EXHIBIT 10.1
 
Execution Copy
 
RESERVE SETTLEMENT AGREEMENT
 
RESERVE SETTLEMENT AGREEMENT (the “Agreement”), dated as of May 26, 2015, by and
among (a) WMI Liquidating Trust (“WMILT”), (b) Thomas W. Casey, Stephen J.
Rotella, David C. Schneider and Robert J. Williams, Jr. (collectively, the
“Appellants”) and (c) AXIS Reinsurance Company, Continental Casualty Company,
Those Certain Underwriters at Lloyd’s, London and London Companies, Subscribing
to Policy Number 509QA015507, and XL Specialty Insurance Company (the “Insurer
Parties”). The signatories hereto are referred to hereinafter collectively as
the “Parties” or individually as a “Party”.
 
RECITALS1
 
A. On September 26, 2008, each of the Debtors filed a voluntary petition for
relief under chapter 11 of the Bankruptcy Code.
 
B. Pursuant to the Confirmation Order, the Bankruptcy Court confirmed the
Debtors’ Seventh Amended Plan.  On March 19, 2012, the Seventh Amended Plan
became effective and, in connection therewith, WMILT became responsible for,
among other things, resolving claims against the Debtors’ estates, the
liquidation of the Debtors’ assets and the closing of the Debtors’ chapter 11
cases.
 
C. Pursuant to that certain Settlement Agreement, dated as of November 30, 2014
(as may be amended from time to time and, together with all amendments thereto,
the “Settlement Agreement”), by and among (1) WMILT, (2) the D&O Claimants and
(3) the Insurers, a copy of which is annexed hereto as Exhibit “A”, the parties
thereto agreed, subject to certain conditions, to compromise and settle certain
claims and causes of action asserted against, among others, the D&O Claimants
and the Appellants, and to reconcile certain proofs of claim filed against the
Debtors’ chapter 11 estates.
 
D. On December 12, 2014, the Appellants commenced litigation in the Superior
Court of the State of Washington for King County (the “Superior Court”) by
filing a complaint against certain of the Contributing Insurers asserting, among
other things, that, by agreeing to the terms of the Settlement Agreement, such
Contributing Insurers breached their obligations to the Appellants as set forth
in their respective director and officer liability insurance policies under the
2007-08 Tower (the “Seattle Litigation”).  Pursuant to a notice, dated January
14, 2015, the Seattle Litigation was removed from the Superior Court to the
United States Bankruptcy Court for the Western District of Washington (the
“Washington Bankruptcy Court”).
 
E. On December 23, 2014, upon notice and a hearing, the Bankruptcy Court entered
the Approval Order approving the Settlement Agreement and authorizing WMILT to
consummate the transactions contemplated therein.
 
_______________
1 Unless otherwise defined herein, capitalized terms used herein, including,
without limitation, the following recitals, shall have the meanings ascribed to
them in the Settlement Agreement, as defined below.
 
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F. On January 5, 2015, a notice of appeal from the Approval Order was filed by
the Appellants (the “Appeal”).
 
G. Pursuant to that certain Amendment to Settlement Agreement, dated as of
January 15, 2015, by and among WMILT, the D&O Claimants and the Insurers, the
parties thereto agreed to amend Section 6.2 of the Settlement Agreement by
extending the period in which the Effective Date must occur up to and including
July 15, 2015.
 
H. The Parties have agreed to resolve all issues associated with the Settlement
Agreement, the Seattle Litigation and the Appeal upon the terms set forth in
this Agreement.
 
NOW, THEREFORE, the Parties, in consideration of the promises, covenants and
agreements herein described, including, without limitation, the Recitals, which
are incorporated herein by reference, and for other good and valuable
consideration acknowledged by each of them to be satisfactory and adequate, and
intending to be legally bound, do hereby mutually agree as follows:
 
AGREEMENT
 
Section 1. Settlement Consideration/Reserve.  Notwithstanding the provisions of
Section 2.1(a) of the Settlement Agreement, on the Effective Date, WMILT shall
cause Three Million Dollars ($3,000,000.00) of the Settlement Amount to be
placed into an interest bearing segregated account (the “Reserve”), to be held
by a third party agreed upon by WMILT and the Appellants (the “Agent”), with the
fees and expenses of the Agent to be paid from the Reserve (including the
interest accrued thereon), and to be otherwise used solely to reimburse
Appellants for reasonable fees and expenses incurred by Appellants in the
defense of an action or an investigation (an “Action”) commenced during the
period from the date hereof up to and including September 25, 2018 (the
“Deadline”) by the United States of America or one if its agencies against one
or more of the Appellants and asserting claims and causes of action under the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub.L.No.
101-73, 103 Stat. 183 (1989) (“FIRREA”).  In the event that an Action is
commenced prior to the Deadline, subject to the limitation set forth in Section
7(g) hereof, upon the presentation to the Agent, with copies thereof provided to
WMILT, of invoices of professionals retained by the Appellants, setting forth in
detail the reasonable fees and expenses incurred by the Appellants, funds shall
be distributed from the Reserve to the Appellants or their designated
counsel.  WMILT shall have fifteen (15) Business Days’ prior written notice of
any request for distribution from the Reserve to the Appellants and shall have
such fifteen (15) Business Day period to challenge the reasonableness thereof,
but shall have no ability to assert a “coverage defense” as if WMILT were an
insurer in the 2007-08 Tower or the 2008-09 Tower.  To the extent that a
challenge to the reasonableness of the fees and expenses is interposed, the
undisputed portion(s) shall be paid and only the disputed portion(s) shall be
withheld, with WMILT and the Appellants submitting the dispute(s) to binding
mediation within sixty (60) days of submission of such challenge, and each of
WMILT and the Appellants bearing their respective costs, attorneys’ fees and
one-half of the cost of such mediation.  In the event that (1) an Action has not
been commenced as of each of the respective dates set forth below, the Reserve
shall be reduced on a dollar-for-dollar basis in the following amounts, with
such funds being distributed
 
