate Company Preferred Securities except for the dividendrate. The Trust Securities are being offered and sold only in the United States and only toU.S. persons that are both qualified institutional buyers and qualified purchasers in reliance onthe exemption from registration under the Securities Act pursuant to Rule '144A. They are notbeing offered by this offering circular. The WaMu Cayman Preferred Securities are notexchangeable for Trust Securities, or vice versa.
WMB has asked for confirmation from the Office of Thrift Supervision (together with anysuccessor regulator, the "OTS") that the Company Preferred Securities constitute core capital ofWMB under the OTS' applicable regulatory capital regulations and, upon receipt of suchconfirmation, intends to treat the Company Preferred Securities accordingly.
If the OTS so directs following the occurrence of an Exchange Event, each WaMu CaymanPreferred Security will be automatically exchanged for a like amount of Fixed Rate DepositaryShares each representing 1/1000th of a share of WMI's Series J Perpetual Non-cumulative FixedRate Preferred Stock, no par value and liquidation preference $1,000,000 per share ("Fixed RateWM1 Preferred Stock"), as described below in this Summary under "— The Offering —Conditional Exchange." Upon a Conditional Exchange, the Trust Securities will also beautomatically exchanged, but for depositary shares representing a different series of WMI'spreferred stock, having substantially equivalent terms (with certain exceptions) as to dividends,liquidation preference and redemption preference as the Fixed-to-Floating Rate CompanyPreferred Securities.
This offering circular uses the term "like amount" in describing the financial entitlements andvoting rights, as applicable, of the WaMu Cayman Preferred Securities as compared to the FixedRate Company Preferred Securities and in describing the amount of Fixed Rate DepositaryShares, each representing a 1 /1000th interest in one share of Fixed Rate WMI Preferred Stockfor which the WaMu Cayman Preferred Securities will be exchanged upon the occurrence of aConditional Exchange. The term "like amount" means:
• when describing the financial entitlements or voting rights, as applicable, of WaMuCayman Preferred Securities as compared to Fixed Rate Company Preferred Securities, anumber of Fixed Rate Company Preferred Securities that have the same aggregateliquidation preference as the WaMu Cayman Preferred Securities to which the referenceis being made (e.g., 1,000 Fixed Rate Company Preferred Securities with an aggregateliquidation preference of $1,000,000 are a "like amount" for ten Series A-1 WaMuCayman Preferred Securities or 100 Series A-2 WaMu Cayman Preferred Securities, eachhaving an aggregate liquidation preference of $1,000,000); and
• when describing the number of depositary shares for Fixed Rate WMI Preferred Stockwith which WaMu Cayman Preferred Securities will be exchanged upon a ConditionalExchange, a number of Fixed Rate Depositary Shares, each representing a 1/1000th in-terest in one share of Fixed Rate WMI Preferred Stock, having a liquidation preferenceequal to the liquidation preference of the WaMu Cayman Preferred Securities that arebeing exchanged (e.g., 10,000 Fixed Rate Depositary Shares representing Fixed RateWMI Preferred Stock with an aggregate liquidation preference of $10,000,000 are a "likeamount" for 100 Series A-1 WaMu Cayman Preferred Securities or 1,000 Series A-2WaMu Cayman Preferred Securities, each having an aggregate liquidation preference of$10,000,000).
The offering of the WaMu Cayman Preferred Securities and the related issuance of theFixed Rate Company Preferred Securities are referred to herein as the "Offering".
Restricted For Use in Connection with Plan Confirmation Only WMI PC 500002044.00018
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and, together with the fixed Rate Company Preferrod Securities, the "Company Preferred Securities"). The terms of the Fixed-to-Floatlng Rate Company Preferred Securities are substantially Identical to the Fixed Rate Company Preferred Secliritres except the dividend rate. The Trust Securities are befng offered and sold only in the United States and only to UB. persons that are both qualified instItUtional buyers and quatrfied purchasers in reliance on the exemption from registration under the Securities Act pursuant to Rute 144A. They are not being offered by this offering circular. The WaMu Cayman Preferred Securities are not exchangeable for Trust Securities, or 'lice versa.
WMB has asked for confirmation from the Office of Thrift Supervision (together with any successor regulator, tho "OTS") that the Company Preferred Securities constitute core capital of WMB under the 01"8' applicable regulatory capita! regulations and, upon receipt of such confirmation, intends to treat the Company Proferred SecuritIes accordlngly.
If the 01"8 so d[rocts following the occurrence of an Exchange Event, each WaMu Cayman Preferred Security will be automatically oxchanged for a like amount of Fixed Rate Depositary Shares each mpresenHng 1 !100Oth of a share of WMI's Series J Perpetual Non-cumulative Fixod Rate Preferred Stock, no par value and liquidation preference $'1,000,000 por share ("Fixed Rate WM} Preferred Stock"), as described below in this Summary under "- The OfferjngConditional Exchange." Upon a Conditional Exchange, the Trust Securities will also be automaUcal1y exchanged, but for depOSitary shares representing a different series of WMJ's preferred stock, having substantially equivalent terms (with certain exceptions) as to d[vldends, liqUidation preference and redemption preference as the Flxed-io-Floating Rate Company Preferred Secudtles.
This offering circular uses the term "lfke amount" in describing the financial entitlements and voting rights, as applicable, of the WaMu Cayman Preferred Securities as compared to the Fixed Rate Company Preferred Securities and in descrlbing the amount of Fixed Rate Depositary Shares, each representing a 111 OOOth interest in one share of Fixed Rate WMf Preferred Stock for which tile WaMu Cayman Preferred Securities will be exchanged upon the occurrence of a Conditional Exchange. The term "lfke amount" moans:
When describing the financia! entitlements or voting rights, as appllcable, of WaMu Cayman Preferred Securitios as compared to Fixed Rate Company Preferred Securities, a number of Fixed Rate Company Preferred Securities that have the same aggregate liquIdation preference as tho WaMu Cayman Preferred Securlties to which the reference is being made (e.g., 1,000 Fixed Rate Company Preferre~ Securities with an aggregate Hqurdation preference of $1,000,000 are a "like amount" for ten Series A~1 WaMu Cayman Preferred Securities· or 100 Series A~2 WaMu Cayman Preferred Securities, each having an aggr~gate [iq~jdation pmfo:en?e of $1,000,000); and
when descrlbfng the number of depositary shares for Fixed Rate WMI Preferred Stock with whlch WaMu -,o.J "C:' Preferred Securities will be exchanged upon a Conditional Exchange, a number of Ftxed Rate Depositary Shares, each representing a '111 OOOth interest in one share of Fixed Rate WMI Preforrod Slock, having a liquidation preforence equal to the !iquidatlon preference of the WaMu Cayman Preferred Securities that are being exchanged (e.g., 10,000 Frxed Rate DepOSitary Shares representing Fixed Rato WMI Preferred Stock with an aggregate liquidation preference of $10,000,000 arc a "like amount" for 100 Series A-1 WaMu Cayman Preferred Securitios or 1,000 Series A-2 WaMu Cayman Preferred SecurIties, each having an aggregate JlquidaUon preference of $10,000,000) ,
Tho offering of the WaMu Cayman Preferred Securltles and the related issuance of the Axed Rate Company Preferred Securitlos are referred to herein as the "Offering".
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The following diagram outlines the relationship among WM1, WMB, University Street, theCompany, the Asset Trust, WaMu Cayman, WaMu Delaware, purchasers of the WaMu CaymanPreferred Securities and purchasers of the Trust Securities:
Proceeds
Fixed-to-Reeling\ Rate Company
Preferred SecuritiesM
Fixed Rate CompanyPreferred Securitiesm
111111!1111-
University Street' )
Proceeds
Company
WaMuDelaware
WaMuCayman
ProceedsWaMu CaymanPreferred Securities
Proceeds TrustSecurities
Investors
Assets
109%Common
interest
Assets
ConditionalExchange
hl New American Capital, Inc., not shown here, is WMB's direct parent.
PI Marion holdings, Inc., not shown here, is University Street's direct parent.
(3) Transferred by WMB to WaMu Cayman.
(41 Transferred by WMB to WaMu Delaware.
ConditionalExchange
CONFIDENTIAL
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Restricted For Use in Connection with Plan Confirmation Only VVMIPC 500002044.00019Restricted For
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The following diagram outlines the relationship among WMI, WMB. University Street, the Company, the Asset Trust, WaMu Cayman, WaMu Delaware, purchasers of the vyaMu Cayman Preferred Securities and purchasers of the Trust SecuritIes: .
C()nd~tfonat
Exchange
, , , , , , , , , , , , , , , , , , ,
Proceeds
Fixed ROlli! Company Pref~rred Securi!1esf.J)
I ______ -!!>-
University Streetp)
Assets
(1) New American Gapili:ll. Inc., not shown here, is WMB's direct parent
(2) Marion Holdings, Inc., not shown here, is UI1Jversity Street's direct parent.
is) Transferred by WMB to WaMu Cayman.
(4) Transferred by WMB to WaMu Delaware.
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Cor.diticnaf Exchange
WMIPC_500002044000019
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WaMu Cayman
Washington Mutual Preferred Funding (Cayman) I Ltd. is a Cayman Islands exemptedcompany limited by shares, incorporated on February 23, 2006 for the purposeS set forth belowin "WaMu Cayman." All of WaMu Cayman's ordinary shares (the "WaMu Cayman OrdinaryShares") will be held in trust for the benefit of a Cayman Islands charity. WaMu Cayman will notissue any securities other than the WaMu Cayman Ordinary Shares, and the WaMu CaymanPreferred Securities offered hereby. WaMu Cayman will be prohibited from issuing other equitysecurities or any debt securities. The Fixed Rate Company Preferred Securities will be the onlymaterial assets of WaMu Cayman. WaMu Cayman will be managed by a Board of Directorsconsisting of five directors, three of whom will be appointed by such Cayman Islands charitabletrust and two of whom will be persons who are also members of the Company's Board ofManagers. Of the two WaMu Cayman directors who are also members of the Company's Boardof Managers, one will be the same individual who is the Company's Independent Manager.
Subject to the limitations and assumptions described under "Certain Tax Considerations —United States Federal Income Tax Consequences," for United States Federal income taxpurposes, WaMu Cayman intends to be treated as a corporation, and for the holders of theWaMu Cayman Preferred Securities to be treated as holders of stock in such corporation.
The Company
Washington Mutual Preferred Funding LLC is a Delaware limited liability company formed onFebruary 3, 2006 for the purpose of (i) issuing the Fixed Rate Company Preferred Securities toWaMu Cayman, the Fixed-to-Floating Rate Company Preferred Securities to WaMu Delaware, thecommon securities of the Company (the "Company Common Securities") to University Street,Inc., an indirect subsidiary of WMB ("University Street"), and additional Parity Equity Securitiesor Junior Equity Securities subject to certain limitations described in this offering circular(ii) acquiring and holding Eligible Investments and (iii) performing functions necessary orincidental thereto.
The Fixed-to-Floating Rate Company Preferred Securities rank pail passu with the FixedRate Company Preferred Securities as to dividends and upon liquidation of the Company. Theterms of the Fixed-to-Floating Rate Company Preferred Securities are substantially identical tothe terms of the Fixed Rate Company Preferred Securities other than with respect to the rateapplicable to dividends thereon. The Fixed-to-Floating Rate Company Preferred Securities will, if,when and as declared by the Company's Board of Managers, pay dividends at an annual rate of6.534% until the Dividend Payment Date on March 15, 2011 and an annual rate equal to three-month LIBOR plus 1.4825% for the Dividend Period starting on such Dividend Payment Date andeach Dividend Period thereafter.
University Street will own all of the Company Common Securities. The Eligible Investmentsowned by the Company from time to time will generate net income for payment by the Companyto WaMu Cayman as dividends on the Fixed Rate Company Preferred Securities (andconsequently for payment as dividends by WaMu Cayman to holders of the WaMu CaymanPreferred Securities), to WaMu Delaware as dividends on the Fixed-to-Floating Rate CompanyPreferred Securities (and consequently for pass through by WaMu Delaware to the holders ofthe Trust Securities) and to University Street as dividends on the Company Common Securities.
Subject to the limitations and assumptions described under "Certain Tax Considerations —United States Federal Income Tax Consequences," the Company intends to be treated as apartnership (other than a publicly traded partnership taxable as a corporation) for United StatesFederal income tax purposes and will receive the opinion of Mayer, Brown, Rowe & Maw LLP tothe effect that, for United States Federal Income tax purposes, the Company will not be treatedas an association taxable as a corporation or as a publicly traded partnership taxable as acorporation.
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00020R",~lriirlc.rl For
WaMu Cayman
Washington Mutual Preferred Funding (Cayman) I Ud, is a Cayman exempted company IJmited by shares, Incorporated on February 23, 2006 for the set forth be10w in "WaMu Cayman." All of WaMu Cayman's ordinary shares (the "WaMu Cayman Ordinary Shares") wi![ be hel9 in trust for the benefit of a Cayman Islands charity. WaMu Cayman will not issue any securities other than the WaMu Cayman Ordinary Shares, and the WaMu Cayman Preferred SecurHlcs offered hereby. WaMu Cayman will be prohibited from issuing other equity securities or any debt securlties. The Fixed Rate Company Preferred Securitres wil! be the only material assets of WaMu Cayman. WaMu Cayman wir! be managed by a Board of Directors consisting of five directors, three of whom wW be appointod by such Cayman !slands charitable trust and two of whom will be persons who are also members of the Company's Board of Managers. Of the two WaMu Cayman directors who are also members of the Company's Board of Managers, one wlll be the same individual wtJo is the Company's Independont Managor.
Sublect to the limitations and assumptions described under "Certain Tax Considerations -United States Federa! Income Tax Consequences," for United States Federal income tax purposos, WaMu Cayman intends to be treated as a corporation, and for the holders of the WaMu Cayman Preferred Securities to be treated as holders of stock in such corporatIon.
The COlrnD,mv
Washington Mutual Preferred Funding LlC is a Delaware limited !lability company formod on February 3, 2006 for the purpose of (i) Issuing the Fixed Rate Company Preferred Securities to WaMu Cayman, the Fixed-to-Floating Rate Company Preferred Securities to WaMu Delaware, the common securities of the Company (the "Company Common Securities") to University Street, Inc., an indIrect subsidiary of WMB ("University Street"). and additional Parity Equity Securities or Junior Equity Securities subject to cenair! limitations doscribed in this offering circular (ii) acquiring and holding Eligible Investments and (1il) porforming functions necessary or incidental thereto.
The Fixed-to-Floating Rate Company Preferred Securitios rank pari passu wIth the Fixed Rate Company Preferred Securities as to dividends and upon liquidation of the Company_ The terms of tho Frxed-to-Floating Rate Company Preferred Securities arc substantially identical to the terms of the Flxed Rate Company Preferred Securities other than with respect to the rate appllcable to dividends'thereon. The Fixed-to-F!oating Rate Company Preferred Securlflos will, If, when and as declared by the Company's Board of Managers, pay dividends at an annual rate of 6,534"/0 until the D!vidend Payment Date on March 15, 2011 and an annual rate equal to threemonth LlBDH plus 1.4825% for the Dividend Period starting ,on such Dividend Payment Date and oach Dividend Period Ulereafter.
University Street will own aU of the Company Commoll,Securities. The Eligible Investments owned by the Company from time to time wiH generate not income for payment by tho Company to WaMu Cayman as divldends on the Fixed Rate Company Preferred Securities (and consequently for payment as dividends by WaMu Cayman to holders of the WaMu Cayman Preferred Securities) , to WaMu Delaware as dividends on the Fixed-to-Floating Rate Company Preferred Securities (and consequently for pass through by WaMu Delaware to the holders of the Trust Securities) and to University Stroet as dividends on the Company Common Securities,
SubJoct to the limitations and assumptions described under "Certain Tax Cons!derationsUnited States Federa! Income Tax Consequences:' tho Company intends to be treated as a partnership (uHler than a publicly traded partnership taxable as a corporation) for United States Federal Income lax purposes and will receive the opinion of Mayer, Brown, Rowe & Maw LLP to the effect that, for United States Federal income tax purposes, the Company wlll not be treated as an associatiun taxable as a corporation or as a publicly traded partners hlp taxable as a corporation,
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The Company will be managed by a Board of Managers. The Company's Board ofManagers will have three members, one of whom is not, and has not been during the precedingfive years, an officer or employee of WMI or any affiliate of WMI, other than a firfancingsubsidiary (the "Independent Manager").
Initial Conveyances
In connection with the Offering, WMB will convey a portfolio of first lien, closed-end, fixedrate home equity loans ("HELs") to the Company in exchange for 100% of the CompanyPreferred Securities. Concurrently with such transfer by WMB, University Street will convey aportfolio of HELs to the Company in exchange for 100% of the Company Common Securities.The portfolios conveyed by WMB and University Street to the Company will consist ofapproximately $5,389,459,150 of HELs in the aggregate. The Company will convey 100% of theHELs that it owns to the Asset Trust in exchange for the Class A Trust Certificate of the AssetTrust. WMB will then sell the Fixed Rate Company Preferred Securities and the Fixed-to-FloatingRate Company Preferred Securities for cash to WaMu Cayman and WaMu Delaware,respectively.
University Street
University Street, Inc. is a Washington corporation. It has elected to be treated as a realestate investment trust for United States Federal income tax purposes. University Street will hold100% of the Company Common Securities which represent 100% of the voting rights in theCompany (subject to the limited rights of holders of the Company Preferred Securities describedherein).
The Asset Trust
Washington Mutual Home Equity Trust I is a Delaware statutory trust formed pursuant to atrust agreement, to be entered into on or before the closing date, between the Company, asdepositor, and Deutsche Bank Trust Company Delaware, as Delaware trustee (the "DelawareTrustee"). The Pooling and Servicing Agreement among the Company, as depositor, WMB, asServicer, Deutsche Bank Trust Company Delaware, as Delaware Trustee, and Deutsche BankNational Trust Company, as Trustee (the "Pooling and Servicing Agreement"), will restate thetrust agreement and will be the governing instrument of the Asset Trust. The Asset Trust willmake an election to be treated as a real estate mortgage investment conduit ("REMIC") forUnited States Federal income tax purposes.
The initial assets of the Asset Trust will consist of the portfolio of HELs to be conveyed bythe Company to the Asset Trust in connection with the Offering. The HELs were originated byWMB primarily through its retail branches between September 2001 and September 2005. As ofJanuary 31, 2006, the HELs to be transferred into the Asset Trust had an aggregate unpaidprincipal balance of approximately $5,389,459,150.
WMI
With a history dating back to 1889, Washington Mutual, Inc., a Washington corporation, is aretailer of financial services to consumers and small businesses. Based on its consolidatedassets at September 30, 2005, WMI was the largest thrift holding company in the United Statesand the seventh largest among all U.S.-based bank and thrift holding companies. As ofSeptember 30, 2005, WMI, together with its subsidiaries, had total assets of approximately$333.6 billion, total liabilities of approximately $311.0 billion and total stockholders' equity ofapproximately $22.6 billion. As of September 30, 2005, WMI and its subsidiaries also had totaldeposits of approximately $190.4 billion. WMI's common stock is listed on the New York Stock
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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00621Restricted
The Company wil! be managed by a Board of Managers. The Company's Board of Managers will have three members, one of whom is not, and has not been during the preceding five years, an officer or employee of WMI or any afflllate of WMI, other than a fidanclng subsidiary (the "Independent Manager").
Initial Conveyances
In connection with the Offering, WMB will convey a portfolio of first lien, closed-end, fixed rate hom'e equity loans ("HELs") to the Company in exchange for 100"/0 of the Company Preferred Securities. Concurrently with such transfer by WMB, University Street wH! convey a portfollo of HELs to U''1B Company In exchange for 1 00% of the Company Common Securrties. The portfolios conveyed by WMB and University Street to the Company will consist of approximately $5,389,459,150 01 HELs in the aggregate. The Company will convey 100% of the HELs that it owns to the Asset Trust in exchange for the Class A Trust Certificate 01 the Asset Trust WMB will then sell the Fixed Rate Company Preferred SecuritIes and the Fixed-to-Floating Rate Company Preferred Securities for cash to WaMu Cayman and WaMu Delaware, respectively.
University Street
UniversIty Street, Inc. IS a Washington corporation. It has elected to be treated as a real estate investment trust for United States Federal income tax purposes. University Street will hold 1000;,;, of the Company Common Securities whIch represent 100"/0 of the voting rights in the Company (subject to the limited rights of tl0iders of the Company Preferred Securities descrIbed herein).
The Asset Trust
Washington Mutual Home Equlty Trust I is a Delaware statutory trust formed pursuant to a trust agreement, to be entered into on or before the closing date, betvlJeen the Company, as depositor, and Deutsche Bank Trust Company Deiaware, as Delaware trustee (tile "Delaware Trustee"), The Pooling and Servicing Agreement among the Company, as depositor, WMB, as Servlcer, Deutsche Bank Trust Company Delaware, as Delaware Trustee, and Deutsche Bank National Trust Company, as Trustee (the "Pooling and Servicing Agreement"), wm restate the trust agreement and will be the governing instrument of the Asset Trust. The Asset Trust win make an election to be treated as a real estate mortgage investment conduit ("REM1C") for United States Federal [ncome tax purposes.
The Initial assets of the Asset Trust will consist of the portfolio of HEls to be conveyed by the Company to the Asset Trust in connection wah the Offering. The HELs were originated by WMB primarHy through its retal! branches between September 2001 and 2005. As of January 31,2006, the HELs to be transferred into the Asset Trust had an aggregate unpaid principal balance of approximately $5,389,459,150.
WMI
With a history dating back to 1889, Washington Mutual, Inc" a WashIngton corporat!on, is a retailer of financiai services to consumers and small businesses. Based on its consolidated assets at September 30, 2005, WMI was the largest thrift holding company in the United States and the seventh largest among al1 U.s.-based bank and thrift holding companIes. As of September 30, 2005, WMI, together wlth its subsidiarIes, had totai assets of approximately 5333.6 bHHon, totalliabilitles of approximately $311.0 billion and total stOCkholders' equity of approxlmatoly $22.6 billion, As of Septernber 30, 2005, WMI and its subsidiaries also had total deposits of approximately $190.4 billion. WMj's common stock is listed on the New York Stock
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CONFIDENTIAL
Exchange under the symbol "WM". The principal business offices of WM1 are located at1201 Third Avenue, Seattle, Washington 98101 and its telephone number is 206-461-2000.
WMB
Washington Mutual Bank (formerly known as Washington Mutual Bank, FA) is a federallychartered savings association, chartered and operating under the United States Home Owners'Loan Act of 1933, as amended. WMB engages in mortgage banking, consumer banking andsmall business banking. WMB, as a federally chartered association, has the authority to makevarious types of loans, including loans secured by homes and commercial real estate, securedand unsecured consumer loans, and secured and unsecured commercial loans. As a federalsavings association, WMB is subject to regulation and examination by the OTS, its primaryregulator. WMB is an indirect wholly-owned subsidiary of WMI.
Prior to 2004, WMB had two sister depository institutions which were both owned directlyby WMI. WMB has since acquired both of these sister institutions. One of these institutions,Washington Mutual Bank fsb, a federal savings bank, became a wholly-owned subsidiary ofWMB on February 1, 2004. The other institution, Washington Mutual Bank, a savings bankchartered under the laws of the state of Washington, converted into a federally chartered savingsbank and then was merged into WMB on January 1, 2005.
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00022
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Exchange under the symbol "WM". The principal business offices of WMI are located at 1201 Third Avenue, Seattle, Washington 98101 and its telephone number is 206-461-2000.
WMB
Washington Mutua! Bank (formerly known as Washington Mutua! Bank, FA) is a federally chartered savings association, chartered and under tile United States Home Owners' Loan Act of 1933, as amended. WMB engages in mortgage banking, consumer banking and sma!! business banking. WMB, as a federally chartered association, has the authority to make various types of loans, including loans secured by homes and commercial real estate, secured and unsecured consumer loans, and secured and unsecured commercial loans. As a federal savings association, WMB is subject to regulation and examination by the OTS, its primary regulator. WMB is an indIrect wholly-owned subsidiary of WMI.
Prior to 2004, WMB had tv/D sister depository institutions which were both owned directly by WMI. WMB has since acquired both of these sister instftutions. One of these institutions, Washington Mutual Bank fso, a federal savings bank, became a who!!y~owned subsidiary of WMB on February 1, 2004. The other institution, Washington Mutual Bank, .a savings bank chartered under the laws of the state of Washington, converted into a federally chartered savings bank and then was merged into WMB on January 1,2005.
