EXHIBIT 10.1
 
EXECUTION VERSION

WMI LIQUIDATING TRUST AGREEMENT
 
WMI LIQUIDATING TRUST AGREEMENT, dated as of March 5, 2012 (this “Trust
Agreement”), is by and among Washington Mutual, Inc. (“WMI”) and WMI Investment
Corp. (“WMI Investment” and, together with WMI, the “Debtors”), as debtors and
debtors-in-possession, William C. Kosturos, as liquidating trustee (together
with any successor or additional trustee appointed under the terms hereof, the
“Liquidating Trustee”), and CSC Trust Company of Delaware as the Delaware
resident trustee (together with any successor Delaware resident trustee
appointed under the terms hereof, the “Resident Trustee” and collectively with
the Liquidating Trustee, the “Trustees”) of the WMI Liquidating Trust (the
“Liquidating Trust”).  Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Debtors’ Seventh Amended
Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States
Bankruptcy Code, dated December 12, 2011, as confirmed (including all exhibits
thereto, as the same may be further amended, modified, or supplemented from time
to time, the “Plan”).
 
BACKGROUND
 
A.           On September 26, 2008, the Debtors filed voluntary petitions for
relief under chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
 
B.           On December 12, 2011, the Debtors filed the Plan and the disclosure
statement relating to the Plan (as amended, the “Disclosure Statement”) with the
Bankruptcy Court.
 
C.           On February 24, 2012, the Bankruptcy Court entered an order
confirming the Plan (the “Confirmation Order”).
 
D.           The Plan provides for the creation of a liquidating trust on or
before the Effective Date to hold, manage and administer the Liquidating Trust
Assets and distribute the proceeds thereof, if any, to the Liquidating Trust
Beneficiaries, in accordance with the terms of this Trust Agreement, the Plan
and the Confirmation Order.
 
E.           The Liquidating Trust is being created on behalf of, and for the
benefit of, the Liquidating Trust Beneficiaries.
 
F.           The Liquidating Trustee shall have all powers necessary to
implement the provisions of this Trust Agreement and administer the Liquidating
Trust, including, without limitation, the power to: (i) prosecute for the
benefit of the Liquidating Trust Beneficiaries through Trust Professionals (as
defined herein) any causes of action that may from time to time be held by the
Liquidating Trust; (ii) preserve, maintain and liquidate the Liquidating Trust
Assets; (iii) distribute the Liquidating Trust proceeds to the Liquidating Trust
Beneficiaries; and (iv) otherwise perform the functions and take the actions
provided for in this Trust Agreement or permitted in the Plan and/or the
Confirmation Order or in any other agreement executed pursuant to the Plan, in
each case
 

 
 

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subject to the provisions of Sections 6.3, 6.4, 6.5 and 6.6 of this Trust
Agreement regarding limitation on the Liquidating Trustee and the oversight and
consent rights of the Trust Advisory Board (as defined herein), the Litigation
Subcommittee (as defined herein) and the Bankruptcy Court as provided for
herein.
 
G.           The Liquidating Trust is organized for the sole purpose of
liquidating and distributing the Liquidating Trust Assets, with no objective to
conduct a trade or business except to the extent reasonably necessary to, and
consistent with, the liquidating purpose of the Liquidating Trust.
 
H.           The Liquidating Trust is intended to qualify as a “liquidating
trust” under the Internal Revenue Code of 1986, as amended (the “IRC”) and the
regulations promulgated thereunder (the “Treasury Regulations”), specifically
Treasury Regulations section 301.7701-4(d) and, as such, as a “grantor trust”
for United States federal income tax purposes with the Liquidating Trust
Beneficiaries treated as the grantors and owners of the Liquidating Trust.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the Debtors and the Liquidating Trustee agree as follows:
 
ARTICLE I
 
DECLARATION OF TRUST
 
1.1 Creation of Trust.  The Debtors and the Liquidating Trustee, pursuant to the
Plan and the Confirmation Order and in accordance with the applicable provisions
of chapter 11 of the Bankruptcy Code, hereby constitute and create the
Liquidating Trust, which shall bear the name “WMI Liquidating Trust.”  In
connection with the exercise of the Liquidating Trustee’s power hereunder, the
Liquidating Trustee may use this name or such variation thereof as the
Liquidating Trustee sees fit.
 
1.2 Purpose of Liquidating Trust.  The sole purpose of the Liquidating Trust is
to implement the Plan on behalf, and for the benefit, of the Liquidating Trust
Beneficiaries, and to serve as a mechanism for liquidating, converting to Cash
and distributing the Liquidating Trust Assets in accordance with Treasury
Regulations section 301.7701-4(d), with no objective to continue or engage in
the conduct of a trade or business, except to the extent reasonably necessary
to, and consistent with, the liquidating purpose of the Liquidating Trust.
 
1.3 Transfer of Liquidating Trust Assets.  On the Effective Date, the Debtors
shall transfer, for the sole benefit of the Liquidating Trust Beneficiaries,
pursuant to Bankruptcy Code sections 1123(a)(5)(B) and 1123(b)(3)(B) and in
accordance with the Plan and the Confirmation Order, the Liquidating Trust
Assets to the Liquidating Trust, free and clear of any and all liens, claims,
encumbrances and interests (legal, beneficial or
 

 
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otherwise) of all other entities to the maximum extent contemplated by and
permissible under Bankruptcy Code section 1141(c); provided, however, that the
Liquidating Trust Assets may be transferred subject to certain liabilities, as
provided in the Plan, Confirmation Order or as otherwise provided herein.  On
the Effective Date, there shall be set aside out of the Liquidating Trust Assets
the amount of Cash that was reasonably determined by the Debtors and the
Creditors’ Committee following consultation with the Equity Committee prior to
the Effective Date to be necessary to fund the activities of the Liquidating
Trust, which amount shall be Sixty Million Dollars ($60,000,000.00) (the
“Funding”); provided, however, that the Funding may be increased from time to
time during the term of the Liquidating Trust upon the request of the
Liquidating Trustee and the approval of a Supermajority of the Trust Advisory
Board.  A “Supermajority” shall mean the affirmative vote of seven (7) of the
nine (9) members of the Trust Advisory Board (excluding the Holdco Member);
provided, however, that if the Trust Advisory Board is reduced to five (5)
members pursuant to Section 6.4(e), a “Supermajority” shall mean the affirmative
vote of three (3) of the five (5) members of the Trust Advisory Board.  Twenty
Million Dollars ($20,000,000.00) of the Funding (the “Litigation Funding”) shall
be allocated to the Litigation Subcommittee, with both the first Ten Million
Dollars ($10,000,000.00) of the Litigation Funding and the second Ten Million
Dollars ($10,000,000.00) of the Litigation Funding (the “Second Tranche”) to be
used for the prosecution of the Recovery Claims (as defined herein); provided,
however, that, prior to the allocation and use of any portion of the Second
Tranche, the Litigation Subcommittee shall obtain the approval of the Trust
Advisory Board as to the reasonable expenditure of such funds; provided,
further, that the Litigation Funding may be increased during the term of the
Liquidating Trust upon the request of the Litigation Subcommittee and the
approval of a Supermajority of the Trust Advisory Board, which approval may be
granted or withheld by the Trust Advisory Board in its sole and absolute
discretion, and provided that any additional Litigation Funding that is approved
shall be deducted from any remaining portion of the Administrative Funding (as
defined herein); provided, further, that nothing herein shall preclude the Trust
Advisory Board or the Litigation Subcommittee from seeking additional financing
from sources other than the Liquidating Trust Assets in the discharge of their
fiduciary duties; provided, further, that any portion of the Funding, including
the Litigation Funding, that is not used to fund the activities of the
Liquidating Trust shall be distributed in accordance with Section 4.3
hereof.  The transfer of the Liquidating Trust Assets shall be exempt from any
stamp, real estate transfer, mortgage reporting, sales, use or other similar
Tax, pursuant to section 1146(a) of the Bankruptcy Code.  Upon delivery of all
Liquidating Trust Assets to the Liquidating Trust, the Debtors shall be
discharged and released from all liability with respect to the delivery of such
distributions, and exculpated as provided in Section 41.8 of the Plan.  In
connection with the receipt of the Liquidating Trust Assets, the Liquidating
Trust shall acquire and assume all of WMI’s rights and obligations pursuant to
Section 2.4 of the Global Settlement Agreement, and WMI shall have no further
liability or obligations thereunder.  The Liquidating Trust Assets and all other
property held from time to time by the Liquidating Trust under this Trust
Agreement and any earnings, including without limitation, interest, on any of
the foregoing are to be applied by the Liquidating Trustee in accordance with
the terms hereof, the Plan and the
 

 
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Confirmation Order for the benefit of the Liquidating Trust Beneficiaries, and
for no other party, subject to the further covenants, conditions and terms
hereinafter set forth.
 
1.4 Appointment and Acceptance of Liquidating Trustee.  As set forth in the
Confirmation Order, the members of the Trust Advisory Board hereby designate
William C. Kosturos in connection with the applicable provisions of the Delaware
Statutory Trust Act, 12 Del. C. § 3801 et seq., as the same may from time to
time be amended, or any successor statute (the “Trust Act”) to serve as the
initial Liquidating Trustee under the Plan.  The Liquidating Trustee shall be
deemed to be appointed pursuant to Bankruptcy Code section 1123(b)(3)(B).  The
Liquidating Trustee accepts the Liquidating Trust created by this Trust
Agreement and the grant, assignment, transfer, conveyance and delivery to the
Liquidating Trustee, on behalf, and for the benefit, of the Liquidating Trust
Beneficiaries, by the Debtors of all of their respective right, title and
interest in the Liquidating Trust Assets, upon and subject to the terms and
conditions set forth herein, in the Plan and in the Confirmation Order.  The
Liquidating Trustee’s powers are exercisable solely in a fiduciary capacity
consistent with, and in furtherance of, the purpose of the Liquidating Trust and
not otherwise.  The Liquidating Trustee shall have the authority to bind the
Liquidating Trust within the limitations set forth herein, but shall for all
purposes hereunder be acting in the capacity as Liquidating Trustee, and not
individually.
 
1.5 Liquidation of Liquidating Trust Assets.  The Liquidating Trustee shall, in
an expeditious but commercially reasonable manner and subject to the provisions
of the Plan (including, without limitation, Section 31.14 of the Plan), the
Confirmation Order and the other provisions of this Trust Agreement, liquidate
and convert to Cash the Liquidating Trust Assets, make timely distributions in
accordance with the terms hereof and the Plan and not unduly prolong the
existence of the Liquidating Trust.  The Liquidating Trustee shall exercise
reasonable business judgment and liquidate the Liquidating Trust Assets to
maximize net recoveries; provided, however, that the Liquidating Trustee shall
be entitled to take into consideration the risks, timing, and costs of potential
actions in making determinations as to the maximization of recoveries and the
determinations and actions of the Liquidating Trustee shall in all cases be
subject to the limitations provided elsewhere herein.  Subject to the terms of
this Trust Agreement, such liquidations may be accomplished through the
prosecution, compromise and settlement, abandonment or dismissal of any or all
claims, rights or causes of action of the Liquidating Trust or through the sale
or other disposition of the Liquidating Trust Assets (in whole or in
combination, and including the sale of any claims, rights or causes of action of
the Liquidating Trust).  The Liquidating Trustee may incur any reasonable and
necessary expenses in connection with the liquidation and conversion of the
Liquidating Trust Assets into Cash or in connection with the administration of
the Liquidating Trust and, to the extent that any Administrative Funding (as
defined herein) is available, such expenses shall first be deducted from the
Administrative Funding.
 
1.6 No Reversion to Debtors.  In no event shall any part of the Liquidating
Trust Assets revert to or be distributed to any Debtor or Reorganized Debtor.
 

 
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1.7 Incidents of Ownership.  Except as provided in Section 1.6 hereof, the
Liquidating Trust Beneficiaries shall be the sole beneficiaries of the
Liquidating Trust and the Liquidating Trust Assets, and the Liquidating Trustee
shall retain only such incidents of ownership as are necessary to undertake the
actions and transactions authorized herein, in the Plan and in the Confirmation
Order, including, but not limited to, those powers set forth in Section 6.2
hereof.
 
1.8 Privileges and Obligation to Respond to Ongoing Investigations.  All
Privileges shall be transferred, assigned, and delivered to the Liquidating
Trust, without waiver, and shall vest in the Liquidating Trustee solely in its
capacity as such (and any other individual whom the Liquidating Trustee, with
the consent of the Trust Advisory Board or the Litigation Subcommittee, as
applicable, may designate, it being understood that, as of the date of this
Trust Agreement, the Liquidating Trustee shall designate the Trust Advisory
Board and the Litigation Subcommittee, solely in their capacities as such, as
well as any other individual designated in this Trust Agreement).  Pursuant to
Federal Rule of Evidence 502(d) (to the extent Rule 502(d) is relevant
notwithstanding the fact that the Debtors, the Liquidating Trustee, the FDIC
Receiver and JPMC are joint holders of certain attorney-client privileges, work
product protections, or other immunities or protections from disclosure), no
Privileges shall be waived by disclosure to the Liquidating Trustee, the Trust
Advisory Board and/or the Litigation Subcommittee of the Debtors’ information
subject to attorney-client privileges, work product protections, or other
immunities or protections from disclosure, or by disclosure among the Debtors,
the Liquidating Trustee, the Trust Advisory Board, the Litigation Subcommittee,
the FDIC Receiver, and/or JPMC of information that is subject to attorney-client
privileges, work product protections, or other immunities or protections from
disclosure jointly held by the Debtors, the FDIC Receiver, the Liquidating
Trustee, the Trust Advisory Board, the Litigation Subcommittee and/or JPMC.  The
Liquidating Trustee shall be obligated to respond, on behalf of the Debtors, to
all Information Demands.  The FDIC Receiver and JPMC shall take reasonable steps
to cooperate with the Liquidating Trustee in responding to Information Demands,
and such cooperation shall include, for example, taking all steps necessary to
maintain and avoid waiver of any and all Privileges (including, without
limitation, any Privileges that are shared jointly among or between any of the
parties).  The Liquidating Trustee, with the consent of the Trust Advisory Board
or the Litigation Subcommittee, as applicable, may waive Privileges that are
held solely by the Debtors and/or the Liquidating Trust, but not jointly held
with the FDIC Receiver and/or JPMC, in the event and to the extent the
Liquidating Trustee, with the consent of the Trust Advisory Board or the
Litigation Subcommittee, as applicable, determines in good faith that doing so
is in the best interests of the Liquidating Trust and its beneficiaries.  The
Liquidating Trustee, the FDIC Receiver and JPMC may disclose information that is
subject to attorney-client privileges, work product protections, or other
immunities or protections from disclosure that are jointly held with the FDIC
Receiver and/or JPMC only (i) upon written permission from the Liquidating
Trustee, the FDIC Receiver and JPMC, as the case may be; (ii) pursuant to an
order of a court of competent jurisdiction, subject to the procedure described
in the next sentence insofar as it applies; or (iii) as otherwise required by
law, subject to the procedure
 

 
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described in the next sentence insofar as it applies.  If the Liquidating
Trustee, the Trust Advisory Board, the Litigation Subcommittee, the FDIC
Receiver or JPMC receives a request from a third party to disclose information
that is subject to attorney-client privileges, work product protections, or
other immunities or protections from disclosure that are jointly held with the
Liquidating Trustee, the Trust Advisory Board, the Litigation Subcommittee, the
FDIC Receiver and/or JPMC, the party or parties who receives such request will
(w) pursue all reasonable steps to maintain the applicable privileges or
protections from disclosure, including, if necessary, to maintain the privileges
or protections from disclosure by seeking a protective order against and/or
otherwise objecting to the production of such material, (x) notify the
Liquidating Trustee, the Trust Advisory Board, the Litigation Subcommittee, the
FDIC Receiver and/or JPMC, as the case may be, (y) allow the Liquidating
Trustee, the Trust Advisory Board, the Litigation Subcommittee, the FDIC
Receiver and/or JPMC, as the case may be, reasonable time under the
circumstances to seek a protective order against and/or otherwise object to the
production of such material, and (z) unless required by law, not disclose the
materials in question unless and until any objection raised by the Liquidating
Trustee, the Trust Advisory Board, the Litigation Subcommittee, the FDIC
Receiver and/or JPMC is resolved in favor of disclosure.
 
1.9 Liquidating Trustee’s Administration and Rights with Respect to Runoff
Notes.  Until such time as any Runoff Notes that are held by the Liquidating
Trust are distributed to any Liquidating Trust Beneficiaries entitled thereto in
accordance with the Plan, the Liquidating Trustee shall (i) not sell, convey,
dispose or otherwise transfer the Runoff Notes except as expressly provided for
in the Plan and (ii) exercise any remedies available to Holders (as defined in
the Indenture) under the Indenture or any Security Document (as defined in the
Indenture) as the Liquidating Trustee deems necessary and advisable solely to
protect the interests of such Liquidating Trust Beneficiaries.
 