 
 
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to WMILT within three (3) Business Days of each date, together with a notice
thereof being provided to the Appellants: (i) on September 25, 2015, Five
Hundred Thousand Dollars ($500,000.00), together with all interest which may
have accrued on the amount contained in the Reserve as of such date; (ii) on
September 26, 2016, Five Hundred Thousand Dollars ($500,000.00), together with
all interest which may have accrued on the amount contained in the Reserve as of
such date; (iii) on September 26, 2017, Five Hundred Thousand Dollars
($500,000.00), together with all interest which may have accrued on the amount
contained in the Reserve as of such date; and (iv) on September 26, 2018, all
amounts then contained in the Reserve, or (2) all of the Appellants receive a
distribution on account of the Employee Components of the disputed portion of
their respective proofs of claim, by settlement, an order of a court of
competent jurisdiction or otherwise, the Reserve, together with all interest
accrued thereon, shall be distributed to WMILT within three (3) Business Days of
written evidence of such distribution being delivered to the Agent; or (3) the
United States Department of Justice or the United States Attorney General
states, in writing, that the United States of America shall not pursue any civil
claims against any of the Appellants under FIRREA, the Reserve, together with
all interest accrued thereon, shall be distributed to WMILT within three (3)
Business Days of a copy of such written statement being delivered to the Agent
and the Appellants or (4) an Action is commenced prior to the Deadline, no
amount of Reserve, including all interest accrued thereon, shall be distributed
to WMILT or otherwise reduced until (i) the Action is concluded or dismissed by
final order of a court of competent jurisdiction or (ii) the United States
Department of Justice or the United States Attorney General states, in writing,
that the United States of America shall not pursue any claims against any of the
Appellants under FIRREA.  Until released to WMILT by the Agent, no funds
contained in the Reserve, including, without limitation, interest accrued
thereon, shall be considered proceeds of the D&O Litigation or the Asserted
Claim.
 
Section 2. Assignment of Reserve.  Subject to the conditions and limitations set
forth herein, WMILT shall have the right to sell, assign or otherwise transfer
WMILT’s interest, in whole or in part, in the Reserve to any third party.  To
the extent such interest is sold, assigned or otherwise transferred, all
references to WMILT in Section 1 hereof and all obligations of WMILT hereunder
shall apply equally to, and be binding upon, the purchasers, assignees or
transferees thereof.
 
Section 3. Release of WMI Entities.  On and effective as of the Effective Date,
and without the need for the execution and delivery of additional documentation
or the entry of any additional orders of the Bankruptcy Court, except as
expressly provided in this Agreement, the Appellants and each of their
respective assigns, advisors, representatives, members of his or her immediate
family, heirs, executors, estates and administrators or any other Person that
claims or might claim through, on behalf of or for the benefit of any of the
foregoing whether directly or derivatively (the “Appellant Releasors”) shall be
deemed to have irrevocably and unconditionally, fully, finally, and forever
waived, released, acquitted and discharged the WMI Entities, WMB, each of the
Debtors’ estates, the Reorganized Debtors, their respective past or present
parent entities, subsidiaries, Affiliates, directors, officers, employees,
professionals, including, without limitation, any and all professionals retained
by WMI or WMILT in the Chapter 11 Cases pursuant to an order of the Bankruptcy
Court other than ordinary course professionals and the predecessors, successors
and assigns of any of them (collectively, the “WMI Releasees”) from any and all
past, present and future claims, demands, rights, liabilities,
 
 
 