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CONFIDENTIAL
Company Preferred Securities, provided that (i) aftergiving effect to such issuance, the pro forma net bookvalue of the Company's assets (after giving effect to theacquisition of any New Assets in connection with theissuance of such Parity Equity Securities) will equal orexceed 1.5 times the sum of the aggregate liquidationpreference of the preferred securities of the Company thenoutstanding and any such Parity Equity Securities that theCompany proposes to issue, (ii) after giving effect to suchissuance, the Company's pro forma funds from continuingoperations, or "FFO", for the four fiscal quarters beginningwith the fiscal quarter in which such Parity Equity Securi-ties are proposed to be issued (calculated (A) assumingthat such proposed Parity Equity Securities are issued andthat, if any Parity Equity Securities (including the ParityEquity Securities that the Company proposes to issue)bear dividends based on a floating rate, the applicabledividend rate will not change during such four fiscalquarters from the rate in effect on the applicable date ofdetermination and (B) as adjusted to reflect any NewAssets) equals or exceeds 150% of the amount that wouldbe required to pay full annual dividends on all preferredsecurities of the Company then outstanding and any suchParity Equity Securities that the Company proposes toissue and (iii) the Company is not otherwise in breach ofany of its covenants set forth in the LLC Agreement. See"Description of the Fixed Rate Company Preferred Securi-ties — Ranking,"
in the Exchange Agreement, WMI will covenant in favor ofthe holders of the WaMu Cayman Preferred Securities andthe Trust Securities that, if full dividends on (i) theCompany Preferred Securities, (ii) the WaMu CaymanPreferred Securities or (iii) the Trust Securities for anyDividend Period are not paid, then WMI will not declare orpay dividends with respect to, or redeem, purchase oracquire, any of its equity capital securities during the nextsucceeding Dividend Period, except dividends in connec-tion with a shareholders' rights plan, if any, or dividends inconnection with, benefits plans.
Conditional Exchange If the OTS so directs following the occurrence of anExchange Event, each WaMu Cayman Preferred Securitywill be automatically exchanged for a like amount of FixedRate Depositary Shares representing 1/1000th of a shareof WMI's Series J Perpetual Non-cumulative Fixed RatePreferred Stock (the "Fixed Rate Depositary Shares").
"Exchange Event" means (i) WMB becoming "undercapi-talized" under the OTS' "prompt corrective action" regula-tions, (ii) WMB being placed into conservatorship orreceivership or (iii) the ()TS, in its sole discretion, directingsuch exchange in anticipation of WMB becoming "under-capitalized" in the near term or taking supervisory action
Restricted For Use in Connection with Plan Confirmation Only WMI PC 500002044.00027
11
Conditional Exchange ...... " ..
CONFIDENTIAL
Company Preferred Securities, provided that (i) after giving effect to such issuance, the pro forma net book value of the Company's assets (after givin:g effect to the acquisitIon of any New Assets in connection with the issuance of such Parity Equity Securities) wm equal or exceed 1.5 times the sum of the aggregate liqu[dation preference of preferred securities of the Company then outstanding and any such Parity Equity Securities that the Company proposes to issue, (II) after giving effect to such issuance, the Company's pro forma funds from continuing operations, Dr "FFO", for the four fiscal quarters beginning wlth the fiscal quarter in which such Parity Equity Securities are proposed to be issued (calculated (A) assuming that such proposed Parity Equlty Securities are issued and that, if any Parity Equity Securities (including the Parity Equity Securitles that the Company proposes to issue) bear dividends based on a floating rate, the applicable divjdend rate will not change during such four fiscal quarters from the rate in effect on the applicable date of determination and (B) as adjusted to reflect any New Assets) equals or exceeds 150% of the amount that would be required to pay full annual dividends on all preferred securities of the Company then outstanding and any such Parity Equity Securities that the Company proposes to issue and (Iii) the Company is not otherwise in breach of any of its covenants set forth in the LLC AgreemenL See "Description of the Fixed Rate Company Preferred Securities - Ranking,"
In the Exchange Agreement, WMI wi!! covenant rn favor of the holders of the WaMu Cayman Preferred Securities and the Trust Secur!tles that, if full dividends on (I) the Company Preferred Securities, (Ii) the WaMu Cayman Preferred Securitles or (iii) the Trust Securitfes for any Dividend Period are- not pajd, then WM! wlll not declare or pay dividends with respect to, or redeem, purchase or acquire, any of its equity capita! securities during the next succeeding Dividend Period, except dividends In connectJor). wi~h a shareholders' rights plan, jf any, or dividends in connection with, benefits plans.
If the OTS so directs following the occurrence of an Exchango Event, each WaMu Cayman Preferred Security will be automatically exchanged for a like amount of Fixed Rate DepositalY Shares representtng 1/1 OOOth of a share of WMl's Series J Perpetual Non~Gumu!atjve Fixed Rate Preferred Stock (the "Fixed Rate Depositary Shares").
"Exchange Event" means (i) WMB becoming "undercapitalized" under the OTS' "prompt corrective action" regulations, (ii) WMB being placed into conservatorship or receivership or (iii) the OTS, in Its sale discretion, directing SUGh exchange in anticipation of WMB becoming "undercapitalized" in the near term or taking supervIsory action
Restricted For Use in Connection with Plan Confirmation
CONFIDENTIAL
that limits the payment of dividends, as applicable, byWMB, and in connection therewith, directs such exchange.
The Fixed Rate WM1 Preferred Stock will'have substantiallyequivalent terms as to dividends, redemption and liquida-tion preference as the Fixed Rate Company PreferredSecurities, except that the Fixed Rate WMI PreferredStock: (i) will not have the benefit of the covenantsdescribed under "Description of the Fixed Rate CompanyPreferred Securities Voting Rights and Covenants;"(ii) will not be listed on any securities exchange orautomated dealer quotation system; (iii) will be redeem-able prior to the Dividend Payment Date occurring onMarch 15, 2011 only upon the occurrence of a RegulatoryCapital Event as described herein); (iv) AdditionalAmounts will not be payable with respect to the Fixed RateWMI Preferred Stock; and (v) if WMI fails to pay, ordeclare and set aside for payment, kill dividends on theFixed Rate WMI Preferred Stock for six Dividend Periods,the authorized number of WMI's directors will increase bytwo, and the holders of Fixed Rate WMI Preferred Stock,voting together with the holders of any other equity capitalsecurities of WMI having similar voting rights, including theFixed-to-Floating Rate WM1 Preferred Stock, will have theright to elect two directors in addition to the directors thenin office at the next annual meeting of shareholders. TheFixed Rate WM1 Preferred Stock will be subject to theReplacement Capital Covenant described under "— Re-demption/Replacement Capital Covenant" above.
WMI will covenant in the Exchange Agreement in favor ofthe holders of the WaMu Cayman Preferred Securities thatit will not issue any preferred stock that would rank seniorto the Fixed Rate WMI Preferred Stock upon its issuance.Each share of Fixed Rate WM1 Preferred Stock will, uponissuance, rank at least pad passu with the most seniorpreferred stock of WMI, if any, then outstanding.
Voting Rights and CertainCovenants Except as otherwise set forth below, the holders of the
Fixed Rate Company Preferred Securities will not havevoting rights.
However, the LLC Agreement will provide that, except withthe consent or affirmative vote of the holders of at leasttwo-thirds of the Fixed Rate Company Preferred Securitiesand the Fixed-to-Floating Rate Company Preferred Securi-ties, voting together as a single class, the Company will not:
• effect a consolidation, merger or share exchange with orinto another entity other than an entity controlled by, orunder common control with, WMI;
• issue any securities of the Company ranking senior tothe Company Preferred Securities in respect of pay-
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00028
12
Restricted For
Voting Rights and Certain Covenants ... . .. , ........ .
that limits the payment of dividends, as applicabte, by WMB, and in connection therewith, directs such exchange.
The Fixed Rate WM! Preferred Stock wilr have substantlatly equivafent terms as to dividends, redemption and lIquidation preference as the Fixed Rate Company Preferred Securities, except that the Fixed Rate WMI Preferred Stock: (l) will not have the benefit of the covenants described under "Description of the Fixed Rate Company Preferred Securities - Voting Rights and Covenants;" (il) wm not be listed on any securities exchange or automated dealer quotation system; (iii) wi!! be redeemable prior to the Dividend Payment Date occurrlng on March 15,2011 only upon the occurrence of a Regulatory Capita! Event (as described herein); (iv) Additional Amounts will not be payable with respect to the Fixed Rate WMI Preferrod Stock; and (v) If WMI fails to pay, or declare and set aside for payment, fuJi dividends on the Fixed Rate WMI Preferred Stock for six Dividend Periods, the authorjzed number of WMI's directors will increase by two, and the holders of Fixed Rate WMI Preferred Stock, voting together with the holders of any other equity capital securities of WMI having Similar voting rights, inclUding the Fixed-to-Floating Rate WMJ Preferred Stock, will have the right to elect two directors in addition to the directors then in office at the next annual meeting of shareholders. The Fixed Rate WMI Preferred Stock: will be subject to the Replacement Capital Covenant described under "- R8~ demption/Rep!acement CapitaJ Covenant" above,
WMI will covenant in the Exchange Agreement in favor of the holders of the WaMu Cayman Preferred Securities that it will not issue any preferred stock that would rank senior to the Fixed Rate WM t Preferred Stock upon its issuance. Each share of fixed Rate WMI Preferred Stock wHl, upon issuance, rank at least pari passu wlth tho most senior preferred stock of WMI, if any, then outstanding.
Except as othflrwise set forth below, the holders of the Fixed Rate Company Preferred SecurIties wHl not have voting rights.
However, the LLC Agreement will provide ttlat, except with the consent or affirmative vote of the holders of at least two-thirds of the Fixed Rate Company Preferred Securittes and the Fixed-to-Hoating Rate Company Preferred Securities, voting together as a single class, the Company wlil not
effect a consolidation, merger or share exchange with or into another entity other tban an entity controlled by, or under common control with, WMI;
issue any securitios of the Company ranking senior to the Company Preferred Securities in respect of pay-
12
in Connection with Plan Confirmation Only WMI PC _500002044,00028
Automatically Exchangeable in Specified Circumstances into
Depositary Shares representing Preferred Stock of
Washington Mutual, Inc.
The Fixed- to-
Floating Rate Perpetual Non-cumulative Trust Securities, liquidation preference $100,000 per security (the
" Trust Securities"),
of Washington Mutual Preferred Funding Trust
I, a Delaware statutory trust
(" WaMu Delaware"), offered
hereby represent undivided beneficial ownership interests in a like amount of
Fixed-
to
-
Floating Rate Perpetual Non-cumulative
Preferrecj Securities, liquidation preference $1,000 per security (the " Fixed- to-
Floating Rate Company Preferred Securities"), of
Washington Mutual Preferred Funding LLC, a Delaware limited liability company ( the
" Company"). WaMu Delaware will have no
assets other than the Fixed- to-
Floating Rate Company Preferred Securities. WaMu Delaware will pass through dividends paid and
redemption and liquidation payments made by
the Company on the Fixed-
to
-
Floating Rate Company Preferred Securities as
distributions and redemption and liquidation payments on the Trust Securities. The Company's initial material assets will consist
of
indirect interests in mortgages and mortgage- related assets originated by Washington Mutual Bank as
described herein.
Dividends on the Fixed-to-Floating Rate Company Preferred Securities will be payable
if, when and as
declared by
the
Company's Board
of Managers out
of
legally available funds,
on a non- cumulative basis
at an annual rate
of 6.534% until
March 15, 2011 and 3-
month USD UBOR plus 1.4825% thereafter on the liquidation preference per security, quarterly in arrears
on March 15, June 15, September 15 and December 15
of
each year, commencing on June 15, 2006, or
the next Business Day if
any such day is not a Business Day (each, a " Dividend Payment Date").
If
the
Office of
Thrift Supervision ( together with any successor regulator, the "OTS") so
directs following the occurrence of
an Exchange Event as
described herein, each Trust Security will be automatically exchanged
fo
r
depositary shares representing alike amount
of Washington Mutual, Inc.' s
(" WMI") Series I Perpetual Non-cumulative Fixed-
to
-
Floating Rate Preferred Stock.
The Fixed-
to
-
Floating Rate Company Preferred Securities will not be redeemable at
the option of
the Company prior to the
Dividend Payment Date in March 2011, except upon the occurrence of
a Tax Event, an Investment Company Act Event or
a
Regulatory Capital Event (each as described herein). Upon the occurrence of
a Tax Event, an Investment Company Act Event or
a Regulatory Capital Event, the Company may redeem the Fixed- to-
Floating Rate Company Preferred Securities in whole but not
in part. On or
after the Dividend Payment Date in March 2011, the Company may redeem the Fixed- to-
Floating Rate Company
Preferred Securities
in
whole
or
in
part. Any redemption will
be subject
to
the prior approval
of
the OTS and will
be
at a
redemption price equal to the liquidation preference pe
r
Fixed- to-
Floating Rate Company Preferred Security, plus declared but
unpaid dividends, if any, plus a U.
S.
Treasury- based " make whole" amount if the redemption occurs prior to the Dividend
Payment Date in March 2011.
The Trust Securities will be issued only in book- entry form. Each individual purchaser or
group of
affiliated
purchasers that acquires Trust Securities
in
the initial offering must acquire
at
least three Trust Securities having
an
aggregate liquidation preference of
$300,000.
The Trust Securities will not
be listed
on any securities exchange
or automated dealer quotation system.
The securities offered hereby are not insured or
guaranteed by
the U.
S.
Federal Deposit Insurance Corporation.
See " Risk Factors" beginning
on page 17
fo
r a description of
the risk factors you should consider before you invest
inthe securities offered hereby.
Offering price: $100,000.00 per Trust Security
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.
S.
SECURITIES ACTOF 1933, AS AMENDED (THE " SECURfTlES ACT") AND ARE BEING OFFERED AND SOLD ONLY T
O PERSONS THAT ARE BOTH" QUALIFIED INSTITUTIONAL BUYERS" (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND "QUALIFIED
PURCHASERS" (WITHIN THE MEANING OF SECTION 2(
a)(
51) OF THE U.
S.
INVESTMENT COMPANY ACT OF
1940, ASAMENDED (THE " INVESTMENT COMPANY ACT" » IN RELIANCE ON AN EXEMPTION FROM REGISTRATION PURSUANT TO RULE
144A. PROSPECTIVE PURCHASERS OF TRUST SECURITIES ARE HEREBY NOTIFIED THAT THE SELLER OF THE TRUST
SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A. THE SECURITIES ARE NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS DESCRIBED
UNDER " NOTICE TO INVESTORS."
The Initial Purchasers expect to deliver the Trust Securities through the
facilities of
The Depository Trust Company and
Euroclear Bank S.
A./ N.
V., as
operator of
the Euroclear System, and Clearstream Banking, societe anonyme, as
participants in
The Depository Trust Company, in each case, against payment in New York, New York on or
about March 7,
2006.
Goldman, Sachs & Co.Sale Global Coordinator,
Sale Structuring Coordinator and
Joint Bookrunner
Credit SuisseJoint Bookrunner
Offering Circular dated February 24, 2006.
Morgan StanleyJomt Bookrunner
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00001
This offering circular is confidential. You are authorized to use this offering circular solely
for
the purpose of
considering the purchase of
the securities described in the offering circular. WMI,
Washington Mutual Bank ("WMB"), University Street, Inc. ("University Street"), the Company,
WaMu Delaware, Washington Mutual Home Equity Trust I (the "Asset Trust"), Washington Mutual
Preferred Funding (Cayman) I Ltd. ("WaMu Cayman") and other sources identified herein have
provided the information contained in this offering circular. The Initial Purchasers named herein
make no representation or
warranty, express or
implied, as
to the accuracy or completeness of
such information, and nothing contained in this offering circular
is,
or
shall be relied upon as, a
promise or
representation by the Initial Purchasers. You may not reproduce or
distribute this
offering circular, in whole or
in part, and you may not disclose any of
the contents of
this offering
circular or
use any information herein
for
any purpose other than considering the purchase of
the
notes. You agree to the foregoing by
accepting delivery of
this offering circular.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY UNITED
STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY ORDETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The distribution of
this offering circular and the offering and sale of the securities offered
hereby in certain jurisdictions may be restricted by
law. WMI, WMB, University Street, the
Company, WaMu Delaware, the Asset Trust, WaMu Cayman and the Initial Purchasers require
persons in whose possession this offering circular comes to inform themselves about and to
observe any such restrictions. This offering circular does not constitute an
offer
of,
or
an
invitation to purchase, any of
the securities offered hereby in any jurisdiction in which such offer
or
invitation would be
unlawful.
Notwithstanding anything herein to the contrary, each investor (and each employee,
representative, or
agent of
any investor) may disclose to any and
all persons, without limitation
of
any kind, the tax treatment and tax structure of
the transactions contemplated herein and
all
materials of
any kind (including opinions or
other tax analyses) that are provided to the
investors relating to such tax treatment and tax structure. However, any information relating tothe United States Federal income tax treatment o
r
tax structure will remain confidential (and the
foregoing sentence will not apply) to the extent reasonably necessary to enable any person to
comply with applicable securities laws. For this purpose, " tax treatment" means United States
Federal or
state income tax treatment, and "tax structure" means any facts relevant to the
United States Federal or
state income tax treatment of
the transactions contemplated herein but
does not include information relating to the identity of
the issuer of
the securities, the issuer of
any assets underlying the securities, or
any of
their respective affiliates that are offering the
securities.
No person has been authorized to give any information or
to make any representations
other than those contained in this offering circular, and, if given or made, such information or
representations must not be relied upon as having been authorized by any of
WMI, WMB,
University Street, the Company, WaMu Delaware, WaMu Cayman or
the Asset Trust. Neither the
delivery of
this offering circular nor any sale hereunder will create, under any circumstances, any
implication that there has been no change in the affairs of
WMI, WMB, the Company, WaMuDelaware, University Street, o
r
the Asset Trust since the date hereof or
that the information
contained herein is correct as
of
any time subsequent to its date.
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00002
NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421- B OF THE NEW HAMPSHIRE REVISED
STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY
DOCUMENT FILED UNDER RSA 421- B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER
ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, ORCAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
IN CONNECTION WITH THIS OFFERING, GOLDMAN, SACHS & CO. AND ITS AFFILIATES,
ON BEHALF OF THE INITIAL PURCHASERS, MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY
AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED
PERIOD OF TIME AFTER THE ISSUE DATE. HOWEVER, THERE MAY BE NO OBLIGATION ON
GOLDMAN, SACHS & CO. TO DO THIS. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME, AND MUST BE BROUGHT TO AN END AFTER A LIMITED
PERIOD.
ii
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00003
NOTICE TO INVESTORS
Because of
the following restrictions, purchasers are advised to consult legal counsel prior to
making any offer, purchase, resale, pledge or
other transfer of
the securities offered hereby.
Representations of
Purchasers
Each purchaser of
Trust Securities (including the registered holders and beneficial owners
of
the Trust Securities as
they exist from time to time, including as a result of
transfers, in each
case as
of
the time of purchase) will be deemed to have represented and agreed as follows:
( A)
the purchaser ( i) is a "qualified institutional buyer" within the meaning of
Rule 144A of
the
Securities Act, (
ii)
is aware that
the
sale of
the
Trust Securities to it is
being made in reliance on Rule 144A or
another exemption from the registration
requirements of
the Securities Act and (
iii) is acquiring such Trust Securities
for
its own
account or
the account of
one or
more qualified institutional buyers;
( B)
the purchaser ( i) is a "qualified purchaser" within the meaning of
Sec-
tion 2 ( a)
(51) of
the Investment Company Act and the rules and regulations thereunder,
(
ii)
is aware that WaMu Delaware will not be registered under the Investment Company Act
in reliance on the exemption set forth in Section 3 ( c)
( 7)
thereof and that the Trust
Securities have not been and will not be registered under the Securities Act and (
iii) is
acquiring such Trust Securities
for
its own account or
the account of
one or
more qualified
purchasers as
to which the purchaser exercises sole investment discretion, as the case may
be;
( C)
either ( i) the purchaser is not ( A)
an
"employee benefit plan" as
defined in
Section 3(
3)
of
the Employee Retirement Income Security Act of
1974, as amended
(" ERISA"), whether or
not subject to ERISA and including, without limitation, foreign or
governmental plans ( B)
a " plan" within the meaning of
Section 4975 of
the Internal
Revenue Code of
1986, as amended (the " Code"), or
( c)
any entity whose underlying
assets include "plan assets" of
any of
the foregoing by reason of
investment by
an
employee benefit plan or
other plan in such entity (each of
the foregoing, a " Benefit Plan
Investor"), or
(
ii) the purchaser is an insurance company general account that represents,
warrants and covenants that, at
the time of
acquisition and throughout the period it holds
the securities, ( A)
it is eligible
for
and meets the requirements of
the Department of
Labor
Prohibited Transaction Class Exemption 95- 60, ( B)
less than 25% of
the assets of such
general account are ( or
represent) assets of a Benefit Plan Investor and ( C)
it is not a
person who has discretionary authority or
control with respect to the assets of WaMu
Delaware or
any person who provides investment advice
for
a fee (direct or
indirect) with
respect to such assets, or
any affiliate of
such a person and would not otherwise be
excluded under 29
C.
F.
R.
2510.3- 101 ( f) (
1);
( D)
the purchaser is not purchasing the Trust Securities with a view to the resale,
distribution or
other disposition thereof in violation of
the Securities Act;
( E)
neither the purchaser nor any account
for
which the purchaser is acquiring the
Trust Securities will hold such Trust Securities
for
the benefit of
any other person and the
purchaser and each such account will be the sole beneficial owners thereof
for
all purposes
and will not sell participation interests in the Trust Securities or
enter into any other
arrangement pursuant to which any other person will be entitled to an interest in the
distributions on
the
Trust Securities;
iii
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00004
( F)
the certificates evidencing the Trust Securities will bear a legend to the following
effect:
THIS SECURITY IS ONE OF THE FIXED- TO-FLOATING RATE PERPETUAL NON-
CUMULATIVE TRUST SECURITIES (" TRUST SECURITIES") ISSUED BY WASHINGTON
MUTUAL PREFERRED FUNDING TRUST I ("WAMU DELAWARE"). THE ISSUER OF THIS
SECURITY HAS NOT BEEN REGISTERED AS
AN INVESTMENT COMPANY UNDER THE
U.
S.
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE " INVESTMENT
COMPANY ACT"), AND THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
U.
S.
SECURITIES ACT OF 1933, AS AMENDED (THE " SECURITIES ACT"), AND NEITHER
THIS SECURITY NOR ANY BENEFICIAL INTERESTS HEREIN MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A PERSON WHO IS BOTH A
" QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A UNDERTHE SECURITIES ACT (
"QUALIFIED INSTITUTIONAL BUYER") AND A " QUALIFIED
PURCHASER" WITHIN THE MEANING OF SECTION 2(
a)
(51) OF THE INVESTMENT
COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER ("QUALIFIED
PURCHASER") ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A PERSONWHO IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER
(AN " ELIGIBLE PURCHASER") AND EACH SUCH PERSON AND ACCOUNT FOR WHICH
SUCH PERSON IS PURCHASING ( A)
IS NOT A BROKER- DEALER THAT OWNS AND
INVESTS ON A DISCRETIONARY BASIS LESS THAN US$ 25 MILLION IN SECURITIES OF
ISSUERS THAT ARE NOT ITS AFFILIATED PERSONS, ( B)
IS NOT A PLAN REFERRED
TO IN PARAGRAPH ( a)
( 1)
( i) ( D) OR ( a)
( 1)
( i) ( E)
OF RULE 144A, OR A TRUST FUNDREFERRED TO IN PARAGRAPH ( a
)
( 1)
( i) ( F)
OF RULE 144A THAT HOLDS THE ASSETS
OF SUCH A PLAN, IF INVESTMENT DECISIONS WITH RESPECT TO THE PLAN AREMADE BY THE BENEFICIARIES OF SUCH PLAN, ( C
)
WAS NOT FORMED FOR THE
PURPOSE OF INVESTING IN WAMU DELAWARE, ( D)
WILL HOLD AT LEAST $300,000
LIQUIDATION PREFERENCE OF TRUST SECURITIES ( i. e.,
AT LEAST THREE TRUST
SECURITIES) AND TRANSFER AT LEAST $100,000 LIQUIDATION PREFERENCE OF
TRUST SECURITIES ( i. e.,
AT LEAST ONE TRUST SECURITY) IN THE CASE OF EACH
INITIAL INVESTOR, AND WILL HOLD AND TRANSFER AT LEAST $100,000 LIQUIDATION
PREFERENCE OF TRUST SECURITIES ( i. e., AT LEAST ONE TRUST SECURITY) IN THE
CASE OF EACH SUBSEQUENT INVESTOR AND ( E)
UNDERSTANDS THAT WAMUDELAWARE MAY RECEIVE A LIST OF PARTICIPANTS HOLDING POSITIONS IN THIS
SECURITY FROM ONE OR MORE BOOK-ENTRY DEPOSITARIES. EACH PURCHASER OF
THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN WILL BE DEEMED TO
REPRESENT THAT IT AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET
FORTH HEREIN AND IN THE AMENDED AND RESTATED TRUST AGREEMENT OF WAMUDELAWARE (THE "TRUST AGREEMENT"), AND WILL NOT TRANSFER THIS SECURITY
OR ANY BENEFICIAL INTERESTS HEREIN EXCEPT TO AN ELIGIBLE PURCHASER WHOCAN MAKE THE SAME REPRESENTATIONS AND AGREEMENTS ON BEHALF OF ITSELF
AND EACH ACCOUNT FOR WHICH IT IS PURCHASING. ANY PURPORTED TRANSFER OF
THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN THAT IS IN BREACH, AT THE
TIME MADE, OF ANY TRANSFER RESTRICTIONS SET FORTH HEREIN OR IN THE
TRUST AGREEMENT WILL BE VOID AB INITIO. IF AT ANY TIME WAMU DELAWARE
DETERMINES IN GOOD FAITH THAT A HOLDER OR BENEFICIAL OWNER OF
THIS
SECURITY OR BENEFICIAL INTERESTS HEREIN IS IN BREACH, AT THE TIME GIVEN, OF
ANY OF THE TRANSFER RESTRICTIONS SET FORTH HEREIN, WAMU DELAWARESHALL CONSIDER THE ACQUISITION OF THIS SECURITY OR SUCH BENEFICIAL
INTERESTS VOID, OF NO FORCE AND EFFECT AND WILL NOT, AT THE DISCRETION OF
WAMU DELAWARE, OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO WAMU DELAWARE,
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT (THE
iv
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00005
'' TRANSFER AGENT"), OR ANY OTHER INTERMEDIARY. IN ADDITION, WAMU DELA-
WARE OR THE TRANSFER AGENT MAY REQUIRE SUCH ACQUIRER OR BENEFICIAL
OWNER TO SELL THIS SECURITY OR SUCH BENEFICIAL INTERESTS TO AN ELIGIBLE
PURCHASER.