ARTICLE II

 
LIQUIDATING TRUST BENEFICIARIES
 
2.1 Conflicting Claims.  If any conflicting claims or demands are made or
asserted with respect to a Liquidating Trust Interest, the Liquidating Trustee
shall be entitled, at his sole election, to refuse to comply with any such
conflicting claims or demands.  In so refusing, the Liquidating Trustee, at his
sole election, may elect to make no payment or distribution with respect to the
Liquidating Trust Interest subject to the claims or demands involved, or any
part thereof, and the Liquidating Trustee shall refer such conflicting claims or
demands to the Bankruptcy Court, which shall have exclusive jurisdiction over
resolution of such conflicting claims or demands.  In so doing, the Liquidating
Trustee shall not be or become liable to any party for its refusal to comply
with any of such conflicting claims or demands.  The Liquidating Trustee shall
be entitled to refuse to act until either (i) the rights of the adverse
claimants have been adjudicated by a Final Order of the Bankruptcy Court (or
such other court of proper jurisdiction) or (ii) all differences have been
resolved by a written agreement among all
 

 
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of such parties and the Liquidating Trustee, which agreement shall include a
complete release of the Liquidating Trust and the Liquidating Trustee (the
occurrence of either (i) or (ii) in this Section 2.1 being referred to as a
“Dispute Resolution”).  Promptly after a Dispute Resolution is reached, the
Liquidating Trustee shall transfer the payments and distributions, if any,
together with any interest thereon to be paid in accordance with Section 4.6
hereof, in accordance with the terms of such Dispute Resolution.  Any payment of
any interest or income should be net of any taxes attributable thereto in
accordance with Section 5.4.
 
2.2 Rights of Liquidating Trust Beneficiaries.  Each Liquidating Trust
Beneficiary shall be entitled to participate in the rights and benefits due to a
Liquidating Trust Beneficiary hereunder according to the terms of its
Liquidating Trust Interest.  The interest of a Liquidating Trust Beneficiary is
hereby declared and shall be in all respects personal property.  Except as
expressly provided hereunder, a Liquidating Trust Beneficiary shall have no
title to, right to, possession of, management of or control of the Liquidating
Trust or the Liquidating Trust Assets or to any right to call for a partition or
division of such assets or to require an accounting.  No surviving spouse, heir
or devisee of any deceased Liquidating Trust Beneficiary shall have any right of
dower, homestead or inheritance, or of partition, or any other right, statutory
or otherwise, in the Liquidating Trust Assets, but the whole title to the
Liquidating Trust Assets shall be vested in the Liquidating Trustee and the sole
interest of the Liquidating Trust Beneficiaries shall be the rights and benefits
given to such person under this Trust Agreement and the Plan.
 
2.3 Evidence of Liquidating Trust Interest.  Ownership of a Liquidating Trust
Interest in the Liquidating Trust will be evidenced by the recording of such
ownership in an electronic book-entry system (the “Book Entry System”)
maintained either by the Liquidating Trust or an agent of the Liquidating
Trust.  A Liquidating Trust Beneficiary shall be deemed the “holder of record”
(hereinafter “holder”) of such Liquidating Trust Beneficiary’s Liquidating Trust
Interest(s) for purposes of all applicable United States federal and state laws,
rules and regulations.  The Liquidating Trustee shall, upon the written request
of a holder of a Liquidating Trust Interest, provide reasonably adequate
documentary evidence of such holder’s Liquidating Trust Interest, as indicated
in the Book Entry System.  The expense of providing such documentation shall be
borne by the requesting holder.
 
2.4 Transfers of Liquidating Trust Interests.
 
(a) General.  Liquidating Trust Interests shall not be transferable or
assignable except by will, intestate succession or operation of law.
 
(b) Book Entry System.  Pursuant to the Book Entry System, the Liquidating Trust
shall maintain, or cause the agent of the Liquidating Trust to maintain, a
register (which may be electronic) setting forth the names and addresses of the
Liquidating Trust Beneficiaries, and the amount and class of their Liquidating
Trust Interests from time to time.  Any transfer or assignment of a Liquidating
Trust Interest by will, intestate succession or operation of law shall not be
effective unless and until such
 

 
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transfer or assignment is recorded in the Book Entry System, which shall be
completed as soon as practicable.  Subject to Section 2.4(d), the entries in the
Book Entry System shall be conclusive absent manifest error, and the Liquidating
Trust and the Liquidating Trustee shall treat each person whose name is recorded
in the Book Entry System pursuant to the terms hereof as the owner of
Liquidating Trust Interests indicated therein for all purposes of this Trust
Agreement, notwithstanding notice to the contrary.
 
(c) Registration.  If the Liquidating Trustee, with the consent of the Trust
Advisory Board and upon advice of counsel, determines that any class of
Liquidating Trust Interests may be subject to registration pursuant to section
12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the
Liquidating Trustee shall pursue relief from such registration by obtaining
either an exemptive order, a no-action letter or an interpretive letter from the
Securities and Exchange Commission or its staff or, absent its ability to
achieve that objective or in lieu thereof, shall register such class pursuant to
section 12 of such statute (it being understood and agreed that the Liquidating
Trustee with the consent of the Trust Advisory Board shall be authorized, among
other things, to register such class and to seek relief from one or more of the
requirements then applicable subsequent to such registration  and to de-register
such class).  To the extent that any Administrative Funding is available, any
expenses that are associated with such application for relief and/or
registration shall first be deducted from the Administrative Funding.
 
(d) Further Limitations on Transfer.  Notwithstanding any other provision to the
contrary, the Liquidating Trustee may disregard any purported transfer or
assignment of Liquidating Trust Interests by will, intestate succession or
operation of law if sufficient necessary information (as reasonably determined
by the Liquidating Trustee), including applicable Tax-related information, is
not provided by such purported transferee or assignee to the Liquidating
Trustee.
 
2.5 Limited Liability.  No provision of this Trust Agreement, the Plan or the
Confirmation Order, and no mere enumeration herein of the rights or privileges
of any Liquidating Trust Beneficiary, shall give rise to any liability of such
Liquidating Trust Beneficiary solely in its capacity as such, whether such
liability is asserted by any Debtor, by creditors, employees, or equity interest
holders of any Debtor, or by any other Person.  Liquidating Trust Beneficiaries
are deemed to receive the Liquidating Trust Assets in accordance with the
provisions of this Trust Agreement, the Plan and the Confirmation Order in
exchange for their Allowed Claims or Equity Interests, as applicable, without
further obligation or liability of any kind, but subject to the provisions of
this Trust Agreement.
 

 
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ARTICLE III

 
DURATION AND TERMINATION OF LIQUIDATING TRUST
 
3.1 Duration.  The Liquidating Trust shall become effective upon the Effective
Date of the Plan and shall remain and continue in full force and effect until
dissolved as provided for in Section 27.14(d) of the Plan.
 
3.2 Dissolution of the Liquidating Trust.  The Liquidating Trustee and the
Liquidating Trust shall be discharged or dissolved, as the case may be, on the
earlier to occur of (i) all of the Liquidating Trust Assets having been
distributed pursuant to the Plan and this Trust Agreement, (ii) the Liquidating
Trustee having determined, with the consent of the Trust Advisory Board, that
the administration of any remaining Liquidating Trust Assets is not likely to
yield sufficient additional Liquidating Trust proceeds to justify further
pursuit, or (iii) all distributions required to be made by the Liquidating
Trustee under the Plan and this Trust Agreement having been made; provided,
however, that in no event shall the Liquidating Trust be dissolved later than
three (3) years from the Effective Date unless the Bankruptcy Court, upon motion
within the six-month period prior to the third (3rd) anniversary (or within the
six-month period prior to the end of any extension period), determines that a
fixed period extension (not to exceed three (3) years, together with any prior
extensions, without a favorable private letter ruling from the IRS or an opinion
of counsel satisfactory to the Liquidating Trustee and the Trust Advisory Board
that any further extension would not adversely affect the status of the trust as
a liquidating trust for United States federal income tax purposes) is necessary
to facilitate or complete the recovery and liquidation of the Liquidating Trust
Assets.  If at any time the Liquidating Trustee determines, in reliance upon
such Trust Professionals as the Liquidating Trustee may retain, that the expense
of administering the Liquidating Trust so as to make a final distribution to the
Liquidating Trust Beneficiaries is likely to exceed the value of the assets
remaining in the Liquidating Trust, the Liquidating Trustee may apply to the
Bankruptcy Court for authority to (i) reserve any amount necessary to dissolve
the Liquidating Trust, (ii) donate any balance to a charitable organization (A)
of the type described in section 501(c)(3) of the IRC, (B) exempt from United
States federal income tax under section 501(a) of the IRC, (C) that is not a
“private foundation”, as defined in section 509(a) of the IRC, and (D) that is
unrelated to the Debtors, the Reorganized Debtors, the Liquidating Trust, and
any insider of the Liquidating Trustee, and (iii) dissolve the Liquidating
Trust.  Upon receipt of such authority from the Bankruptcy Court, the
Liquidating Trustee shall (X) notify each Liquidating Trust Beneficiary, (Y)
file a Certificate of Cancellation with the Secretary of State of the State of
Delaware and (Z) provide a copy of the evidence of such cancellation to the
Resident Trustee.
 
3.3 Continuance of Liquidating Trust for Winding Up.  After the dissolution of
the Liquidating Trust and solely for the purpose of liquidating and winding up
the affairs of the Liquidating Trust, the Liquidating Trustee shall continue to
act as such until its duties have been fully performed.  Upon distribution of
all the Liquidating Trust Assets, the Liquidating Trustee shall retain the
books, records and files that shall
 

 
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have been delivered to or created by the Liquidating Trustee.  At the
Liquidating Trustee’s discretion, all of such records and documents may be
destroyed at any time following the date that is six (6) years after the final
distribution of the Liquidating Trust Assets, subject to any joint prosecution
and common interests agreement(s) to which the Liquidating Trustee may be party.
 
ARTICLE IV

 
ADMINISTRATION OF LIQUIDATING TRUST
 
4.1 Payment of Claims, Expenses and Liabilities.  Subject to the Budget (as
defined below) from time to time approved by the Trust Advisory Board in
accordance with Section 4.14(b) hereof, and subject to the approval of the
Bankruptcy Court in accordance with Sections 6.4(m), 6.5(k), 6.8(b), 6.11(c) and
7.7, and except as otherwise provided herein, the Liquidating Trustee shall use
the Funding (i) to pay reasonable costs and expenses of the Liquidating Trust
that are incurred (including, but not limited to, the costs and expenses
associated with the administration of the Disputed Equity Escrow (excluding any
Taxes), any Taxes imposed on the Liquidating Trust, the actual reasonable
out-of-pocket fees and expenses incurred by Trust Professionals in connection
with the administration and liquidation of the Liquidating Trust Assets, as
provided in Section 6.8 hereof, and the preservation of books and records of the
Liquidating Trust); (ii) to satisfy other obligations or other liabilities
incurred or assumed by the Liquidating Trust (or to which the Liquidating Trust
Assets are otherwise subject) in accordance with the Plan, the Confirmation
Order, the Global Settlement Agreement or this Trust Agreement, including fees
and costs incurred in connection with the protection, preservation, liquidation
and distribution of the Liquidating Trust Assets and the costs of investigating,
prosecuting, resolving and/or settling any Claims; (iii) as reasonably necessary
to meet contingent liabilities and to maintain the value of the Liquidating
Trust Assets during liquidation, (iv) to satisfy any other obligations of the
Liquidating Trust expressly set forth in the Plan, this Trust Agreement, the
Confirmation Order, and the Global Settlement Agreement.
 
4.2 BB Liquidating Trust Interests.  On the Effective Date, the Liquidating
Trustee shall immediately distribute the funds on account of the BB Liquidating
Trust Interests, subject to consensual release by the parties pursuant to
Section 2.4 of the Global Settlement Agreement of such funds from the tax escrow
account.
 
4.3 Distributions.
 
(a) Generally.  Subject to Section 4.4(b) hereof, the Liquidating Trustee is
required to distribute to the Liquidating Trust Beneficiaries on account of
their Liquidating Trust Interests, on each Distribution Date (as defined below)
all unrestricted Cash then on hand (including any Cash received from the Debtors
on the Effective Date, and treating any permissible investment as Cash for
purposes of this Section 4.3), except (i) the Funding, (ii) such other amounts
as are allocable to or retained
 

 
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on account of Disputed Claims in accordance with Section 26.3 of the Plan, and
(iii) after taking into account the Funding, such additional amounts (A) as are
reasonably necessary to meet contingent liabilities and to maintain the value of
the Liquidating Trust Assets pending their liquidation during the term of the
Liquidating Trust, (B) as are necessary to pay reasonably incurred or
anticipated expenses (including, but not limited to, any Taxes imposed on or
payable by the Debtors or the Liquidating Trust or in respect of the Liquidating
Trust Assets), or (C) as are necessary to satisfy other liabilities incurred or
anticipated by the Liquidating Trust in accordance with the Plan, the Global
Settlement Agreement, or this Trust Agreement; provided, that the amounts listed
in clause (iii) shall be subject to the approval of a Supermajority of the Trust
Advisory Board; provided, further, that the Liquidating Trustee shall not be
required to make a distribution pursuant to this Section 4.3 if the aggregate,
net amount of unrestricted Cash available for distribution (taking into account
the above listed exclusions) is such as would make the distribution
impracticable as reasonably determined by the Liquidating Trustee, with the
consent of the Trust Advisory Board, in accordance with applicable law, and so
long as such aggregate amount is less than Twenty-Five Million Dollars
($25,000,000.00); and provided, further, that the Liquidating Trustee, with
consent of the Trust Advisory Board, may decide to forego the first quarterly
distribution to those Liquidating Trust Beneficiaries with respect to which the
Liquidating Trustee, in its reasonable judgment, is not administratively
prepared to make such distribution, in which case, such distribution shall be
made to such holders as soon as practicable after the Liquidating Trustee is
administratively prepared to do so.  “Distribution Date” means the 1st day of
the second month in each fiscal quarter during the term of the Liquidating Trust
or such other dates that the Liquidating Trustee determines, in consultation
with the Trust Advisory Board, are appropriate from time to time; provided,
however, that there shall be at least one such date in each fiscal quarter
during the term of the Liquidating Trust.
 
(b) Payment of Distributions.  Subject to Section 4.2, each Liquidating Trust
Beneficiary’s share of the Liquidating Trust Interests as determined pursuant to
the Plan (including any Cash to be received on account of any Liquidating Trust
Interests) shall be allocated and distributed, and the Liquidating Trust Assets
shall be allocated and distributed, in accordance with Article XXXI of the Plan
and Annex C hereto.  Any distribution that is to be made to a Liquidating Trust
Beneficiary who elected to forego fifty percent (50%) of such Liquidating Trust
Beneficiary’s Litigation Proceeds Interest shall be adjusted as required
pursuant to Sections 6.2(b), 7.2(b), 16.2(b)(ii), 18.2(b), 19.1(b) and 20.2 of
the Plan.
 
(c) De Minimis Distributions.  No Cash payment shall be made to any holder of a
Liquidating Trust Interest until such time, if ever, as the amount payable
thereto, in any distribution from the Liquidating Trust, is equal to or greater
than ten dollars ($10.00).  Any holder of a Liquidating Trust Interest on
account of which the amount of Cash to be distributed pursuant to any
distribution from the Liquidating Trust is less than ten dollars ($10.00) shall
be deemed to have no claim for such distribution against the Debtors, the
Reorganized Debtors, the Liquidating Trust or the Liquidating Trust
Assets.  Subject to Section 4.6 hereof, any Cash not distributed pursuant to
this
 

 
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Section 4.3 shall be the property of the Liquidating Trust free of any
restrictions thereon, and shall be available for distribution to the other
Liquidating Trust Beneficiaries, in accordance with the Plan and this Trust
Agreement.
 
(d) Runoff Notes.  To the extent the Liquidating Trust Assets include Runoff
Notes that are not allocable to the Liquidating Trust Claims Reserve, the
Liquidating Trustee shall distribute such Runoff Notes in accordance with
Section 31.14 of the Plan.
 

4.4 Undeliverable Property.
 
(a) Holding of Undeliverable Distributions:  For purposes of this Trust
Agreement, an “undeliverable” distribution shall include, without limitation, a
check that is sent to a holder in respect of a distribution to such holder,
which check has not been negotiated within six (6) months following the date on
which such check was issued.  Subject to Section 4.4(b), if any distribution to
the holder of a Liquidating Trust Interest is undeliverable, no further
distribution shall be made to such holder unless and until the Liquidating
Trustee (or its duly authorized agent) is notified, in writing, of such holder’s
then-current address.  Undeliverable distributions shall remain in the
possession of the Liquidating Trustee (or its duly authorized agent) until such
time as a distribution becomes deliverable or as set forth in Section 4.4(b)
below.  All Entities ultimately receiving an undeliverable distribution shall
not be entitled to any interest or other accruals of any kind on account of the
delay in payment resulting from the undeliverable status of such
distribution.  Except as required by law, the Liquidating Trustee (or its duly
authorized agent) shall not be required to attempt to locate any holder of a
Liquidating Trust Interest.
 