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or causes of action of any and every kind, character or nature whatsoever, in
law or in equity, known or unknown, whether asserted or unasserted, which the
Appellants, or any of them, or anyone claiming through them, on their behalf or
for their benefit have or may have or claim to have, now or in the future,
against any WMI Releasee that are based upon, related to, or arise out of or in
connection with any of the Indemnification Claims (as applicable), the
Subrogation Claims, the Asserted Claim (including, without limitation, the
Committee Letter and the Demand Letters) the D&O Litigation, the Carrier
Litigation, the Appeal, the Seattle Litigation, the Outside Director
Non-Indemnity Claims (as applicable), or any claim, act, fact, transaction,
occurrence, statement or omission in connection with, or alleged or that could
have been alleged in any of the foregoing, including, without limitation, any
such claim, demand, right, liability, or cause of action for indemnification,
contribution, or any other basis in law or equity for damages, costs or fees
incurred by the Appellants arising directly or indirectly from or otherwise
relating to the foregoing (the “WMI/Appellant Released Claims”). Further, the
Appellant Releasors shall be deemed to have irrevocably and unconditionally,
fully, finally, and forever granted the releases provided for in Sections 41.6,
41.7 and 41.8 of the Seventh Amended Plan, the forms of which are annexed hereto
as Exhibit “B”.  Notwithstanding anything contained in this Section 3 or
elsewhere to the contrary, the foregoing is not intended to release, nor shall
it have the effect of limiting or releasing, (i) the Excluded Claims, or (ii)
the WMI Releasees from the performance of their obligations in accordance with
this Agreement.
 
Section 4. Release of the Appellants.  On and effective as of the Effective
Date, and without the need for the execution and delivery of additional
documentation or the entry of any additional orders of the Bankruptcy Court,
except as expressly provided in this Agreement, the WMI Entities, each of the
Debtors’ estates, and the Reorganized Debtors and each of the foregoing’s
respective subsidiaries and Affiliates and the predecessors, successors and
assigns of any of them and any other Person that claims or might claim through,
on behalf of or for the benefit of any of the foregoing, whether directly or
derivatively (including, without limitation, by or through the Debtors, the
receivership of WMB’s assets or otherwise) (the “WMI Releasors”), shall be
deemed to have irrevocably and unconditionally, fully, finally and forever
waived, released, acquitted and discharged the Appellants, and each of their
respective assigns, advisors, representatives, members of his or her immediate
family, heirs, executors, estates and administrators (collectively, the
“Appellant Releasees”), from any and all past, present and future claims,
demands, rights, liabilities, or causes of action of any and every kind,
character or nature whatsoever, in law or in equity, known or unknown, whether
asserted or unasserted, which the WMI Releasors, or any of them, or anyone
claiming through them, on their behalf or for their benefit, have or may have or
claim to have, now or in the future, against any Appellant Releasee that are
based upon, related to, or arise out of or in connection with any of the
Committee Letter, the Demand Letters, the Asserted Claim, the D&O Litigation,
the Indemnification Claims (as applicable), the Subrogation Claims, the Carrier
Litigation, the Appeal, the Seattle Litigation, the Released Avoidance Actions
and the Outsider Director Non-Indemnity Claims (as applicable), or any claim,
act, fact, transaction, occurrence, statement or omission in connection with or
alleged or that could have been alleged in relation to any of the foregoing
including, without limitation, any such claim, demand, right, liability, or
cause of action for indemnification, contribution, or any other basis in law or
equity for damages, costs or fees incurred by the WMI Releasors arising directly
or indirectly from or otherwise relating to the Committee Letter, the Demand
Letters, the Asserted Claim, the D&O Litigation, the Indemnification Claims, the
Subrogation Claims, the Carrier Litigation, the Appeal, the Seattle
 
 
 
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Litigation, the Released Avoidance Actions or the Outside Director Non-Indemnity
Claims (collectively, the “Appellant Released Claims”); provided, however, that,
notwithstanding anything contained in this Agreement to the contrary, the
foregoing is not intended to release, nor shall it have the effect of limiting
or releasing, (i) the Excluded Claims and (ii) the Appellant Releasees from the
performance of their obligations in accordance with this Agreement.
 
Section 5. Release of the Insurers.  On and effective as of the Effective Date,
and without the need for the execution and delivery of additional documentation
or the entry of any additional orders of the Bankruptcy Court, except as
expressly provided in this Agreement, the Appellant Releasors shall be deemed to
have irrevocably and unconditionally, fully, finally and forever waived,
released, acquitted and discharged the Insurers, and each of their respective
assigns, advisors, representatives, predecessors, successors, parent companies,
subsidiaries, affiliates, directors, officers, employees, reinsurers, members of
his or her immediate family, heirs, executors, estates and administrators
(collectively, the “Insurer Releasees”), from any and all past, present and
future claims, demands, rights, liabilities, or causes of action of any and
every kind, character or nature whatsoever, in law or in equity, (including any
claims for “bad faith”, breach of the duty of good faith and fair dealing,
unfair claims handling, unfair or deceptive trade practices, or any violation of
any insurance law, statute or regulation) known or unknown, whether asserted or
unasserted, which the Appellant Releasors, or any of them, or anyone claiming
through them, on their behalf or for their benefit, have or may have or claim to
have, now or in the future, against any Insurer Releasee that are based upon,
related to, or arise out of or in connection with any of the Committee Letter,
the Demand Letters, the Asserted Claim, the D&O Litigation, the Seattle
Litigation, the Indemnification Claims, the Subrogation Claims, the Carrier
Litigation, the Outsider Director Non-Indemnity Claims (as applicable), and/or
the 2007-2008 Policies or any claim, act, fact, transaction, occurrence,
statement or omission in connection with or alleged or that could have been
alleged in relation to any of the foregoing, including, without limitation, any
claim, demand, right, liability or cause of action for indemnification,
contribution, or any other basis in law or equity for damages, costs or fees
incurred by the Appellant Releasors, arising directly or indirectly from or
otherwise relating to the Committee Letter, the Demand Letters, the Asserted
Claim, the D&O Litigation, the Seattle Litigation, the Indemnification Claims,
the Subrogation Claims, the Carrier Litigation or the Outside Director
Non-Indemnity Claims (collectively, the “Insured/Appellant Released Claims”).
 