NO SECURITY MAY BE PURCHASED OR TRANSFERRED TO: ( I) AN " EMPLOYEE
BENEFIT PLAN" AS DEFINED IN SECTION 3(
3)
OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), WHETHER OR NOT
SUBJECT TO ERISA AND INCLUDING, WITHOUT LIMITATION, FOREIGN OR GOVERN-
MENTAL PLANS, (
II) A " PLAN" WITHIN THE MEANING OF SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE " CODE"), OR (
III) ANY
ENTITY WHOSE UNDERLYING ASSETS INCLUDE " PLAN ASSETS" OF ANY OF THE
FOREGOING BY REASON OF INVESTMENT BY AN EMPLOYEE BENEFIT PLAN OR
OTHER PLAN IN SUCH ENTITY (EACH OF THE FOREGOING, A " BENEFIT PLAN
INVESTOR"), EXCEPT FOR AN INSURANCE COMPANY GENERAL ACCOUNT THAT
REPRESENTS, WARRANTS AND COVENANTS THAT, AT THE TIME OF ACQUISITION
AND THROUGHOUT THE PERIOD IT HOLDS THE SECURITIES, ( I)
IT IS ELIGIBLE FOR
AND MEETS THE REQUIREMENTS OF THE DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION 95- 60, (
II) LESS THAN 25% OF THE ASSETS OF
SUCH GENERAL ACCOUNT ARE (OR REPRESENT) ASSETS OF A BENEFIT PLAN
INVESTOR AND (
III)
IT IS NOT A PERSON WHO HAS DISCRETIONARY AUTHORITY ORCONTROL WITH RESPECT TO THE ASSETS OF WAMU DELAWARE OR ANY PERSONWHO PROVIDES INVESTMENT ADVICE FOR A FEE (DIRECT OR INDIRECT) WITH
RESPECT TO SUCH ASSETS, OR ANY AFFILIATE OF SUCH A PERSON AND WOULD
NOT OTHERWISE BE EXCLUDED UNDER 29
C.
F.
R.
2510.3- 101 ( F)
(
1).
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OFTHE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (
"DTC"), TO
WAMU DELAWARE OR THE TRANSFER AGENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTERESTHEREIN.
( G)
the purchaser and each account
for
which it is purchasing:
( i) is not a broker- dealer that owns and invests on a discretionary basis less
than $ 25
million in securities of
unaffiliated issuers;
(
ii)
is not a participant- directed employee plan, such as
a 401 ( k)
plan, as
referred
to in paragraph ( a)
( 1)
( i) ( D)
or
( a)
( 1)
( i) ( E)
of
Rule 144A, or
a trust fund referred to
in paragraph ( a)
(1 ) ( i) ( F)
of
Rule 144A that holds the assets of
such a plan;
(
iii) was not formed
for
the purpose of
investing in WaMu Delaware;
(
iv)
will hold at
least $300,000 liquidation preference of
Trust Securities ( i. e.,
at
least three Trust Securities) and transfer at
least $100,000 liquidation preference of
Trust Securities ( i. e.,
at
least one Trust Security) in the case of
each initial investor,
and will hold and transfer at
least $100,000 liquidation preference of
Trust Securities
( i. e.,
at
least one Trust Security) in the case of
each subsequent investor;
( v)
will provide notice of
the transfer restrictions described in this " Notice to
Investors" to any subsequent transferees;
v
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00006
(
vi) acknowledges that WaMu Delaware may receive a
list
of
participants holding
positions in the Trust Securities from one or more book- entry depositaries; and
(vii) may not transfer the Trust Securities or
beneficial interests therein except to
a transferee who can make the same representations and agreements as set forth in
this " Notice to Investors" and Amended and Restated Trust Agreement of WaMu
Delaware (the " Trust Agreement") on behalf of
itself and each account
for
which it is
purchasing.
The purchaser acknowledges that the Trust Securities are being offered only in a
transaction not involving any public offering within the meaning of
the Securities Act. The Trust
Securities have not been and will not be registered under the Securities Act and WaMu Delaware
has not been and will not be
registered under the Investment Company Act, and, if in the future
the purchaser decides to offer, resell, pledge or
otherwise transfer the Trust Securities, such
Trust Securities may be offered, resold, pledged or
otherwise transferred only in accordance with
the legend on such Trust Securities described above. The purchaser acknowledges that no
representation is made by WaMu Delaware, the Company or
the Initial Purchasers as
to the
availability of
any exemption under the Securities Act or
any state securities laws
for
resale of
the Trust Securities.
Forced Sale of
Securities
Any transfer of
Trust Securities in breach of
the transfer restrictions set forth in this "Notice
to Investors" and the Trust Agreement will be
of
no force and effect, will be void ab initio, and
will not operate to transfer any rights to the transferee, notwithstanding any instructions to the
contrary to WaMu Delaware,
its Transfer Agent or
any other intermediary.
The purchaser agrees that in the event that WaMu Delaware or
its Transfer Agent
determines in good faith that a holder or
beneficial owner of
the Trust Securities is in breach, at
the time given, of
any of
the representations or
agreements set forth above, WaMu Delaware
shall consider the acquisition of
the Trust Securities or
beneficial interests therein void, of
no
force and effect and will not, at
the discretion of WaMu Delaware, operate to transfer any rights
to the transferee notwithstanding any instructions to the contrary to WaMu Delaware, the
Transfer Agent or
any other intermediary. In addition, WaMu Delaware or
the Transfer Agent may
require such acquirer or
beneficial owner to transfer such Trust Securities or
beneficial interests
therein to a transferee acceptable to WaMu Delaware who is able to and who does make
all
of
the representations and agreements set forth in this " Notice to Investors". Pending such
transfer, such holder will be deemed not to be the holder of such Trust Securities
for
any
purpose, including but not limited to receipt of
dividend and redemption payments on such Trust
Securities or
distributions upon
the
liquidation of WaMu Delaware, and such holder
will
be
deemed to have no interest whatsoever in such Trust Securities except as
otherwise required to
redeem or
sell
its interest therein as
described in this paragraph.
Investment Company Act
In reliance on Section 3(
c)
( 7)
under the Investment Company Act ("Section 3(
c)
( 7)
"),
WaMu Delaware has not registered as
an investment company pursuant to the Investment
Company Act. To
rely on Section 3(
c)
(7), WaMu Delaware must have a " reasonable belief" that
all purchasers of
the Trust Securities (including the Initial Purchasers and subsequent
transferees) are qualified purchasers at
the time of
their purchase of
such securities. WaMuDelaware will establish a reasonable belief
for
purposes of
Section 3 ( c)
( 7)
based upon the
representations deemed made by
the purchasers of
the securities as
se
t
forth under
"- Representations of
Purchasers", the covenants and undertakings of WaMu Delaware
referred to below and the agreements of
the Initial Purchasers relating to the private placement
of the securities pursuant to Rule 144A referred to under "Plan of
Distribution."
vi
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00007
Reminder Notices
Whenever WaMu Delaware sends an annual report or
other periodic report to holders of
the
Trust Securities, it will also send a reminder notice (each, a "Reminder Notice") to the holders of
the Trust Securities. Each Reminder Notice will state that ( i) each holder of
a Trust Security ( or
an interest in a Trust Security) must be able to make the representations set forth above in
paragraphs ( B)
and ( G)
(
iv) under "- Representations of Purchasers" (the " 3(
c)
( 7)
Representations"), (
ii) the Trust Securities ( or
interests in the Trust Securities) are transferable
only to purchasers deemed to have made the 3 ( c)
( 7)
Representations and to have satisfied the
other transfer restrictions applicable to the securities, (
Hi)
if any prospective transferee of
the
Trust Securities ( or
an interest in the Trust Securities) is determined not to be a qualified
purchaser, then WaMu Delaware will have the right (exercisable in its sole discretion) to refuse
to honor such transaction, and (
iv)
if any security holder ( or
any holder of
an interest in a
security) is determined not to be a qualified purchaser, then WaMu Delaware will have the right
(exercisable in its sole discretion) to treat the transfer to such purchaser as
null and void and
require such purchaser to sell
all
of
its securities (and
all
interests therein) to a transferee
designated by WaMu Delaware at
the then current market price therefor. WaMu Delaware will
send a copy of
each annual or
other periodic reports (and each Reminder Notice) to DTC with a
request that participating organizations in DTC (" DTe Participants") forward them to the security
holders or
holders of
an interest in Trust Securities.
DTC Actions with respect to the Trust Securities
WaMu Delaware will direct DTC to take the following steps in connection with the Trust
Securities:
• to include the " 3cT' marker and, in lieu of
the "GABS" marker or
otherwise, the " GRLS"
marker in the DTC 20-character security descriptor, and the 48-character additional
descriptor
for
the Trust Securities in order to indicate that sales are limited to Qualified
Purchasers;
• to cause ( i) each physical DTC delivery order ticket delivered by DTC to purchasers to
contain the 20-character security descriptors and (
ii) each DTC delivery order ticket
delivered by DTC to purchasers in electronic form to contain the " 3cT' and "GRLS"
indicators and the related user manual
for
participants, which will contain a description of
relevant restrictions;
• to send, on
or
prior to the closing date of
this Offering, an
" Important Notice" to all DTC
Participants in connection with the Offering of
the securities. WaMu Delaware may
instruct DTC from time to time (but not more frequently than every six months) to
reissue the " Important Notice";
• to include WaMu Delaware in DTC's " Reference Directory" of
Section 3(
c)
( 7)
offerings;
• to include in all
" confirms" of
trades of
the Trust Securities in DTC, CUSIP numbers with
a " fixed field" attached to the CUSIP number that has the " 3cT' and "GRLS" markers;
and
• to deliver to WaMu Delaware from time to time a
list
of
all DTC Participants holding an
interest in the securities.
vii
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00008
Euroclear Actions with respect to the Trust Securities
WaMu Delaware will instruct Euroclear Bank S.
A./
N.
V., as
operator of
the Euroclear System
("Euroclear"), to take the following steps in connection with the Trust Securities:
• to reference "144A 13
( c)
(
7)"
as part of
the security name in the
Euroclear securities
database;
• in each daily securities balances report and daily transactions report to Euroclear
participants holding positions in the
Trust Securities, to include "144A 13
( c)
(
7)"
in the
securities namefor
the Trust Securities;
• periodically (and at
least annually) to send to the Euroclear participants holding positions
in the Trust Securities an electronic " Important Notice" outlining
the
restrictions
applicable to 3 ( c)
( 7)
securities;
• to deliver to WaMu Delaware from time to time, upon
its request, a list of
all Euroclear
participants holding an interest in the Trust Securities; and
• to include the 3 ( c)
( 7) marker in the name of
the Trust Securities in lists distributed by
Euroclear monthly to its participants showing
all securities accepted within the Euroclear
securities' database.
Clearstream Actions with respect to the Trust Securities
WaMu Delaware will instruct Clearstream Banking, societe anonyme ("Clearstream") to
take the following steps in connection with the Trust Securities:
• to reference "144A 13
( c)
(7)" as
part of
the security name in the Clearstream securities
database;
• in each daily portfolio report and daily settlement report to Clearstream participants
holding positions in the Trust Securities, to include " 144A/ 3(
c)
(7)" in the securities
name
for
the Trust Securities;
• periodically (and at
least annually) to send to the Clearstream participants holding
positions in the Trust Securities an electronic " Important Notice" outlining the restrictions
applicable to 3 (c ) ( 7)
securities;
• to deliver to WaMu Delaware from time to time, upon
its request, a
list
of
all Clearstream
participants holding an interest in the Trust Securities; and
• to include the 3(
c)
( 7)
marker in the name of
the Trust Securities in the continuously
updated
list
made available by
Clearstream to its participants showing
all
securities
accepted within the Clearstream securities' database and to include the 3 ( c)
( 7)
marker
in the name of
the Trust Securities.
Bloomberg Screens, etc.
WaMu Delaware will from time to time request
all third- party vendors to include on screens
maintained by such vendors appropriate legends regarding Rule 144A and Section 3 ( c)
( 7)
restrictions on the Trust Securities. Without limiting the foregoing, the Initial Purchasers will
request that Bloomberg, L.
P.
include the following on each Bloomberg screen containing
information about the securities as
applicable:
• the bottom of
the " Security Display" page describing the Trust Securities should state:
" Iss'd under 144A/ 3cT' and " GRLS";
viii
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00009
•
the
" Security Display" page should have a flashing red indicator stating " Additional Note
Pg";
• such indicator
for
the Trust Securities should link to an
"Additional Security Information"
page, which should state that the Trust Securities " are being offered in reliance on
the
exception from registration under Rule 144A of
the Securities Act of
1933, as amended
(the "Securities Act") to persons that are ( i) " qualified institutional buyers" as defined in
Rule 144A under
the
Securities Act, and (
ii) "qualified purchasers" as defined under
Section 2 ( a)
(51) of
the Investment Company Act of
1940, as amended";
• the " Disclaimer" pages
for
the Trust Securities should state that the securities " have not
been and will not be
registered under the Securities Act of
1933, as
amended, and
Washington Mutual Preferred Funding Trust I has not been registered under the
Investment Company Act of 1940, as amended (the " Investment Company Act"), and the
Fixed-
to-
Floating Rate Perpetual Non- cumulative Trust S~ curities may not be offered or
sold absent an applicable exemption from registration requirements and any such offer
and sale of
these securities must be
in accordance with Section 3 ( c)
( 7)
of
the
Investment Company Act".
CUSIP
WaMu Delaware will cause each " CUSIP" obtained
for
a Global Security to have an
attached " fixed field" that contains " 3cT', "GRLS" and "144A" indicators.
Legends
WaMu Delaware
will
no
t
remove
the
legend
se
t
forth in "- Representations of
Purchasers"
at
any time.
ix
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00010
SPECIAL NOTE REGARDING FORWARD- LOOKING STATEMENTS
This offering circular and the documents incorporated herein by
reference qontain certain
" forward- looking statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 with respect to financial condition, results of
operations, and other matters. Statements
in this offering circular, including those incorporated herein by reference, that are
no
t
historical
facts are " forward- looking statements" for the purpose of
the safe harbor provided by
Section 21E of
the Exchange Act and Section 27A of
the Securities Act. Forward- looking
statements can be
identified by the fact that they do not relate strictly to historical or
current
facts. They often include words, such as
" expects", "anticipates", " intends", "plans",
"believes", " seeks", "estimates" or
words of
similar meaning, or
future or
conditional verbs,
such as
"will", " should", "could" or
" may".
Forward- looking statements provide WMl's or
WMB's ( as
applicable) expectations or
predictions of
future conditions, events or
results. They are not guarantees of
future
performance. By
their nature forward- looking statements are subject to risks and uncertainties.
These statements speak only as
of
the date they are made. WMI and WMB do
not undertake to
update forward- looking statements to reflect the impact of
circumstances or
events that arise
after the date the forward- looking statements were made. There are a number of
factors, many
of
which are beyond WMl's or
WMB's ( as
applicable) control, that could cause actual
conditions, events or
results to differ significantly from those described in the forward- looking
statements. The factors are generally described in WMI's or
WMB's ( as
applicable) most recent
Form 10-K and Form 10-Q under the caption "Risk Factors."
x
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00011
WHERE YOU CAN FIND MORE INFORMATION
WMI files annual, quarterly and current reports, proxy statements and other information with
the Securities and Exchange Commission (the " SEe"). You may read and copy, any document
that WMI files with the SEC at
the SEC's public reference room in Washington, D.
C.
Please call
the SEC at
1-
800-SEC- 0330
for
further information on the public reference room. In addition,
WMI's SEC filings are available to the public at
the SEC's web site at
http:// www. sec. gov. You
can also inspect reports, proxy statements and other information about WMI at
the offices of
the
New York Stock Exchange, 20 Broad Street, New York, New York.
This offering circular incorporates by reference certain information that WMI files with the
SEC. The information incorporated by reference is considered to be a part of
this offering circular
and should be read with the same care. When WMI updates
the
information contained in
documents that have been incorporated by
reference by making future filings with the SEC, the
information incorporated by
reference in this offering circular is considered to be
automatically
updated and superseded. In other words, in the case of
a conflict or
inconsistency between
information with respect to WMI contained in this offering circular and information incorporated
by
reference into this offering circular, you should rely on the information contained in the
document that was filed later. WMI incorporates by
reference the documents listed below and
any documents it files with the SEC in the future under Sections 13
(
a),
13(
c),
14, or
15
( d)
of
the Exchange Act until the Offering is completed:
• Annual Report on Form 10-K
for
the year ended December 31, 2004;
• Quarterly Reports on Form 10-Q
for
the quarterly periods ended March 31, 2005,
June 30, 2005 and September 30, 2005; and
• Current Reports on Form 8-
K dated January 6,
2005, January 14, 2005, January 20, 2005,
January 24, 2005, February 18, 2005, February 22, 2005, March 2,
2005, March 22, 2005,
March 23, 2005, April 19, 2005, June 7, 2005, June 9, 2005, June 24, 2005, July 6, 2005,
July 20, 2005, July 25, 2005, September 8,
2005, September 23, 2005, September 26,
2005, October 4,2005, October
19
,
2005, October 27,2005, November 2,2005,
December 23, 2005, January 18, 2006, January 23, 2006, February 7,
2006 and
February 21, 2006. The press release text of
WMI dated January 18, 2006 and the
financial supplement of
WMI, included as
Exhibits 99.1 and 99.2 to WMI's Current Report
on Form 8-
K,
dated January 18, 2006, are incorporated by
reference in this offering
circular notwithstanding that such Current Report provides that the press release and
financial statements were " furnished" but not " filed" under the Exchange Act. Please
note that the information included in the January 18, 2006 Current Report on Form 8-
K
has not been audited by
Deloitte & Touche LLP, WMI's independent registered public
accountants.
WMB files annual and quarterly reports and other information with the OTS. You may read
and copy these reports and other non-confidential information that WMB files with the OTS at
the
OTS's offices at 1700 G Street, NW., Washington, D.
C.
20552. In addition, WMB's most recent
periodic filings with the OTS are available to the investors at WMI's website at
http:// www. wamu. com
fir and then clicking the "Fixed Income" button.
This offering circular incorporates by
reference certain information that WMB files with the
OTS. The information incorporated by
reference is considered to be a part of
this offering circular
and should be read with the same care. When WMB updates the information contained in
documents that have been incorporated by
reference by making future filings with the OTS, the
information incorporated by
reference in this offering circular is considered to be
automatically
updated and superseded. In other words, in the case of
a conflict or
inconsistency between
information with respect to WMB contained in this offering circular and information incorporated
by
reference into this offering circular, you should rely on the information contained in the
xi
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00012
document that was filed later. WMB incorporates by
reference the documents listed below and
any documents it files with the OTS in the future under Sections 13
(
a),
13
( c ), 14, or
15( d)
of
the Exchange Act or
regulations of
the OTS to substantially similar effect until the Offering is
completed:
• Annual Report on Form 10-K
for
the year ended December 31, 2004; and
• Quarterly Reports on Form 10-Q
for
the quarterly periods ended March 31, 2005,
June 30, 2005 and September 30, 2005.
This offering circular also incorporates herein by
reference certain other information that
WMB submits to the OTS. WMB submits to the OTS quarterly reports regarding WMB's financial
condition and operations on OTS Form 1313 entitled ' Thrift Financial Report" (each, a "Thrift
Financial Report" and collectively, the "Thrift Financial Reports"). Each Thrift Financial Report
consists of
a Consolidated Statement of
Condition, Consolidated Statement of
Operations,
Consolidated Cash Flow Information, Consolidated Capital Requirements and other supporting
schedules as
of
the end of
the period to which the report relates. The Thrift Financial Reports
are prepared in accordance with regulatory instructions issued by
the OTS. These regulatory
instructions in most, but not all, cases follow generally accepted accounting principles in the
United States (" GAAP") or
the opinions and statements of
the Accounting Principles Board or
the Financial Accounting Standards Board. While the Thrift Financial Reports are supervisory and
regulatory documents, not previously accounting documents, and do not provide a complete
range of
financial disclosure about WMB, the reports nevertheless provide important information
concerning WMB's financial condition and operating results. In addition, WMB's Thrift Financial
Reports are not audited. The non-confidential portions of
Thrift Financial Reports filed by WMB
are on
file with, and are publicly available upon written request to the Office of
Thrift Supervision,
FOIA, 1700 G Street, NW., Washington, D.
C.
20552, Attention: Dissemination Branch and are
also available at
the U.
S.
Federal Deposit Insurance Corporation's (the " FDIC") web site at
http:// www. fdic. gov.
You may request a copy of
these filings, other than an exhibit to a filing unless that exhibit
is specifically incorporated by reference into that filing, at
no cost, by writing to or
telephoning
WMI
at:
1201 Third Avenue
Seattle, Washington 98101
(206) 461- 3187
INDEX OF TERMS
An
index of
terms used in this offering circular with specific meanings appears on the inside
back cover of
this offering circular.
xii
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002048.00013
OFFERING CIRCULAR SUMMARY
The following summary is qualified in its entirety by the detailed information appearing
elsewhere in this offering circular, in particular, the information under the headings "Description of
references to such Successor Entity, to such Fixed
Rate Substitute Preferred Stock, to such Fixed-to-
Floating Rate Substitute
Preferred Stock, to a Successor Depositary Share, respectively. This paragraph
shall apply to any subsequent Business Combination mutatis mutandis.
Acknowledgments and Agreements Relating to Preferred Securities. Each
Preferred Securityholder ( by
purchasing a Preferred Security) and each Owner ( by
purchasing a beneficial interest in a Book- Entry Preferred Security)
( i) acknowledges that
the
offer and sale of
the
Preferred Securities has not been
and will
not
be
registered under
the
U.
S.
Securities Act of
1933, as
amended, (
ii)
acknowledges and agrees that the Company has not been and will not be
registered as
an
" investment company" within the meaning of
the
U.
S.
Investment
Company Act of
1940, as amended, and (
iii) by purchasing Preferred Securities or
interests therein, makes each of
the
representations, warranties and agreements
se
t
forth in the
Offering Circular under. the caption "Notice to Investors" to be made
by
purchasers ( as
provided in the Offering Circular to be
applicable to the
purchasers of
Series A-
I Preferred Securities or
Series A-
2 Preferred Securities,
respectively). The Company covenants and agrees to take each of
the
actions and
steps specified in the
Offering Circular under
the
caption " Notice to Investors" to
be taken by
the Company ( it being understood that
the Company is identified as
" WaMu Cayman" in the
Offering Circular), including, without limitation, those
se
t
forth under
the
sub- captions "- Series A-
I WaMu Cayman Preferred
Securities", "- Reminder Notices," "-DTC Actions with Respect to the WaMu
Cayman Preferred Securities," "-Bloomberg Screens, Etc.," "- CUSIP," and "-
Legends."