(b) Failure to Claim Undeliverable Distributions:  If (i) a check is sent to a
holder in respect of a distribution and such check is not negotiated within six
(6) months following the date on which the check was issued, or (ii) any other
form of distribution to a holder is otherwise undeliverable, the Liquidating
Trustee (or its duly authorized agent) shall, no later than seven (7) months
after the sending of the un-negotiated check or other form of undeliverable
distribution, send a written notice (a “Missing Holder Notice”) to such holder
at the address shown on the Book Entry System with respect to such holder.  The
Missing Holder Notice shall state that (i) the holder has been sent a check or
other form of distribution that has not yet been negotiated or is otherwise
undeliverable, (ii) no further distributions will be made to such holder unless
and until the Liquidating Trustee (or its duly authorized agent) is notified, in
writing, of such holder’s then-current address, and (iii) that unless such
holder notifies the Liquidating Trustee (or its duly authorized agent) of the
holder’s then-current address within thirty (30) days of the date of the Missing
Holder Notice, such holder shall have its entitlement to such undeliverable
distribution and the Liquidating Trust Interest or Interests to which such
undeliverable distribution relates cancelled and shall be forever barred from
asserting any entitlement with respect thereto pursuant to the Plan, this Trust
Agreement or otherwise against the Debtors, the Reorganized Debtors, the
Liquidating
 

 
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Trust, or their respective property.  In such case, any consideration held for
distribution on account of such Liquidating Trust Interest(s) shall revert to
the Liquidating Trustee for redistribution to other holders of Liquidating Trust
Interests in accordance with the terms and provisions of this Trust Agreement,
the Plan and the Confirmation Order.
 
4.5 Interest on Liquidating Trust Interests.  As set forth in the Plan, interest
shall not accrue and be paid on the Liquidating Trust Interests themselves, but
only with respect to and to the extent provided in the Plan with respect to an
Allowed Claim (“Interest”).  Interest may, as an incremental adjustment on the
maximum amount the Liquidating Trust distributes in respect of a Liquidating
Trust Interest, accrue up to and including the date of final payment in full of
the Allowed Claim related to the Liquidating Trust Interest as provided in the
Plan.
 
4.6 Setoffs.  The Liquidating Trustee may, pursuant to applicable bankruptcy or
non-bankruptcy law, set off against any Liquidating Trust Interest and the
distributions to be made pursuant to the Plan on account thereof (before any
distribution is made on account of such Liquidating Trust Interest by the
Liquidating Trustee), the claims, rights, and causes of action of any nature
that one or more of the Debtors, Debtors in Possession, the Liquidating Trustee
or the Reorganized Debtors may hold against the holder of such Allowed Claim;
provided, however, that neither the failure to effect such a setoff nor the
allowance of any Claim hereunder shall constitute a waiver or release by the
Debtors, Debtors in Possession, the Liquidating Trustee or the Reorganized
Debtors of any such claims, rights, and causes of action that the Debtors,
Debtors in Possession, the Liquidating Trustee or the Reorganized Debtors may
possess against such holder; and, provided, further, that nothing contained
herein is intended to limit the ability of any Liquidating Trust Beneficiary to
effectuate rights of setoff or recoupment preserved or permitted by the
provisions of sections 553, 555, 559, or 560 of the Bankruptcy Code or pursuant
to the common law right of recoupment.
 
4.7 Distributions After the Effective Date.  Distributions made after the
Effective Date to holders of Liquidating Trust Interests on account of Claims
that are not Allowed Claims as of the Effective Date, but which later become
Allowed Claims, shall be deemed to have been made in accordance with the terms
and provisions of Article XXXI of the Plan.
 
4.8 Compliance with Laws.  Any and all distributions of Liquidating Trust Assets
shall be in compliance with applicable laws, including but not limited to,
applicable federal and state tax and securities laws.
 
4.9 Fiscal Year.  Except for the first and last years of the Liquidating Trust,
the fiscal year of the Liquidating Trust shall be the calendar year.  For the
first and last years of the Liquidating Trust, the fiscal year of the
Liquidating Trust shall be such portion of the calendar year that the
Liquidating Trust is in existence.
 
4.10 Books and Records.  The Liquidating Trustee shall retain and preserve the
Debtors’ books, records and files that shall have been delivered to or created
 

 
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by the Liquidating Trustee.  Subject to Section 3.3 hereof, the Liquidating
Trustee shall maintain, in respect of the Liquidating Trust and the Liquidating
Trust Beneficiaries and all others to receive distributions under this Trust
Agreement, books and records relating to the assets and the income of the
Liquidating Trust and the payment of expenses of, liabilities of, and claims
against or assumed by, the Liquidating Trust and the Liquidating Trustee, in
such detail and for such period of time as may be necessary to enable it to make
full and proper reports in respect thereof in accordance with the provisions of
this Trust Agreement and applicable provisions of law, including but not limited
to applicable Tax, securities and other federal and state laws.  Except as
otherwise provided herein or in the Plan, nothing in this Trust Agreement
requires the Liquidating Trustee to file any accounting or seek approval of any
court with respect to the administration of the Liquidating Trust, or as a
condition for making any payment or distribution out of the Liquidating Trust
Assets.  The Liquidating Trustee shall provide any member of the Trust Advisory
Board with access to such books and records during normal business hours as may
be reasonably requested with five (5) days’ advance notice.  Liquidating Trust
Beneficiaries shall have the right upon thirty (30) days’ prior written notice
delivered to the Liquidating Trustee to inspect such books and records;
provided, that, if so requested, all costs associated with such inspection shall
be paid in advance by such requesting Liquidating Trust Beneficiary and such
Liquidating Trust Beneficiary shall have entered into a confidentiality
agreement reasonably satisfactory in form and substance to the Liquidating
Trustee.
 
4.11 Cash Payments.  Subject to Section 26.3 of the Plan and Section 4.3(d)
hereof, all distributions required to be made by the Liquidating Trustee to the
Liquidating Trust Beneficiaries shall be made in Cash denominated in United
States dollars by checks drawn on a domestic bank selected by the Liquidating
Trustee or, at the option of the Liquidating Trustee, by wire transfer from a
domestic bank selected by the Liquidating Trustee or as otherwise required or
provided in applicable agreements; provided, however, that Cash payments to
foreign holders of Liquidating Trust Interests may be made, at the option of the
Liquidating Trustee, in such funds as and by such means as are necessary or
customary in a particular foreign jurisdiction.
 
4.12 Insurance.  The Liquidating Trust shall maintain customary insurance
coverage for the protection of the Liquidating Trustee, the members of the Trust
Advisory Board, employees and any such other persons serving as administrators
and overseers of the Liquidating Trust on and after the Effective Date.  The
Liquidating Trustee also may obtain insurance coverage it deems necessary and
appropriate with respect to real and personal property which may become
Liquidating Trust Assets, if any.
 
4.13 Disputes.  To the extent a dispute arises between the Liquidating Trustee,
the Trust Advisory Board and/or the Litigation Subcommittee concerning the
performance of any of the powers, duties, and/or obligations herein, the
Liquidating Trustee, the Trust Advisory Board or the Litigation Subcommittee may
file a motion and/or other pleadings with the Bankruptcy Court and obtain advice
and guidance or such other relief as may be appropriate concerning a resolution
of the matter(s) in dispute between the parties.  In the event of a dispute, the
Liquidating Trustee, the Trust
 

 
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Advisory Board and the Litigation Subcommittee, as applicable, shall have the
right to engage legal counsel to advise it with respect to the matter(s) in
dispute and the reasonable fees and expenses of such legal counsel shall be
reimbursed by the Liquidating Trustee from the Funding (excluding the Litigation
Funding, the “Administrative Funding”)) or, in the event the Administrative
Funding has been spent, any other unrestricted Cash in the Liquidating Trust,
subject to the approval of a Supermajority of the Trust Advisory Board and
subject to Section 7.6 hereof.
 
4.14 Reports.
 
(a) The Liquidating Trustee shall deliver reports to members of the Trust
Advisory Board not later than thirty (30) days following the end of each fiscal
quarter.  Such reports shall specify in reasonable detail (i) the status of any
Causes of Action, Claims and litigation involving the Liquidating Trust or the
Liquidating Trust Assets, including, without limitation, Avoidance Actions,
including any settlements entered into by the Liquidating Trust, (ii) the costs
and expenses of the Liquidating Trust that are incurred (including, but not
limited to, any Taxes imposed on the Liquidating Trust or actual reasonable
out-of-pocket fees and expenses incurred by Trust Professionals in connection
with the administration and liquidation of the Liquidating Trust Assets and
preservation of books and records as provided in Section 4.10 hereof) during the
preceding fiscal quarter and the remaining amount (if any) of the Administrative
Funding and the Litigation Funding, (iii) the amounts listed in clause (ii)
incurred since the Effective Date, (iv) the amount of Cash and other assets
received by the Liquidating Trust during the prior fiscal quarter, (v) the
Liquidating Trustee’s estimate as of the end of the most recent fiscal quarter
of the uncollected Tax Refunds and all other Liquidating Trust Assets, (vi) the
aggregate amount of Cash and other assets received by the Liquidating Trust
since the Effective Date, (vii) the calculation of the estimated amount of the
Cash and other assets to be distributed on the next Distribution Date, including
any Cash on hand that is not to be distributed pursuant to Section 4.3(a) above,
(viii) the aggregate amount of distributions from the Liquidating Trust to the
Liquidating Trust Beneficiaries since the Effective Date, and (ix) such other
information as the Trust Advisory Board or the Litigation Subcommittee may
reasonably request from time to time.  The Liquidating Trustee shall also timely
prepare, file and distribute such additional statements, reports and submissions
(A) as may be necessary to cause the Liquidating Trust and the Liquidating
Trustee to be in compliance with applicable law or (B) as may be otherwise
reasonably requested from time to time by the Trust Advisory Board.
 
(b) The Liquidating Trustee shall prepare and submit to the Trust Advisory Board
(or, pursuant to Section 6.5(c)(z), the Litigation Subcommittee, as applicable)
for approval an annual plan and budget at least thirty (30) days prior to the
commencement of each fiscal year of the Liquidating Trust; provided, however,
that the first such report shall be submitted no later than forty-five (45) days
after the Effective Date of the Plan.  Such annual plan and budget shall set
forth in reasonable detail: (i) the Liquidating Trustee’s anticipated actions to
administer and liquidate the Liquidating Trust Assets; and (ii) the anticipated
expenses, including the expenses of Trust
 

 
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Professionals, associated with conducting the affairs of the Liquidating
Trust.  Such annual plan and budget shall be updated and submitted to the Trust
Advisory Board (or, pursuant to Section 6.5(c)(z), the Litigation Subcommittee)
for review and approval on a quarterly basis, and each such quarterly update
shall reflect the differences between the anticipated actions described in the
annual report and actual operations of the Liquidating Trust to date.  Any such
annual plan and budget as approved by the Trust Advisory Board (or, pursuant to
Section 6.5(c)(z), the Litigation Subcommittee) is referred to herein as the
“Budget”.  All actions by the Liquidating Trustee must be substantially
consistent with the then current Budget, provided that the Liquidating Trustee
may take action outside the Budget with the prior approval of the Trust Advisory
Board (or the Litigation Subcommittee with respect to Section 6.5(c)(z)).
 
4.15 Until such time as the Liquidating Trust is dissolved in accordance with
Section 27.14(d) of the Plan (or otherwise in accordance with this Agreement),
the Liquidating Trust shall file with (or furnish to, as the case may be) the
Securities and Exchange Commission (the “SEC”) such periodic reports as the
Liquidating Trust is required to file pursuant to the Exchange Act.  In
addition, until the Chapter 11 Cases are closed, the Liquidating Trust shall
file Post-Confirmation Quarterly Summary Reports for each of the Chapter 11
Cases with the Bankruptcy Court and, thereafter, and until such time as the
Liquidating Trust is dissolved in accordance with Section 27.14(d) of the Plan
(or otherwise in accordance with this Agreement), the Liquidating Trust shall
file with (or furnish to, as the case may be) the SEC or otherwise make
available to the Liquidating Trust Beneficiaries quarterly reports that are
substantially similar to such Post-Confirmation Quarterly Summary Reports.
 
ARTICLE V
 
TAX MATTERS
 
5.1 Liquidating Trustee’s Tax Power for Debtors.
 
(a) For all taxable periods ended on or before December 31, 2009, the
Liquidating Trustee shall have full and exclusive authority and responsibility
in respect of all Taxes of the Debtors (including, without limitation, as the
common parent or other agent of any consolidated, combined or unitary Tax group
of which the Debtors were the agent), to the same extent as if the Liquidating
Trustee were the Debtors.  Without limiting the foregoing, each of the Debtors
shall execute, on or prior to the Effective Date, a power of attorney
authorizing the Liquidating Trustee to correspond with any Tax authority on
behalf of such Debtor and to sign, collect, negotiate, settle, and administer
Tax payments and Tax returns.
 
(b) In furtherance of the transfer of the Liquidating Trust Assets to the
Liquidating Trust on the Effective Date, the Liquidating Trust shall be entitled
to all Tax Refunds of the Debtors (and the Liquidating Trust shall bear
responsibility for (i) all Tax liabilities of the Debtors for taxable years
ended on or before December 31, 2009, to the extent not discharged by the Plan
or provided for payment in
 

 
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the Plan or the Global Settlement Agreement and (ii) WMI’s obligations pursuant
to Section 2.4 of the Global Settlement Agreement), it being understood that the
Liquidating Trustee only shall have whatever rights the Debtors have pursuant to
the terms of the Global Settlement Agreement, and the Liquidating Trustee shall
be contractually bound to all restrictions in the Global Settlement Agreement
with respect to Tax filings.
 
(c) Following the Effective Date, the Liquidating Trustee shall prepare and file
(or cause to be prepared and filed), on behalf of the Debtors, all Tax Returns
required to be filed or that the Liquidating Trustee otherwise deems
appropriate, including the filing of amended Tax Returns or requests for refunds
for all taxable periods ended on or before December 31, 2009.
 
5.2 Liquidating Trust Assets Treated as Owned by Liquidating Trust
Beneficiaries.  For all United States federal income tax purposes, all parties
(including, without limitation, the Debtors, the Reorganized Debtors, the
Liquidating Trustee, and the Liquidating Trust Beneficiaries) shall treat the
transfer of the Liquidating Trust Assets to the Liquidating Trust as (1) a
transfer of the Liquidating Trust Assets (subject to any obligations relating to
those assets) directly to the Liquidating Trust Beneficiaries and, to the extent
Liquidating Trust Assets are allocable to Disputed Claims, to the Liquidating
Trust Claims Reserve, followed by (2) the transfer by such beneficiaries to the
Liquidating Trust of the Liquidating Trust Assets (other than the Liquidating
Trust Assets allocable to the Liquidating Trust Claims Reserve) in exchange for
Liquidating Trust Interests.  Accordingly, the Liquidating Trust Beneficiaries
shall be treated for United States federal income tax purposes as the grantors
and owners of their respective share of the Liquidating Trust Assets (other than
such Liquidating Trust Assets as are allocable to the Liquidating Trust Claims
Reserve, discussed below).  The foregoing treatment shall also apply, to the
extent permitted by applicable law, for state and local income tax purposes.
 
5.3 Tax Reporting.
 
(a) The Liquidating Trustee shall file Tax Returns for the Liquidating Trust
treating the Liquidating Trust as a grantor trust pursuant to Treasury
Regulation section 1.671-4(a) and in accordance with this Article V.  The
Liquidating Trustee also will annually send to each holder of a Liquidating
Trust Interest a separate statement regarding the receipts and expenditures of
the Liquidating Trust as relevant for United States federal income tax purposes
and will instruct all such holders to use such information in preparing their
United States federal income tax returns or to forward the appropriate
information to such holder’s underlying beneficial holders with instructions to
utilize such information in preparing their United States federal income tax
returns.  The Liquidating Trustee shall also file (or cause to be filed) any
other statement, return or disclosure relating to the Liquidating Trust that is
required by any governmental unit.
 
(b) On or before the Effective Date, the Debtors shall provide the Liquidating
Trustee with a good-faith valuation of the Tax Refunds as of the Effective Date
or shall otherwise arrange for such a valuation to be provided to the
Liquidating
 

 
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Trustee as soon as practicable after the Effective Date by such third party
professionals as the Debtors deem appropriate.  The Liquidating Trustee, in
consultation with the Trust Advisory Board, will then in good faith value all
other Liquidating Trust Assets, and shall make all such values (including the
Tax Refund values) publicly available from time to time (by posting on a website
or otherwise), to the extent relevant, and such values shall be used
consistently by all parties to the Liquidating Trust (including, without
limitation, the Debtors, the Liquidating Trustee, and Liquidating Trust
Beneficiaries) for all United States federal income tax purposes.
 
(c) Allocations of Liquidating Trust taxable income among the Liquidating Trust
Beneficiaries (other than taxable income allocable to the Liquidating Trust
Claims Reserve) shall be determined by reference to the manner in which an
amount of Cash representing such taxable income would be distributed (were such
cash permitted to be distributed at such time) if, immediately prior to such
deemed distribution, the Liquidating Trust had distributed all its assets
(valued at their tax book value, and other than assets allocable to the
Liquidating Trust Claims Reserve) to the holders of the Liquidating Trust
Interests, adjusted for prior taxable income and loss and taking into account
all prior and concurrent distributions from the Liquidating Trust.  Similarly,
taxable loss of the Liquidating Trust shall be allocated by reference to the
manner in which an economic loss would be borne immediately after a hypothetical
liquidating distribution of the remaining Liquidating Trust Assets.  The tax
book value of the Liquidating Trust Assets for purposes of this Section 5.3(c)
shall equal their fair market value on the Effective Date, adjusted in
accordance with tax accounting principles prescribed by the IRC, the applicable
Treasury Regulations, and other applicable administrative and judicial
authorities and pronouncements.
 