Section 6. Unknown Claims.  With respect to any and all released claims under
this Agreement, each Party under this Agreement shall expressly waive or be
deemed to have waived the provisions, rights and benefits of California Civil
Code §1542 (to the extent it applies herein), which provides:
 
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.
 
Each Party expressly waives, and shall be deemed to have waived any and all
provisions, rights and benefits conferred by any law of any state or territory
of the United States, or principle of
 
 
 
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common law or foreign law, that is similar, comparable or equivalent in effect
to California Civil Code §1542.  The Parties may hereafter discover facts in
addition to or different from those that any of them now knows or believes to be
true with respect to the subject matter of the Agreement, but each Party shall
expressly have and shall be deemed to have fully, finally and forever settled
and released any and all claims, known or unknown, suspected or unsuspected,
contingent or non-contingent, whether or not concealed or hidden, that now exist
or heretofore have existed, upon any theory of law or equity now existing or
coming into existence in the future, including conduct that is negligent,
reckless, intentional, with or without malice, or a breach of any duty, law or
rule, without regard to the subsequent discovery or existence of such different
or additional facts.  Each Party acknowledges and shall be deemed to have
acknowledged that the foregoing waiver was separately bargained for and a key
element of the settlement of which the releases contained herein are a part.
 
Section 7. Representations and Warranties of the Appellants.  Each of the
Appellants hereby represents and warrants for himself, that:  (a) he has full
requisite power and authority to execute and deliver and to perform his
obligations under this Agreement, and the execution, delivery and performance
hereof, and the instruments and documents required to be executed by him in
connection herewith (i) have been duly and validly authorized by him and (ii)
are not in contravention of any organizational documents or any agreements
specifically applicable to him; and (b) no proceeding, litigation or adversary
proceeding before any court, arbitrator or administrative or governmental body
is pending against him which would adversely affect his ability to enter into
this Agreement or to perform his obligations hereunder.
 
Section 8. Covenants.  Each of the Appellants hereby covenants and agrees as
follows:
 
(a) None of the Appellants shall sell, transfer, pledge, hypothecate or assign
any of the Indemnification Claims (or, where applicable, Indemnification
Components), or any voting rights or participations or other interests therein
during the period from the date hereof up to and including the Effective Date.
 
(b) None of the Appellants shall, except as expressly provided herein, (i) file
any additional claims or proofs of claim, whatsoever, with the Bankruptcy Court
against any of the Debtors (including secured, unsecured, administrative,
priority or substantial contribution claims) other than as an amendment to an
existing proof of claim, (ii) file any additional claims, commence or prosecute
any pending or additional litigation, proceeding, action or matter or seek to
recover damages or to seek any other type of relief against (1) any of the
Insurer Releasees based upon, arising from or relating to the Insured/Appellant
Released Claims, and (2) any of the WMI Releasees based upon, arising from or
relating to the WMI/Appellant Released Claims, or any of the claims or causes of
action asserted or which could have been asserted in the Chapter 11 Cases in
connection therewith, or (iii) directly or indirectly aid any person in taking
any action with respect to the WMI/Appellant Released Claims, that is prohibited
by this Section 7(b).
 
(c) Except with respect to (i) the disputed portion of the Employee Components
of the Appellants’ respective proofs of claim and (ii) litigation commenced or
which may be commenced with respect thereto, each of the Appellants shall
support, and otherwise take no
 
 
 
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action to impede or preclude, the administration of the Chapter 11 Cases, or the
consummation, implementation and administration of the Seventh Amended Plan.
 
(d) On the Effective Date, and without limiting the generality of the foregoing,
each of the Appellants shall be deemed to have covenanted not to sue (1) the
Insurer Releasees with respect to the Insured/Appellant Released Claims, and to
be permanently barred and enjoined from instituting, prosecuting, pursuing or
litigating, in any manner, the Insured/Appellant Released Claims against the
Insurer Releasees, and (2) the WMI Releasees with respect to the WMI/Appellant
Released Claims, and to be permanently barred and enjoined from instituting,
prosecuting, pursuing or litigating, in any manner, the WMI/Appellant Released
Claims against the WMI Releasees and (3) the D&O Releasees with respect to D&O
Released Claims, and to be permanently barred and enjoined from instituting,
prosecuting, or pursuing or litigating, in any manner, the D&O Released Claims
against D&O Releasees.  Nothing in this Agreement is intended, nor shall be
construed, to modify, alter, diminish or waive the Approval Order, or any
portion thereof, including, without limitation, any release, bar order, or
injunction provided for therein.
 