NPB/ 616525/ 1600336/ v2
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002065.00023
(
18
REGISTER OF MEMBERS10
The Company shall maintain or
cause to be
maintained the
Register of
Membersin accordance with
the
Statute. For so
long as
the Agency Agreement is in effect,th
e
Securities Registrar shall maintain
the
Register of
Members on
behalf of
the
Company in accordance with such Agreement.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
11 For the purpose of
determining Members entitled to notice
of,
or
to vote at
any
meeting of
Members or
any adjournment thereof, or
Members entitled to receive
payment of
any dividend, or
in order to make a determination of
Members
for
any
other proper purpose, the
Directors may provide that the
Register of
Members
shall be
closed
for
transfers
for
a stated period which shall not in any case exceed
forty days. If the
Register of
Members shall be
closed
for
the purpose of
determining Members entitled to notice
of,
or
to vote
at,
a meeting of
Members
the Register of
Members shall be
closed
for
at
least ten days immediately
preceding
the
meeting.
12
In lieu
of,
or
apart from, closing
the
Register of
Members,
the
Directors may
fix in
advance or
arrears a date as
the record date
for
any such determination of
Members
entitled to notice
of,
or
to vote at
any meeting of
the Members or
any adjournment
thereof, or
for
the
purpose of
determining the
Members entitled to receive payment
of
any dividend or
in order to make a determination of
Members
for
any other
proper purpose (subject to Article 9(
b)
in the
case of
dividends on
Preferred
Securities).
13
If the
Register of
Members is not so
closed and no
record date is fixed
for
the
determination of
Members entitled to notice
of,
or
to vote
at,
a meeting of
Members or
Members entitled to receive payment of
a dividend,
the
date on
which notice of
the
meeting is sent or
the date on which
the
resolution of
the
Directors declaring such dividend is adopted, as
the
case may
be,
shall be
the
record date
for
such determination of
Members. When a determination of
Members entitled to vote at
any meeting of
Members has been made as
provided
in this Article, such determination shall apply to any adjournment thereof
CERTWICATES FOR SHARES
14 A Member shall only be
entitled to a share certificate if the Directors resolve that
share certificates shall be
issued. Share certificates representing Shares, if any,
shall be
in such form as
the
Directors may determine, subject to Article
15.
Share
certificates shall be
signed by
one or
more Directors or
other Person authorised by
the Directors. The Directors may authorise certificates to be
issued with the
authorised signature( s)
affixed by mechanical process. All certificates
for
Shares
shall be
consecutively numbered or
otherwise identified and shall specify the
Shares to which they relate.
All
certificates surrendered to the Company
for
transfer shall be
cancelled and subject to these Articles no new certificate shall be
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19
issued until
the
former certificate representing a like number of
relevant Shares
shall have been surrendered and cancelled.
15 Each share certificate representing Series A-
I Preferred Securities shall bear
the
following legend:
"THIS SECURITY IS ONE OF THE 7.25% PERPETUAL NON-
CUMULATIVE PREFERRED SECURITIES, SERIES A-
I
(" SERIES Al WAMU CAYMAN PREFERRED SECURITIES")
ISSUED BY WASHINGTON MUTUAL PREFERRED
FUNDING (CAYMAN) I LTD. ("WAMU CAYMAN"). THE
ISSUER OF THIS SECURITY HAS NOT BEEN REGISTERED
AS AN INVESTMENT COMPANY UNDER THE U.
S.
INVESTMENT COMPANY ACT OF 1940, AS AMENDED(THE " INVESTMENT COMPANY ACT"), AND THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.
S.
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND NEITHER THIS SECURITY NORANY BENEFICIAL INTERESTS HEREIN MAY B
E OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
TO A PERSON WHO IS BOTH A " QUALIFIED
INSTITUTIONAL BUYER" WITHIN THE MEANING OF
RULE l44A UNDER THE SECURITIES ACT (" QUALIFIED
INSTITUTIONAL BUYER") AND A " QUALIFIED
PURCHASER" WITHIN THE MEANING OF SECTION 2(
a)(
51)
OF THE INVESTMENT COMPANY ACT AND THE RULES
AND REGULATIONS THEREUNDER (" QUALIFIED
PURCHASER") ACQUIRING FOR ITS OWN ACCOUNT ORTHE ACCOUNT O
F A PERSON WHO IS BOTH A QUALIFIED
INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER
(AN "ELIGIBLE PURCHASER") AND EACH SUCH PERSON
AND ACCOUNT FOR WHICH SUCH PERSON IS
PURCHASING ( A)
IS NOT A BROKER- DEALER THAT
OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS
THAN US$ 25 MILLION IN SECURITIES OF
ISSUERS THAT
ARE NOT ITS AFFILIATED PERSONS, ( B)
IS NOT A PLAN
REFERRED TO IN PARAGRAPH (
a)(
I)(
i)(
D)
OR (
a)(
I)(
i)(
E)
OF RULE 144A, OR A TRUST FUND REFERRED TO IN
PARAGRAPH (
a)(
l)(
i)(
F)
OF RULE 144A THAT HOLDS THE
ASSETS OF SUCH A PLAN, IF INVESTMENT DECISIONS
WITH RESPECT TO THE PLAN ARE MADE BY THE
BENEFICIARIES OF SUCH PLAN, ( C)
WAS NOT FORMED
FOR THE PURPOSE OF INVESTING IN WAMU CAYMAN,
( D)
WILL HOLD AND TRANSFER AT LEAST $100,000
LIQUIDATION PREFERENCE OF SERIES A-
I WAMUCAYMAN PREFERRED SECURITIES (i.~., A
T LEAST ONE
WAMU CAYMAN PREFERRED SECURITY), AND ( E)
UNDERSTANDS THAT WAMU CAYMAN MAY RECEIVE A
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LIST OF PARTICIPANTS HOLDING POSITIONS IN THIS
SECURITY FROM ONE OR MORE BOOK-ENTRY
DEPOSITARIES. EACH PURCHASER OF THIS SECURITY
OR ANY BENEFICIAL INTERESTS HEREIN WILL BE
DEEMED TO REPRESENT THAT IT AGREES TO COMPLY
WITH THE TRANSFER RESTRICTIONS SET FORTH HEREIN
AND IN THE MEMORANDUM AND ARTICLES OF
ASSOCIATION OF WAMU CAYMAN (AS AMENDED, THE
"ARTICLES OF ASSOCIATION") AND WILL NOT
TRANSFER THIS SECURITY OR ANY BENEFICIAL
INTERESTS HEREIN EXCEPT TO AN ELIGIBLE
PURCHASER WHO CAN MAKE THE SAME
REPRESENTATIONS AND AGREEMENTS ON BEHALF OF
ITSELF AND EACH ACCOUNT FOR WHICH IT IS
PURCHASING. ANY PURPORTED TRANSFER OF THIS
SECURITY OR ANY BENEFICIAL INTERESTS HEREIN
THAT IS IN BREACH, AT THE TIME MADE, OF ANYTRANSFER RESTRICTIONS SET FORTH HEREIN OR IN
THE ARTICLES OF ASSOCIATION WILL BE VOID AB
INITIO. IF AT ANY TIME WAMU CAYMAN DETERMINES
IN GOOD FAITH THAT A HOLDER OR BENEFICIAL
OWNER OF THIS SECURITY OR BENEFICIAL INTERESTS
HEREIN IS IN BREACH, AT THE TIME GIVEN, OF ANY OF
THE TRANSFER RESTRICTIONS SET FORTH HEREIN,
WAMU CAYMAN SHALL CONSIDER THE ACQUISITION
OF THIS SECURITY OR SUCH BENEFICIAL INTERESTS
VOID, OF NO FORCE AND EFFECT AND WILL NOT, AT
THE DISCRETION OF WAMU CAYMAN, OPERATE TO
TRANSFER ANY RIGHTS TO THE TRANSFEREE
NOTWITHSTANDING ANY INSTRUCTIONS TO THE
CONTRARY TO WAMU CAYMAN, ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT
(THE "TRANSFER AGENT"), OR ANY OTHER
INTERMEDIARY. IN ADDITION, WAMU CAYMAN OR ITS
TRANSFER AGENT MAY REQUIRE SUCH ACQUIRER ORBENEFICIAL OWNER TO SELL THIS SECURITY OR SUCH
BENEFICIAL INTERESTS TO AN ELIGIBLE PURCHASER.
NO SECURITY MAY BE PURCHASED OR TRANSFERRED
TO: ( 1) AN " EMPLOYEE BENEFIT PLAN" AS DEFINED IN
SECTION 3(
3)
OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF
1974, AS AMENDED ("ERISA"),
WHETHER OR NOT SUBJECT TO ERISA AND INCLUDING,
WITHOUT LIMITATION, FOREIGN OR GOVERNMENTAL
PLANS, (
II) A "PLAN" WITHIN THE MEANING OF SECTION
4975 OF THE INTERNAL REVENUE CODE OF
1986, AS
AMENDED (THE "CODE"), OR (
III) ANY ENTITY WHOSE
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'..
(
21
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" OF ANY
OF THE FOREGOING BY REASON OF INVESTMENT BY AN
EMPLOYEE BENEFIT PLAN OR OTHER PLAN IN SUCHENTITY (EACH OF THE FOREGOING, A " BENEFIT PLANINVESTOR"), EXCEPT FOR AN INSURANCE COMPANYGENERAL ACCOUNT THAT REPRESENTS, WARRANTSAND COVENANTS THAT, AT THE TIME O
F ACQUISITION
AND THROUGHOUT THE PERIOD IT HOLDS THESECURITIES, ( 1
)
IT IS ELIGIBLE FOR AND MEETS THEREQUIREMENTS O
F THE DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60,
( II) LESS THAN 25% OF
THE ASSETS OF
SUCH GENERALACCOUNT ARE (OR REPRESENT) ASSETS O
F A BENEFIT
PLAN INVESTOR AND (III) IT IS NOT A PERSON WHO HASDISCRETIONARY AUTHORITY OR CONTROL WITHRESPECT TO THE ASSETS O
F WAMU CAYMAN OR ANY
PERSON WHO PROVIDES INVESTMENT ADVICE FOR AFEE (DIRECT OR INDIRECT) WITH RESPECT TO SUCHASSETS, OR ANY AFFILIATE OF SUCH A PERSON ANDWOULD NOT OTHREWISE BE EXCLUDED UNDER 2
9
C.
F.
R.
2510.3- 101( F)(
1).
UNLESS THIS SECURITY IS PRESENTED BY ANAUTHORIZED REPRESENTATIVE O
F THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (" DTC"),
TO WAMU CAYMAN OR THE TRANSFER AGENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAMEOF CEDE & CO. OR IN SUCH OTHER NAME AS ISREQUESTED BY AN AUTHORIZED REPRESENTATIVE OFDTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS
IS REQUESTED BY ANAUTHORIZED REPRESENTATIVE OF DTC), ANYTRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH. AS .THE REGISTERED OWNERHEREOF, CEDE & CO., HAS AN INTEREST HEREIN."
Each share certificate evidencing Series A-
2 Preferred Securities shall bear the
following legend:
"THIS SECURITY IS ONE OF THE 7.25% PERPETUAL NON-
CUMULATIVE PREFERRED SECURITIES, SERIES A-
2
(" SERIES A-
2 WAMU CAYMAN PREFERRED SECURITIES")
ISSUED BY WASHINGTON MUTUAL PREFERREDFUNDING (CAYMAN) I LTD. (
" WAMU CAYMAN"). THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.
S.
SECURITIES ACT OF
1933, AS AMENDED (THE
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22
" SECURITIES ACT"), AND NEITHER THIS SECURITY NORANY BENEFICIAL INTERESTS HEREIN MAYBE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
( 1)
IN AN OFFSHORE TRANSACTION MEETING THEREQUIREMENTS O
F
REGULATION S UNDER THESECURITIES ACT TO A PERSON OTHER THAN A U
.S
.
PERSON, OR ( 2)
IN RELIANCE UPON RULE 144A UNDERTHE SECURITIES ACT IN A TRANSACTION INVOLVING
AN EXCHANGE OF THIS SECURITY FOR A LIKE AMOUNT
OF 7.25% PERPETUAL NON- CUMULATIVE PREFERRED
SECURITIES, SERIES A-
I,
OF WAMU CAYMAN, WHICH IS
ALSO THE ISSUER OF
THIS SECURITY, BUT ONLY UPONRECEIPT BY WAMU CAYMAN'S TRANSFER AGENT O
F
AWRITTEN CERTIFICATE ON BEHALF OF THETRANSFEROR TO THE EFFECT THAT SUCH TRANSFER IS
BEING MADE TO A PERSON WHO THE TRANSFERORREASONABLY BELIEVES IS BOTH A "QUALIFIED
INSTITUTIONAL BUYER" WITHIN THE MEANING OFRULE 144A UNDER THE SECURITIES ACT (
" QUALIFIED
INSTITUTIONAL BUYER") AND A " QUALIFIED
PURCHASER" WITHIN THE MEANING OF
SECTION 2(
a)(
51)
OF
THE U.
S.
INVESTMENT COMPANY ACT OF
1940, AS
AMENDED (" QUALIFIED PURCHASER"), ACQUIRING FOR
ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER WHO IS ALSO A QUALIFIED
PURCHASER (AN " ELIGIBLE PURCHASER") IN ATRANSACTION MEETING THE REQUIREMENTS OF RULE144A UNDER THE SECURITIES ACT AND INACCORDANCE WITH ALL APPLICABLE LAWS OF THESTATES O
F THE UNITED STATES AND OTHER
JURISDICTIONS. EACH PURCHASER OF THIS SECURITY
OR ANY BENEFICIAL INTERESTS HEREIN WILL BE
DEEMED TO REPRESENT THAT IT AGREES TO COMPLYWITH THE TRANSFER RESTRICTIONS SET FORTH HEREIN
AND IN THE MEMORANDUM AND ARTICLES OFASSOCIATION OF WAMU CAYMAN (AS AMENDED, THE" ARTICLES O
F
ASSOCIATION"), AND WILL NOT
TRANSFER THIS SECURITY OR ANY BENEFICIAL
INTERESTS HEREIN EXCEPT TO A PURCHASER WHO CAN
MAKE THE SAME REPRESENTATIONS ANDAGREEMENTS ON BEHALF O
F
ITSELF AND EACHACCOUNT FOR WHICH IT IS PURCHASING. ANYPURPORTED TRANSFER OF THIS SECURITY OR ANYBENEFICIAL INTERESTS HEREIN THAT IS IN BREACH, ATTHE TIME MADE, OF ANY TRANSFER RESTRICTIONS SET
FORTH HEREIN OR IN THE ARTICLES OF ASSOCIATION
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23
WILL BE VOID AB INITIO. IF AT ANY TlME WAMU
CAYMAN DETERMINES IN GOOD FAITH THAT A HOLDEROR BENEFICIAL OWNER OF THIS SECURITY ORBENEFICIAL INTERESTS HEREIN IS IN BREACH, AT THETlME GIVEN, OF ANY OF THE TRANSFER RESTRICTIONS
SET FORTH HEREIN, WAMU CAYMAN SHALL CONSIDER
THE ACQUISITION OF
THIS SECURITY OR SUCHBENEFICIAL INTERESTS VOID, O
F NO FORCE ANDEFFECT AND WILL NOT, AT THE DISCRETION OF WAMUCAYMAN, OPERATE TO TRANSFER ANY RIGHTS TO THETRANSFEREE NOTWITHSTANDING ANY INSTRUCTIONS
TO THE CONTRARY TO WAMU CAYMAN, ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT
(THE "TRANSFER AGENT"), OR ANY . OTHERINTERMEDIARY. IN ADDITION, WAMU CAYMAN OR ITS
TRANSFER AGENT MAY REQUIRE SUCH ACQUIRER ORBENEFICIAL OWNER TO SELL THIS SECURITY OR SUCHBENEFICIAL INTERESTS TO AN ELIGIBLE PURCHASER.
NO SECURITY MAY BE PURCHASED OR TRANSFERREDTO: ( I) AN "EMPLOYEE BENEFIT PLAN" AS DEFINED IN
SECTION 3(
3)
OF THE EMPLOYEE RETIREMENT INCOMESECURITY ACT O
F
1974, AS AMENDED (" ERISA"),
WHETHER OR NOT SUBJECT TO ERISA AND INCLUDING,
WITHOUT LlMITATION, FOREIGN OR GOVERNMENTAL
PLANS, ( II) A "PLAN" WITHIN THE MEANING OF SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, ASAMENDED (THE " CODE"), OR (III) ANY ENTITY WHOSEUNDERLYING ASSETS INCLUDE "PLAN ASSETS" OF ANY
OF THE FOREGOING BY REASON OF INVESTMENT BY AN
EMPLOYEE BENEFIT PLAN OR OTHER PLAN IN SUCHENTITY (EACH O
F
THE FOREGOING, A " BENEFIT PLANINVESTOR"), EXCEPT FOR AN INSURANCE COMPANYGENERAL ACCOUNT THAT REPRESENTS, WARRANTSAND COVENANTS THAT, AT THE TIME OF ACQUISITION
AND THROUGHOUT THE PERIOD IT HOLDS THESECURITIES, ( I) IT IS ELIGIBLE FOR AND MEETS THEREQUIREMENTS O
F
THE DEPARTMENT OF
LABORPROHIBITED TRANSACTION CLASS EXEMPTION 9
5-
60,
( II) LESS THAN 25% OF THE ASSETS OF SUCH GENERAL
ACCOUNT ARE (OR REPRESENT) ASSETS OF A BENEFIT
PLAN INVESTOR AND (III) IT IS NOT A PERSON WHO HASDISCRETIONARY AUTHORITY OR CONTROL WITHRESPECT T
O THE ASSETS OF WAMU CAYMAN OR ANY
PERSON WHO PROVIDES INVESTMENT ADVICE FOR AFEE (DIRECT OR INDIRECT) WITH RESPECT TO SUCHASSETS, OR ANY AFFILIATE OR SUCH PERSON AND
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-' -
24
WOULD NOT OTHERWISE BE EXCLUDED UNDER
29
C.
F.
R.
25IO. 3-
IOI( F)(
1).
" UNLESS THIS SECURITY IS PRESENTED BY ANAUTHORIZED REPRESENTATIVE O
F THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (" DTC"),
TO WAMU CAYMAN OR THE TRANSFER AGENT, ANDANY CERTIFICATE ISSUED IS REGISTERED IN THE NAMEOF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OFDTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS
IS REQUESTED BY ANAUTHORIZED REPRESENTATIVE OF DTC), ANYTRANSFER, PLEDGE, OR OTHER USE HEREOF FORVALUE OR OTHERWISE BY OR T
O ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE &CO., HAS AN INTEREST HEREIN."
Notwithstanding any other provision of
these Articles:
( h)
The Series A-
I Preferred Securities will initially be
represented by
one or
more Share certificates in registered, global form, including
the
legend
set
forth above
for
Share certificates evidencing Series
A-
I Preferred Securities and any legend required by
a Clearing
Agency (a " Rule 144A Global Security"), and
the
Series A-
2
Preferred Securities initially will be
represented by
one or
more
Share certificates in registered, global form including the
legend
set
forth above and any other legends required by
any applicable
Clearing Agency ( the
" Regulation S Global Security" and, together
with
the
Rule I44A Global Security,
the
"Global Securities").
Each Global Security shall be a Book- Entry Preferred Security.
( i) On
the
Issue Date,
the
Company will cause
the
Global Securities to
be deposited with
the
Securities Registrar as custodian
for
DTC in
New York, New York, and registered in the name of
DTC or
a
nominee designated by DTC.
( j) Share certificates that are not Global Securities will be
issued only
in the circumstances described in the
Offering Circular under the
caption " Book- Entry Issuance- Special Circumstances When
Global Security Will Be
Terminated."
16 The Company shall
no
t
be bound to issue more than one certificate
for
Shares
held jointly by
more than one Person and delivery of
a certificate to one joint
holder shall be
a sufficient delivery to all
of
them.
17
If a share certificate is defaced, worn out, lost or
destroyed, it may be
renewed on
such terms ( if any) as
to evidence and indemnity and on
the
payment of
such
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25
expenses reasonably incurred by
the Company in investigating evidence, as
the
Directors may prescribe, and ( in the
case of
defacement or
wearing out) upon
delivery of
the
old certificate.
TRANSFER OF SHARES
18
Shares
are transferable subject to the
consent of
the
Directors who may, in their
absolute discretion, decline to register any transfer of
Shares without giving any
reason. If the Directors refuse to register a transfer they shall notify
the
transferee
within two months of
such refusal provided, however, that
( i) notwithstanding
the
foregoing, if for
so
long as
any Preferred Securities
are outstanding, Ordinary Shares may not be
issued or
transferred to or
registered in the
name of
any Person other than
the
trustee of
the Cayman
Trust; and
(
ii) unless and until the circumstances described in the
Offering Circular under
the
caption " Book- Entry Issuance - Special Situations when Global
Security Will Be
Terminated" apply (and, as
a consequence
the
Preferred
Securities are no
longer represented by
Global Securities), Preferred
Securities may not be
recorded on
the
Register of
Members as
owned of
record by
any Person other than
the
Clearing Agency or
its nominee
(initially Cede & Co. as nominee
for
DTC).
19 Notwithstanding any other provision of
these Articles, if any Preferred Securities
are
held by
a Clearing Agency or
its nominee (initially Cede & Co. as
nominee
for
DTC) and a Relevant Event occurs, such Preferred Securities shall, upon notification
of
the
Company or
its
agent by
the
Registrar of
the
identity of
the
Accountholders
and the
number of
Preferred Securities in which they are respectively beneficially
interested as
at
the occurrence of
such Relevant Event, be
automatically transferred
to such Accountholders in the
appropriate amounts and
the
Registrar, failing whom
the Company or
such other person as
the
Directors may designate, shall forthwith
make
the
relevant entries in the
Register and shall, if the Directors deem appropriate,
issue share certificates in respect of
such transfer.
The instrument of
transfer of
any Share shall be
in writing and shall be
executed
by
or
on
behalf of
the . transferor (and if the
Directors
so
.
require, signed by
the
transferee); provided, however, that no such instrument shall be
necessary to
effect a Conditional Exchange in accordance with Article 9(
f).
The transferor
shall be deemed to remain
the
holder of
a Share until
the name of
the transferee is
entered in the
Register of
Members.
REDEMPTION AND REPURCHASE OF SHARES
20 The Ordinary Shares shall not be
redeemable. The Preferred Securities shall be
redeemable only as
provided in Article 9(
c).
21
Subject to the
provisions of
the
Statute,
the Company may purchase
its own
Shares (including any redeemable Shares) provided that the Members shall have
approved
the
manner of
purchase by Ordinary Resolution.
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26
The Company may make a payment in respect of
the redemption or
purchase of
its own Shares in any manner permitted by
the
Statute, including
ou
t
of
capital.
VARIATION OF RlGHTS OF SHARES
23 Subject to Article 9(
e)
with respect to the
Preferred Securities, if at
any time
the
share capital of
the Company is divided into different classes of
Shares,
the
rights
. attached to any class (unless otherwise provided by
the terms of
issue of
the
Shares of
that class) may, whether or
not
the Company is being wound-
up,
be
varied with the consent in writing of
the holders of
two- thirds of
the
issued Shares
of
that class, or
with the sanction of
a Special Resolution passed at
a general
meeting of
the holders of
the
Shares of
that class.
24 The provisions of
these Articles relating to general meetings shall apply to every
class meeting of
the
holders of
one class of
Shares except that
the
necessary
quorum shall be
one Person holding or
representing by
proxy at
least one- third of
the
issued Shares of
the
class and that any holder of
Shares of
the
class present in
Person or
by
proxy may demand a poll.
COMMISSION ON SALE OF
SHARES
25 The Company may, in so
far
as
the
Statute permits, pay a commission to any
Person in consideration of
his subscribing or
agreeing to subscribe whether
absolutely or
conditionally
for
any Shares of
the
Company. Such commissions
may be satisfied by
the
payment of
cash and/ or
the
issue of
fully or
partly paid- up
Shares. The Company may also on any issue of
Shares pay such brokerage as
may be
lawful.
NON- RECOGNITION OF TRUSTS
26 The Company shall not be bound by
or
compelled to recognise in any way (even
when notified) any equitable, contingent, future or
partial interest in any Share, or
(except only as
is otherwise provided by
these Articles or
the
Statute) any other
rights in respect of
any Share other than an absolute right to the
entirety thereof in
the
registered holder.
LIEN ON SHARES
27
The Company shall have a first and paramount lien on
all
Shares (whether fully
paid- up
or
not) registered in the
name of
a Member (whether solely or
jointly with
others)
for
all
debts, liabilities or
engagements to or
with the Company (whether
presently payable or
not) by
such Member or
his
estate, either alone or
jointly
with any other Person, whether a Member or
not, but
the
Directors may at
any
time declare any Share to be wholly or
in part exempt from
the
provisions of
this
Article. The registration of
a transfer of
any such Share shall operate as
a waiver
of
the
Company's lien thereon. The Company's lien on a Share shall also extend
to any amount payable in respect of
that Share.