(d) Subject to definitive guidance from the IRS or a court of competent
jurisdiction to the contrary (including the receipt by the Liquidating Trustee
of a private letter ruling if the Liquidating Trustee so requests one, or the
receipt of an adverse determination by the IRS upon audit if not contested by
the Liquidating Trustee), the Liquidating Trustee shall (i) timely elect to
treat any Liquidating Trust Claims Reserve as a “disputed ownership fund”
governed by Treasury Regulation section 1.468B-9, and (ii) to the extent
permitted by applicable law, report consistently with the foregoing for state
and local income tax purposes.  All parties (including the Liquidating Trustee,
the Debtors, and the Liquidating Trust Beneficiaries) shall report for United
States federal, state and local income tax purposes consistently with the
foregoing.
 
(e) The Liquidating Trustee shall be responsible for payment, out of the
Liquidating Trust Assets, of any Taxes imposed on the Liquidating Trust or its
assets, including the Liquidating Trust Claims Reserve.  In the event, and to
the extent, any Cash retained on account of Disputed Claims in the Liquidating
Trust Claims Reserve is insufficient to pay the portion of any such Taxes
attributable to the taxable income arising from the assets allocable to, or
retained on account of, Disputed Claims (including any income that may arise
upon the distribution of the assets from the Liquidating Trust Claims Reserve),
such Taxes may be (i) reimbursed from any subsequent Cash amounts retained on
account of Disputed Claims, or (ii) to the extent
 

 
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such Disputed Claims have subsequently been resolved, deducted from any amounts
otherwise distributable by the Liquidating Trustee as a result of the resolution
of such Disputed Claims.
 
(f) The Liquidating Trustee may request an expedited determination of Taxes of
the Liquidating Trust, including the Liquidating Trust Claims Reserve, or the
Debtors under section 505(b) of the Bankruptcy Code for all Tax Returns filed
for, or on behalf of, the Liquidating Trust or the Debtors for all taxable
periods through the dissolution of the Liquidating Trust.
 
5.4 Tax Withholdings by Liquidating Trustee.  The Liquidating Trustee may
withhold and pay to the appropriate Tax Authority all amounts required to be
withheld pursuant to the IRC or any provision of any foreign, state or local tax
law with respect to any payment or distribution to the holders of Liquidating
Trust Interests.  All such amounts withheld and paid to the appropriate Tax
Authority (or placed in escrow pending resolution of the need to withhold) shall
be treated as amounts distributed to such holders of Liquidating Trust Interests
for all purposes of the Trust Agreement. The Liquidating Trustee shall be
authorized to collect such tax information from the holders of Liquidating Trust
Interests (including, without limitation, social security numbers or other tax
identification numbers) as in its sole discretion the Liquidating Trustee deems
necessary to effectuate the Plan, the Confirmation Order, and the Trust
Agreement. In order to receive distributions under the Plan, all holders of
Liquidating Trust Interests (including, without limitation, holders of Allowed
Senior Notes Claims, Allowed Senior Subordinated Notes Claims, Allowed CCB-1
Guarantees Claims, Allowed CCB-2 Guarantees Claims, Allowed General Unsecured
Claims, Allowed Late-Filed Claims, Allowed PIERS Claims, Allowed WMB Senior
Notes Claims, Allowed Preferred Equity Interests, Allowed Common Equity
Interests, holders of Dime Warrants, and Accepting Non-Filing WMB Senior Note
Holders, who in each case, deliver a release in accordance with the provisions
of Section 41.6 of the Plan) shall be required to identify themselves to the
Liquidating Trustee and provide tax information and the specifics of their
holdings, to the extent the Liquidating Trustee deems appropriate in the manner
and in accordance with the procedures from time to time established by the
Liquidating Trustee for these purposes.  This identification requirement
generally applies to all holders, including those who hold their Claims in
“street name.”  The Liquidating Trustee may refuse to make a distribution to any
holder of a Liquidating Trust Interest that fails to furnish such information in
a timely fashion, and until such information is delivered may treat such
holder’s Liquidating Trust Interests as disputed; provided, however, that, upon
the delivery of such information by a holder of a Liquidating Trust Interest,
the Liquidating Trustee shall make such distribution to which the holder of the
Liquidating Trust Interest is entitled, without additional interest occasioned
by such holder’s delay in providing tax information; and, provided, further,
that, if such information is not furnished to the Liquidating Trustee within six
(6) months of the original request to furnish such information, no further
distributions shall be made to the holder of such Liquidating Trust Interest;
and, provided, further, that, if the Liquidating Trustee fails to withhold in
respect of amounts received or distributable with respect to
 

 
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any such holder and the Liquidating Trustee is later held liable for the amount
of such withholding, such holder shall reimburse the Liquidating Trustee for
such liability (to the extent such amounts were actually distributed to such
holder).
 
ARTICLE VI

 
POWERS OF AND LIMITATIONS ON THE TRUSTEES
 
6.1 Liquidating Trustee.
 
(a) “Liquidating Trustee” means William C. Kosturos so long as he continues in
office, and all other individuals who have been duly elected and qualify as
liquidating trustees of the Liquidating Trust hereunder pursuant to Section 1.4
or Article VIII hereof, but shall not include the Resident Trustee.  Subject to
Article VIII hereof, the Liquidating Trustee shall hold office until the
termination of the Liquidating Trust in accordance with the terms set forth
herein.  References herein to the Liquidating Trustee shall refer to the
individual or individuals serving as the Liquidating Trustee solely in its or
their capacity as trustees hereunder.
 
(b) Subject to the express limitations set forth herein, any actions of the
Liquidating Trustee contemplated by this Trust Agreement shall be decided and
conducted by the Liquidating Trustee only.
 
6.2 Powers of the Liquidating Trustee.
 
(a) Pursuant to the terms of the Plan, the Confirmation Order and this Trust
Agreement, the Liquidating Trustee shall have various powers, duties and
responsibilities concerning the prosecution of certain litigation claims, the
disposition of assets, the resolution of claims, and numerous other obligations
relating to maximizing the proceeds of the Liquidating Trust Assets and the
administration of the Liquidating Trust.
 
(b) The Liquidating Trustee shall have only such rights, powers and privileges
expressly set forth in the Confirmation Order, the Plan and this Trust Agreement
and as otherwise provided by applicable law.  Subject to the Confirmation Order,
the Plan, the Global Settlement Agreement and the provisions of this Trust
Agreement, including, without limitation, the oversight and approvals by and of
the Trust Advisory Board, the Litigation Subcommittee and the Bankruptcy Court
provided herein, the Liquidating Trustee shall be expressly authorized to
undertake the following actions (and, except with respect to Section 6.2(b)(iii)
and Section 6.2(b)(vi), to delegate such authority to such representatives or
agents of the Liquidating Trustee as the Liquidating Trustee may nominate from
time to time):
 
(i) to open bank accounts, and to hold, manage, convert to Cash, and distribute
the Liquidating Trust Assets,
 

 
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including prosecuting and resolving the Claims and Causes of Action belonging to
the Liquidating Trust;
 
(ii) to hold the Liquidating Trust Assets for the benefit of the Liquidating
Trust Beneficiaries, whether their Claims or Interests are Allowed on or after
the Effective Date;
 
(iii) in the Liquidating Trustee’s reasonable business judgment, to investigate,
prosecute, settle and/or abandon rights, Causes of Action, Claims, or litigation
of the Liquidating Trust, including, without limitation, Avoidance Actions;
 
(iv) to monitor and enforce the implementation of the Plan;
 
(v) to file all Tax and regulatory forms, returns, reports, and other documents
required with respect to the Liquidating Trust;
 
(vi) in the Liquidating Trustee’s reasonable business judgment, to object to
Claims, and manage, control, prosecute, and/or settle on behalf of the
Liquidating Trust, objections to Claims on account of which the Liquidating
Trustee (as Disbursing Agent) will be responsible (if Allowed) for making
distributions under the Plan;
 
(vii) to take all actions and create any document necessary to implement the
Plan;
 
(viii) to hold, manage, and distribute Cash or non-Cash Liquidating Trust Assets
obtained through the exercise of its power and authority;
 
(ix) to act as a signatory to the Debtors for all purposes, including those
associated with the novation of contracts or other obligations arising out of
the sales of the Debtors’ assets; and
 
(x) to take all necessary actions and file all appropriate motions to obtain an
order closing the Chapter 11 Cases.
 
(c) In all circumstances, the Liquidating Trustee shall comply with all of the
Debtors’ obligations under the Global Settlement Agreement and in accordance
with applicable law and shall otherwise act in the best interest of all
Liquidating Trust Beneficiaries, and the Liquidating Trustee shall act in
furtherance of the purpose of the Liquidating Trust.  With the consent of the
Trust Advisory Board, the Liquidating Trustee may serve on the board of
directors of any subsidiary of the
 

 
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Liquidating Trust, provided the subsidiary’s objective is consistent with that
of the Liquidating Trust (i.e. to sell its assets and distribute the proceeds in
liquidation) (the “Objective”).
 
(d) Except as otherwise provided in this Trust Agreement, the Liquidating
Trustee will not be required to obtain the order or approval of the Bankruptcy
Court, or any other court of competent jurisdiction in, or account to the
Bankruptcy Court or any other court of competent jurisdiction for, the exercise
of any right, power or privilege conferred hereunder.  Notwithstanding the
foregoing, where the Liquidating Trustee determines, in its reasonable
discretion, that it is necessary, appropriate or desirable, the Liquidating
Trustee will have the right to submit to the Bankruptcy Court any question or
questions regarding any specific action proposed to be taken by the Liquidating
Trustee with respect to this Trust Agreement, the Liquidating Trust, or the
Liquidating Trust Assets, including, without limitation, the administration and
distribution of the Liquidating Trust Assets and the termination of the
Liquidating Trust.  Pursuant to the Plan, the Bankruptcy Court has retained
jurisdiction for such purposes and may approve or disapprove any such proposed
action upon motion by the Liquidating Trustee.
 
6.3 Limitations on Liquidating Trustee.
 
(a) The Liquidating Trustee shall, on behalf of the Liquidating Trust, hold the
Liquidating Trust out as a trust in the process of liquidation and not as an
investment company.  The Liquidating Trustee shall be restricted to the
liquidation of the Liquidating Trust Assets on behalf, and for the benefit, of
the Liquidating Trust Beneficiaries and the distribution and application of
Liquidating Trust Assets for the purposes set forth in, and the conservation and
protection of the Liquidating Trust Assets and the administration thereof in
accordance with, the provisions of this Trust Agreement, the Plan and the
Confirmation Order.
 
(b) Notwithstanding anything in this Trust Agreement to the contrary, and
subject to any powers that are expressly vested in the Litigation Subcommittee
pursuant to this Trust Agreement, the Liquidating Trustee shall submit to the
Trust Advisory Board for its approval the following matters and any other
matters that expressly require the approval of the Trust Advisory Board pursuant
to the other terms of this Trust Agreement:
 
(i) Any transaction involving the sale, assignment, transfer or abandonment of
any Liquidating Trust Asset or Assets having a value in excess of $500,000.00;
 
(ii) Any incurrence of any cost, expense or fee in excess of $500,000.00
(covering services to be rendered or products utilized by the Liquidating
Trustee within a one month period);
 

 
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(iii) Subject to Section 6.8(b), any determination to retain Trust Professionals
and any compensation arrangements for such Trust Professionals, it being
understood that the Liquidating Trustee initially intends to engage Weil,
Gotshal & Manges LLP, Quinn Emanuel Urquhart & Sullivan, LLP and such other
counsel as may be appointed by the Trust Advisory Board from time to time to
litigate Disputed Claims;
 
(iv) Determination of the amount and timing of any distribution to the
Liquidating Trust Beneficiaries;
 
(v) Any determination to initiate lawsuits or proceedings; and
 
(vi) The dissolution of the Liquidating Trust.
 
The foregoing shall not limit the Liquidating Trustee’s ability to make
determinations and take actions regarding compliance with tax withholding
requirements (including remittances).
 
(c) The Liquidating Trustee shall submit any proposed  settlement, disposition
or abandonment of any Claims asserted against the Debtors or the Debtors’
estates to the Trust Advisory Board or to the Litigation Subcommittee, as
applicable, for consideration and approval as provided in this Section 6.3(c)
and in Section 6.6(a), other than (i) any proposed final settlement, disposition
or abandonment that was made or accepted by the Debtors prior to the Effective
Date, the principal terms of which have been evidenced in writing (whether or
not such offer or acceptance is conditioned upon approval of any supervising
authority), and (ii) any settlement, disposition or abandonment of a GUC Claim
(as defined below) where the proposed settlement, disposition or abandonment
amount with respect to such GUC Claim is $2,000,000.00 or less (each such GUC
Claim, a “De Minimis GUC Claim”).  Proposed settlements, dispositions or
abandonments of (A) Claims asserted against the Liquidating Trust (other than de
Minimis GUC Claims), (B) Claims previously asserted against the Debtors or the
Debtors’ estates within Class 12 (General Unsecured Claims) of the Plan (the
“GUC Claims”) or (C) Claims, that if litigated, could result in the
classification of such Claim within Class 12 (General Unsecured Claims),
including claims related to Dime Warrants, in each case, shall be submitted to
the Trust Advisory Board for consideration and approval and the Trust Advisory
Board shall promptly, and in any event within twenty (20) Business Days of such
submission, make a determination regarding the proposed settlement, disposition
or abandonment.  Subject to the provisions of Section 6.6(a) hereof, proposed
settlements, abandonments or dispositions of Claims asserted against the
Liquidating Trust (other than De Minimis GUC Claims) or claims previously
asserted against the Debtors or the Debtors’ estates within Class 17A (WMB
Senior Notes Claims), Class 17B (WMB Subordinated Notes Claims) and Class 18
(Subordinated Claims) of the Plan (collectively, the “Junior Disputed Claims”),
shall be submitted to the Litigation Subcommittee for the consideration and
approval of the
 

 
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Litigation Subcommittee (provided, however, that such Claims shall not be
submitted to the Litigation Subcommittee if, when litigated, such litigation
could result in the classification of such Claim within Class 12 (General
Unsecured Claims)) and the Litigation Subcommittee shall promptly, and in any
event within twenty (20) Business Days of such submission, make a determination
regarding the proposed settlement, disposition or abandonment.  If the
Litigation Subcommittee does not approve, within twenty (20) Business Days of
its submission to the Litigation Subcommittee, a settlement offer that the
Liquidation Trustee believes in good faith should be accepted, the Liquidating
Trustee may submit the settlement offer to the Trust Advisory Board for
consideration and approval.
 
6.4 Establishment of Trust Advisory Board.
 
(a) The “Trust Advisory Board” means the board to be appointed in accordance
with, and to exercise the duties set forth in, this Trust Agreement, which
duties shall be (i) to oversee the liquidation and distribution of the
Liquidating Trust Assets by the Liquidating Trustee in accordance with this
Trust Agreement, the Plan and the Confirmation Order, (ii) to approve (or
withhold approval) of those matters submitted to it for approval in accordance
with the terms of this Trust Agreement, and (iii) to remove and appoint any
successor to the Liquidating Trustee as provided for in this Trust Agreement.
 
(b) The Trust Advisory Board initially shall be comprised of (A) three (3)
members, to be selected by the Creditors’ Committee (together with any
successors and the Additional CC Member, the “CC Members”); (B) four (4)
members, to be selected by the Equity Committee (together with any successors,
the “EC Members”), with one (1) such member to be named by the TPS Funds (as
defined below) before being selected (together with any successors, the “TPS
Member”); (C) one (1) member, to be selected by the Creditors’ Committee and
approved by the Equity Committee, such approval not to be unreasonably withheld
(together with any successors, the “CC-EC Member”); (D) one (1) member to be
selected by Tricadia Capital Management, LLC (the “Tricadia Member”); and (E)
one (1) ex officio member, to be selected by Holdco Advisors, L.P., subject to
the execution of appropriate agreements regarding confidentiality,
non-disclosure and restrictions on trading, with limited member rights
consisting solely of the right of observation and the review of materials
provided to the Trust Advisory Board and, subject to the agreement of the other
members of the Trust Advisory Board, a right of participation in discussions of
the Trust Advisory Board but with no right to vote (the “Holdco Member”).  The
“TPS Funds” means, collectively, Black Horse Capital LP, Black Horse Capital
Master Fund Ltd, Greywolf Capital Partners II LP, Greywolf Capital Overseas
Master Fund, Greywolf Opportunities Fund II LP, Greywolf Structured Products
Master Fund, Ltd., Greywolf Capital Overseas Fund II, Pines Edge Value Investors
Ltd., Pine River Convertibles Master Fund Ltd. (f/k/a Nisswa Convertibles Master
Fund Ltd.), Pine River Fixed Income Master Fund Ltd. (f/k/a Nisswa Fixed Income
Master Fund Ltd.), Pine River Master Fund Ltd. (f/k/a Nisswa Master Fund Ltd.),
LMA SPC for and on behalf of the MAP 89 Segregated Portfolio, Visium Global
Master Fund, Ltd., Visium Catalyst Credit Master Fund, Ltd., VR Global
 

 
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Partners, L.P., Scoggin Worldwide Fund Ltd., Scoggin Capital Management II LLC,
Scoggin International Fund Ltd, Karnak Partners, L.P., Ermitage Selz Fund, Ltd.,
GAM Selection Hedge Investments, Inc., and Varana Onshore, LP.  The initial
members of the Trust Advisory Board are set forth on Annex A hereto.  Each
member of the Trust Advisory Board shall have a fiduciary duty to act in the
best interests of the Liquidating Trust Beneficiaries as a whole.
 