(e) On the Effective Date, the Appellants shall take such action as is necessary
to (1) withdraw the Appeal, including, without limitation, filing a notice of
dismissal with the United States District Court for the District of Delaware and
(2) cause the dismissal, with prejudice, of the Seattle Litigation, including,
without limitation, by filing a request, notice or stipulation of dismissal with
the Washington Bankruptcy Court.
 
(f) Each of the Appellants shall not object to, or otherwise directly or
indirectly aid any person in taking any action to oppose, the release of the
Settlement Amount or amounts or distributions reserved in the Plan Reserve, the
Reserve, the disputed claims reserve or disputed equity reserve pursuant to the
Seventh Amended Plan on account of the Retained Subrogation Claims being
released and redistributed to holders of allowed claims in accordance with the
terms and provisions of Section 26.3 of the Seventh Amended Plan.
 
(g) In the event that an Action is commenced prior to the Deadline,
 
Appellants shall be entitled to submit invoices for reimbursement from the
Reserve for up to two (2) independent defense counsel and WMILT shall be
entitled to contest the amount and reasonableness of any fees and expenses
incurred as provided herein; provided, however, that WMILT hereby waives any
right to assert a “coverage defense” with respect thereto.
 
(h) On the Effective Date, each of the Appellants shall confirm in writing to
the WMI Entities, the D&O Claimants and the Insurers that each of the
representations and warranties set forth in Section 6 of this Agreement are true
and correct as of the Effective Date.”
 
Section 9. Reimbursement of Fees.  On the Effective Date, the Appellants shall
be reimbursed for fees and expenses incurred, up to an aggregate amount of Sixty
Thousand Dollars ($60,000.00) (the “Limit”), through the Appellants’ retention
of  Phillips, Goldman & Spence, P.A. and Gordon Tilden Thomas & Cordell LLP
(collectively, the “Firms”), in connection with (1) the review of, the
preparation and filing of responses to, and the review of the pleadings to stay
the D&O Litigation, (2) the preparation and prosecution of their objection to
the entry of the Approval Order and the Appeal, (3) the preparation of the
complaint
 
 
 
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commencing the Seattle Litigation and motions to stay related thereto and (4)
the negotiation and execution of this Agreement.  WMILT and the Insurer Parties
shall fund such reimbursement obligations up to the Limit on a twenty-five
percent (25%)/seventy-five percent (75%) basis, respectively, with the Insurer
Parties each paying an equal share of seventy-five percent (75%) of the
Limit.  The obligation of the Insurer Parties to make payments of their portion
of the Limit shall be several and not joint.  In order to receive such
reimbursement, Appellants shall provide a copy of the Firms’ invoices or
statements for fees and expenses incurred to WMILT and the Insurer Parties at
the addresses set forth in Section 7.10 of the Settlement Agreement.  Within ten
(10) Business Days of delivery thereof, WMILT and the Insurer Parties shall
reimburse the Appellants up to the Limit for such fees and expenses reflected in
the invoices or statements, in the percentages detailed above.
 
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date set forth above.
 

  WMI LIQUIDATING TRUST           
 
By:
/s/  Charles Edward Smith       Name: Charles Edward Smith       Title: General
Counsel   

 
 

  THOMAS W. CASEY           
 
By:
/s/  Thomas W. Casey  

 

  STEPHEN J. ROTELLA           
 
By:
/s/  Stephen J. Rotella  

 

  DAVID C. SCHNEIDER           
 
By:
/s/  David C. Schneider  

 

  ROBERT J. WILLIAMS, JR.           
 
By:
/s/  Robert J.Williams, Jr.  

 

  AXIS REINSURANCE COMPANY                  
 
By:
/s/  Timothy Vazquez       Name: Timothy Vazquez       Title: AVP - Claims
Manager  

 
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  CONTINENTAL CASUALTY COMPANY                  
 
By:
/s/  David Philips       Name: David Philips       Title: Sr. Claim Counsel  

 
 

 
THOSE CERTAIN UNDERWRITERS AT
LLOYD'S, LONDON AND LONDON
COMPANIES, SUBSCRIBING TO
POLICY NUMBER 509QA01550707
                 
 
By:
/s/  Sean Simpson       Name: Sean Simpson       Title: Authorized
Representative  

 
 

 
XL SPECIALTY INSURANCE
COMPANY
                 
 
By:
/s/  Michael P. Morabito       Name: Michael P. Morabito       Title: Vice
President, Claims  

 
 
 
 
 
 
 

 
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EXHIBIT A
SETTLEMENT AGREEMENT
(Without Exhibits)
 
 
 
 
 

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 EXECUTION COPY
SETTLEMENT AGREEMENT