28 The Company may sell, in such manner as
the
Directors think
fit, any Shares on
which
the Company has a lien, if a sum in respect of
which the lien exists is
presently payable, and is no
t
paid within fourteen clear days after notice
has
been
given to the
holder of
the
Shares, or
to the
Person entitled to it in consequence of
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27
the
death or
bankruptcy of
the
holder, demanding payment and stating that if the
notice is not complied with
the
Shares may be
sold.
To give effect to any such sale
the
Directors may authorise any Person to executean
instrument of
transfer of
the
Shares sold
to,
or
in accordance with
the
directions
of,
the
purchaser. The purchaser or
his nominee shall be
registered as
the
holder of
the
Shares comprised in any such transfer, and he
shall not be bound
to see to the
application of
the
purchase money, nor shall
his
title to the
Shares be
affected by
any irregularity or
invalidity in the
sale or
the
exercise of
the
Company's power of
sale under these Articles.
The
ne
t
proceeds of
such sale after payment of
costs, shall be applied in payment
of
such part of
the
amount in respect of
which
the
lien exists as
is presently
payable and any residue shall (subject to a like lien for
sums no
t
presently payable
as
existed upon the Shares before
the
sale) be
paid to the
Person entitled to the
Shares at
the
date of
the sale.
CALL ON SHARES
31
Subject to the
terms of
the
allotment the
Directors may from time to time make
calls upon the Members in respect of
any monies unpaid on
their Shares (whether
in respect of
par value or
premium), and each Member shall (subject to receiving
at
least fourteen days' notice specifying
the
time or
times of
payment) pay to the
Company at
the time or
times so
specified
the
amount called on
the
Shares. Acall may b
e
revoked or
postponed as
the
Directors may determine. A call may be
required to be
paid by
instalments. A Person upon whom a call is made shall
remain liable for
calls made upon him notwithstanding the
subsequent transfer of
the
Shares in respect of
which
the
call was made.
32 A call shall be deemed to have been made at
the
time when the resolution of
the
Directors authorising such call was passed.
33 The joint holders of
a Share shall be jointly and severally liable to pay
all calls in
respect thereof
34
If a call remains unpaid after it has become due and payable,
the
Person from
whom it is due shall pay interest on
the amount unpaid from
the
day it became
due and payable until it is paid at
such rate as
the
Directors may determine,
but
the
Directors may waive payment of
the interest wholly or
in part.
35
An
amount payable in respect of
a Share on
allotment or
at
any fixed date,
whether on
account of
the
par value of
the
Share or
premium or
otherwise, shall
be deemed to be a call and if it is no
t
paid
all
the
provisions of
these Articles shall
apply as
if that amount had become due and payable by
virtue
ofa call.
36 The Directors may issue Shares with different terms as
to the
amount and times of
payment of
calls, or
the
interest to be
paid.
37 The Directors may, if they think
fit, receive an amount from any Member willing
to advance
all
or
any part of
the
monies uncalled and unpaid upon any Shares held
by him, and may (until
the
amount would otherwise become payable) pay interest
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at
such rate as
may be
agreed upon between the
Directors and the
Member paying
such amount in advance.
No
such amount paid in advance of
calls shall entitle the Member paying such
amount to any portion of
a Dividend declared in respect of
any period prior to the
date upon which such amount would, but
for
such payment, become payable.
FORFEITURE OF SHARES
41
(
39
If a call remains unpaid after it has become due and payable
the
Directors may
give to the
Person from whom it is due not less than fourteen clear days' notice
requiring payment of
the
amount unpaid together with any interest, which may
have accrued. The notice shall specify where payment is to be made and shall
state that if the
notice is not
complied with
the
Shares In respect of
which
the
call
was made will be
liable to be
forfeited.
40
If
the
notice is no
t
complied with any Share in respect of
which it was given !Jlay,
before the
payment required by
the
notice has
been made, be
forfeited by
a
resolution of
the Directors. Such forfeiture shall include
all
dividends or
other
monies declared payable in respect of
the
forfeited Share and not paid before the
forfeiture.
A forfeited Share may be
sold,
re-
allotted or
otherwise disposed of
on
such terms
and in such manner as
the
Directors think
fit and at
any time before a sale,
re-
allotment or
disposition
the
forfeiture may be
cancelled on
such terms as
the
Directors think
fit. Where
for
the
purposes of
its disposal a forfeited Share is to
be
transferred to any Person
the
Directors may authorise some Person to execute
an
instrument of
transfer of
the
Share in favour of
that Person.
42 A Person any of
whose Shares have been forfeited shall cease to be
a Member in
respect of
them and shall surrender to the Company
for
cancellation the certificate
for
the
Shares forfeited and shall remain liable to pay to the Company
all monies
which at
the
date of
forfeiture were payable by
him to the Company in respect of
those Shares together with interest, but
his liability shall cease if and when
the
Company shall have received payment in fu
ll
of
all
monies due
and payable by
him in respect of
those Shares.
43 A certificate in writing under the hand of
one Director or
officer of
the Company
that a Share has been forfeited on a specified date shall be
conclusive evidence of
the
fact as
against
all
Persons claiming to be
entitled to the
Share. The certificate
shall (subject to the
execution of
an
instrument of
transfer) constitute a good title
to the
Share and
the
Person to whom
the
Share is disposed of
shall
no
t
be bound
to see
to the
application of
the
purchase money, if any, no
r
shall his
title to the
Share be
affected by
any irregularity or
invalidity in the
proceedings in reference
to the
forfeiture, sale or
disposal of
the
Share.
44 The provisions of
these Articles as
to forfeiture shall apply in the
case of
non- payment of
any sum which, by
the
terms of
issue of
a Share, becomes
payable at
a fixed time, whether on
account of
the
par value of
the Share or
by
way of
premium as
if it had been payable by
virtue of
a
ca
ll
duly made and
notified.
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( TRANSMISSION OF SHARES45
48
46
47
If a Member dies
the
survivor or
survivors where he was a joint holder, and
his
legal personal representatives where he was a sole holder, shall be
the
only
Persons recognised by
the Company as
having any title to his
interest. The estate
of
a deceased Member is not thereby released from any liability in respect of
any
Share, which had been jointly held by
him.
Any Person becoming entitled to a Share in consequence of
the
death or
bankruptcy or
liquidation or
dissolution of
a Member ( or
in any other way than by
transfer) may, upon such evidence being produced as may from time to time be
required by
the
Directors, elect either to become
the
holder ofthe Share or
to have
some Person nominated by
him as
the
transferee. If he
elects to become the
holder he
shall give notice to the
Company to that effect, bu
t
the
Directors shall,
in either case, have
the
same right to decline or
suspend registration as
they would
have had in the
case of
a transfer of
the Share by
that Member before
his death or
bankruptcy, as
the
case may
be.
If the
Person so becoming entitled shall elect to be
registered himself as
holder he
shall deliver or
send to the Company a notice in writing signed by
him stating that
he
so
elects.
A Person becoming entitled to a Share by reason of
the
death or
bankruptcy or
liquidation or
dissolution of
the
holder ( or
in any other case than by
transfer) shall
be
entitled to the
same dividends and other advantages to which he would be
entitled if he were
the
registered holder of
the
Share. However, he
shall not,
before being registered as
a Member in respect of
the
Share, be
entitled in respect
of
it to exercise any right conferred by
membership in relation to meetings of
the
Company and
the
Directors may at
any time give notice requiring any such
Person to elect either to be registered himself or
to transfer
the
Share. If
the
notice
is not complied with within ninety days
the
Directors may thereafter withhold
payment of
all
dividends, bonuses or
other monies payable in respect of
the
Share
until
the
requirements of
the
notice have been complied with.
AMENDMENTS OF MEMORANDUM AND ARTICLES OF ASSOCIATION ANDALTERATION OF CAPITAL
49
Subject to the
provisions of
the
Statute and
the
provisions of
these Articles as
regards
the
matters to be
dealt with by
Ordinary Resolution, and subject to Article
9(
e),
the Company may by Special Resolution:
49.1 change its name;
49.2 alter or
add to these Articles;
49.3 alter or
add to the Memorandum with respect to any objects, powers or
other matters specified therein; and
49.4 reduce
its share capital and any capital redemption reserve fund.
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30
REGISTERED OFFICE50
Subject to the provisions of
the
Statute, the Company may by
resolution of
the
Directors change the location of
its Registered Office.
GENERAL MEETINGS
51
All
general meetings other than annual general meetings shall be called
extraordinary general meetings.
52 The Company shall, if required by
the
Statute, in each year hold a general meeting
as
its armual general meeting, and shall specify
the
meeting as
such in the notices
calling
it. The annual general meeting shall be
held at
such time and place as
the
Directors shall appoint and if no
other time and place is prescribed by
them, it
shall be
held at
the
Registered Office on
the
second Wednesday in December of
each year at
ten
o'clock in the
morning. At
these meetings
the
report of
the
Directors ( if any) shall be presented.
53 The Company may hold an
annual general meeting,
but
shall
not
(unless required
by
Statute) be
obliged to hold an
armual general meeting.
54 The Directors may call general meetings, and they shall on
a Members'
requisition forthwith proceed to convene an
extraordinary general meeting of
the
Company.
55 A Members' requisition is a requisition of
Members of
the Company holding at
the
date of
deposit of
the
requisition not less than
ten
per cent. in par value of
the
capital of
the Company which as
at
that date carries
the
right of
voting at
general
meetings of
the
Company.
56 The requisition must state the objects of
the
meeting and must be
signed by
the
requisitionists and deposited at
the
Registered Office, and may consist of
several
documents in like form each signed by
one or
more requisitionists.
57
If the
Directors do
not within twenty- one days from the date of
the
deposit of
the
requisition duly proceed to convene a general meeting to be
held within a further
twenty- one days,
the
requisitionists, or
any of
them representing more than one-
half of
the
total voting rights of
all
of
them, may themselves convene a general
meeting, but any meeting so convened shall not be
held after
the
expiration of
three months after
the
expiration of
the
said twenty- one days.
58 A general meeting convened as
aforesaid by
requisitionists shall be
convened in
the
same manner as
nearly as
possible as
that in which general meetings are to be
convened by
Directors.
NOTICE OF GENERAL MEETINGS
59
At
least five days' notice shall be given of
any general meeting. Every notice
shall be
exclusive of
the
day on which it is given or
deemed to be
given and of
the
day
for
which it is given and shall specify
the
place,
the
day and
the
hour of
the
meeting and
the
general nature of
the
business and shall be
given in marmer
hereinafter mentioned or
in such other manner if any as may be
prescribed by
the
Company, provided that a general meeting of
the Company shall, whether or
not
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31
the
notice specified in this regulation has been given and whether or
not
the
provisions of
the
Articles regarding general meetings have been complied with, be
deemed to have been duly convened if it is so
agreed:
59.1 in the case of
an
annual general meeting, by
all
the Members ( or
their
proxies) entitled to attend and vote thereat; and
59.2 in the case of
an
extraordinary general meeting, by
a majority in number
of
the Members ( or
their proxies) having a right to attend and vote at
the
meeting, being a majority together holding
no
t
less than ninety- five
pe
r
cent. in par value of
the Shares giving that right.
The accidental omission to give notice of
a general meeting
to,
or
the
non- receipt
of
notice of
a meeting
by,
any Person entitled to receive notice shall not invalidate
the
proceedings of
that meeting.
PROCEEDINGS AT GENERAL MEETINGS
61
No
business shall be
transacted at
any general meeting unless a quorum is present.
Two Members being individuals present in Person or
by
proxy or
if a corporation
or
other non- natural Person by
its duly authorised representative shall be a
quorum unless
the Company
has
only one Member entitled to vote at
such general
meeting in which case
the
quorum shall be
that one Member present in Person or
by
proxy or
( in the
case of
a corporation or
other non- natural Person) by
a duly
authorised representative.
62 A Person may participate at
a general meeting by
conference telephone or
other
communications equipment by
means of
which
all
the
Persons participating in the
meeting can communicate with each other. Participation by
a Person in a general
meeting in this manner is treated as presence in Person at
that meeting.
63 A resolution (including a Special Resolution) in writing ( in one or
more
counterparts) signed by
all Members
for
the
time being entitled to receive notice
of
and to attend and vote at
general meetings (
or,
being corporations, signed by
their duly authorised representatives) shall be
as
valid and effective as
if the
resolution had been passed at
a general meeting of
the
Company duly convened
and held.
64
If a quorum is not present within half an hour from the time appointed
for
the
meeting or
if during such a meeting a quorum ceases to be present,
the
meeting, if
convened upon the
requisition of
Members, shall be
dissolved and in any other
case it shall stand adjourned to the
same day in the
next week at
the
same time
and place or
to such other day, time or
such other place as
the
Directors may
determine, and if at
the
adjourned meeting a quorum is no
t
present within half an
hour from
the
time appointed
for
the
meeting
the Members present shall be
a
quorum.
65 The chairman, if any, of
the
board of
Directors shall preside as chairman at
every
general meeting of
the
Company, or
if there is no
such chairman, or
ifhe shall not
be
present within fifteen minutes after
the
time appointed
for
the holding of
the
meeting, or
is unwilling to act, the Directors present shall elect one of
their
number to be chairman of
the
meeting.
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66
67
68
69
32
If no
Director is willing to act
as
chairman or
if no
Director is present within
fifteen minutes after the time appointed
for
holding
the
meeting,
the Members
present shall choose one of
their number to be chairman of
the
meeting.
The chairman may, with
the
consent of
a meeting at
which a quorum is present,
(and shall if so
directed by
the
meeting), adjourn
the
meeting from time to time
and from place to place,
but
no
business shall be
transacted at
any adjourned
meeting other than
the
business left unfinished at
the
meeting from which
the
adjournment took place. When a general meeting is adjourned
for
thirty days or
more, notice of
the
adjourned meeting shall be
given as
in the
case of
an
original
meeting. Otherwise it shall not be
necessary to give any such notice.
A resolution
pu
t
to the
vote of
the
meeting shall be decided on a show of
hands
unless before, or
on
the
declaration of
the
result of,
the
show of
hands, the
chairman demands a poll, or
any other Member or
Members collectively present
in Person or
by
proxy and holding at
least
ten
per cent. in par value of
the
Shares
giving a right to attend and vote at
the
meeting demand a poll.
Unless a poll is duly demanded a declaration by
the
chairman that a resolution has
been carried or
carried unanimously, or
by
a particular majority, or
lost or
not
carried by
a particular majority, an
entry to that effect in the minutes of
the
proceedings of
the
meeting shall be conclusive evidence of
that fact without proof
of
the
number or
proportion of
the
votes recorded in favour of
or
against such
resolution.
70 The demand
for
a poll may be
withdrawn.
71
Except on
a poll demanded on
the
election of
a chairman or
on
a question of
adjournment, a poll shall be
taken as
the
chairman directs, and the
result of
the
poll shall be deemed to be
the
resolution of
the general meeting at
which
the
poll
was demanded.
72 A poll demanded on
the
election of
a chairman or
on a question of
adjournment
shall be
taken forthwith. A poll demanded on
any other question shall be
taken at
such time as
the
chairman of
the
general meeting directs, and any business other
than that upon which a poll has been demanded or
is contingent thereon may
proceed pending
the
taking of
the poll.
73
In the
case of
an
equality of
votes, whether on
a show of
hands or
on
a poll, the
chairman shall be
entitled to a second or
casting vote.
VOTES OF MEMBERS
74 Subject to any rights or
restrictions attached to any Shares, on a show of
hands
every Member who (being an
individual) is present in Person or
by
proxy or,
if a
corporation or
other non- natural Person is present by
its duly authorised
representative or
proxy, shall have one vote and on a poll every Member shall
have one vote
for
every Share of
which he
is the
holder.
75
In the
case of
joint holders of
record
the
vote of
the
senior holder who tenders a
vote, whether in Person or
by proxy, shall be accepted to the
exclusion of
the
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76
77
79
78
votes of
the
other joint holders, and seniority shall be determined by
the
order in
which
the
names of
the
holders stand in the
Register of
Members.
A Member of
unsound mind, or
in respect of
whom an
order has been made by
any court, having jurisdiction in lunacy, may vote, whether on a show of
hands or
on a poll, by
his committee, receiver, curator bonis, or
other Person on
such
Member's behalf appointed by
that court, and any such committee, receiver,
curator bonis or
other Person may vote by
proxy.
No
Person shall be
entitled to vote at
any general meeting or
at
any separate
meeting of
the holders of
a class of
Shares unless he
is registered as a Member on
the record date
for
such meeting and
all
calls or
other monies then payable by
him
in respect of
Shares have been paid.
No
objection shall be
raised to the qualification of
any voter except at
the
general
meeting or
adjourned general meeting at
which
the
vote objected to is given or
tendered and every vote not disallowed at
the
meeting shall be
valid. Any
objection made in due time shall be
referred to the
chairman whose decision shall
be
final and conclusive.
On a poll or
on a show of
hands votes may be cast either personally or
by proxy.
A Member may appoint more than one proxy or
the
same proxy under one or
more instruments to attend and vote at
a meeting. Where a Member appoints more
than one proxy
the
instrument of
proxy shall state which proxy is entitled to vote
on
a show of
hands.
80 A Member holding more than one Share need no
t
cast the
votes in respect of
his
Shares in the
same way on any resolution and therefore may vote a Share or
some
or
all such Shares either
for
or
against a resolution and/ or
abstain from voting a
Share or
some or
all
of
the
Shares and, subject to the
terms of
the
instrument
appointing him, a proxy appointed under one or
more instruments may vote a
Share or
some or
all
of
the Shares in respect of
which he
is appointed eitherfor
or
against a resolution and/ or
abstain from voting.
(
PROXIES
81
The instrument appointing a proxy shall be
in writing, be
executed under the
hand
of
the
appointor or
of
his attorney duly authorised in writing,
or,
if the
appointor
is a corporation under
the
hand of
an
officer or
attorney duly authorised
for
that
purpose. A proxy need
no
t
be a Member of
the
Company.
82
The instrument appointing a proxy shall be
deposited at
the
Registered Office or
at
such other place as
is specified for
that purpose in the
notice convening the
meeting, or
in any instrument of
proxy sent ou
t
by
the
Company:
82.1 not less than 48
hours before the time
for
holding
the
meeting or
adjourned meeting at
which the Person named in the
instrument proposes
to vote; or
82.2 in the
case of
a poll taken more than 48 hours after it is demanded, be
deposited as
aforesaid after the poll has been demanded and not less than
24
hours before
the
time appointed
for
the
taking of
the poll; or
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34
82.3 where
the
poll is not
taken forthwith
but
is taken not more than 48
hours
after it was demanded be
delivered at
the
meeting at
which: the poll was
demanded to the
chairman or
to the
secretary or
to any director;
provided that
the
Directors may in the
notice convening
the
meeting, or
in an
instrument of
proxy sent out by
the Company, direct that
the
instrument
appointing a proxy may be
deposited ( no
later than
the
time
for
holding
the
meeting
or
adjourned meeting) at
the
Registered Office or
at
such other place as
is
specified
for
that purpose in the
notice convening
the
meeting, or
in any
instrument of
proxy sent out by
the
Company. The chairman may in any event at
his discretion direct that an
instrument of
proxy shall be deemed to have been duly
deposited. An instrument of
proxy that is no
t
deposited in the
manner permitted
shall be
invalid.
(
83
84
The instrument appointing a proxy may be
in any usual or
common form and may
be
expressed to be
for
a particular meeting or
any adjournment thereof or
generally until revoked. An
instrument appointing a proxy shall be
deemed to
include
the
power to demand or
join or
concur in demanding a poll.
Votes given in accordance with
the
terms of
an
instrument of
proxy shall be
valid
notwithstanding the previous death or
insanity ofthe principal or
revocation of
the
proxy or
of
the authority under which
the
proxy was executed, or
the
transfer of
the
Share in respect of
which
the
proxy is given unless notice in writing of
such
death, insanity, revocation or
transfer was received by
the Company at
the
Registered Office before
the
commencement of
the
general meeting, or
adjourned
meeting at
which it is sought to use
the
proxy.
CORPORATE MEMBERS
85 Any corporation or
other non-natural Person which is a Member may in
accordance with
its constitutional documents, or
in the
absence of
such provision
by resolution of
its directors or
other governing body, authorise such Person as
itthinks
fit to act
as
its representative at
any meeting of
the Company or
of
any
class of
Members, and
the
Person so
authorised shall be
entitled to exercise
the
same powers on
behalf of
the
corporation which he
represents as
the
corporation
could exercise
ifit were an
individual Member.
SHARES THAT MAY NOT BE VOTED
86
Shares in the Company that
are beneficially owned by
the Company shall not be
voted, directly or
indirectly, at
any meeting and shall not be
counted in
determining
the
total number of
outstanding Shares at
any given time.
DIRECTORS
87
There shall be a board of
Directors consisting of
five members. Two of
the
five
Directors will automatically and at
all
times be
the WaMu LLC Designated
Directors. The other three Directors shall be
the "Ordinary Directors". For
purposes ofthe foregoing:
( k)
"WaMu LLC Designated Directors" means, on any day, the two
natural Persons most recently identified by WaMu LLC to the
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,..
( Company in writing as
the
members of
WaMu LLC's Board of
Managers that shall be
Directors of
the
Company, one of
whom
shall be
the individual who is the
" Independent Manager" of
WaMu LLC within
the
meaning of
the WaMu LLC Agreement;
( 1)
" Ordinary Directors"
are
the
three Directors elected from time-
to-
time by
the
holders of
the
Ordinary Shares in accordance with
these Articles; and
( m)
The WaMu LLC Designated Director who is the
" Independent
Manager" of WaMu LLC
for
purposes of
the WaMu LLC
Agreement, as
most recently identified by WaMu LLC to the
Company in writing (except as
provided below), shall be
the
" Independent Director" of
the Company.
If ( x) WaMu LLC fails to pay full dividends on
the WaMu LLC Preferred
Securities or
on
its Fixed-
to-
Floating Rate Perpetual Non- cumulative Preferred
Securities, liquidation preference $1,000 pe
rsecurity, o
n
any dividend payment
date
for
such securities determined in accordance with the WaMu LLC
Agreement, ( y)
the Company fails to pay full dividends on
the
Preferred
Securities on any Dividend Payment Date or
( z)
a Bankruptcy Event occurs, then
( i) under the WaMu LLC Agreement the
holders of
the WaMu LLC Preferred
Securities and the
Fixed- to-
Floating Rate Perpetual Non- cumulative Preferred
Securities of
WaMu LLC, voting as
a single class, will be
entitled to remove the
Person who has been
the
Independent Manager of WaMu LLC from
his office as
both a member ofWaMu LLC's Board of
Managers and
its Independent Manager
and replace such Person in such capacities with a natural Person elected by
such
securityholders, (
ii)
in order to give effect to the
rights of
the
Preferred
Securityholders to direct the manner in which
the Company exercises
its voting
rights on
such matter,
the Company shall give a notice and
act
in accordance with
the
provisions of
Article 9(
e),
and (
iii) effective upon the
Person so
elected or
nominated becoming the
Independent Manager of
WaMu LLC, such Person shall
also become
the
Independent Director of
the Company.
POWERS OF DIRECTORS
88
Subject to the
provisions of
the
Statute, the Memorandum and these Articles
(including Article
89
)
and to any directions given by Special Resolution,
the
business of
the
Company shall be
managed by
the
Directors who may exercise all
the
powers of
the
Company. No
alteration of
the
Memorandum or
Articles and no
such direction shall invalidate any prior act
of
the
Directors which would have
been valid if that alteration had not been made or
that direction had not been
given. A duly convened meeting of
Directors at
which a quorum is present may
exercise
all powers exercisable by
the
Directors.
89 Notwithstanding
the
provisions of
Article 88 and any other provisions of
these
Articles, the
Directors shall no
t
have the
power, without the
prior Consent of
the
Independent Director and the
approval of
a majority of
the
Directors, to ( i)
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36
repurchase any Ordinary Shares or
(
ii)
to the
extent within the power of
the
Directors, convert or
approve
the
conversion of
the Company into another type of
entity or
the consolidation or
merger of
the Company with or
into any other
entity,
the
consolidation or
merger of
any other entity with or
into
the
Company,
or
the
sale by
the Company of
any of
its
assets.
All cheques, promissory notes, drafts, bills of
exchange and other negotiable
instruments and
all
receipts
for
monies paid to the Company shall be
signed,
drawn, accepted, endorsed or
otherwise executed as
the case may be
in such
manner as
the
Directors shall determine by
resolution.