(c) If, during the term of the Liquidating Trust, all Allowed CCB-2 Guarantees
Claims are paid in full in Cash or through the issuance of Runoff Notes and
Reorganized Common Stock in accordance with the Plan, the Tricadia Member shall,
without any further action by the Liquidating Trustee, the Trust Advisory Board,
the Bankruptcy Court or any other Person, resign immediately, and one (1) new
member of the Trust Advisory Board shall be selected by (i) the Creditors’
Committee, as notified in writing to the Trust Advisory Board and the
Liquidating Trustee within ten (10) Business Days, or (ii) if the Creditors’
Committee has been dissolved, by the other CC Members, as notified in writing to
the Trust Advisory Board and the Liquidating Trustee within ten (10) Business
Days (the “Additional CC Member”).  The Holdco Member shall, without any further
action by the Liquidating Trustee, the Trust Advisory Board, the Bankruptcy
Court or any other Person, resign immediately upon the earlier to occur of (A)
all Allowed CCB-1 Guarantees Claims being paid in full and (B) the two (2) year
anniversary of the Effective Date.
 
(d) If, during the term of the Liquidating Trust, the aggregate outstanding
amount of the Liquidating Trust Interests representing (i) Allowed Claims, (ii)
the greater of Intercreditor Interest Claims or Postpetition Interest Claims in
respect of such Allowed Claims, (iii) Disputed Claims, (iv) the greater of
Intercreditor Interest Claims or Postpetition Interest Claims in respect of such
Disputed Claims, and (v) contingent, unliquidated Claims, is $50,000,000.00 or
less, (X) one (1) CC Member who is not a CC Subcommittee Member (as defined
below) shall without any further action by the Liquidating Trustee, the Trust
Advisory Board, the Bankruptcy Court or any other Person, resign, and (Y) within
twenty (20) Business Days of such event, the EC Members shall appoint a new
member of the Trust Advisory Board and notify the Liquidating Trustee of the
identity of the new member in writing.  Solely for the purposes of this
subsection (d), (A) the amount of any Disputed Claim shall be (1) the liquidated
amount set forth in the filed proof of Claim relating to such Disputed Claim,
(2) if the Bankruptcy Court has estimated the amount of the Disputed Claim
pursuant to Section 502 of the Bankruptcy Code in an amount that constitutes and
represents the maximum amount in which such Claim may ultimately become an
Allowed Claim (such estimated amount, the “Disputed Claim Estimate”), the
Disputed Claim Estimate, or (3) if the Liquidating Trustee and the holder of
such Disputed Claim have agreed upon an amount (the “Agreed Amount”), the Agreed
Amount and (B) the amount of any contingent, unliquidated Claim shall be the
amount agreed by a majority of the Trust Advisory Board and a majority of the
Litigation Subcommittee or, in the event that a majority of the Trust Advisory
Board and a majority of the Litigation Subcommittee do not agree as to the
amount within twenty (20) Business Days, the amount estimated by the Bankruptcy
Court at the request
 

 
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of any member of the Trust Advisory Board or the Litigation Subcommittee.  For
the purposes of this subsection (d), Disputed Claims and contingent,
unliquidated Claims shall include any claims that are withdrawn as of the date
hereof but that, pursuant to stipulation with the Debtors and by order of the
Bankruptcy Court, may be refiled and asserted in Class 18 (Subordinated Claims)
of the Plan.
 
(e) If, during the term of the Liquidating Trust, all Liquidating Trust
Interests representing Allowed Claims and Postpetition Interest Claims in
respect of such Allowed Claims are paid in full, (X) any remaining CC Members
shall, without any further action by the Liquidating Trustee, the Trust Advisory
Board, the Bankruptcy Court or any other Person, resign immediately and (Y)
within twenty (20) Business Days of such event, the remaining members of the
Trust Advisory Board shall (i) appoint such number of new members of the Trust
Advisory Board as is equal to the number of resigning CC Members and notify the
Liquidating Trustee in writing of the identity of such members, or (ii) elect to
continue without such replacement members and so notify the Liquidating Trustee
in writing.
 
(f) The authority of the members of the Trust Advisory Board shall be effective
as of the Effective Date and shall remain and continue in full force and effect
until the Liquidating Trust is dissolved in accordance with Section 3.2
hereof.  The service of the members of the Trust Advisory Board shall be subject
to the following:
 
(i) subject to Section 6.4(d) and Section 6.4(e), the members of the Trust
Advisory Board shall serve until death or resignation pursuant to clause (ii)
below, or removal pursuant to clause (iii) below;
 
(ii) a member of the Trust Advisory Board may resign at any time by providing a
written notice of resignation to the remaining members of the Trust Advisory
Board.  Such resignation shall be effective when a successor is appointed as
provided herein;
 
(iii) a member of the Trust Advisory Board may be removed by the unanimous vote
of the other members for (a) fraud or willful misconduct in connection with the
affairs of the Liquidating Trust or (b) cause, which shall include a breach of
fiduciary duty other than as specified in the foregoing clause (a).  Such
removal shall be effective immediately upon such vote.
 
(iv) subject to Section 6.4(d) and Section 6.4(e), in the event of a vacancy in
a member’s position (whether by removal, death or resignation), a new member may
be appointed, (A) in the case of a CC Member, by (i) the Creditors’ Committee,
as notified in writing to the Trust Advisory Board and the Liquidating Trustee
within ten (10) Business Days, or (ii) if the Creditors’ Committee
 

 
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has been dissolved, the CC Members, as notified in writing to the Trust Advisory
Board and the Liquidating Trustee within ten (10) Business Days; or (iii) if
there are no remaining CC Members, the Liquidating Trustee, as notified in
writing to the Trust Advisory Board within ten (10) Business Days, (B) in the
case of an EC Member (other than the TPS Member), by the other EC Members; (C)
in the case of a TPS Member, by the TPS Funds as notified in writing to the
Trust Advisory Board and the Liquidating Trustee within ten (10) Business Days,
(D) in the case of the CC-EC Member, by (i) the Creditors’ Committee subject to
the approval of the EC members (such approval not to be unreasonably withheld),
as notified in writing to the Trust Advisory Board and the Liquidating Trustee
within ten (10) Business Days, or (ii) if the Creditors’ Committee has been
dissolved, the CC Members subject to the approval of the EC Members (such
approval not to be unreasonably withheld), as notified in writing to the Trust
Advisory Board and the Liquidating Trustee within ten (10) Business Days, or
(iii) if there are no remaining CC Members, the Liquidating Trustee subject to
the approval of the EC Members (such approval not to be unreasonably withheld),
as notified in writing to the Trust Advisory Board within ten (10) Business
Days.  In each case, the appointment of a successor member of the Trust Advisory
Board (including any appointment pursuant to Section 6.4(d) and Section 6.4(e))
shall be evidenced by the filing with the Bankruptcy Court by the Liquidating
Trustee of a notice of appointment, which notice shall include the name,
address, and telephone number of the successor member of the Trust Advisory
Board; and
 
(v) immediately upon appointment of any successor member of the Trust Advisory
Board, all rights, powers, duties, authority, and privileges of the predecessor
member of the Trust Advisory Board hereunder shall be vested in and undertaken
by the successor member of the Trust Advisory Board without any further act; and
the successor member of the Trust Advisory Board shall not be liable personally
for any act or omission of the predecessor member of the Trust Advisory Board.
 
(g) Each member of the Trust Advisory Board shall designate (i) one or more
representatives who shall attend meetings of and participate in other activities
of the Trust Advisory Board and (ii) an alternate representative to attend
meetings and participate in other activities of the Trust Advisory Board when
the representatives designated pursuant to clause (i) above are unavailable.
 
(h) Notwithstanding anything in this Trust Agreement to the contrary, the Trust
Advisory Board shall not take any action which will cause the
 

 
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Liquidating Trust to fail to qualify as a “liquidating trust” for United States
federal income tax purposes.
 
(i) A quorum for meetings of the Trust Advisory Board shall consist of a
majority of the non-recused, voting members of the Trust Advisory Board then
serving; provided, however, that, for purposes of determining whether a quorum
is present at such a meeting, a voting member of the Trust Advisory Board shall
be deemed present if a representative of the member is attending in person, by
telephone or by proxy.
 
(j) Except as expressly provided herein, the affirmative vote of a majority of
the non-recused, voting members of the Trust Advisory Board shall be the act of
the Trust Advisory Board with respect to any matter that requires the
determination, consent, approval or agreement of such board.  If an equal number
of the non-recused voting members of the Trust Advisory Board vote for and
against a particular matter, the Liquidating Trustee shall only in such
circumstances have the authority to cast a vote with respect to such
matter.  Any or all of the members of the Trust Advisory Board may participate
in a regular or special meeting by, or conduct the meeting through the use of,
conference telephone or similar communications equipment by means of which all
persons participating in the meeting may hear each other, in which case any
required notice of such meeting may generally describe the arrangements (rather
than or in addition to the place) for the holding thereof.  Any member of the
Trust Advisory Board participating in a meeting by this means is deemed to be
present in person at the meeting.  In all matters submitted to a vote of the
Trust Advisory Board, each Trust Advisory Board member (excluding the Holdco
Member) shall be entitled to cast one vote, which vote shall be cast personally
by such Trust Advisory Board member or by proxy.  In a matter in which the
Liquidating Trustee cannot obtain direction or authority from the Trust Advisory
Board, the Liquidating Trustee may file a motion requesting such direction or
authority from the Bankruptcy Court; provided, however, that any member of the
Trust Advisory Board may oppose such motion.
 
(k) A Trust Advisory Board member and its representative shall be recused from
the Trust Advisory Board’s deliberations and votes on any and all matters as to
which such member has a conflicting interest.  If a Trust Advisory Board member
or its representative does not recuse itself from any such matter, that Trust
Advisory Board member and its representative may be recused from such matter by
the majority vote of the remaining, voting members of the Trust Advisory Board
that are not recused from the matter.
 
(l) Any action required or permitted to be taken by the Trust Advisory Board at
a meeting may be taken without a meeting if the action is taken by unanimous
written consent of the Trust Advisory Board (excluding the Holdco Member) as
evidenced by one or more written consents describing the action taken, signed by
the Trust Advisory Board and filed with the minutes or proceedings of the Trust
Advisory Board.
 

 
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(m) The members of the Trust Advisory Board shall be compensated as set forth in
the attached Annex B from the Administrative Funding.  Any member of the Trust
Advisory Board shall also be reimbursed by the Liquidating Trustee from the
Administrative Funding for its actual, reasonable out-of-pocket expenses
incurred for serving on such board and for reasonable legal fees incurred by any
member of the Trust Advisory Board in their capacity as such with respect to
outside counsel in the same manner and priority as the compensation and expenses
of the Liquidating Trustee under this Trust Agreement, in accordance with the
Budget, after submission of reasonably detailed receipts or invoices evidencing
such expenses and the approval of such expenses by the Bankruptcy Court.  Except
as provided for in this Section 6.4, the members of the Trust Advisory Board
shall not be entitled to receive any other form of compensation for their
services provided as such members.  The Budget shall include a reserve for the
fees and expenses of the Trust Advisory Board.
 
6.5 The Litigation Subcommittee
 
(a) The “Litigation Subcommittee” means the subcommittee of the Trust Advisory
Board appointed in accordance with Section 6.5(b) of this Agreement to exercise
the duties set forth in Section 6.5(c) of this Trust Agreement.
 
(b) The Litigation Subcommittee initially shall be comprised of (A) two (2)
members, to be selected by the Creditors’ Committee (together with any
successors, the “CC Subcommittee Members”), with Joel Klein and Marc. S.
Kirschner to be the initial CC Subcommittee Members; (B) two (2) members, to be
selected from the EC Members (excluding the TPS Member) (together with any
successors, the “EC Subcommittee Members”), with Hon Douglas Southard and
Michael Willingham to be the initial EC Subcommittee Members; and (C) one (1)
member, who shall be the TPS Member.  The initial members of the Litigation
Subcommittee are set forth on Annex A hereto.  Each member of the Litigation
Subcommittee shall (i) continue to act as a member of the Litigation
Subcommittee until he or she is no longer a member of the Trust Advisory Board,
and (ii) have a fiduciary duty to act in the best interests of the Liquidating
Trust Beneficiaries as a whole.
 
(c) The Litigation Subcommittee shall oversee (i) the prosecution of, subject to
the exculpation and release provisions of the Plan, (A) claims against present
and former officers and directors of the Debtors for actions arising during the
period prior to the Petition Date (the “D&O Claims”), (B) claims against
professionals and representatives retained by the Debtors with respect to
conduct that occurred prior to the Petition Date; and (C) claims based on
conduct that occurred prior to the commencement of the Debtors’ bankruptcy cases
against third-parties for any non-contractual breach of duty to WMI, including,
but not limited to, antitrust claims and business tort claims (collectively
categories (A), (B), and (C) are the “Recovery Claims”) and (ii) the defense of
Junior Disputed Claims including Disputed Claims of WMB Noteholders for
misrepresentation, which Disputed Claims are classified in Class 18
(Subordinated Claims) pursuant to the Plan (the “WMB Claims”); provided,
however, that the Litigation Subcommittee shall not pursue business tort Claims
that were released
 

 
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against JPMC and its Related Persons pursuant to the Global Settlement
Agreement.  In connection with the foregoing, and subject to the review and
approval of the Bankruptcy Court, upon notice and a hearing, the Litigation
Subcommittee shall have discretion over the following matters:  (x) retention of
counsel and professionals in conjunction with the Recovery Claims and the Junior
Disputed Claims; provided, however, that the prosecution of any D&O Claims shall
be the responsibility of Klee, Tuchin, Bogdanoff, & Stern LLP and the defense of
any Junior Disputed Claims shall be the responsibility of Weil, Gotshal & Manges
LLP, Quinn Emanuel Urquhart & Sullivan, LLP and such other counsel as may be
appointed from time to time; (y) subject to the provisions set forth in Section
6.3(c) and Section 6.6(a) hereof, prosecution and settlement of the Recovery
Claims; and (z) establishment of budgets and expenditure of the first Ten
Million Dollars ($10,000,000.00) of the Litigation Funding and of the second Ten
Million dollars ($10,000,000) if authorized by the Trust Advisory Board.  In the
event that all of the Litigation Funding has been spent, the Litigation
Subcommittee may request additional funds from the Trust Advisory Board which
shall have the sole and absolute discretion as to whether to allocate such
additional funds.  To the extent the Litigation Funding or any additional funds
that are allocated to the Litigation Subcommittee are unused, such funds shall
be distributed by the Liquidating Trust in accordance with the terms and
conditions of the Plan.
 
(d) Any proceeds that are obtained with respect to any Recovery Claims (whether
by settlement, judgment or otherwise) shall be retained by the Liquidating Trust
and distributed by the Liquidating Trustee in accordance with the terms and
conditions of this Liquidating Trust Agreement and the Plan.
 
(e) If any member of the Litigation Subcommittee is not a natural person, it
shall designate (i) one or more representatives who shall attend meetings of and
participate in other activities of the Litigation Subcommittee and (ii) an
alternate representative to attend meetings and participate in other activities
of the Litigation Subcommittee when the representatives designated pursuant to
clause (i) above are unavailable.
 
(f) Notwithstanding anything in this Trust Agreement to the contrary, the
Litigation Subcommittee shall not take any action which will cause the
Liquidating Trust to fail to qualify as a “liquidating trust” for United States
federal income tax purposes.
 
(g) A quorum for meetings of the Litigation Subcommittee shall consist of a
majority of the non-recused, voting members of the Litigation Subcommittee then
serving; provided, however, that, for purposes of determining whether a quorum
is present at such a meeting, a voting member of the Litigation Subcommittee
shall be deemed present if a representative of the member is attending in
person, by telephone or by proxy.
 
(h) Except as expressly provided herein, the affirmative vote of a majority of
the non-recused, voting members of the Litigation Subcommittee shall be
 

 
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the act of the Litigation Subcommittee with respect to any matter that requires
the determination, consent, approval or agreement of such subcommittee.  If an
equal number of the non-recused voting members of the Litigation Subcommittee
vote for and against a particular matter, the Liquidating Trustee shall only in
such circumstances have the authority to cast a vote with respect to such
matter.  Any or all of the members of the Litigation Subcommittee may
participate in a regular or special meeting by, or conduct the meeting through
the use of, conference telephone or similar communications equipment by means of
which all persons participating in the meeting may hear each other, in which
case any required notice of such meeting may generally describe the arrangements
(rather than or in addition to the place) for the holding thereof.  Any member
of the Litigation Subcommittee participating in a meeting by this means is
deemed to be present in person at the meeting.  In all matters submitted to a
vote of the Litigation Subcommittee, each Litigation Subcommittee member shall
be entitled to cast one vote, which vote shall be cast personally by such
Litigation Subcommittee member or such member’s representative as appointed
pursuant to Section 6.5(e).  In a matter in which the Liquidating Trustee cannot
obtain direction or authority from the Litigation Subcommittee, the Liquidating
Trustee may file a motion requesting such direction or authority from the
Bankruptcy Court; provided, however, that any member of the Litigation
Subcommittee may oppose such motion.
 
(i) A Litigation Subcommittee member and its representative shall be recused
from the Litigation Subcommittee’s deliberations and votes on any and all
matters as to which such member has a conflicting interest.  If a Litigation
Subcommittee member or its representative does not recuse itself from any such
matter, that Litigation Subcommittee member and its representative may be
recused from such matter by the majority vote of the remaining, voting members
of the Litigation Subcommittee that are not recused from the matter.
 