SETTLEMENT AGREEMENT (the “Agreement”), dated as of November 30, 2014, by and
among (a) WMI Liquidating Trust (“WMILT”), as successor in interest to
Washington Mutual, Inc. (“WMI”) and WMI Investment Corp. (“WMIIC” and,
collectively with WMI, the “Debtors”), (b) Kerry K. Killinger (“Killinger”) and
Alan H. Fishman (“Fishman”) (collectively, the “Officer Claimants”), (c) Stephen
I. Chazen, Anne V. Farrell, Stephen E. Frank, Thomas C. Leppert, Charles M.
Lillis, Phillip D. Matthews, Regina T. Montoya, Michael K. Murphy, Margaret
Osmer-McQuade, Mary E. Pugh, William G. Reed, Jr., Orin C. Smith, James H.
Stever and Willis B. Wood, Jr. (collectively, the “Outside Director Claimants”),
(d) David Bonderman (“Bonderman” and, collectively with the Officer Claimants
and the Outside Director Claimants, the “D&O Claimants”) and (e) certain
insurers under WMI’s director and officer liability insurance policies for
2007-2008 (the “2007-08 Tower”) and 2008-2009 (the “2008-09 Tower”), each as set
forth on Exhibit “A” hereto (collectively, the “Insurers”). The signatories
hereto are referred to hereinafter collectively as the “Parties” or individually
as a “Party”.
 
RECITALS
 
A. On September 25, 2008, the Office of Thrift Supervision (the “OTS”), by order
number 2008-36, closed Washington Mutual Bank (“WMB”), appointed the Federal
Deposit Insurance Corporation (the “FDIC”) as receiver for WMB (the “FDIC
Receiver”) and advised that the FDIC Receiver was immediately taking possession
of WMB’s assets (the “Receivership”).
 
B. On or about September 25, 2008, the FDIC Receiver, the FDIC, in its corporate
capacity, and JPMorgan Chase Bank, N.A. entered into that certain Purchase and
Assumption Agreement, Whole Bank, dated September 25, 2008, as amended, modified
or supplemented prior to the date hereof.
 
C. On September 26, 2008, each of the Debtors filed a voluntary petition for
relief under chapter 11 of title 11 of the United States Code, as amended (the
“Bankruptcy Code”), with the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”).  By order, dated October 3, 2008, the
Debtors’ chapter 11 cases are being jointly administered and are styled as In re
Washington Mutual, Inc., et al., No. 08-12229 (MFW) (the “Chapter 11 Cases”).
 
D. On December 12, 2011, the Debtors filed their Seventh Amended Joint Plan of
Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code
[D.I. 9178] (as modified, the “Seventh Amended Plan”).  By order, dated February
23, 2012 (the “Confirmation Order”) [D.I. 9759], the Bankruptcy Court confirmed
the Seventh Amended Plan in accordance with section 1129 of the Bankruptcy Code.
 
E. Upon satisfaction or waiver of the conditions described in the Seventh
Amended Plan, the transactions contemplated therein were consummated on March
19, 2012.  Pursuant to the Seventh Amended Plan, the Confirmation Order and that
certain Liquidating Trust Agreement effective March 6, 2012, the administration
of
 
 

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the Chapter 11 Cases and the responsibility to reconcile and litigate remaining
disputed proofs of claim were transferred to WMILT.
 
Bankruptcy Proofs of Claim
 
F. On or before March 31, 2009, the date established by the Bankruptcy Court as
the last date to file proofs of claim against the Debtors and their chapter 11
estates, each of the D&O Claimants filed a proof of claim all of which, except
for the proof of claim filed by Bonderman, asserted, among other claims,
unliquidated claims for indemnification and advancement of defense and other
litigation costs and damages, with respect to investigations, litigation
commenced, threatened to be commenced or which may be commenced, under WMI’s
articles of incorporation, by-laws and other corporate documents and applicable
law, employment contracts and indemnification agreements (the “Indemnification
Claims”).  A list of the Indemnification Claims of each of the D&O Claimants
asserting such claims is attached hereto as Exhibit “B-1”.
 
G. Killinger also filed a proof of claim for employment-related benefits
pursuant to certain employment agreements and other documents, (collectively,
the “Killinger Non-Indemnity Claim”).  A list of the components of the Killinger
Non-Indemnity Claim is attached hereto as Exhibit “C”. In addition, certain of
the Outside Director Claimants filed proofs of claim, a list of which is
attached hereto as Exhibit “D”, asserting claims against the Debtors’ estates
for unpaid directors’ fees, reimbursement of ordinary course expenses incurred
on behalf of the Debtors and deferred amounts allegedly owed as a result of
service with various of the Debtors’ predecessor institutions (collectively, the
“Outside Director Non-Indemnity Claims”).
 