Subject to the
Memorandum,
the
Directors may exercise
all
the
powers of
the
Company to borrow money and to mortgage or
charge
its undertaking, property
and uncalled capital or
any part thereof and to issue debentures, debenture stock,
mortgages, bonds and other such securities whether outright or
as
security for
any
debt, liability or
obligation of
the Company or
of
any third party ..
APPOINTMENT AND REMOVAL OF
DIRECTORS
92 The Company may by
Ordinary Resolution appoint any Person to be
an
Ordinary
Director or
may by
Ordinary Resolution remove any Director.
93 The Directors may appoint any Person to be
an
Ordinary Director, either to fill a
vacancy or
as
an additional Ordinary Director provided that
the
appointment does
not
cause
the
number of
Directors to exceed any number fixed by
or
in
accordance with these Articles as
the maximmn nmnber of
Ordinary Directors.
94 WaMu LLC Designated Directors may be
appointed and removed only In
accordance with Article
87.
VACATION OF
OFFICE OF
DIRECTOR
95 The office of
a Director shall be
vacated
if:
95.1 he
gives notice in writing to the Company that he
resigns
the
office of
Director; or
95.2 if he
absents himself (without being represented by
proxy or
an
alternate Director
appointed by him) from three consecutive meetings of
the
board of
Directors
without special leave of
absence from the
Directors, and
they pass a resolution
that he
has
by
reason of
such absence vacated office; or
95.3 if he
dies, becomes bankrupt or
makes any arrangement or
composition with
his
creditors generally; or
95.4 ifhe is found to be
or
becomes of
unsound mind; or
95.5 in the
case of
Ordinary Directors, if all
the other Ordinary Directors of
the
Company (being not less than two in nmnber) resolve that he
should be removed
as
an Ordinary Director.
PROCEEDINGS OF DIRECTORS
96 The quorum
for
the
transaction of
the business of
the Directors may be
fixed by
the
Directors, and unless so
fixed shall be two if there
are two or
more Directors,
and shall be one if there is only one Director; provided, however, that a quorum
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for
the
transaction of
the
business of
the Directors will not exist without
the
presence of
the
Independent Director. A Person who holds office as
an
alternate
Director shall, if his appointor is not
present, be
counted in the quorum. ADirector who also acts a
s
an
alternate Director shall, if his appointor is not
present, count twice towards
the
quorum.
97
Subject to the
provisions of
the
Articles,
the
Directors may regulate their
proceedings as they think
fit. Questions arising at
any meeting shall be decided
by
a majority of
votes. In the case of
an
equality of
votes,
the
chairman shall have
a second or
casting vote. A Director who is also an
alternate Director shall be
entitled in the
absence of
his
appointor to a separate vote on
behalf of
his
appointor in addition to his own vote.
98 A Person may participate in a meeting of
the
Directors or
committee of
Directors
by
conference telephone or
other communications equipment by
means of
which
all
the
Persons participating in the
meeting can communicate with each other at
the
same time. Participation by a Person in a meeting in this manner is treated as
presence in Person at
that meeting. Unless otherwise determined by
the
Directors
the meeting shall be deemed to be
held at
the
place where the chairman is at
the
start of
the
meeting.
99 A resolution in writing ( in one or
more counterparts) signed by
all
the
Directors or
all
the
members of
a committee of
Directors ( an
alternate Director being entitled
to sign such a resolution on
behalf of
his appointor) shall be
as
valid and effectual
as
if it had been passed at
a meeting of
the
Directors, or
committee of
Directors as
the
case may
be
,
duly convened and held.
100 A Director or
alternate Director may, or
other officer of
the
Company on
the
requisition of
a Director or
alternate Director shall, call a meeting of
the
Directors
by
at
least two days' notice in writing to every Director and alternate Director
which notice shall
se
t
forth the general nature of
the
business to be
considered
unless notice is waived by
all
the
Directors ( or
their alternates) either
at,
before or
after
the
meeting is held.
101 The continuing Directors may
act
notwithstanding any vacancy in their body, but
if and so long as
their number is reduced below
the
number fixed by
or
pursuant
to these Articles as
the
necessary quorum of
Directors
the
continuing Directors or
Director may
act
for
the
purpose of
increasing
the
number of
Directors to that
number, or
of
summoning a general meeting of
the
Company, but
for
no
other
purpose.
102 The Directors may elect a chairman of
their board and determine the period
for
which he
is to hold office; but if no
such chairman is elected, or
if at
any meeting
the
chairman is no
t
present within five minutes after the
time appointed for
holding the
same, the
Directors present may choose one of
their number to be
chairman of
the
meeting.
103
All
acts done by
any meeting of
the
Directors or
of
a committee of
Directors
(including any Person acting as
an
alternate Director) shall, notwithstanding that it
be
afterwards discovered that there was some defect in the
appointment of
any
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Director or
alternate Director, or
that they or
any of
them were disqualified, be
as
valid as
if every such Person had been duly appointed and qualified to be a
Director or
alternate Director as
the
case may be
.
l04 A Director
but
not an
alternate Director may be
represented at
any meetings of
the
board of
Directors by
a proxy appointed in writing by
him. The proxy shall count
towardsth
equorum and the vote o
f
the proxy shall
for
all
purposes be deemed to
be
that ofthe appointing Director.
PRESUMPTION OF ASSENT
l05 A Director of
the Company who is present at
a meeting of
the
board of
Directors
at
which action on any Company matter is taken shall be presumed to have
assented to the
action taken unless
his dissent shall be entered in the
minutes of
the
meeting or
unless he
shall file
his written dissent from such action with
the
Person acting as
the
chairman or
secretary of
the
meeting before
the
adjournment
thereof or
shall forward such dissent by
registered post to such Person
immediately after the
adjournment of
the
meeting. Such right to dissent shall no
t
apply to a Director who voted in favour of
such action.
DIRECTORS' INTERESTS
l06 A Director may hold any other office or
place of
profit under
the Company (other
than
the
office of
Auditor) in conjunction withhis office of
Director
for
such
period and on such terms as
to remuneration and otherwise as
the
Directors may
determine.
l07 A Director may
act
by
himself or
his firm in a professional capacity
for
the
Company and he
or
his firm shall be
entitled to remuneration
for
professional
services as
if he were not a Director or
alternate Director.
l08 A Director or
alternate Director of
the Company may be
or
become a director or
other officer of
or
otherwise interested in any company promoted by
the Company
or
in which
the Company may be interested as shareholder or
otherwise, and no
such Director or
alternate Director shall be
accountable to the Company
for
any
remuneration or
other benefits received by
him as
a director or
officer
of,
or
from
his
interest in,
such other company.
l09 No
Person shall be
disqualified from the office of
Director or
alternate Director or
prevented by
such office from contracting with
the
Company, either as
vendor,
purchaser or
otherwise, nor shall any such contract or
any contract or
transaction
entered into by
or
on behalf of
the Company in which any Director or
alternate
Director shall be
in any way interested be
or
be
liable to be
avoided, nor shall any
Director or
alternate Director so
contracting or
being so
interested be
liable to
account to the Company
for
any profit realised by
any such contract or
transaction
by
reason of
such Director holding office or
of
the
fiduciary relation thereby
established. A Director ( or
his
alternate Director in his absence) shall be
at
liberty
to vote in respect of
any contract or
transaction in which he
is interested provided
that
the
nature of
the
interest of
any Director or
alternate Director in any such
contract or
transaction shall be
disclosed by
him at
or
prior to its consideration
and any vote thereon.
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110 A general notice that a Director or
alternate Director is a shareholder, director,
officer or
employee of
any specified firm or
company and is to be
regarded as
interested in any transaction with such firm or
company shall be
sufficient
disclosure for
the
purposes of
voting on
a resolution in respect of
a contract or
transaction in which he has an
interest, and after such general notice it shall not be
necessary to give special notice relating to any particular transaction.
MINUTES
111 The Directors shall cause minutes to be made in books kept
for
the
purpose of
all
appointments of
officers made by
the
Directors,
all
proceedings at
meetings of
the
Company or
the
holders of
any class of
Shares and of
the Directors, and of
committees of
Directors including the
names of
the
Directors or
alternate
Directors present at
each meeting.
DELEGATION OF DIRECTORS' POWERS
112 The Directors may delegate any of
their powers to any committee consisting of
one or
more Directors; provided, however, that
the
Directors may
not
delegate to
any committee any of
the
powers reserved to the
Independent Director by Article
89
or
otherwise requiring
the
Consent of
the
Independent Director except with
the
consent of
the
Independent Director. They may also delegate to any managing
director or
any Director holding any other executive office such of
their powers as
they consider desirable to be
exercised by
him provided that an
alternate Director
may not
act
as
managing director and
the
appointment of
a managing director
shall be
revoked forthwith ifhe ceases to be a Director. Any such delegation may
be made subject to any conditions
the
Directors may impose, and either
collaterally with or
to the
exclusion of
their own powers and may be revoked or
altered. Subject to any such conditions,
the
proceedings of
a committee of
Directors shall be governed by
the
Articles regulating
the
proceedings of
Directors, so
far
as
they
are capable of
applying.
113 The Directors may establish any committees, local boards or
agencies or
appoint
any Person to be
a manager or
agent
for
managing
the
affairs of
the Company and
may appoint any Person to be a member of
such committees or
local boards. Any
such appointment may be made subject to any conditions
the
Directors may
impose, and either collaterally with or
to the exclusion of
their own powers and
may be
revoked or
altered. Subject to any such conditions,
the
proceedings of
any
such committee, local board or
agency shall be
governed by
the
Articles
regulating the
proceedings of
Directors, so
far
as
they are capable of
applying.
114 The Directors may by
power of
attorney or
otherwise appoint any Person to be
the
agent of
the Company on such conditions as
the Directors may determine,
provided that
the
delegation is no
t
to the
exclusion of
their own powers and may
be
revoked by
the
Directors at
any time.
115 The Directors may by
power of
attorney or
otherwise appoint any company, firm,
Person or
body of
Persons, whether nominated directly or
indirectly by
the
Directors, to be
the
attorney or
authorised signatory of
the Company
for
such
purpose and with such powers, authorities and discretions (not exceeding those
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( vested in or
exercisable by
the Directors under these Articles) and
for
such period
and subject to such conditions as they may think
fit, and any such powers of
attorney or
other appointment may contain such provisions for
the
protection and
convenience of
Persons dealing with any such attorneys or
authorised signatories
as
the
Directors may think fit and may also authorise any such attorney or
authorised signatory to delegate
all
or
any of
the
powers, authorities and
discretions vested in him.
116 The Directors may appoint such officers as
they consider necessary on
such
terms, at
such remuneration and to perform such duties, and subject to such
provisions as
to disqualification and removal as
the
Directors may think
fit.
Unless otherwise specified in the
terms of
his appointment an
officer may be
removed by
resolution of
the Directors or
Members.
ALTERNATE DIRECTORS
117 Any Director (other than an
alternate Director) may by
writing appoint any other
Director, or
any other Person willing to act, to be
an
alternate Director and by
writing may remove from office an
alternate Director so
appointed by
him.
118 An
alternate Director shall be
entitled to receive notice of
all meetings of
Directors and of
all
meetings of
committees of
Directors of
which
his appointor is
a member, to attend and vote at
every such meeting at
which
the
Director
appointing him is not
personally present, and generally to perform
all
the
functions of
his appointor as
a Director in his absence.
119 An
alternate Director shall cease to be
an
alternate Director if his
appointor ceases
to be
a Director.
120 Any appointment or
removal of
an
alternate Director shall be
by
notice to the
Company signed by
the
Director making or
revoking
the
appointment or
in any
other manner approved by
the
Directors.
121 An
alternate Director shall be deemed
for
all purposes to be a Director and shall
alone be
responsible
for
his own acts and defaults and shall not be deemed to be
the
agent of
the
Director appointing him.
NO MINIMUM SHAREHOLDING
122 The Company in general meeting may
fix a minimum shareholding required to be
held by
a Director, bu
t
unless and until such a shareholding qualification is fixed a
Director is not required to hold Shares.
REMUNERATION OF DIRECTORS
123 For so long as any Preferred Securities
are
outstanding,
the
Directors shall
no
t
be
entitled to any fees, other remuneration or
expense reimbursement from
the
Company in connection with their service as
Directors ( it being understood that
the WaMu LLC Directors will receive fees and expense reimbursement in their
capacity as
members of
the
Board of
Managers of
WaMu LLC and the Ordinary
Directors shall receive fees and expense reimbursement in their capacity as
employees of
the
Administrator). Thereafter,
the
remuneration to be paid to the
Directors, if any, shall be such remuneration as
the
Directors shall determine.
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Additionally, at
any time when no
Preferred Securities are outstanding, the
Directors shall also be
entitled to be
paid
all
travelling, hotel and other expenses
properly incurred by
them in connection with their attendance at
meetings of
Directors or
committees of
Directors, or
general meetings of
the
Company, or
separate meetings of
the holders of
any class of
Shares or
debentures of
the
Company, or
otherwise in connection with
the
business of
the
Company, or
to
receive a fixed allowance in respect thereof as
may be
determined by
the
Directors, or
a combination partly of
one such method and partly the other.
124 At
any time when no
Preferred Securities
are outstanding,
the
Directors may by
resolution approve additional remuneration to any Director
for
any services other
than
his ordinary routine work as
a Director. Any fees paid to a Director who is
also counselor solicitor to the Company, or
otherwise serves it in a professional
capacity shall be
in addition to his remuneration as
a Director.
SEAL
125 The Company may, if the
Directors so determine, have a Seal. The Seal shall only
be
used by
the
authority of
the
Directors or
of
a committee of
the
Directors
authorised by
the
Directors. Every instrument to which
the
Seal has been affixed
shall be
signed by
at
least one Person who shall be
either a Director or
some
officer or
other Person appointed by
the
Directorsfor
the
purpose.
126 The Company may have for
use in any place or
places outside the
Cayman Islands
a duplicate Seal or
Seals each of
which shall be a facsimile of
the common Seal of
the Company and, if the
Directors so
determine, with
the
addition on
its face of
the name of
every place where it is to be used.
127 A Director or
officer, representative or
attorney of
the
Company may without
further authority of
the
Directors affix
the
Seal over
his signature alone to any
document of
the Company required to be
authenticated by
him under seal or
to be
filed with
the
Registrar of
Companies in the Cayman Islands or
elsewhere
wheresoever.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
128 Subject to the Statute and
the
other provisions of
these Articles ( including Article
9),
the
Directors may declare dividends and distributions on Shares in issue and
authorise payment of
the
dividends or
distributions ou
t
of
the
funds of
the
Company lawfully available therefor. No
dividend or
distribution shall be
paid
except out of
the
realised or
umealised profits of
the
Company, or
out of
the
share
premium account or
as
otherwise permitted by
the
Statute.
129 Except as
otherwise provided by
the
rights attached to Shares ( it being understood
that the first sentence of
this Article 129 shall
not
apply to the
Preferred
Securities),
all dividends shall be declared and paid according to the
pa
r
value of
the
Shares that a Member holds. If any Share is issued on
terms providing that it
shall rank
for
dividend as
from a particular date, that Share shall rank
for
dividend
accordingly.
130 Subject to Article 9(
b)
with respect to dividends on
the Preferred Securities, the
Directors may deduct from any dividend or
distribution payable to any Member
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(
all sums of
money ( if any) then payable by
him to the Company on
account of
calls or
otherwise.
131 Subject to Article 9(
b)
with respect to dividends on
the
Preferred Securities,
the
Directors may declare that any
dividend or
distribution be
paid wholly or
partly
by
the
distribution of
specific assets and in particular of
shares, debentures, or
securities of
any other company or
in anyone or
more of
such ways and where
any difficulty arises in regard to such distribution,
the
Directors may settle the
same as
they think expedient and in particular may issue fractional Shares and
fix
the
value
for
distribution of
such specific assets or
any part thereof and may
determine that cash payments shall be made to any Members upon
the
basis of
the
value so
fixed in order to adjust the
rights of
all Members and
may vest any such
specific assets in trustees as may seem expedient to the Directors.
132 Any dividend, distribution, interest or
other monies payable in cash in respect of
Shares may be
paid by
wire transfer to the
holder or
by
cheque or
warrant sent
through the post directed to the registered address of
the holder
or,
in the
case of
joint holders, to the
registered address of
the
holder who is first named on
the
Register of
Members or
to such Person and to such address as
such holder or
joint
holders may in writing direct. Every such cheque or
warrant shall be made
payable to the
order of
the Person to whom it is sent. Anyone of
two or
more
joint holders may give effectual receipts
for
any dividends, bonuses, or
other
monies payable in respect of
the Share held by
them as
joint holders.
Notwithstanding
the
foregoing,
for
so
long as
the Preferred Securities
are Book-
Entry Preferred Securities, the Company shall pay dividends on
the
Preferred
Securities by
wire transfer of
Federal (same day) funds to the
Clearing Agency at
such bank account of
the
Clearing Agency as
shall be designated from time to
time by
the
Clearing Agency to the
Company.
133 No
dividend or
distribution shall bear interest against
the
Company.
134 Any dividend which cannot be
paid to a Member and/ or
which remains unclaimed
after six months from the
date of
declaration of
such dividend may, in the
discretion of
the
Directors, be
paid into a separate account in the
Company's
name, provided that the Company shall not be
constituted as
a trustee in respect of
that account and the Dividend shall remain as
a debt due to the
Member. Any
dividend which remains unclaimed after a period of
six years from
the
date of
declaration of
such dividend shall be
forfeited and shall revert to the Company.
CAPIT ALISA nON
135 The Directors may capitalise any sum standing to the
credit of
any of
the
Company's reserve accounts ( including share premium account and capital
redemption reserve fund) or
any sum standing to the
credit of
profit and loss
account or
otherwise available
for
distribution and to appropriate such sum to
Members in the
proportions in which such sum would have been divisible
amongst them had
the
same been a distribution of
profits by way of
dividend and
to apply such sum on
their behalf in paying up
in full unissued Shares
for
allotment and distribution credited as
fully paid- up
to and amongst them in the
proportion aforesaid. In such event
the
Directors shall do
all
acts and things
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required to give effect to such capitalisation, with full power to the
Directors to
make such provisions as
they think fit
for
the
case of
Shares becoming
distributable in fractions (including provisions whereby the
benefit of
fractional
entitlements accrue to the Company rather than to the Members concerned). The
Directors may authorise any Person to enter on
behalf of
all
of
the Members
interested into an agreement with
the Company providing
for
such capitalisation
and matters incidental thereto and any agreement made under such authority shall
be effective and binding on
all concerned.
BOOKS OF ACCOUNT
136 The Directors shall cause proper books of
account to be
kept with respect to all
sums of
money received and expended by
the Company and
the
matters in respect
of
which
the
receipt or
expenditure takes place,
all
sales and purchases of
goods
by
the Company and the assets and liabilities of
the
Company. Proper books shall
not be deemed to be
kept if there are not kept such books of
account as
are
necessary to give a true and fair view of
the state of
the Company's affairs and to
explain
its transactions.
137 The Directors shall from time to time determine whether and to what extent and at
what times and places and under what conditions or
regulations
the
accounts and
books of
the Company or
any of
them shall be open to the
inspection of
Members
not being Directors and no Member (
not
being a Director) shall have any right of
inspecting any account or
book or
document of
the Company except as
conferred
by
Statute or
authorised by
the
Directors or
by
the Company in general meeting.
138 The Directors may from time to time cause to be
prepared and to be
laid before
the Company in general meeting profit and loss accounts, balance sheets, group
accounts ( if any) and such other reports and accounts as may be required by law.
AUDIT
139 The Directors may appoint an
Auditor of
the Company who shall hold office until
removed from office by
a resolution of
the
Directors, and may
fix
his
or
their
remuneration.
140 Every Auditor of
the Company shall have a right of
access at
all
times to the
books and accounts and vouchers of
the Company and shall be
entitled to require
from the Directors and officers of
the Company such information and explanation
as may be necessary
for
the
performance of
the
duties of
the
Auditor.
141 Auditors shall, if so required by
the
Directors, make a report on
the
accounts of
the Company during their tenure of
office at
the
next annual general meeting
following their appointment in the
case of
a company which is registered with
the
Registrar of
Companies as
an
ordinary company, and at
the next extraordinary
general meeting following their appointment in the
case of
a company which is
registered with
the
Registrar of
Companies as
an exempted company, and at
any
other time during their term of
office, upon request of
the
Directors or
any general
meeting of
the Members.
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44
(- NOTICES
142 Notices shall be
in writing and may be
given by
the Company to any Member
either personally or
by sending it by courier, post, cable, telex,
fax
or
e-
mail to
him or
to his
address as
shown in the
Register of
Members ( or
where the
notice is
given bye-mail by
sending it to the
e-
mail address provided by
such Member);
provided that any notice to Preferred Securityholders, with respect to redemption
of
Preferred Securities or
their voting or
consensual rights shall in each case be
mailed, by
first class mail, postage prepaid, to the
holders of
Preferred Securities
of
record at
the
respective last addresses appearing on
the
Register of
Members.
Any notice, if posted from one country to another, is to be sent airmail.
143 Where a notice is sent by courier, service of
the
notice shall be deemed to be
effected by
delivery of
the
notice to a courier company, and shall be deemed to
have been received on
the third day (not including Saturdays or
Sundays or
public
holidays) following the
day on
which the
notice was delivered to the
courier.
Where a notice is sent by
post, service of
the
notice shall be deemed to be
effected
by
properly addressing, pre-paying and posting a letter containing the notice, and
shall be deemed to have been received on
the
fifth day (
not
including Saturdays or
Sundays or
public holidays) following
the
day on which
the
notice was posted.
Where a notice is sent by
cable, telex or
fax, service of
the
notice shall be deemed
to be
effected by
properly addressing and sending such notice and shall be
deemed to have been received on
the
same day that it was transmitted. Where a
notice is given bye- mail service shall be deemed to be
effected by
transmitting
the
e-
mail to the
e-
mail address provided by
the
intended recipient and shall be
deemed to have been received on
the
same day that it was sent, and it shall not be
necessary
for
the
receipt ofthe e-
mail to be acknowledged by the recipient.
144 A notice may be given by
the Company to the
Person or
Persons which
the
Company has been advised
are entitled to a Share or
Shares in consequence of
the
death or
bankruptcy of
a Member in the
same manner as
other notices which
are
required to be
given under these Articles and shall be
addressed to them by
name,
or
by
the
title of
representatives of
the
deceased, or
trustee of
the
bankrupt, or
by
any like description at
the
address supplied
for
that purpose by
the
Persons
claiming to be
so
entitled, or
at
the option of
the Company by
giving the notice in
any manner in which
the
same might have been given if the
death or
bankruptcy
had
no
t
occurred.
145 Notice of
every general meeting shall be
given in any manner hereinbefore
authorised to every Person shown as
a Member in the
Register of
Members on
the
record date
for
such meeting except that in the
case of
joint holders
the
notice
shall be
sufficient if given to the
joint holder first named in the
Register of
Members and every Person upon whom
the
ownership of
a Share devolves by
reason of
his being a legal personal representative or
a trustee in bankruptcy of
a
Member of
record where
the Member of
record but
for
his death or
bankruptcy
would be
entitled to receive notice of
the
meeting, and no
other Person shall be
entitled to receive notices of
general meetings.
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45
146 Notwithstanding
the
provisions of
the
foregoing Articles 142 to 145,
for
so long
as
any Series A-
2 Preferred Securities are listed on
the
Euro MTS Market of
the
Luxembourg Stock Exchange and such exchange so
requires,
the Company will
publish any notice given to holders of
Series A-
2 Preferred Securities in one
English language newspaper that is a daily newspaper of
general circulation in
Luxembourg (expected initially to be
the Luxemburger Wort).
WlNDINGUP
147 Subject to Article 9(
d)
with respect to the
Preferred Securities, if the Company
shall be wound
up
,
and
the
assets available
for
distribution amongst
the
Members
shall be
insufficient to repay the whole of
the share capital, such assets shall be
distributed so
that, as
nearly as may
be,
the
losses shall be
borne by
the Members
in proportion to the
par
value of
the
Shares held by
them. If in a winding up
the
assets available for
distribution amongst the
Members shall be
more than
sufficient to repay
the
whole of
the
share capital at
the
commencement of
the
winding up,
the
surplus shall be
distributed amongst
the Members in proportion to
the
pa
r
value of
the
Shares held by them at
the
commencement of
the
winding up
subject to a deduction from those Shares in respect of
which there
are
monies due,
of
all monies payable to the Company
for
unpaid calls or
otherwise. This Article
is without prejudice to the
rights of
the
holders of
Shares issued upon special
terms and conditions (including Article 9(
d)
as
to the
Preferred Securities).