(j) Any action required or permitted to be taken by the Litigation Subcommittee
at a meeting may be taken without a meeting if the action is taken by unanimous
written consent of the Litigation Subcommittee as evidenced by one or more
written consents describing the action taken, signed by the Litigation
Subcommittee and filed with the minutes or proceedings of the Litigation
Subcommittee.
 
(k) The members of the Litigation Subcommittee shall be compensated as set forth
in the attached Annex B from the Litigation Funding.  Any member of the
Litigation Subcommittee shall also be reimbursed by the Liquidating Trustee from
the Litigation Funding for its actual, reasonable out-of-pocket expenses
incurred for serving on such committee and for reasonable legal fees incurred by
any member of the Litigation Subcommittee in their capacity as such with respect
to outside counsel in the same manner and priority as the compensation and
expenses of the Liquidating Trustee under this Trust Agreement, in accordance
with the Budget, after submission of reasonably detailed receipts or invoices
evidencing such expenses and the approval of such expenses by the Bankruptcy
Court.  Except as provided for in this Section 6.5, the members of the
Litigation Subcommittee shall not be entitled to receive
 

 
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any other form of compensation for their services as such members.  The Budget
shall include a reserve for the fees and expenses of the Litigation
Subcommittee.
 
6.6 Resolution of Claims.
 
(a) Except as otherwise provided in Section 6.3(c), the Trust Advisory Board
shall have the authority, subject to Bankruptcy Court review and approval, to
settle (A) all GUC Claims (other than any De Minimis GUC Claim), (B) all Claims
relating to Dime Warrants, and (C) all Claims that, if litigated, could result
in the classification of such Claim as a GUC Claim (other than any De Minimis
GUC Claim).  Notwithstanding the foregoing, and except as otherwise provided in
Section 6.3(c), the Litigation Subcommittee shall have authority to settle all
Recovery Claims and the Junior Disputed Claims, subject to Bankruptcy Court
review and approval; provided, however, that, from and after the expiry of the
six (6) month period beginning on the Effective Date, both the Trust Advisory
Board and the Litigation Subcommittee shall have the authority to settle all
Recovery Claims and the Junior Disputed Claims, subject to Bankruptcy Court
review and approval; provided further that the Litigation Subcommittee shall not
settle a Junior Disputed Claim if such settlement would result in the
classification of all or any part of such Claim as a GUC Claim.
 
(b) The Trust Advisory Board shall have the authority to retain counsel and
professionals in conjunction with the GUC Claims (other than any De Minimis GUC
Claim), subject to Bankruptcy Court review and approval.  The fees and expenses
of such counsel and professionals shall be deducted from the Administrative
Funding.
 
(c) Except as provided in the proviso to Section 6.5(c)(x), the Litigation
Subcommittee shall have authority to retain counsel and professionals in
conjunction with the Recovery Claims and the Junior Disputed Claims, subject to
Bankruptcy Court review and approval.  The fees and expenses of counsel and
professionals for the Recovery Claims shall be deducted from the Litigation
Funding.  The fees and expenses of counsel for the Junior Disputed claims shall
be paid from the Administrative Funding and not deducted from the Litigation
Funding.
 
(d) Notwithstanding any other provision hereof, if any portion of a Claim is
disputed, no payment or distribution provided hereunder shall be made on account
of such Claim unless and until such Disputed Claim becomes an Allowed Claim.
 
(e) To the extent that a Disputed Claim ultimately becomes an Allowed Claim,
distributions (if any) shall be made to the holder of such Allowed Claim in
accordance with the provisions of the Plan and this Trust Agreement.
 
(f) In connection with the exercise of the powers that are vested in the Trust
Advisory Board and the Litigation Subcommittee pursuant to Section 6.6(a), the
Trust Advisory Board and the Litigation Subcommittee, as applicable, may at any
time request that the Bankruptcy Court estimate any GUC Claim or Junior Disputed
 

 
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Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether
any of the Debtors or any other Person previously objected to such Claim or
whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy
Court shall retain jurisdiction to estimate any Claim at any time during
litigation concerning any objection to any Claim, including, without limitation,
during the pendency of any appeal relating to any such objection.  In the event
that the Bankruptcy Court estimates any GUC Claim or Junior Disputed Claim, the
amount so estimated shall constitute either the allowed amount of such Claim or
a maximum limitation on such Claim, as determined by the Bankruptcy Court.  If
the estimated amount constitutes a maximum limitation on the amount of such
Claim the Trust Advisory Board or the Litigation Subcommittee, as applicable,
may pursue supplementary proceedings to object to the allowance of such
Claim.  All of the aforementioned objection, estimation and resolution
procedures are intended to be cumulative and not exclusive of one
another.  Claims may be estimated and subsequently compromised, settled,
withdrawn or resolved by any mechanism approved by the Bankruptcy Court.
 
(g) The amount of any Liquidating Trust Assets allocable to, or retained on
account of, any Disputed Claim in the Liquidating Trust Claims Reserve shall be
determined based on the estimation of such Disputed Claim pursuant to Section
6.6(f) hereof or as otherwise agreed in writing by the Trust Advisory Board or
the Litigation Subcommittee, as applicable, and the holder of such Claim.
 
6.7 Actions Taken on Other Than A Business Day.  In the event that any payment
or act under the Plan or this Trust Agreement is required to be made or
performed on a date that is not a Business Day, then the making of such payment
or the performance of such act may be completed on the next succeeding Business
Day, but shall be deemed to have been completed as of the required date.
 
6.8 Agents, Employees and Professionals.
 
(a) The Liquidating Trust may, but shall not be required to, from time to time
enter into contracts with, consult with and retain employees, officers and
independent contractors, including attorneys, accountants, appraisers,
disbursing agents or other parties deemed by the Liquidating Trustee to have
qualifications necessary or desirable to assist in the proper administration of
the Liquidating Trust (collectively, the “Trust Professionals”), on such terms
as the Liquidating Trustee deems appropriate.  The Liquidating Trustee may
assume existing contracts and/or leases to which WMI is a party as of the date
hereof including, without limitation, employment agreements, or may enter into
new arrangements on substantially similar terms.  None of the professionals that
represented parties-in-interest in the Chapter 11 Cases shall be precluded from
being engaged by the Liquidating Trustee solely on account of their service as a
professional for such parties-in-interest prior to the Effective Date.  Without
limiting the foregoing, it is understood and agreed that the Liquidating Trustee
may elect to hire Alvarez & Marsal North America, LLC and/or any of its
Affiliates (together “A&M”) notwithstanding that the Liquidating Trustee may be
a member or Managing Director of A&M.  The Liquidating Trustee shall not be
subject to any liability
 

 
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whatsoever on account of the hiring of or the decision to hire A&M as a Trust
Professional, notwithstanding the Liquidating Trustee’s relationship with A&M.
 
(b) After the Effective Date, Trust Professionals shall be required to submit
reasonably detailed invoices on a monthly basis to the Liquidating Trustee and
the Trust Advisory Board, including in such invoices a description of the work
performed, who performed such work, and if billing on an hourly basis, the
hourly rate of such person, plus an itemized statement of expenses.  Subject to
the approval of the Bankruptcy Court, the Liquidating Trustee shall pay such
invoices thirty (30) days after such invoices are approved by the Bankruptcy
Court.  In the event of any dispute concerning the entitlement to, or the
reasonableness of any compensation and/or expenses of any Trust Professionals,
either the Liquidating Trustee or the affected party may ask the Bankruptcy
Court to resolve the dispute.
 
(c) Except as provided in the following sentence, all payments to Trust
Professionals shall be paid out of the Administrative Funding or, if all of the
Administrative Funding has been spent, any remaining Liquidating Trust Assets,
subject to the approval of a Supermajority of the Trust Advisory Board.  All
payments to Trust Professionals related to the Recovery Claims shall be paid out
of the Litigation Funding.
 
6.9 Investment of Liquidating Trust Monies.  All monies and other assets
received by the Liquidating Trustee as Liquidating Trust Assets (including the
proceeds thereof as a result of investment in accordance with this Section 6.9)
shall, until distributed or paid over as herein provided, be held in trust for
the benefit of the Liquidating Trust Beneficiaries, and shall not be segregated
from other Liquidating Trust Assets, unless and to the extent required by the
Plan.  The Liquidating Trustee shall promptly invest any such monies (including
any earnings thereon or proceeds thereof) as permitted by section 345 of the
Bankruptcy Code, in the manner set forth in this Section 6.9, but shall
otherwise be under no liability for interest or income on any monies received by
the Liquidating Trust hereunder and held for distribution or payment to the
Liquidating Trust Beneficiaries, except as such interest shall actually be
received.  Investment of any monies held by the Liquidating Trust shall be
administered in accordance with the general duties and obligations hereunder. 
The right and power of the Liquidating Trustee to invest the Liquidating Trust
Assets, the proceeds thereof, or any income earned by the Liquidating Trust,
shall be limited to the right and power to (i) invest such Liquidating Trust
Assets (pending distributions in accordance with the Plan or this Trust
Agreement) in (a) short-term direct obligations of, or obligations guaranteed
by, the United States of America or (b) short-term obligations of any agency or
corporation which is or may hereafter be created by or pursuant to an act of the
Congress of the United States as an agency or instrumentality thereof; or (ii)
deposit such assets in demand deposits at any bank or trust company, which has,
at the time of the deposit, a capital stock and surplus aggregating at least
$1,000,000,000 (collectively, the “Permissible Investments”); provided, however,
that the scope of any such Permissible Investments shall be limited to include
only those investments that a liquidating trust, within the meaning of Treasury
Regulations section 301.7701-4(d), may be permitted to
 

 
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hold, pursuant to the Treasury Regulations, or any modification in the IRS
guidelines, whether set forth in IRS rulings, other IRS pronouncements or
otherwise.
 
6.10 Termination.  The duties, responsibilities and powers of the Liquidating
Trustee shall terminate on the date the Liquidating Trust is wound up and
dissolved in accordance with Delaware law pursuant to Section 3.2 hereof, under
applicable law in accordance with the Plan, by an order of the Bankruptcy Court
or by entry of a final decree closing the Debtors’ Chapter 11 cases; provided,
that Sections 7.2, 7.4, 7.5 and 7.6 hereof shall survive such termination,
dissolution and entry.
 
6.11 Resident Trustee.
 
(a) The Resident Trustee has been appointed and hereby agrees to serve as the
trustee of the Liquidating Trust solely for the purpose of complying with the
requirement of Section 3807(a) of the Trust Act that the Liquidating Trust have
one trustee, which, in the case of a natural person, is a resident of the State
of Delaware, or which in all other cases, has its principal place of business in
the State of Delaware.  The duties and responsibilities of the Resident Trustee
shall be limited solely to (i) accepting legal process served on the Liquidating
Trust in the State of Delaware, (ii) the execution of any certificates required
to be filed with the office of the Delaware Secretary of State that the Resident
Trustee is required to execute under Section 3811 of the Trust Act, and (iii)
any other duties specifically allocated to the Resident Trustee in this Trust
Agreement.  Except as provided in the foregoing sentence, the Resident Trustee
shall have no management responsibilities or owe any fiduciary duties to the
Liquidating Trust, the Liquidating Trustee, the Trust Advisory Board or the
Liquidating Trust Beneficiaries.  Contemporaneously with the execution of this
Trust Agreement, the Resident Trustee is hereby authorized and directed to file
a Certificate of Trust with the Secretary of State of the State of Delaware as
provided under the Trust Act.
 
(b) By its execution hereof, the Resident Trustee accepts the Liquidating Trust
created herein.  Except as otherwise expressly required by Section 6.11(a), the
Resident Trustee shall not have any duty or liability with respect to the
administration of the Liquidating Trust, the investment of the Liquidating Trust
Assets or the distribution of the Liquidating Trust Assets to the Liquidating
Trust Beneficiaries, and no such duties shall be implied.  The Resident Trustee
shall not be liable for the acts or omissions of the Liquidating Trustee or the
Trust Advisory Board, nor shall the Resident Trustee be liable for supervising
or monitoring the performance of the duties and obligations of the Liquidating
Trustee or the Trust Advisory Board under this Trust Agreement, except as
expressly required by Section 6.11(a).  The Resident Trustee shall not be
obligated to give any bond or other security for the performance of any of its
duties hereunder.  The Resident Trustee shall not be personally liable under any
circumstances, except for its own willful misconduct, bad faith or gross
negligence.  Without limiting the foregoing:
 
(i) the Resident Trustee shall not be personally liable for any error of
judgment made in good faith, except to the extent
 

 
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such error of judgment constitutes willful misconduct, bad faith or gross
negligence;
 
(ii) no provision of this Trust Agreement shall require the Resident Trustee to
expend or risk its personal funds or otherwise incur any financial liability in
the performance of its rights or powers hereunder if the Resident Trustee has
reasonable grounds to believe that the payment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
 
(iii) the Resident Trustee shall not be personally liable for the validity or
sufficiency of this Trust Agreement or for the due execution hereof by the other
parties hereto;
 
(iv) the Resident Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect;
 
(v) the Resident Trustee may request the Liquidating Trustee to provide a
certificate with regard to any fact or matter the manner of ascertainment of
which is not specifically prescribed herein, and such certificate shall
constitute full protection to the Resident Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon;
 
(vi) in the exercise or administration of the Liquidating Trust hereunder, the
Resident Trustee (a) may act directly or through agents or attorneys pursuant to
agreements entered into with any of them, and (b) may consult with nationally
recognized counsel selected by it in good faith and with due care and employed
by it, and it shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the advice or opinion of any such counsel; and
 
(vii) the Resident Trustee acts solely as Resident Trustee hereunder and not in
its individual capacity, and all persons having any claim against the Resident
Trustee by reason of the transactions contemplated by this Trust Agreement shall
look only to the Liquidating Trust Assets for payment or satisfaction thereof.
 
(c) The Resident Trustee shall be entitled to receive compensation out of the
Administrative Funding from the Liquidating Trust for the services that the
Resident Trustee performs in accordance with this Trust Agreement in
 

 
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accordance with such fee schedules as shall be agreed from time to time by the
Resident Trustee, the Liquidating Trustee and the Trust Advisory Board, as
approved by the Bankruptcy Court.  The Resident Trustee may also consult with
counsel (who may be counsel for the Liquidating Trustee or for the Resident
Trustee) with respect to those matters that relate to the Resident Trustee’s
role as the Delaware resident trustee of the Liquidating Trust, and the
reasonable legal fees incurred in connection with such consultation shall be
reimbursed out of the Administrative Funding to the Resident Trustee pursuant to
this Section 6.11(c) provided such fees are approved by the Bankruptcy Court and
provided further that no such fees shall be reimbursed to the extent that they
are incurred as a result of the Resident Trustee’s gross negligence, bad faith
or willful misconduct.
 
(d) The Resident Trustee shall serve for the duration of the Liquidating Trust
or until the earlier of (i) the effective date of the Resident Trustee’s
resignation, or (ii) the effective date of the removal of the Resident
Trustee.  The Resident Trustee may resign at any time by giving thirty (30)
days’ written notice to the Liquidating Trustee and the Trust Advisory Board;
provided, however, that such resignation shall not be effective until such time
as a successor Resident Trustee has accepted appointment.  The Resident Trustee
may be removed at any time by the Liquidating Trustee, with the consent of the
Trust Advisory Board, by providing thirty (30) days’ written notice to the
Resident Trustee; provided, however, such removal shall not be effective until
such time as a successor Resident Trustee has accepted appointment.  Upon the
resignation or removal of the Resident Trustee, the Liquidating Trustee, with
the consent of the Trust Advisory Board, shall appoint a successor Resident
Trustee.  If no successor Resident Trustee shall have been appointed and shall
have accepted such appointment within forty-five (45) days after the giving of
such notice of resignation or removal, the Resident Trustee may petition the
Bankruptcy Court for the appointment of a successor Resident Trustee.  Any
successor Resident Trustee appointed pursuant to this Section 6.11(d) shall be
eligible to act in such capacity in accordance with this Trust Agreement and,
following compliance with this Section 6.11(d), shall become fully vested with
the rights, powers, duties and obligations of its predecessor under this Trust
Agreement, with like effect as if originally named as Resident Trustee.  Any
such successor Resident Trustee shall notify the Resident Trustee of its
appointment by providing written notice to the Resident Trustee and upon receipt
of such notice, the Resident Trustee shall be discharged of its duties herein.
 
ARTICLE VII
 
CONCERNING THE LIQUIDATING TRUSTEE
 
7.1 Reliance by the Trustees and the Members of the Trust Advisory Board and the
Litigation Subcommittee.  Except as otherwise provided in this Trust Agreement,
the Plan or the Confirmation Order, the Trustees and the Members of the Trust
Advisory Board and the Litigation Subcommittee may rely and shall be protected
in acting upon any resolution, statement, instrument, opinion, report, notice,
request,
 

 
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consent, order or other paper or document reasonably believed by the Trustees to
be genuine and to have been signed or presented by the proper party or parties.
 