H. On September 14, 2012, WMILT and, certain claimants entered into that certain
Stipulation to Suspend Local Rule 3007-1(f)(iii) With Respect to Certain
Director and Officer Claims (the “Bifurcation Stipulation”).  The Bifurcation
Stipulation, approved by the Bankruptcy Court by order, dated September 17, 2012
[D.I. 10670], (1) bifurcated the proofs of claim filed by the foregoing Officer
Claimants into two parts: (i) unliquidated claims for indemnification and
advancement of defense and other litigation costs and damages with respect to
investigations, litigation commenced, threated to be commenced or which may be
commenced under WMI’s articles of incorporation, by-laws and other corporate
documents and applicable law, employment contracts and indemnification
agreements (collectively, the “Indemnification Components”), the list of which
are set forth on Exhibit “B-1” hereto; and (ii) claims for severance payments
and other employment-related benefits pursuant to certain employment agreements
and other documents, including various documents with “change in control”
provisions (collectively, the “Employee Components”), the list of which are set
forth on Exhibit “B-2” hereto, and (2) provided, among other things, that WMILT
could object to the Indemnification Components and Employee Components in
separate objections notwithstanding Rule 3007-1(f)(iii) of the Local Rules for
the United States Bankruptcy Court for the District of Delaware.
 
 
 
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The D&O Policies
 
I. WMI held, and WMILT as WMI’s successor in interest now owns and holds,
director and officer liability insurance policies, including, for claims made
during the period from May 1, 2007 through May 1, 2008 (the “2007-2008
Policies”) and the period from May 1, 2008 through May 1, 2009 (the “2008-2009
Policies” and, together with the 2007-2008 Policies, the “D&O Policies”),
acquired in connection with WMI’s indemnification obligations to its officers
and directors and to officers and directors of WMI’s subsidiaries, including
certain of the D&O Claimants.  By orders, entered December 16, 2008, May 4, 2010
and September 23, 2010, the Bankruptcy Court granted relief from the automatic
stay to allow the insurance carriers with respect to the 2007-2008 Policies (the
“2007-2008 Insurers”) to advance and/or pay defense costs pursuant to the D&O
Policies that are, or will become, owing to certain of the D&O Claimants who
were named as defendants in certain then pending litigation and investigations.
 
The Creditors’ Committee Letter and the Demand Letters
 
J. By letter, dated April 27, 2009 (the “Committee Letter”), from the statutory
committee of unsecured creditors appointed in the Chapter 11 Cases (the
“Creditors’ Committee”) to the Board of Directors and certain officers of WMI,
and following a preliminary investigation, the Creditors’ Committee provided a
“Notice of Circumstances Resulting in Potential Claims” claiming that the
persons set forth on Exhibit A to such notice had engaged in certain wrongful
acts that injured the Debtors, the Debtors’ estates and the creditors thereof,
including, without limitation, causing a wasteful transfer of Five Hundred
Million Dollars ($500,000,000.00) from WMI to WMB on September 10, 2008 (the
“September Downstream” ).
 
K. By letter, dated October 13, 2011, special litigation counsel to WMI and
counsel to the Creditors’ Committee, and by letter, dated November 11, 2013,
counsel to WMILT (collectively, the “Demand Letters”), (1) made a claim and
demand upon, among others, certain of the D&O Claimants with respect to the
September Downstream, (2) indicated the estate’s intent to pursue legal remedies
against, among others, the named D&O Claimants in the absence of a negotiated
resolution of liability in connection with the September Downstream
(collectively, together with the Committee Letter and the Demand Letters, the
“Asserted Claim”) and (3) stated that the estate was investigating other
potential claims.
 
The Carrier-Related Litigation
 
L. Following receipt of the Demand Letters, several of the D&O Claimants and WMI
sought coverage for the Asserted Claim under the 2008-2009 Policies, asserting
that the 2008-2009 Policies require the insurers thereunder (the “2008-2009
Insurers”) to provide insurance coverage to them in the event that “claims”,
which include the Asserted Claim set forth in the Demand Letters, are made
against them based upon alleged acts of such D&O Claimants in their capacities
as directors or officers of WMI.  In response to the foregoing requests, the
2008-2009 Insurers denied coverage under the 2008-2009 Policies for the Asserted
Claim.
 
 
 
 
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M. By complaint, dated March 15, 2012 (the “XL Litigation”), the Debtors
commenced litigation, styled Washington Mutual, Inc. v. XL Specialty Insurance
Company, et al., Adv. Pro. No. 12-50422 (MFW), in the Bankruptcy Court against
the 2008-2009 Insurers seeking, among other recoveries, compensatory and
punitive damages and a declaratory judgment with respect to the 2008-2009
Insurers’ obligation to provide coverage under the 2008-2009 Policies with
respect to the Asserted Claim.  The Bankruptcy Court dismissed the action due to
a lack of bankruptcy court jurisdiction in an opinion reported as Washington
Mutual, Inc. v. XL Specialty Insurance Company, et al., Adv. Pro. No. 12-50422
(MFW), 2012 WL 4755209 (Bankr. D. Del. Oct. 4, 2012).
 