148 If the Company shall be wound up
the liquidator may, with the sanction of
a
Special Resolution of
the Company and any other sanction required by
the
Statute, divide amongst
the Members in kind
the
whole or
any part of
the
assets of
the Company (whether they shall consist of
property of
the
same kind or
not) and
may
for
that purpose value any assets and determine how
the
division shall be
carried out as
between the Members or
different classes of
Members. The
liquidator may, with the
like sanction, vest the
whole or
any part of
such assets in
trustees upon such trusts for
the
benefit of
the
Members as
the
liquidator, with the
like sanction, shall think
fit, but so
that no Member shall be compelled to accept
any asset upon which there is a liability.
INDEMNITY
149 Every Director, agent or
officer of
the Company shall be indemnified
ou
t
of
the
assets of
the Company against any liability incurred by
him as
a result of
any
act
or
failure to act
in carrying out
his functions other than such liability ( if any) that
he may incur by
his own wilful neglect or
default. No
such Director, agent or
officer shall be
liable to the Company
for
any loss or
damage in carrying out
his
functions unless that liability arises through
the
wilful neglect or
default of
such
Director, agent or
officer.
FINANCIAL YEAR
150 Unless
the
Directors otherwise prescribe, the financial year of
the Company shall
end on
31
st
December in each year and, following
the
year of
incorporation, shall
begin on
1st
January in each year.
TRANSFER BY WAY OF CONTINUATION
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46
151 If the Company is exempted as
defined in the
Statute, it shall, subject to the
provisions of
the
Statute and with
the
approval of
a Special Resolution, have
the
power to register by
way of
continuation as
a body corporate under the laws of
any jurisdiction outside
the Cayman Islands and to be
deregistered in the Cayman
Islands.
CERTIFIED TO
BE A TRUE AND CORRECf COpy
SIG..
_~
~
NEYD/ S TAVERAS
Am Rtgillrar of
C9Illpuits
Dat~ < iR / tJJkCb, JoDb-,
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Exhibit A
WASHINGTON MUTUAL BANK
Board of
Directors Resolutions
WHEREAS, Washington Mutual Bank (the "Bank") indirectly owns
all
of
the issued and
outstanding common stock of
University Street, Inc. (" University Street");
WHEREAS, it is proposed that the Bank will make a contribution to University Street to
consist of
loans or
interests thereon not to exceed $1.2 billion in book value (the "University
Street Contribution) in exchangefo
r
preferred stock issued by
University Street;
WHEREAS, University Street proposes to cause the formation of
a Delaware limited
liability company (the "LLC") and in connection therewith University Street and the Bank will
contribute to the LLC assets of
approximately $5 billion, with the Bank's portion (
the
" LLC
Contribution") to consist of
loans or
interests therein not to exceed $1.0 billion in book value;
WHEREAS, in exchange
for
such contributions, University Street
will
receive
substantially
all
of
the common interests of
the LLC and the Bank or
its designee will receive
two classes or
series preferred stock of
the LLC (" LLC Preferred Interests");
WHEREAS, it is proposed that the LLC Preferred Interests
will
be
transferred by WMB or
its designee to two special purpose entities (" SPEs") which in turn will issue substantially similar
securities (the "SPE Securities") to investors; and
WHEREAS, it is proposed that the Bank's parent, Washington Mutual, Inc. ("WMI"), will
authorize two series of
preferred stock (the "WMI Preferred Stock")
for
which under certain
circumstances each class of
SPE Securities will be automatically exchanged.
THEREFORE, IT IS HEREBY RESOLVED, that the University Street Contribution and
the LLC Contribution are hereby authorized and approved, and any Authorized Officer ( as
defined below) is hereby authorized on behalf of
the Bank to negotiate, execute and deliver any
agreements or documents as such Authorized Officer deems necessary or
appropriate in
connection with the University Street Contribution or
the LLC Contribution.
RESOLVED FURTHER, that
the
Bank is hereby authorized to transfer, or
to cause
its
designee to transfer, the LLC Preferred Interests to the SPEs in exchange
for
cash and any
Authorized Officer is hereby authorized on behalf of
the Bank to negotiate, execute and deliver
any agreements or documents as such Authorized Officer deems necessary or
appropriate in
connection with such transfers;
,
RESOLVED FURTHER, each of
the Authorized Officers is her~ by
authorized on behalf
of
the Bank to negotiate, execute and deliver any agreements with the LLC as such Authorized
Officer deems necessary or
appropriate in connection with the management, operation or
administration of
the LLC;
RESOLVED FURTHER, that the Authorized Officers, or
any of
them, are authorized and
empowered, on behalf of
the Bank and in its name, with
fu
ll power and authority to delegate
such authority to one or
more attorneys-
in-
fact or
agents acting
for
such Authorized Officers, or
any of
them, in the event that it is deemed necessary or
desirable so
to do, in connection with
the offering of
the Preferred Stock, the LLC Preferred Interests or
the SPE Securities in a
127695.1
WM: CONFIDENTIAL LIMITED ACCESS
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002081.00001
private/ Regulation S offering, to prepare, cause to be
prepared or
to participate in the
preparation of,
an
offering circular or
offering memorandum with respect to such securities (and
any supplements or
amendments thereto), as
the Authorized Officers, or
any of
them, taking
such action shall approve in connection therewith in order to effect the offering of
such
securities in a private/ Regulation S offering;
RESOLVED FURTHER, that any Authorized Officer, together with other proper officers
of
the Bank (including, without limitation, those authorized from time to time pursuant to the
Bank's Asset and Liability Management Policy and the standards and procedures from time to
time in effect thereunder), is 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 Bank ( including, without limitation, filings or
applications with
banking regulators, securities regulators or
stock exchanges, domestic or
foreign) and to take
any other actions, in each case, as
such Authorized Officer or
other proper officer deems to be
necessary or
advisable in connection with the issuance of
the University Street Contribution, the
LLC Contribution or
the transfers of
the LLC Preferred Interests or
to further the intent of
these
resolutions; and
RESOLVED FURTHER, that for
purposes of
these resolutions and the transactions
contemplated hereby, each of
the following shall be
an
" Authorized Officer": ( i) the Chief
Executive Officer, (
ii) the Chief Operating Officer, (
iii) the Chief Financial Officer, (
iv)
any Senior
Executive Vice President, ( v)
any Executive Vice President, (
vi) the Senior Vice President and
Treasurer, (vii) the Senior Vice President and Assistant Treasurer and (viii) the Senior Vice
President and Controller.
127695 v1
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ASSISTANT SECRETARY'S CERTIFICATE
OFWASHINGTON MUTUAL, INC.
March 7,
2006
The undersigned, a duly qualified and acting Assistant Secretary of
Washington Mutual,
Inc., a Washington corporation ( the "Company"), does hereby certify as
follows:
1.
Attached hereto as
Exhibit A-
1 is a true, complete and correct copy of
the
Amended and Restated Articles of
Incorporation of
the
Company as
of
the open of
business on
March 6,
2006 and certified on such date by
the Secretary of
State of
the state of
Washington
(the "Secretary of
State"). Except for
two sets of
articles of
amendment filed on March 6,
2006
with the Secretary of
State which are attached hereto as
Exhibits A-
2 and A-
3,
there have been
no amendments or
other documents relating to or
affecting the Amended and Restated Articles
of
Incorporation filed with the Secretary of
State of
the State of
Washington since the date of
the
attached certification, and no amendments have been authorized or
approved by
the board of
directors of
the Company (the " Board"), or
its
shareholders, as
of
the date hereof, nor has any
action been taken by
the Board, the Company or
its shareholders in contemplation of
the
liquidation or
dissolution of
the Company or
any other material development~.
2.
Attached hereto as
Exhibit B-
1 is a true, complete and correct copy of
the
currently effective Bylaws of
the Company. Except as
set forth on
Exhibit B-
2 attached hereto,
such Bylaws have not been modified, amended or
rescinded and remain in full force and effect
as
of
the date hereof.
3.
Attached hereto as
Exhibit C is a true, complete and correct copy of
a certificate
issued by
the Secretary of
State of
the State of
Washington with respect to the due
incorporation and legal existence of
the Company.
4.
Attached hereto as
Exhibit 0-
1 is a true, complete and correct copy of
the
resolutions ( the
"Resolutions") duly adopted by
the
Board at
meetings duly called and held on
January 17
,
2006 and February 21
,
2006, in each case at
which a quorum was present and
acting throughout, approving and authorizing, among other things, the
transactions described
therein relating to ( i) the
authorization and reservation of
the
Series I Perpetual Non- cumulative
Fixed- to-
Floating Rate Preferred Stock and the Series J Perpetual Non- cumulative Fixed Rate
Preferred Stock (together, the
"Preferred Stock") and the
filing of
articles of
amendment with
respect thereto, and ( ii)
the
offer and sale of
( a)
$1,250,000,000 of
Fixed- to-
Floating Rate
Perpetual Non- cumulative Trust Securities, liquidation preference $100,000 pe
r
security ("
Trust
Securities"), by
Washington Mutual Preferred Funding Trust I, and ( b)
( i) $302,300,000 of
7.25% Perpetual Non- cumulative Preferred Securities, Series A-
1,
liquidation preference
$100,000 per security, and ( ii) $447,700,000 of
7.25% Perpetual Non- cumulative Preferred
Securities, Series A-
2,
liquidation preference $10,000 pe
r
security, in each case by
Washington
Mutual Preferred Funding (Cayman) I Ltd. Except as
set forth on
Exhibit 0-
2,
the Resolutions
attached hereto as
Exhibit 0-
1 have not been amended, supplemented, modified, revoked or
rescinded and have been in fu
ll
force and effect since their adoption to and including the
date
hereof and are now in fu
ll
force and effect and the
Resolutions as
so amended as
set
forth on
Exhibit 0-
2 are the
only resolutions adopted by
the Board or
any committee thereof relating to
the
Preferred Stock or
the
Securities. Attached hereto as
Exhibits 0-
2,
0-
3 and 0-
4 are true,
complete and correct copies of
the actions of
Authorized Officers effected pursuant to the
17357747 WMI Assistant Secretary's Certificate
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002099.00001
Resolutions relating, respectively, to the pricing, articles of
amendment and forms of
certificates
for
the Preferred Stock. Each such action remains in full force and effect.5.
Attached hereto as
Exhibit E is a list of
duly elected or
appointed, qualified and
acting officers of
the Company (the "Authorized Officers"), holding the titles indicated next to
their respective names, and the signatures appearing opposite their respective names are the
true and genuine signatures of
such Authorized Officers, and each such Authorized Officer is
duly authorized to execute and deliver, on
behalf of
the Company, the agreements, documents
and other instruments related to the transactions more specifically described in or
contemplated
by
the Resolutions and was so
duly authorized at
the time of
signing and delivery of
any such
agreements, documents or
other instruments signed and delivered prior to the date hereof, and
the signatures of
such .Authorized Officers appearing on such agreements, documents or
other
instruments are the genuine signatures.
[Signature Pages to Follow]
17357747 WMI Assistant Secretwy's Certificate
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002099.00002
INWITNESS WHEREOF, the undersigned has signed this Certificate a
s
of
the date first
hereinabove written. ~ IJ /
By:
j!~
Name: Susan Taylor
Title: Assistant Secretary
I, Sophie Hager Hume, an
Assistant Secretary, hereby certify that Susan Taylor is a duly
elected, qualified and acting Assistant Secretary of
the Company as
of
the date hereof and that
the signature set
forth opposite his name is his genuine signature.
~~ me $ M!
ft+~Title: Assistant Secretary
IN WITNESS WHEREOF, I have hereunto signed my name as
of
the date first
hereinabove written.
17357747WMJAssistant Secretary's Certificate
CONFIDENTIAL
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EXHIBIT AI
Amended and Restated Articles of Incorporation
17357747 WMI Assistant Secretarys Certificate
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002099.00004
I, Sam Reed, Secretary of
State of
the State of
Washington and custodian of
its
seal,
hereby issue this
certificate that the attached is a true and correct copy of
ARTICLES OF AMENDMENT
of
WASHINGTON MUTUAL, INC.
as
filed in this office on
February 8,
2001.
Date: March 6,
2006
Given under my hand and
the Seal of
the
State
of
Washington at
Olympia.
the
State Capital
Sam Reed, Secretary of
State
""
l{\
n n(\ 1
CONFIDENTIAL
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~....
Secretary of
State
I, Sam Reed, Secretary of
State of
the
State of
Washington and custodian of
its
seal,
hereby issue this
ARTICLES OF AMENDMENTto
WASHINGTON MUTUAL, INC.
a Washington Profit Corporation. Articles of
Amendment were filed
for
record in this office on
the
date indicated below.
UBI Number: 601 566389
:~
Date: February 8,
2001
Effective Date:
Given under my hand and
the Seal of
the
State of
Washington at
Olympia,
cFirn~
Sam Reed, Secretary of
State
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002099.00006
043-
1663,
0
20
01
ARTICLES OF AMENDMENT
TO THE
FIl.
ED
STATE OF
WASI- IIM~ TON
FE
B
08 2001 ~
'
cr.
RETARY OF
STATe
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
WASIDNGTON MUTUAL, INC.
Pursuant to the provisions of
Chapter 23B. 10 and Section 23B. 06.020 of
the
Washington Business Corporation Act, Washington Mutual, Inc., a Washington
corporation, hereby adopts the
following articles of
amendment to its amended and
restated articles of
incorporation: .
FIRST: The name of
the
corporation
is:
Washington Mutual, Inc.
SECOND: The rights, preferences, privileges, restrictions and other matters
relating to the
Series H Preferred Stock of
the
corporation are as
follows:
1.
Designation. The designation of
this Series shall be
Series H Preferred Stock
(hereinafter referred to as
this " Series"), and
the
number of
shares constituting this Series
shall be 2,000,000. Shares of
this Series shall have a liquidation preference
of$
50
.
2.
Dividends. ( a)
The holders of
shares of
this Series shall be
entitled to receive
cash dividends, when, as
and if declared by
the
Board of
Directors, out of
funds legally
available
for
that purpose, at
the
rates
se
t
forth below in this Section 2.
Dividends on
the
shares of
this Series shall be
payable, when, as
and if declared by
the
Board of
Directors,
quarterly in arrears on February
16
,
May
16
,
August 16 and November 16
of
each year
(each, a "Dividend Payment Date"), commencing on
the
Initial Dividend Payment Date.
The " Initial Dividend Payment Date" shall mean
the
first Dividend Payment Date
following the effective date of
the
merger (the " Merger") of
Bank United Corp. with and
into
the
Company, or
if any such date is not a Business Day ( as
defined below),
the
next
succee!! ing Business Day. Each such dividend shall be
paid to the
holders of
record of
shares of
this Series as
they appear on
the
stock register of
the Company on
the
applicable Record Date, as
shall be fixed by
the
Board of
Directors; provided, however,
that holders of
shares of
this Series called for
redemption on
a Redemption Date falling
between
the
record date associated with a Dividend Payment Date and such Dividend
Payment Date shall receive
the
applicable dividend payment, together with
all
other
accumulated and unpaid dividends on
such date as
shall be
fixed
for
redemption.
Dividends on
the
shares ofthis Series shall accumulate and be
cumulative from the date
of
original issuance. " Business Day" shall mean any day other than a Saturday or
Sunday
or
a day on which banking institutions in New York City
are authorized or
required by
law or
executive order to remain closed.
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CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002099.00007
02
04
03
1-
1563.
.
1
( b)
For each quarterly dividend period (each, a "Dividend Period") from
the
Initial Dividend Payment Date, through and including
the
Dividend Period ending August
16,2002, dividends payable on
the
shares of
this Series shall be
payable at
a'rate per
annum of
the
liquidation preference thereof equal to 7.25% (
the
" Initial Rate Period").
For each Dividend Period after
the
Initial Rate Period, dividends payable on
the
shares of
this Series shall be
payable at
a rate per annum of
the
liquidation preference thereof equal
to the
Reset Rate ( as
defined below). The amount of
dividends per share
for
each
Dividend Period shall be computed by
dividing the applicable rate
for
such Dividend
Period by
four and applying
the
resulting rate to the
liquidation preference per share of
this Series. Each Dividend Period (other than
the
Initial Dividend Period, defmed below)
shall commence on
a Dividend Payment Date and shall end on and include
the
day next
preceding
the
next Dividend Payment Date. The " Initial Dividend Period" shall mean
the
period commencing on
the
effective date of
the
Merger and ending on
the Initial
Dividend Payment Date.
( c)
Dividends payable on
this Seriesfor
any period greater or
less than a full
Dividend Period, other than
the
Initial Dividend Period, shall be computed on
the
basis of
a 360-day year consisting of
twelve 30- day months and,
for
any period less than one
month,
the
actual number of
days elapsed in the
period. In connection with
the
Merger,
the
shares of
Bank United Corp.'s Series B Preferred Stock (
the
" Predecessor Shares")
shall be
converted into shares of
this Series. Prior to the
completion of
the
Merger, the
board of
directors of
Bank United Corp. declared a dividend on
the
Predecessor Shares
payable on
the
Initial Dividend Payment Date. AB
successor to Bank United Corp.,
the
Company will pay on
the
Initial Dividend Payment Date
the
dividend declared
bu
t
not
paid on
the Predecessor Shares; provided that in no
event shall a holder of
this Series be
entitled to a dividend on
the
Initial Dividend Payment Date that is greater than such
holder would have been entitled to on
the
Initial Dividend Payment Date had
the
Merger
not been completed and the Predecessor Shares not been converted into shares of
this
Series.
( d)
No
full dividends shall be declared or
paid or
se
t
apart
for
payment on
the
Preferred Stock of
any series ranking, as
to dividends, on a parity with or
junior to this
Series
for
any period unless full cumulative dividends on
the shares of
this Series
for
all
full Dividend Periods ending on
or
prior to the
date of
such dividends on
such other series
ofPr. ef!
lrred Stock have been or
contemporaneously are declared and paid or
declared and
a sum sufficient
for
the
payment thereof
se
t
apart
for
such payment. When dividends are
not paid in full, as
aforesaid, upon
the
shares of
this Series and any other series of
Preferred Stock ranking on a parity as
to dividends with this Series,
all dividends
declared upon shares of
this Series and any other series of
Preferred Stock ranking on
a
parity as
to dividends with this Series shall be
declared pro rata so
that
the
amount of
dividends declared
per
share on
this Series and such other Preferred Stock shall in all
cases bear to each other the same ratio that accrued and unpaid dividends per share on
the
shares of
this Series and such other Preferred Stock bear to each other. No
interest, or
sum of
money in lieu of
interest, shall be payable in respect of
any dividend payment or
payments on
this Series which may be
in arrears.
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( e)
So
long as
any shares of
this Series are outstanding, no
dividend (other than a
dividend in Common Stock or
in any other stock ranking junior to this Series as
to
dividends and upon liquidation and other than as
provided in paragraph ( d)
of
this Section
2)
shall be
declared or
paid or
se
t
aside
for
payment or
other distribution declared or
made uponth
e Common Stock or
upon any other stock ranking junior to or
on a parity
with this Series as
to dividends or
upon liquidation, no
r
shall any Common Stock or
any
other stock of
the
Company ranking junior to or
on
a parity with this Series as
to
dividends or
upon liquidation be
redeemed, purchased or
otherwise acquired for
any
consideration ( or
any moneys be
paid to or
made available for
a sinking fund for
the
redemption of
any shares of
any such stock) by
the Company (except by
conversion into
or
exchange
for
stock of
the Company ranking junior to this Series as
to dividends and
upon liquidation), unless, in each case, full cumulative dividends on
all outstanding
shares of
this Series for
all
fu
ll
Dividend Periods ending on
or
prior to the
date of
such
other dividend, distribution, redemption, purchase or
other acquisition, shall have been or
contemporaneously are paid or
declared and a sum sufficient for
the
payment thereof set
aside
for
such payment.
3.
Remarketin~. ( a)
The dividend rate on this Series shall be reset to the
Reset
Rate on
the
Purchase Contract Settlement Date ( as
defmed below). The Company shall
request,
not
later than 15
nor more than 30
calendar days prior to the
Remarketing Date
( as
defined below), that
the
Depositary ( as
defined below) notifY the Holders of
shares of
this Series and the
holders of
Corporate PIES of
the
Remarketing and of
the
procedures
that must be
followed if a Holder of
Corporate PIES wishes to make a cash settlement of
its obligation to purchase Common Stock ofthe Company pursuant to the
Purchase
Contract Agreement.
( b)
Not later than 5:
00
p.
m., New York City time, on
the
seventh Business Day
preceding the
Purchase Contract Settlement Date, each Holder may elect to have the
shares of
this Series held by
such Holder remarketed in the
Remarketing. Holders of
Corporate PIES that do
not give notice of
their intention to make a cash settlement of
the
purchase contract component of
their Corporate PIES prior to such time in the
manner
specified in the
Purchase Contract Agreement, or
that give such notice
bu
t
fail to deliver
cash prior to 11: 00
a.
m., New York City time, on
or
prior to the fifth Business Day
preceding the
Purchase Contract Settlement Date, shall be
deemed to have consented to
the
disRosition of
the
shares of
this Series that are a component of
their Corporate PIES in
the
Remarketing. Holders of
the
shares of
this Series that
are not a component of
Corporate PIES. wishing to have their shares of
this Series remarketed shall give to the
Purchase Contract Agent notice of
their election prior to 11: 00
a.
m., New York City time
on such fifth Business Day. Any such notice shall be irrevocable and may
no
t
be
conditioned upon the
level at
which the
Reset Rate is established in the
Remarketing.
Promptly after 11: 00
a.
m.,
New York City time, on
such fifth Business Day, the
Purchase
Contract Agent, based on
the
notices received by
it prior to such time (including notices
from the
Purchase Contract Agent as
to purchase contracts for
which cash settlement has
been elected and cash received), shall notifY
the
Remarketing Agent of
the
number of
shares of
this Series to be
tendered
for
purchase in the
Remarketing.
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( c)
If any Holder of
shares of
this Series does
no
t
give a notice of
its intention to
make a cash settlement or
gives such notice bu
t
fails to deliver cash as
described in
Section 3(
b)
above, or
gives a notice of
election to have shares of
this Series'that are
no
t
a
component of
Corporate PIES remarketed, then the
shares of
this Series of
such Holder
shall be
deemed tendered for
purchase in the
Remarketing, notwithstanding any failure
by
such Holder to deliver or
properly deliver such shares to the
Remarketing Agent
for
purchase.
( d)
The right of
each Holder to have shares ofthis Series tendered
for
purchase
shall be
limited to the
extent that ( i) the
Remarketing Agent conducts a remarketing
pursuant to the
terms of
the
Remarketing Agreement, (
ii)
the
shares of
this Series
tendered have not been called
for
redemption, (
iii)
the
Remarketing Agent is able to find
a purchaser or
purchasers
for
the
tendered shares of
this Series and (
iv)
such purchaser or
purchasers deliver
the
purchase price therefor to the
Remarketing Agent.
( e)
On
the
Remarketing Date,
the
Remarketing Agent shall use commercially
reasonable efforts to remarket, at
a price equal to 100.50% of
the
aggregate liquidation
preference thereof,
the
shares of
this Series tendered or
deemed tendered
for
purchase.
( f)
If,
as a result ofthe efforts described in Section 3(
e),
the
Remarketing Agent
determines that it will be able to remarket
all
of
the
shares of
this Series tendered or
deemed tendered
for
purchase at
a price of
100.50% of
the
aggregate liquidation
preference of
such shares prior to 4:
00
p.
m., New York City time, on
the
Remarketing
Date,
the
Remarketing Agent shall determine
the
Reset Rate, which shall be
the
rate
per
annum (rounded to the
nearest one- thousandth (0.001) of
one percentper
annum) that the
Remarketing Agent determines, in its sole judgment, to be
the
lowest rate
per
annum that
will enable it to remarket
all
of
the
shares ofthis Series tendered or
deemed tendered
for
Remarketing.
( g)
If none of
the Holders of
the
shares of
this Series or
the
holders of
the
Corporate PIES elects to have shares of
this Series remarketed in the
Remarketing,
the
Reset Rate shall be
the
rate determined by
the Remarketing Agent,
in:
i. ts sole discretion,
as
the
rate that would have been established had a Remarketing of
all
the
shares of
this
Series been held on
the
Remarketing Date.
:( h)
If,
by
4:
00
p.
m.,
New York City time, on
the
Remarketing Date, the
Remarketing Agent is unable to remarket
all
of
the
Preferred Securities tendered or
deemed tendered for
purchase, a "Failed Remarketing" shall be
deemed to have occurred
and the Remarketing Agent shall so
advise by
telephone
the
Depositary and
the
Company. Inthe event of
a Failed Remarketing,
the
Reset Rate shall equal ( 1)
the
"AA"
Composite Commercial Paper Rate ( as defmed below), plus ( 2)
the
Applicable Margin
( as
defined below).