7.2 Liability to Third Persons.  No Liquidating Trust Beneficiary shall be
subject to any personal liability whatsoever, in tort, contract or otherwise, to
any person in connection with the Liquidating Trust Assets or the affairs of the
Liquidating Trustee.  The Liquidating Trustee, the Trust Professionals and the
members of the Trust Advisory Board and the Litigation Subcommittee shall not be
subject to any personal liability whatsoever, in tort, contract or otherwise, to
any person (including, in the case of the Liquidating Trustee and members of the
Trust Advisory Board and the Litigation Subcommittee, to any Trust Professionals
retained by the Liquidating Trustee in accordance with this Trust Agreement) in
connection with the Liquidating Trust Assets or the affairs of the Liquidating
Trust and shall not be liable with respect to any action taken or omitted to be
taken in good faith, except for actions and omissions determined by a final
order of the Bankruptcy Court to be due to their respective gross negligence,
intentional fraud, criminal conduct or willful misconduct, and all such persons
shall look solely to the Liquidating Trust Assets for satisfaction of claims of
any nature arising in connection with affairs of the Liquidating Trust.  Other
than as set forth in the Plan or in the Confirmation Order, nothing in this
Section 7.2 shall be deemed to release any Liquidating Trust Beneficiary from
any actions or omissions occurring prior to the Effective Date.
 
7.3 Nonliability of Liquidating Trustee, Trust Advisory Board and the Litigation
Subcommittee for Acts of Others.  Except as provided herein, nothing contained
in this Trust Agreement, the Plan or the Confirmation Order shall be deemed to
be an assumption by the Liquidating Trustee, the Trust Advisory Board (or its
members) or the Litigation Subcommittee (or its members) or the Trust
Professionals of any of the liabilities, obligations or duties of the Debtors or
shall be deemed to be or contain a covenant or agreement by the Liquidating
Trustee to assume or accept any such liability, obligation or duty.  Any
successor Liquidating Trustee, Trust Advisory Board member or Litigation
Subcommittee member may accept and rely upon any accounting made by or on behalf
of any predecessor Liquidating Trustee hereunder, and any statement or
representation made as to the assets comprising the Liquidating Trust Assets or
as to any other fact bearing upon the prior administration of the Liquidating
Trust, so long as it has a good faith basis to do so.  The Liquidating Trustee,
the Trust Advisory Board members and the Litigation Subcommittee members shall
not be liable for having accepted and relied in good faith upon any such
accounting, statement or representation if it is later proved to be incomplete,
inaccurate or untrue.  The Liquidating Trustee or any successor Liquidating
Trustee, the Trust Advisory Board members and the Litigation Subcommittee
members shall not be liable for any act or omission of any predecessor
Liquidating Trustee, Trust Advisory Board member or Litigation Subcommittee
member, nor have a duty to enforce any claims against any predecessor
Liquidating Trustee, Trust Advisory Board member or Litigation Subcommittee
member on account of any such act or omission, unless directed to do so by the
Trust Advisory Board or the Litigation Subcommittee, as applicable.  No
provision of this Trust Agreement shall require the
 

 
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Liquidating Trustee to expend or risk his personal funds or otherwise incur any
financial liability in the performance of his rights or powers hereunder if the
Liquidating Trustee has reasonable grounds to believe that the payment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured or provided to him.
 
7.4 Exculpation.  As of the Effective Date, the Liquidating Trustee, the Trust
Professionals and the members of the Trust Advisory Board and the Litigation
Subcommittee shall be and hereby are exculpated by all Persons, including
without limitation, Liquidating Trust Beneficiaries, holders of Claims, holders
of Equity interests,  and other parties-in-interest, from any and all claims,
causes of action and other assertions of liability arising out of or related to
the discharge of their respective powers and duties conferred by the Plan, this
Trust Agreement or any order of the Bankruptcy Court entered pursuant to or in
furtherance of the Plan, or applicable law or otherwise, except for actions or
omissions to act that are determined by final order of the Bankruptcy Court to
have arisen out of their own respective intentional fraud, criminal conduct,
gross negligence or willful misconduct.  No Liquidating Trust Beneficiary,
holder of a Claim, holder of an Equity Interest, or other party-in-interest
shall have or be permitted to pursue any claim or cause of action against the
Liquidating Trustee, the Liquidating Trust, the employees, professionals or
representatives of either the Liquidating Trustee or the Liquidating Trust
(including the Trust Professionals) or the members of the Trust Advisory Board
and the Litigation Subcommittee, for making payments in accordance with, or for
implementing, the provisions of the Plan, the Confirmation Order and this Trust
Agreement.  Any action taken or omitted to be taken with the express approval of
the Bankruptcy Court, the Trust Advisory Board or the Litigation Subcommittee
shall conclusively be deemed not to constitute gross negligence or willful
misconduct; provided, however, that, notwithstanding any provision herein to the
contrary, the Liquidating Trustee shall not be obligated to comply with a
direction of the Trust Advisory Board or the Litigation Subcommittee, whether or
not express, which would result in a change to the distribution provisions of
this Trust Agreement and the Plan.
 
7.5 Limitation of Liability.  The Trustees, the members of the Trust Advisory
Board, the members of the Litigation Subcommittee, and the Trust Professionals
will not be liable for punitive, exemplary, consequential, special or other
damages for a breach of this Trust Agreement under any circumstances.
 
7.6 Indemnity.  The Trustees (including the individual(s) serving as or
comprising the Liquidating Trustee), the employees of the Liquidating Trust, the
members of the Trust Advisory Board and the members of the Litigation
Subcommittee, and their respective agents, employees, officers, directors,
professionals, attorneys, accountants, advisors, representatives and principals,
including, without limitation, the Trust Professionals (collectively, the
“Indemnified Parties”) shall be indemnified by the Liquidating Trust solely from
the Liquidating Trust Assets for any losses, claims, damages, liabilities and
expenses occurring after the Effective Date, including, without limitation,
reasonable attorneys’ fees, disbursements and related expenses which the
Indemnified Parties may incur or to which the Indemnified Parties may become
subject in
 

 
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connection with any action, suit, proceeding or investigation brought by or
threatened against one or more of the Indemnified Parties on account of the acts
or omissions in their capacity as, or on behalf of, the Trustees or a member of
the Trust Advisory Board or the Litigation Subcommittee; provided, however, that
the Liquidating Trust shall not be liable to indemnify any Indemnified Party for
any act or omission arising out of such Indemnified Party’s respective gross
negligence, fraud or willful misconduct as determined by a Final Order of the
Bankruptcy Court.  Notwithstanding any provision herein to the contrary, the
Indemnified Parties shall be entitled to obtain advances from the Liquidating
Trust to cover their reasonable expenses of defending themselves in any action
brought against them as a result of the acts or omissions, actual or alleged, of
an Indemnified Party in its capacity as such, except for any actions or
omissions arising from their own respective willful misconduct, fraud or gross
negligence; provided, however, that the Indemnified Parties receiving such
advances shall repay the amounts so advanced to the Liquidating Trust
immediately upon the entry of a final, non-appealable judgment or order finding
that such Indemnified Parties were not entitled to any indemnity under the
provisions of this Section 7.6.  The foregoing indemnity in respect of any
Indemnified Party shall survive the termination of such Indemnified Party from
the capacity for which they are indemnified.
 
7.7 Compensation and Expenses. The Liquidating Trustee (including the
individual(s) serving as or comprising the Liquidating Trustee) shall receive
compensation for its services, to be paid out of the Administrative Funding, in
accordance with Annex D.  In addition, the Liquidating Trustee shall be
entitled, with the consent of the Trust Advisory Board, and subject to the
approval of the Bankruptcy Court, to reimburse itself from the Administrative
Funding on a monthly basis for all reasonable out-of-pocket expenses actually
incurred in the performance of duties in accordance with this Trust Agreement
and the Plan.
 
ARTICLE VIII
 
SUCCESSOR LIQUIDATING TRUSTEES
 
8.1 Resignation.  The Liquidating Trustee may resign from the Liquidating Trust
by giving at least sixty (60) days prior written notice thereof to each member
of the Trust Advisory Board.  Such resignation shall become effective on the
later to occur of (a) the date specified in such written notice and (b) the
effective date of the appointment of a successor Liquidating Trustee in
accordance with Section 8.4 hereof and such successor’s acceptance of such
appointment in accordance with Section 8.5 hereof.
 
8.2 Removal.  The Liquidating Trustee may be removed by a majority vote of the
members of the Trust Advisory Board.  Such removal shall become effective on the
date specified in such action by the Trust Advisory Board.
 
8.3 Effect of Resignation or Removal.  The resignation, removal, incompetency,
bankruptcy or insolvency of the Liquidating Trustee shall not operate to
 

 
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terminate the Liquidating Trust or to revoke any existing agency created
pursuant to the terms of this Trust Agreement, the Plan or the Confirmation
Order or invalidate any action theretofore taken by the Liquidating
Trustee.  All fees and expenses properly incurred by the Liquidating Trustee
prior to the resignation, incompetency or removal of the Liquidating Trustee
shall be paid from the Liquidating Trust Assets, unless such fees and expenses
are disputed by (a) the Trust Advisory Board or (b) the successor Liquidating
Trustee, in which case the Bankruptcy Court shall resolve the dispute and any
disputed fees and expenses of the predecessor Liquidating Trustee that are
subsequently allowed by the Bankruptcy Court shall be paid from the Liquidating
Trust Assets.  In the event of the resignation or removal of the Liquidating
Trustee, such Liquidating Trustee shall:  (i) promptly execute and deliver such
documents, instruments and other writings as may be reasonably requested by the
successor Liquidating Trustee or directed by the Bankruptcy Court to effect the
termination of such Liquidating Trustee’s capacity under this Trust Agreement;
(ii) promptly deliver to the successor Liquidating Trustee all documents,
instruments, records and other writings related to the Liquidating Trust as may
be in the possession of such Liquidating Trustee; and (iii) otherwise assist and
cooperate in effecting the assumption of its obligations and functions by such
successor Liquidating Trustee.
 
8.4 Appointment of Successor.  In the event of the death, resignation, removal,
incompetency, bankruptcy or insolvency of the Liquidating Trustee, a vacancy
shall be deemed to exist and a successor shall be appointed by a majority of the
Trust Advisory Board; provided, however, that, under no circumstance, shall the
successor Liquidating Trustee be a director or officer of any Affiliate of the
Liquidating Trust.  In the event that a successor Liquidating Trustee is not
appointed within thirty (30) days after the date of such vacancy, the Bankruptcy
Court, upon its own motion or the motion of a Liquidating Trust Beneficiary or
any member of the Trust Advisory Board, shall appoint a successor Liquidating
Trustee.
 
8.5 Acceptance of Appointment by Successor Liquidating Trustee.  Any successor
Liquidating Trustee appointed hereunder shall execute an instrument accepting
its appointment and shall deliver one counterpart thereof to the Bankruptcy
Court for filing and to the Trust Advisory Board and, in case of the Liquidating
Trustee’s resignation, to the resigning Liquidating Trustee.  Thereupon, such
successor Liquidating Trustee shall, without any further act, become vested with
all the liabilities, duties, powers, rights, title, discretion and privileges of
its predecessor in the Liquidating Trust with like effect as if originally named
Liquidating Trustee and shall be deemed appointed pursuant to Bankruptcy Code
section 1123(b)(3)(B).  The resigning or removed Liquidating Trustee shall duly
assign, transfer and deliver to such successor Liquidating Trustee all property
and money held by such resigning or removed Liquidating Trustee hereunder and
shall, as directed by the Bankruptcy Court or reasonably requested by such
successor Liquidating Trustee, execute and deliver an instrument or instruments
conveying and transferring to such successor Liquidating Trustee upon the trusts
herein expressed, all the liabilities, duties, powers, rights, title, discretion
and privileges of such resigning or removed Liquidating Trustee.
 

 
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ARTICLE IX
 
MISCELLANEOUS PROVISIONS
 
9.1 Governing Law.  Except to the extent that the Bankruptcy Code or other
federal law is applicable, or to the extent that any document to be entered into
in connection herewith provides otherwise, the rights, duties, and obligations
arising under this Trust Agreement shall be governed by, and construed and
enforced in accordance with, the Bankruptcy Code and, to the extent not
inconsistent therewith, the laws of the State of Delaware, without giving effect
to principles of conflicts of laws.
 
9.2 Jurisdiction.  Subject to the proviso below, the parties agree that the
Bankruptcy Court shall have exclusive jurisdiction over the Liquidating Trust
and the Liquidating Trustee, including, without limitation, the administration
and activities of the Liquidating Trust and the Liquidating Trustee, and,
pursuant to the Plan, the Bankruptcy Court has retained such jurisdiction;
provided, however, that notwithstanding the foregoing, the Liquidating Trustee
shall have power and authority to bring any action in any court of competent
jurisdiction (including the Bankruptcy Court) to prosecute any Claims or Causes
of Action assigned to the Liquidating Trust.
 
9.3 Severability.  In the event any provision of this Trust Agreement or the
application thereof to any person or circumstances shall be determined by a
final, non-appealable judgment or order to be invalid or unenforceable to any
extent, the remainder of this Trust Agreement or the application of such
provision to persons or circumstances or in jurisdictions other than those as to
or in which it is held invalid or unenforceable, shall not be affected thereby,
and each provision of this Trust Agreement shall be valid and enforceable to the
full extent permitted by law.
 
9.4 Notices.  Any notice or other communication required or permitted to be made
under this Trust Agreement shall be in writing and shall be deemed to have been
sufficiently given, for all purposes, if delivered personally, by email,
facsimile, sent by nationally recognized overnight delivery service or mailed by
first-class mail:
 
(i)   if to the Liquidating Trustee, to:
 
William C. Kosturos
Alvarez & Marsal
100 Pine Street, Suite 900
San Francisco, CA 94111
Fax:  415-837-1684
Email:  bkosturos@alvarezandmarsal.com

with a copy to:

Weil, Gotshal & Manges LLP
767 Fifth Avenue

 
42

--------------------------------------------------------------------------------

 

New York, New York  10153
Attention:  Brian S. Rosen, Esq.
Facsimile:  (212) 310-8007
Email:  brian.rosen@weil.com

if to the Resident Trustee, to:

CSC Trust Company of Delaware
2711 Centerville Road, Suite 400
Wilmington, DE 19808
Attention: Trust Administration
Fax:             302-636-8666
Email:             csctrust@cscinfo.com

with a copy to:

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention:                      Brian S. Rosen, Esq.
Facsimile:                      (212) 310-8007
Email:                    brian.rosen@weil.com

(ii)  if to members of the Trust Advisory Board, then to each of;
 
Wells Fargo Bank, N.A.
MAC: N9311-110
625 Marquette Avenue, 11th Floor
Minneapolis, MN 55479
Attention:                      Thomas Korsman
Facsimile:                      (612) 667-9825
Email:             Thomas.m.korsman@wellsfargo.com

Arnold Kastenbaum
655 Barrymore Lane
Mamaroneck, NY 10543
Email:             akastenbaum@yahoo.com

Joel Klein
PPM America, Inc.
225 West Wacker Drive, Suite 1200
Chicago, IL 60606
Facsimile:                      (312) 634-0050

 
43

--------------------------------------------------------------------------------

 

Email:             Joel.klein@ppmamerica.com

Michael Willingham
Email:             wservices@earthlink.net

Matthew Cantor
235 West 71st Street, 3rd Floor
New York, NY 10023
Email:             mcantor4@me.com

Marc S. Kirschner
Kirschner Consulting Company
18 East 94th Street, Suite 1A
New York, NY 10128
Facsimile:                      (212) 722-0349
Email:             mskirschner@kirschnerconsulting.com

Hon. Douglas Southard
Email:             dksouthard@sbcglobal.net

Joe McInnis
GREYWOLF CAPITAL
4 Manhattanville Road, Suite 201
Purchase, New York  10577
Facsimile:                      914-251-8244
Email:             joe.mcinnis@greywolfcapital.com

Misha Zaitzeff
HoldCo Advisors, LP
32 Broadway, Suite 1112
New York, NY 10004
Email:             misha@holdcoadvisors.com

Mayur Lakhani
Tricadia Capital
780 Third Ave., 29th floor
New York, NY 10017
Email:             mlakhani@tricadiacapital.com

(iii) if to the TPS Funds, to
 
Brown Rudnick LLP
One Financial Center
Boston, MA  02111
Attention: Jeremy Coffey

 
44

--------------------------------------------------------------------------------

 

Facsimile: (617) 856-8200
Email: jcoffey@brownrudnick.com

(iv) if to any Liquidating Trust Beneficiary, to the last known address of such
Liquidating Trust Beneficiary according to the Debtors’ Schedules, such
Liquidating Trust Beneficiary’s proof of claim or the lists of record holders
provided to the Liquidating Trustee; and
 
(v) To the Debtors or the Post-Effective Date Debtors:
 
Washington Mutual, Inc.
1201 Third Avenue, Suite 3000
Seattle, Washington  98101
Attention:                  General Counsel
Facsimile:                  (206) 432-8879
Email:                  chad.smith@wamuinc.net

With a copy to:

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York  10153
Attention:                  Brian S. Rosen, Esq.
Facsimile:                  (212) 310-8007
Email:                    brian.rosen@weil.com

9.5 Headings.  The headings contained in this Trust Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation of
this Trust Agreement or of any term or provision hereof.
 
9.6 Relationship to the Plan.  The terms of this Trust Agreement are intended to
supplement the terms provided by the Plan and the Confirmation Order, and
therefore this Trust Agreement incorporates the provisions of the Plan and the
Confirmation Order (which may amend or supplement the Plan).  Additionally, the
Liquidating Trustee, the Trust Advisory Board and the Litigation Subcommittee
may seek any orders from the Bankruptcy Court, upon notice and a hearing in
furtherance of implementation of the Plan, the Confirmation Order and this Trust
Agreement.  However, to the extent that there is conflict between the provisions
of this Trust Agreement, the provisions of the Plan, or the Confirmation Order,
each document shall have controlling effect in the following rank order:  (1)
this Trust Agreement, (2) the Confirmation Order, and (3) the Plan.
 
9.7 Entire Trust Agreement.  This Trust Agreement (including the recitals and
annex hereto), the Plan and the Confirmation Order constitute the entire
agreement by and among  the parties and supersede all prior and contemporaneous
 

 
45

--------------------------------------------------------------------------------

 

agreements or understandings by and among the parties with respect to the
subject matter hereof.
 
9.8 Cooperation.  The Debtors shall turn over or otherwise make available to the
Liquidating Trustee at no cost to the Liquidating Trust or the Liquidating
Trustee, all books and records reasonably required by the Liquidating Trustee to
carry out its duties hereunder, and agree to otherwise reasonably cooperate with
the Liquidating Trustee in carrying out its duties hereunder, subject to the
confidentiality provisions herein to preserve the confidential nature of the
Debtors’ books and records.
 
9.9 Amendment and Waiver.  Any provision of this Trust Agreement may be amended
or waived by the Liquidating Trustee with the consent of all voting members of
the Trust Advisory Board; provided that any such amendment which alters the
duties or liabilities of the Resident Trustee shall require the consent of the
Resident Trustee.  Notwithstanding this Section 9.9, any amendment to this Trust
Agreement shall not be inconsistent with the purpose and intention of the
Liquidating Trust to liquidate in an expeditious but orderly manner the
Liquidating Trust Assets in accordance with Treasury Regulations section
301.7701-4(d) and Section 1.2 hereof.
 
9.10 Confidentiality.  The Trustees and their employees, members, agents,
professionals and advisors, including the Trust Professionals, and each member
of the Trust Advisory Board and the Litigation Subcommittee (each a
“Confidential Party” and, collectively, the “Confidential Parties”) shall hold
strictly confidential and not use for personal gain any material, non-public
information of which they have become aware in their capacity as a Confidential
Party, of or pertaining to any Debtor to which any of the Liquidating Trust
Assets relates; provided, however, that such information may be disclosed if (a)
it is now or in the future becomes generally available to the public other than
as a result of a disclosure by the Confidential Parties; or (b) such disclosure
is required of the Confidential Parties pursuant to legal process including but
not limited to subpoena or other court order or other applicable laws or
regulations.  In the event that any Confidential Party is requested to divulge
confidential information pursuant to this clause (b), such Confidential Party
shall promptly, in advance of making such disclosure, provide reasonable notice
of such required disclosure to the Liquidating Trustee (or the Trust Advisory
Board in case the Liquidating Trustee or the Resident Trustee is the disclosing
party) to allow sufficient time to object to or prevent such disclosure through
judicial or other means and shall cooperate reasonably with the Liquidating
Trustee (or the Trust Advisory Board, as applicable) in making any such
objection, including but not limited to appearing in any judicial or
administrative proceeding in support of any objection to such disclosure.
 
9.11 Meanings of Other Terms.  Except where the context otherwise requires,
words importing the masculine gender include the feminine and the neuter, if
appropriate, words importing the singular number shall include the plural number
and vice versa and words importing persons shall include firms, associations,
corporations and other entities.  All references herein to Articles, Sections
and other subdivisions, unless referring specifically to the Plan or provisions
of the Bankruptcy Code, the
 

 
46

--------------------------------------------------------------------------------

 

Bankruptcy Rules, or other law, statute or regulation, refer to the
corresponding Articles, Sections and other subdivisions of this Trust Agreement,
and the words herein and words of similar import refer to this Trust Agreement
as a whole and not to any particular Article, Section or subdivision of this
Trust Agreement.  The term “including” shall mean “including, without
limitation.”
 
9.12 Counterparts.  This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same instrument.  A facsimile or
portable document file (PDF) signature of any party shall be considered to have
the same binding legal effect as an original signature.
 
9.13 Intention of Parties to Establish Liquidating Trust.  This Trust Agreement
is intended to create a liquidating trust for United States federal income tax
purposes and, to the extent provided by law, shall be governed and construed in
all respects as such a trust and any ambiguity herein shall be construed
consistent herewith and, if necessary, this Trust Agreement may be amended to
comply with such United States federal income tax laws, which amendments may
apply retroactively.
 
[Remainder of Page Blank — Signature Page Follows]
 
 
 
 
 
 
 
 
 
 
 
 

 
47

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement or
caused this Trust Agreement to be duly executed by their respective officers,
representatives or agents, effective as of the date first above written.
 

 
WASHINGTON MUTUAL, INC.
         
By:
/s/  Charles Edward Smith
     
Name:
Charles Edward Smith
     
Title:
Executive Vice President &
General Counsel
                       
WMI INVESTMENT CORP.
         
By:
/s/  Charles Edward Smith
     
Name:
Charles Edward Smith
     
Title:
Executive Vice President &
General Counsel
                       
WILLIAM C. KOSTUROS
         
By:
/s/  William C. Kosturos
     
Name:
William C. Kosturos
               
CSC TRUST COMPANY OF DELAWARE, not in its individual capacity, but solely as
Resident Trustee
         
By:
/s/  Alan R. Halpern
     
Name:
Alan R. Halpern
     
Title:
Vice President
 

 

 
 

--------------------------------------------------------------------------------

 

Annex A
 
Initial Trust Advisory Board Members
 
CC Members:

1.  Wells Fargo Bank, N.A.
2.  Arnold Kastenbaum
3.  Marc S. Kirschner

EC Members:

4.  Joel Klein
5.  Michael Willingham
6.  Hon. Douglas Southard
7.  Joe McInnis (TPS Member)

CC-EC Member:

8.  Matthew Cantor

Holdco Member:

9.  Misha Zaitzeff

Tricadia Member:

10.  Mayur Lakhani

Initial Litigation Subcommittee Members
 
1.  Hon. Douglas Southard
2.  Michael Willingham
3.  Marc S. Kirschner
4.  Joel Klein
5.  Joe McInnis

 
 

--------------------------------------------------------------------------------

 

Annex B
 
Trust Advisory Board and Litigation Subcommittee Compensation
 
(a) Base Compensation

The annual base compensation of each member of the Trust Advisory Board shall be
$40,000.00 per member, which amount shall be paid in twelve equal installments
on a monthly basis in arrears. In addition, each member of the Litigation
Subcommittee shall be paid an additional amount of $10,000.00 per annum, which
amount shall be paid in twelve equal installments on a monthly basis in arrears.

(b) Incentive Compensation

In addition to the base compensation set forth above, each member of the Trust
Advisory Board (excluding the Holdco Member) shall be entitled to receive such
member's pro rata share (based on the total number of Trust Advisory Board
members at the time at which such compensation is paid) of the following
additional incentive compensation; provided, however, that the total annual
incentive compensation of each Member shall not exceed $50,000.00:

(i) On an annual basis in arrears during the term of the Liquidating Trust, 0.1%
of the aggregate value of the Liquidating Trust Assets (excluding any Runoff
Notes, Funding and the Liquidating Trust Claims Reserve) that are distributed to
the Liquidating Trust Beneficiaries during the preceding 12 month period,
excluding the first distribution that the Liquidating Trust makes on or after
the Effective Date;

(ii) Upon the dissolution of the Trust in accordance with the terms of this
Trust Agreement, and after taking into account any reasonable reserve that may
be required to be retained with respect to the winding up of the affairs of the
Liquidating Trust in accordance with Section 3.3, 0.1% of any portion of the
Funding that remains unspent immediately prior to such dissolution and the
payment of any final distribution to the Liquidating Trust Beneficiaries; and

(iii) On an annual basis in arrears during the term of the Liquidating Trust,
0.1% of the aggregate reduction in the Liquidating Trust Claims Reserve which is
the result of the disallowance of any Disputed Claims during the preceding 12
month period.

 
 

--------------------------------------------------------------------------------

 

Annex C
 
 
 
 
 
 
 

   
Senior Fixed
Rate Notes
Senior Floating
Rate Notes
Senior
Subordinated
Notes
CCB
Guarantees
PIERS
General
Unsecured
Creditors
510(b) Sub.
Claims
Preferred
Stock
 
 
Tranche 1
 
No LTIs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[recovery2.jpg]
 
Tranche 2
·  Senior Note
Postpetition Interest (939322AL7) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AP8) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AX1) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AT0) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AV5) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AW3) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AQ6) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AS2) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AU7) Liquidating Trust Interests
·  Prepetition Claim &
Postpetition Interest Claim Subordinated Note (939322AE3) Liquidating Trust
Interests
 
·  Prepetition Claim &
Postpetition Interest Claim Subordinated Note  (939322AN3) Liquidating Trust
Interests
 
·  Prepetition Claim &
Postpetition Interest Claim Subordinated Note (939322AY9)  Liquidating Trust
Interests 
 
No LTIs
 
No LTIs
 
·  General Unsecured
Creditor Liquidating Trust Interests: Pro Rata Share based on Claims(4) (9)
·  Liquidating Trust
Interests on Late-Filed Claims(8)
 
No LTIs
 
No LTIs
 

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 

   
Senior Fixed
Rate Notes
Senior Floating
Rate Notes
Senior
Subordinated
Notes
CCB
Guarantees
PIERS
General
Unsecured
Creditors
510(b) Sub.
Claims
Preferred
Stock

   
No LTIs
No LTIs
No LTIs
·  Prepetition Claim &
Postpetition Interest Claim CCB Capital Trust IV (22499AAB5) Liquidating Trust
Interests(5)
·  Prepetition Claim &
Postpetition Interest Claim CCB Capital Trust V (19499AAI6) Liquidating Trust
Interests(5)
·  Prepetition Claim &
Postpetition Interest Claim CCB Capital Trust VII (22899AAB1) Liquidating Trust
Interests(5)
No LTIs
 
·  General Unsecured
Creditor Liquidating Trust Interests: Pro Rata Share based on Claims(4) (9)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
No LTIs
 
No LTIs
 

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 

   
Senior Fixed
Rate Notes
Senior Floating
Rate Notes
Senior
Subordinated
Notes
CCB
Guarantees
PIERS
General
Unsecured
Creditors
510(b) Sub.
Claims
Preferred
Stock

         
·  Prepetition Claim &
Postpetition Interest Claim CCB Capital Trust VIII (22899AAA3) Liquidating Trust
Interests(5)
·  Prepetition Claim &
Postpetition Interest Claim HFC Capital Trust I (420542AD4) Liquidating Trust
Interests(5)
·  Prepetition Claim &
Postpetition Interest Claim HFC Capital Trust I (420542102) Liquidating Trust
Interests(5)
·  Prepetition Claim &
Postpetition Interest Claim CCB Capital Trust VI (124873AA8) Liquidating Trust
Interests(5)
       

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 

   
Senior Fixed
Rate Notes
Senior Floating
Rate Notes
Senior
Subordinated
Notes
CCB
Guarantees
PIERS
General
Unsecured
Creditors
510(b) Sub.
Claims
Preferred
Stock

         
·  Prepetition Claim &
Postpetition Interest Claim CCB Capital Trust IX (124871AA2) Liquidating Trust
Interests(5)
           
No LTIs
·  Senior Note
Postpetition Interest (939322AW3) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AQ6) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AS2) Liquidating Trust Interests
·  Senior Note
Postpetition Interest (939322AU7) Liquidating Trust Interests
No LTIs
No LTIs
· Residual PIERS (939322848) Liquidating Trust Interests(6)
 
· Subordinated PIERS (93933U407) Liquidating Trust Interests(7)
 
· General Unsecured Creditor Liquidating Trust Interests: Pro Rata Share based
on Claims(4) (9)
 
No LTIs
No LTIs

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 

   
Senior Fixed
Rate Notes
Senior Floating
Rate Notes
Senior
Subordinated
Notes
CCB
Guarantees
PIERS
General
Unsecured
Creditors
510(b) Sub.
Claims
Preferred
Stock

   
 
 
No LTIs
 
 
 
No LTIs
 
 
No LTIs
 
 
 
No LTIs
 
 
 
No LTIs
 
 
No LTIs
 
 
No LTIs
 
 
No LTIs
 
   
 
No LTIs
 
 
 
No LTIs
 
 
 
 
No LTIs
 
 
 
 
No LTIs
 
 
 
 
No LTIs
 
   
 
No LTIs
 
 
 
 
No LTIs
 
 
 
 
No LTIs
 
 

 

Notes:

(1)
Within Tranche 2, the holders of Senior Notes Postpetition Interest Claim
Liquidating Trust Interests and the holders of Subordinated Notes Prepetition
Claim Liquidating Trust Interests and Postpetition Interest Claim Liquidating
Trust Interests will share Pro Rata based on the size of those claims.  For the
calculation of the General Unsecured Creditors’ Pro Rata Share in all Tranches,
see Note 4.
 
(2)
Holders of Liquidating Trust Interests in Tranches will be paid in order with
Tranche 2 Liquidating Trust Interests (if any) receiving distributions first and
Tranche 6 Liquidating Trust Interests (if any) receiving distributions
last.  Claims of Tranche 2 Liquidating Trust Interests (if any) must be
satisfied in full prior to Tranche 3 Liquidating Trust Interests receiving
distributions and so forth.

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 
 
(3)
All CUSIP numbers that appear in this Annex C refer to the CUSIP numbers for the
applicable tranches of debt, as applicable, as of December  2011.
   
(4)
There shall be only one class of General Unsecured Creditor Liquidating Trust
Interests.  The Pro Rata Share of holders of General Unsecured Creditor
Liquidating Trust Interests are calculated by dividing (a) the amount of General
Unsecured Claims, by (b) the total cash distributed within the Tranche.  The
cash distributed within the Tranche is the lesser of (i) the amount necessary to
satisfy all claims within the Tranche or (ii) the amount of cash
available.  Separate Liquidating Trust Interest sub-Tranches may need to be
issued by claim in order to track interest accretion post the Effective Date.
 
(5)
Each CCB Guarantee Liquidating Trust Interest under Tranche 3 represents the
related class of CCB preferred securities only, in each case as described more
specifically in Exhibits A and B of the Plan.  In accordance with the terms of
the Global Settlement Agreement, and upon implementation thereof, holders of
CCB-related common securities will release all claims against the Debtors and
will not receive a distribution related to such common securities.  While no
funds or Liquidating Trust Interests will be distributed in relation to
CCB-related common securities, amounts claimed by holders of CCB-related common
securities with respect to CCB Guarantees will be taken into account for
disbursement calculation purposes. 
 
(6)
See Note 9 below for a description of pro rata sharing with General Unsecured
Creditor Liquidating Trust Interests.
 
(7)
The Subordinated PIERS Liquidating Trust Interests are representative of the
common PIERS securities and are owned by WMI.  While Subordinated PIERS
Liquidating Trust Interests will be issued for disbursement calculation
purposes, as set forth in the Plan, WMI will not collect any funds in
association with these Subordinated PIERS Liquidating Trust Interests.  See Note
9 below for a description of pro rata sharing with General Unsecured Creditor
Liquidating Trust Interests.
 
(8)
Holders of Liquidating Trust Interests on account of Allowed Late-Filed Claims
will be paid only after all other pre-Petition Date claims (other than
Subordinated Claims) are paid in full without giving effect to applicable
turnover provisions.  Liquidating Trust Interests on Allowed Late-Filed Claims
will not share pro rata with Liquidating Trust Interests based on any other
claims.  Therefore, to the extent holders of Liquidating Trust Interests on
Allowed Late-Filed Claims are paid, this will create a break in the recovery of
other creditors prior to their recovery on account of post-petition
interest.  The placement of Liquidating Trust Interests for Allowed Late-Filed
Claims in the chart above is illustrative only, as the size of the Allowed
General Unsecured Claims and the amount of post-Petition Date interest turned
over on account of contractual subordination provisions will influence the
position of relevant Liquidating Trust Interests in the waterfall.  The
Liquidating Trust Interests for Allowed Late-Filed Claims will, in any event, be
paid immediately after satisfaction of General Unsecured Creditor Liquidating
Trust Interests, but prior to the payment of post-Petition Date interest and
Liquidating Trust Interests on Subordinated Claims.
 
(9)
If it is provided for in an applicable contract or by law, the General Unsecured
Creditors Liquidating Trust Interests will share pro rata in distributions to
holders of PIERS Liquidating Trust Interests on account of post-Petition Date
interest with respect to all Postpetition Interest Claims, including
Postpetition Interest Claims to which the holders of PIERS Claims have been
subrogated (on account of turnover in accordance with contractual subordination
provisions).  The chart above is illustrative only, as the point at which the
holders of Allowed General Unsecured Liquidating Trust Interests begin receiving
post-Petition Date interest is dependent on the size of the Allowed General
Unsecured Prepetition Claims and the amount of post-Petition Date interest paid
pursuant to contractual subordination.  Separate Liquidating Trust Interest
sub-Tranches may need to be issued by claim in order to track interest accretion
post the Effective Date.

 
 

--------------------------------------------------------------------------------

 

Annex D
 
Liquidating Trustee Compensation
 
The Liquidating Trustee shall be compensated on a monthly rate for any services
that the Liquidating Trustee provides while acting as Liquidating Trustee.  The
Liquidating Trustee’s monthly rate as of the date of this Agreement is $15,000,
which rate is subject to adjustment on an annual basis on January 1 each year.