( i) By
approximately 4:
30
p.
m., New York City time, on
the Remarketing Date,
proVided that there has not been a Failed Remarketing,
the
Remarketing Agent shall
advise, by
telephone ( i) the
Depositary and
the Company of
the
Reset Rate determined in
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the Remarketing and
the
number of
shares of
this Series sold in the
Remarketing, (
ii)
each purchaser ( or
the Depositary Participant thereof) of
the
Reset Rate and
the
number
of
shares of
this Series such purchaser is to purchase and (
iii) each purchaserio give
instructions to its Depositary Participant to pay
the
purchase price on
the Purchase
Contract Settlement Date in same day funds against delivery of
the shares of
this Series
purchased through
the
facilities of
the
Depositary.
( j) In accordance with
the
Depositary's normal procedures, on
the
Purchase
Contract Settlement Date, the transactions described above with respect to each Preferred
Security tendered
for
purchase and sold in the
Remarketing shall be
executed through
the
Depositary, and
the
accounts of
the respective Depositary Participants shall be
debited
and credited and such shares of
this Series delivered by book- entry as necessary to effect
purchases and
sales of
such shares of
this Series. The Depositary shall make payment in
accordance with
its normal procedures.
( k)
If any Holder of
shares of
this Series selling shares of
this Series in the
Remarketing fails to deliver such shares, the Depositary Participant of
such selling holder
and of
any other Person that was to have purchased shares of
this Series in the
Remarketing may deliver to any such other Person a number of
shares of
this Series that
is less than the
number of
shares of
this Series that otherwise was to be
purchased by
such Person. In such event,
the
number of
shares of
this Series to be
so
delivered shall be
determined by
such Depositary Participant, and delivery of
such lesser number of
shares
of
this Series shall constitute good delivery.
( 1)
Under
the
Remarketing Agreement,
the Company shall be
liable for, and shall
pay, any and
all costs and expenses incurred in connection with
the
Remarketing.
( m)
The tender and settlement procedures
se
t
in this Section 3,
including
provisions
for
payment by
purchasers of
the shares of
this Series in the Remarketing,
shall be
subject to modification to the
extent required by
the Depositary or
if the
book-
entry system is no
longer available
for
the shares ofthis Series at
the
time of
the
Remarketing, to facilitate
the
tendering and remarketing of
the
shares-. Qf
this Series in
certificated form. In addition,
the
Remarketing Agent may modify
the
settlement
procedures
se
t
forth herein in order to facilitate
the
settlement process.
:-.
( n)
Definitions:
"'AA' Composite Commercial Paper Rate" on any date shall mean ( i) the
interest
equivalent of
the
60-day rate on commercial paper placed on behalf of
issuers whose
corporate bonds
are rated "AN' by S&P or
the
equivalent of
such rating by S&P or
the
equivalent of
such rating by S&P or
another rating agency, as made available on
a
discount basis or
otherwise by
the
Federal Reserve Board for
the
business day
.immediately preceding such date or
(
ii)
if the
Federal Reserve Board does not make
available any such rate, then
the
arithmetic average of
those rates, as
quoted on a discount
basis or
otherwise, by
the
Commercial Paper Dealers to the
Remarketing Agent
for
the
close of
business on
the
Business Day next preceding such date. If any Commercial
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Paper Dealer does no
t
quote a rate required to determine the
" AA" Composite
Commercial Paper Rate, the
" AA" Composite Commercial Paper Rate will be
determined
on
the
basis of
the
quotation or
quotations fumished by
the
remaining COmnlercial Paper
Dealer or
Commercial Paper Dealers and any substitute commercial paper dealer or
substitute commercial paper dealers selected by
the
Remarketing Agent
or,
if the
Remarketing Agent does
no
t
select any such substitute commercial paper dealer or
substitute commercial paper dealers, by
the
remaining Commercial Paper Dealer or
Commercial Paper Dealers.
" Applicable Margin" shall mean
the
spread determined as
se
t
forth below, based
on
the
prevailing rating of
the Remarketed shares of
this Series in effect at
the
close of
business on
the
Business Day immediately preceding the date of
a Failed Remarketing:
Prevailing Rating
AAJ " aa"
AI
" a"
BBB/ " baa"
Below BBB/ '' baa''
Spread
3.00%
4.00%
5.00%
7.00%
For purposes of
this definition, the
" prevailing rating" of
the
Remarketed shares
of
this Series shall
be:
( i) AAJ aa
if such shares have a credit rating of
AA- or
better by S&P and
" aa3" or
better by
Moody's or
the
equivalent of
such ratings by
such
agencies or
a substitute rating agency or
substitute rating agencies selected
by
the
Remarketing Agent;
(
ii)
if not under clause ( i) above, then AI
a if the
Remarketed Securities
have a credit rating of
A-
or
better by S&P and " a3"
ex.
better by Moody's
or
the
equivalent of
such ratings by
such agencies or
a substitute rating
agency or
substitute rating agencies selected by
the. Remarketing Agent;
(
iii) if not
under clauses ( i) or
(
ii) above, then BBB/ " baa" if the
Remarketed Securities have a credit rating ofBBB- or
better by S&P and
" baa3" or
better by
Moody's or
the equivalent of
such ratings by
such
agencies or
a substitute rating agency or
substitute rating agencies selected
by
the Remarketing Agent~ or
iv)
ifnot under clauses ( i) - (
iii) above, then below BBB/ " baa."
" Certificate" shall mean a Corporate PIES Certificate.
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"Commercial Paper Dealers" shall mean Lehman Commercial Paper Inc.,
Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated or
their
affiliates or
successors, if such affiliates or
successors
are
commercial paper lfealers.
"Common Stock" shall mean the Common Stock, no
par value, of
the
Company.
"Corporate PIES" shall mean a stock purchase unit consisting of
( A)
a stock
purchase contract under which ( i) the
holder of
the
unit will purchase from
the
Company,
for
$50.00 in cash, a certain number of
shares of
common stock of
the Company and (
ii)
the Company will pay such holder contract adjustment paYments and ( B)
beneficial
ownership of
a shares of
this Series.
"Corporate PIES Certificate" means a certificate evidencing the
rights and
obligations of
a Holder in respect of
the
number of
Corporate PIES' specified on such
certificate.
"Depositary" shall mean, with respect to shares of
this Series issuable in whole or
in part in the form of
one or
more Global Securities, a clearing agency registered under
the Exchange Act that is designated to act
as
depositary
for
such shares, and initially shall
be The Depository Trust Company.
"Depositary Participant" shall mean a member
of,
or
participant
in,
the
Depositary.
" Exchange Act" shall mean
the
Securities Exchange Act of
1934 and any statute
successor thereto, in each case as
amended from time to time, and
the
rules and
regulations promulgated thereunder.
"Global Certificate" means a Certificate that evidences
all
or
part of
the
shares of
this Series and is registered in the name of
a clearing agency or
a nominee thereof.
"Global Security" shall mean a global Series H Preferred Stock Certificate
registered in the
name of
a Depositary or
its nominee.
";:
Holder" shall mean any holder of
shares of
this Series.
''Moody's'' shall mean Moody's Investors Service, Inc.
" Purchase Contract Agent" shall mean the purchase contract agent under the
Purchase Contract Agreement, including successor purchase contract agents.
" Purchase Contract Agreement" shall mean
the
Purchase Contract Agreement
dated as
of
August
10
,
1999 between
the Company ( through
its predecessor entity, Bank
United Corp.) and Bank One N.
A.
(under
its
prior name, The First National Bank of
Chicago), as
Purchase Contract Agent.
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" Purchase Contract Settlement Date" shall mean August 16,2002.
" Record Date"
for
dividends on
the
shares of
this Series on any Payn1ent Date
shall mean, as
to any Global Certificate,
the
Business Day next preceding such Payment
Date, and as
to any other Certificate, 15
Business Days prior to such Payment Date.
" Remarketing Agent" shall mean
the
remarketing agent selected by
the
Company,
including any successor remarketing agents selected by
the
Company.
" Remarketing Date" shall mean
the
third Business Day preceding
the
Purchase
Contract Settlement Date.
" Reset Rate" shall mean shall mean
the
distribution rate per annum that results
from
the
Remarketing pursuant this Section 3.
" S&
P"
shall mean Standard & Poor's Ratings Services, a division of
McGraw- Hill Corporation.
4.
Redemption. ( a)
Optional Redemption. The shares of
this Series
are
not
redeemable prior to October 16
,
2002. The Company, at
its
option, may redeem shares of
this Series, as
a whole or
in part, at
any time or
from time'to time, on
or
after October 16,
2002 at
a redemption price of$ 50
per share plus accrued and unpaid cumulative
dividends thereon (whether or
no
t
declared) to the
date fixed
for
redemption.
( b)
Mandatory Redemption. The Company shall redeem, from any source of
funds legally available therefor,
all
issued and outstanding shares of
this Series, in whole
and
not
in part, on August 16, 2004, at
a redemption price of
$ 50
per
share plus accrued
and unpaid cumulative dividends thereon (whether or
not declared) to the
date fixed
for
redemption.
( c)
Redemption Procedures.
( i) In the
event that, pursuant to paragraph ( a)
above, fewer than
all
the
outstanding shares of
this Series are to be redeemed;
the
number of
shares
to be redeemed shall be
determined by
the
Board of
Directors and
the
shares to be redeemed shall be
determined by
lot
or
pro rata as may be
determined by
the
Board of
Directors or
by any other method as may be
determined by
the Board of
Directors in its sole discretion to be
equitable,
provided that such method satisfies any applicable requirements of
any
securities exchange on which this Series is listed.
(
ii)
In the
event
the Company shall redeem shares of
this Series, notice of
such redemption shall be given by
first class mail, postage prepaid, mailed
not less than 30
or
more than 60
days prior to the
redemption date, to each
holder of
record of
the
shares to be
redeemed, at
such holder's address as
the
same appears on
the stock register of
the
Company. Each such notice
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shall state: ( a)
the
redemption date; ( b)
the
number of
shares of
this Series
to be redeemed and, if fewer than
all
the
shares held by
such holder are to
be redeemed,
the
number of
such shares to be redeemed from ~ ch holder;
( c)
the
redemption price; ( d)
the
place or
places where certificates
for
such
shares
are to be
surrendered
for
payment of
the
redemption price; and ( e)
that dividends on
the
shares to be redeemed shall cease to accrue on
the
redemption date.
(
iii) Notice having been mailed as
aforesaid, from and after the redemption
date (unless default shall be made by
the Company in providing money
for
the
payment of
the
redemption price) dividends on
the
shares of
this Series
so
called for
redemption shall cease to accrue, and said shares shall no
longer be
deemed to be
outstanding, and all
rights of
the
holders thereof as
stockholders of
the
Company (except the
right to receive from the
Company
the
redemption price) shall cease. Upon surrender in accordance
with said notice ofthe certificates
for
any shares so redeemed (properly
endorsed or
assigned
for
transfer, if the
Board of
Directors shall so
by
the
Company at
the
redemption price aforesaid. In case fewer than
all
the
shares represented by
any such certificate
are redeemed, a without cost to
the
holder thereof.
(
iv)
Any shares of
this Series which shall at
any time have been redeemed
shall, after such redemption, have
the
status of
authorized
bu
t
unissued
shares of
Preferred Stock, without designation as
to series until such shares
are once more designated as
part of
a particular series by
the
Board of
Directors.
( v)
Notwithstanding the foregoing provisions of
this Section 4,
if full
cumulative dividends on
all outstanding shares of
this Series
are
in arrears,
no shares of
this Series shall be redeemed unless
all outstanding shares of
this Series
are simultaneously redeemed, and
the Company shall
not
purchase or
otherwise acquire any shares ofthis Series;.: provided, however,
that
the
foregoing shall not prevent
the
purchase or
acquisition of
shares of
this Series pursuant to a:
purchase or
exchange offer made on
the
same
terms to holders of
all
outstanding shares of
this Series.
5.
Conversion. The holders of
shares of
this Series shall
no
t
have any rights to
convert such shares into shares of
any other class or
series of
capital stock of
the
Company.
6.
Liquidation Ril: hts. ( a)
Upon
the
voluntary or
involuntary dissolution,
liquidation or
winding up
of
the
Company,
the
holders of
the shares of
this Series shall be
entitled to receive and to be paid
ou
t
of
the
assets of
the Company available
for
distribution to its stockholders, before any payment or
distribution shall be made on
the
Common Stock or
on any other class of
stock ranking junior to this Series upon
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liquidation, the
amount of
$ 50
pe
r
share, plus accrued and unpaid cumulative dividends
(whether or
not declared) to the date ofthe liquidating distribution.
( b)
After
the
payment to the
holders of
the
shares of
this Series of
the
full
preferential amounts provided
for
in this Section 6,
the
holders of
this Series as such shall
have no
right or
claim to any of
the remaining assets of
the
Company.
( c)
If, upon any voluntary or
involuntary dissolution, liquidation, or
winding up
of
the
Company,
the
amounts payable with respect to the
shares of
this Series and any
other shares of
stock of
the Company ranking as
to any such distribution on
a parity with
the
shares of
this Series
are
not paid in full,
the
holders of
the
shares ofthis Series and of
such other shares shall share ratably in any
such distribution of
assets of
the
Company in
proportion to the
full respective distributions to which they
are entitled.
( d)
Neither the sale of
all
or
substantially
all
the property or
business of
the
Company, nor the merger or
consolidation of
the Company into or
with any other
corporation or
the
merger or
consolidation of
any other corporation into or
with
the
Company, shall be deemed to be a dissolution, liquidation or
winding up, voluntary or
involuntary, for
the
purposes ofthis Section 6.
.
7.
Rankin~. For purposes of
this reso lution, any stock of
any class or
classes 0f
the
Company shall be
deemed to rank:
( a)
prior to the shares of
this Series, either as
to dividends or
upon liquidation, if
the
holders of
such class or
classes shall be entitled to the
receipt of
dividends or
of
amounts distributable upon dissolution, liquidation or
winding up
of
the
Company, as
the
case may
be,
in preference or
priority to the
holders of
shares of
this Series;
( b)
on
a parity with shares of
this Series, either as
to dividends or
upon
liquidation, whether or
not
the
dividend rates, dividend payment dates or
redemption or
liquidation prices
pe
r
share or
sinking fund provisions, if any, be different from those of
this Series (and whether or
not such dividends shall accumulate), if~~ holders of
such
stock shall be
entitled to the
receipt of
dividends or
of
amounts distributable upon
dissolution, liquidation or
winding up
ofthe Company; as
the
case maybe, without
prefer~
n.~ ce'
or
priority, one over the
other, as
between the
holders of
such stock and the
holders of
shares of
this Series; and
( c)
junior to shares of
this Series, either as
to dividends or
upon liquidation, if
such class shall be Common Stock or
if the
holders of
shares of
this Series shall be
entitled to receipt of
dividends or
of
amounts distributable upon dissolution, liquidation
or
winding up
of
the
Company, as
the
case may be
,
in preference or
priority to the
holders of
shares of
such class or
classes.
( d)
The shares of
each of
the
other series of
preferred stock ofthe Company shall
rank on
a parity with the
shares of
this Series.
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8.
Yotin~ Ri2hts. The holders of
the
shares of
this Series shall have.
the
following voting rights:
( a)
Each share of
this Series will have
the
right to vote, with each share of
this
Series having 0.10 vote, in connection with matters submitted generally to the holders of
the common stock and other capital stock ofthe Company entitled to yote in respect of
matters submitted to the stockholders of
the Company generally. For these purposes,
the
holders ofthe shares of
this Series and the holders of
the common stock and such other
capital stock of
the
Company, so entitled to vote, shall vote as a single class.
( b)
Unless the vote or
consent of
the holders of
a greater number of
shares shall
then be
required by
law,
the
approval ofthe holders of
at
least two- thirds of
the
then-
outstanding shares ofthis Series, given in person or
by
proxy, either in writing or
by
a
vote at
a meeting called for
the
purpose at
which the
holders of
shares of
this Series shall
vote together as
a separate class, shall be
required
for
authorizing, effecting or
validating
any amendment, alteration or
repeal, whether by
merger, consolidation or
otherwise, of
any of
the
provisions ofthe Amended and Restated Articles of
Incorporation of
the
Company or
of
any certificate amendatory thereof or
supplemental thereto ( including any
Certificate of
Designations or
any similar document relating to any series of
Preferred
Stock) that adversely affect the
powers, preferences, privileges or
rights of
this Series;
provided, however, that the
creation and issuance of
any other class or
series of
preferred
stock, or
any increase in the number of
authorized shares of
any Preferred Stock of
any
other class or
series, in each case ranking on
a parity with or
junior to this Series with
respect to the
payment of
dividends and
the
distribution of
assets upon liquidation,
dissolution or
winding up
of
the
affairs of
the Company shall not be deemed to adversely
affect such powers, preferences or
other special rights.
( c)
Unless
the
vote or
consent of
the
holders of
a greater number of
shares shall
then be
required by
law,
the
approval of
the holders of
at
least two- thirds of
all
of
the
then- outstanding shares of
this Series and
all other series of
preferred stock ranking on a
parity with shares of
this Series, either as
to dividends or
upon liquidation, given in
person or
by
proxy, either in writing or
by
a vote at
a meeting called Jq[.
the
purpose at
which the holders of
shares of
this Series and such other series of
Preferred Stock shall
vote together as
a single class without regard to series, shall be
necessary
for
authorizing,
effectin~ or
validating ( i) the
creation, authorization or
issuance
of,
(
ii)
the
reclassification of
any authorized stock of
the Company into, or
(
iii)
the
creation,
authorization or
issuance of
any obligation or
security convertible into or
evidencing
the
right to purchase, any additional class or
series of
stock ranking prior to this Series, either
as
to dividends or
upon liquidation.
( d)
( i) If at
any time dividends on
this Series shall be
in arrears in an
amount
equal to six quarterly dividends thereon,
the
occurrence of
such
contingency shall mark
the
beginning of
a period (herein called a " default
period") which shall extend until such time as
all
accrued and unpaid
dividends for
all
previous dividend periods and for
the
current dividend
period. on
all
shares of
this Series then outstanding shall have been
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declared and paid or
se
t
apart
for
payment. During each default period,
the
holders of
shares of
this Series and other shares of
Preferred Stock on
which dividends
are
in arrears and as
to which similar voting tights have
been conferred, voting as
a class, irrespective of
series, shall have
the
right
to elect two Directors to the
Board of
Directors of
the
Company.
(
ii) During any default period, such voting right of
the
holders of
this
Series may be
exercised by
written consent, at
a special meeting called
pursuant to Section 7(
d)(
iii) hereof or
at
any annual meeting of
stockholders. The absence ofa quorum of
the
holders of
Common Stock
at
any such special or
annual meeting shall not affect
the
exercise by
the
holders of
Preferred Stock of
such voting right. At
any meeting at
which
the
holders of
Preferred Stock shall exercise such voting right initially
during an
existing default period, they shall have the-right, voting as
a
class, to elect Directors to fill such vacancies, if any, in the
Board of
Directors as may then exist up
to two Directors
or,
if such- right is
exercised at
an
annual meeting, to elect two Directors. If the
number
which may be
so
elected at
any special meeting does no
t
amount to the
required number, the
holders of
Preferred Stock shall have the
right to
make such increase in the
number of
Directors as
shall be
necessary to
permit
the
election by
them of
the
required number. After
the
holders of
the
Preferred Stock shall have exercised their right to elect Directors in
any default period and during
the
continuance of
such period,
the
number
of
Directors shall no
t
be
increased or
decreased except by
vote of
the
holders of
Preferred Stock as
herein provided. Any Director elected by
a
vote of
the
holders of
Preferred Stock may be
removed from office, with
or
without cause, only by
the
affirmative vote of
the
requisite percentage
of
holders of
Preferred Stock required to elect Directors as
specified in this
Section 8(
d).
(
iii) Unless
the
holders of
Preferred Stock, during an
existing default
period, shall have previously exercised their right
to,
el€
ct
Directors,
the
Board of
Directors may order, or
any shareholder or
shareholders owning
in the
aggregate not less than
ten
percent (10%) of
the
total number of
shares of
Preferred Stock outstanding, irrespective of
series, on which
dividends
are
in arrears and as
to which similar voting rights have been
conferred, may request,
the
calling ofa special meeting of
the
holders of
Preferred Stock, which meeting shall thereupon be
called by
the
Chairman, a Vice Chairman or
the Secretary of
the
Company. Notice of
such meeting and of
any annual meeting at
which holders of
Preferred
Stock
are entitled to vote pursuant to this Section 7(
d)(
iii) shall be
given to
each holder of
record of
Preferred Stock entitled to vote thereat by mailing
a copy of
such notice to him at
his
last address as
the same appears on
the
books of
the Company on such record date, not more than 45
days prior to
the date of
such notice, as
the
Board of
Directors may
fix
for
this purpose.
Such meeting shall be
called
for
a time not earlier than 10
days and not
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later than 60
days after such order or
request
or,
in default ofthe calling of
such meeting within 60
days after such order or
request, such meeting may
be
called on
similar notice by
any shareholder or
shareholders'Owning in
the
aggregate not less than 10% of
the
total number of
shares of
Preferred
Stock outstanding, irrespective of
series, entitled to vote thereat.
(
iv) m any default period
the
holders of
Common Stock, and other classes
of
stock of
the Company if applicable, shall continue to be
entitled to elect
the
whole number of
Directors constituting
the
Board of
Directors until
the
holders of
Preferred Stock, voting as
a class, shall have exercised their
right to elect two Directors, after
the
exercise of
which right ( A)
the
Directors so
elected by
the
holders of
Preferred Stock shall continue in
office until their successors shall have been elected by
such holders or
until
the
expiration of
the default period, and ( B)
any vacancy on
the
Board of
Directors may (except as
provided in Section 8(
d)(
ii) hereof) be
filled by
vote of
a majority of
the
remaining Directors theretofore elected
by
the
holders of
the
class of
stock which elected
the
Director whose
office shall have become vacant. References in this Section 8(
d)
to
Directors elected by
the
holders of
a particular class of
stock shall include
Directors elected by
such Directors to fill
vacancies as
provided in clause
( B)
of
the
foregoing sentence.
( v)
Immediately upon the expiration of
a default period, ( A)
the right of
the
holders of
Preferred Stock as a class to elect Directors shall cease, ( B)
the
term of
any Directors elected by
the
holders of
Preferred Stock as
a
class shall terminate, and ( C)
the
number of
Directors shall be
such
number as may be
provided
for
in the Amended and Restated Articles of
mcorporation or
Bylaws of
the Company or
by
resolution ofthe Board of
Directors, irrespective of
any increase made pursuant to the
provisions of
Section 8(
d)(
ii) hereof (such number being subject, however, to change
thereafter in any
manner provided by
law or
in the
Amended and Restated
Articles ofmcorporation or
Bylaws of
the
Company~=Any vacancies on
the
Board of
DireCtors effected by
the
provisions of
clauses ( B)
and ( C)
in
the preceding sentence may be
filled by
a majority of
the
-remaining
Directors.
( e)
Except as
se
t
forth herein or
required by
applicable law, holders of
shares of
this Series shall have no voting rights and their consent shall
no
t
be required
for
taking
any corporate action.
TmRD: These amendments do
not provide
for
an
exchange, reclassification
or
cancellation of
any issued shares.
FOURTH: The foregoing amendments to the
amended and restated articles of
incorporation were adopted by
the
Board of
Directors of
Washington Mutual, mc. on
October 17, 2000. Shareholder action was not required.
CONFIDENTIAL
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EXECUTED this
8th day of
February, 2001.
:~
, t
'..
WASHINGTON MUTUAL, INC.
By:
Its:
-
.- u~-=
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002099.00020
f~'.
I, Sam Reed, Secretary of
State of
the
State of
Washington and custodian of
its
seal,
hereby issue this
certificate that
the
attached is a true and correct copy of
ARTICLES OF AMENDMENT
of
WASHINGTON MUTUAL, INC.
RESTATED
as
filed in this office on
January
22,
2001.
Date: March 6,
20~
''
If\
f\
f\
f\1
Given under my hand and
the
Seal of
the
State
of
Washington at
Olympia. the
State Capital
Sam Reed. Secrelary of
State
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I ~ • ~
', 0;
•
...'
.'
JAN 222001
SEeR/?
1{.
Ry
() r :; J I,
T£
:
TO THE
OF
WASHINGTON MUTlJAL. INC..
REST ATEf) ARTICLES OF
INCORPORA TJON
Pursuaill to the
provisions of RCW 23
B.
1/)
of
the
Washingtoli Business Corporation Act.
Washington Mutual,
Inc
.. a Washington corp() rUlioll ( tfH''' Corponltion'' j berehy . idopts
the
1()
llowing articles 1.)
1'
amendment to its restated ankles ofincorpofmjoo.
Seclion
.:!.
ARTICLES OF
AMENDMENT
SF-CONI): The C,
lrpOfalion hefell> (TCalL's. rrOri1lhe 10.000.000 shares of