N. WMILT then commenced litigation, Case No. N12C-10-087 (MMJ) (CCLD) (the
“Delaware Action” and, together with the XL Litigation, the “Carrier
Litigation”) in the Superior Court of the State of Delaware in and for New
Castle County (the “Delaware Superior Court”) against the 2008-2009 Insurers,
alleging, inter alia, that the 2008-2009 Insurers breached the 2008-2009
Policies by denying coverage to the D&O Claimants for the Asserted Claim.   The
2008-2009 Insurers filed a motion to dismiss the Delaware Action, asserting that
WMILT lacked standing and the complaint otherwise failed to state a claim upon
which relief may be granted or to present an actual controversy.  The Delaware
Superior Court denied the 2008-2009 Insurers’ motion to dismiss, which decision
the 2008-2009 Insurers appealed to the Supreme Court for the State of Delaware
(the “Delaware Supreme Court”).  Pursuant to an opinion, dated May 28, 2014, and
reported as XL Specialty Ins. Co. v. WMI Liquidating Trust, 93 A.3d 1208 (Del.
2014), the Delaware Supreme Court determined that the Delaware Action was not
ripe and remanded the matter to the Delaware Superior Court with direction to
dismiss the Delaware Action without prejudice to refiling.  By order, dated June
6, 2014, the Delaware Action was dismissed without prejudice by the Delaware
Superior Court.
 
O. WMI and Allied World Assurance Company, Ltd. (“Allied”) are parties to the
Allied World Assurance Company Policy No. C009436/001 (the “Allied Policy”),
which policy WMI acquired in connection with WMI’s indemnification obligations
to its officers and directors and to officers and directors of WMI’s
subsidiaries.  In the XL Litigation, WMILT had named Allied as a
defendant.  WMILT did not name Allied as a defendant in the Delaware Action.
 
P. On May 20, 2012, Allied filed an action against WMI and its successors, the
trustee of WMILT and CSC Trust Company of Delaware (collectively, the “Bermuda
Action Defendants”) in the Supreme Court of Bermuda, Civil Jurisdiction, styled
Allied World Assurance Co., Ltd v. Washington Mutual, Inc., et al., Case No.
2012: 186 (Sup. Ct. Bermuda) (the “Bermuda Action”), seeking, among other
things, alleged prevailing party attorneys’ fees (the “Bermuda
Claims”).  Pursuant to a Standstill and Non-Waiver Agreement, dated December 6,
2012, and a First Amendment thereto, dated June 17, 2014, further activity
between WMILT and Allied in connection with the Carrier Litigation and the
Bermuda Action has been stayed subject to agreement among the parties thereto.
 
 
 
 
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The Plan Reserve Stipulations
 
Q. On November 17, 2010, the Debtors filed that certain (1) Motion to Estimate
the Maximum Amount of Certain Claims for Purposes of Establishing Reserve Under
the Debtors’ Confirmed Chapter 11 Plan [D.I. 5971] (the “Estimation Motion”),
seeking to estimate the maximum amount of certain claims, including, without
limitation, the Indemnification Claims, and (2) Sixtieth Omnibus (Substantive)
Objections to Claims (Claim Nos. 2108, 2240, 2241, 2246, 2247, 2248, 2604, 2606,
2631, 2633, 2634, 2635, 2636, 2637 and 3242) [D.I. 5970], seeking to disallow
claims filed by certain of the D&O Claimants as set forth on Exhibit “A” to the
Sixtieth Omnibus.
 
R. By stipulations, dated February 21, 2012, June 7, 2012 and September 14, 2012
(the “Non-Subordinated Reserve Stipulations”), as approved by Bankruptcy Court
orders, dated March 1, 2012 [D.I. 9797], June 11, 2012 [D.I. 10272], and
September 17, 2012 [D.I. 10669], respectively (the “Reserve Orders”), certain of
the Parties, among others (but not including the Insurers), (1) stipulated to
the establishment of a contingent reserve under Section 26.3 of the Seventh
Amended Plan (the “Non-Subordinated Reserve”) to provide for distributions on
account of any Allowed Indemnification Claims that may be granted relating to
any litigation, investigation, or demand, which has been or may be asserted
against the D&O Claimants and not subject to subordination under section 510(b)
of the Bankruptcy Code (collectively, the “Non-Subordinated Indemnification
Claims”) and (2) determined to resolve the issues subject to the Estimation
Motion.  Among other things, the Non-Subordinated Reserve Stipulations provide
that, as of the date hereof, the Non-Subordinated Reserve shall be in an amount
equal to the Pro Rata Share of Distributions that would be made to the D&O
Claimants if the Non-Subordinated Indemnification Claims were Allowed Claims (in
Class 12 of the Seventh Amended Plan) in the aggregate amount of Twenty-Three
Million Four Hundred Four Thousand One Hundred Thirty-Nine Dollars
($23,404,139.00), to be used for distributions upon the granting of any Allowed
Non-Subordinated Indemnification Claims.
 
S. Pursuant to letters, dated December 16, 2013 and January 6, 2014, counsel for
Killinger and certain of the Outside Director Claimants stated that certain fees
and expenses had been reimbursed by the Insurers and the respective categories
of the Non-Subordinated Reserve pursuant to the Non-Subordinated Reserve
Stipulations is as follows:
 

 
Unpaid Fees and Costs
$880,849.35
     
Subrogation Claims
$4,399,179.60
     
Potential Defense Fees and Costs
$18,124,109.96
   

T. By stipulation, dated March 8, 2012 (the “Subordinated Claim Stipulation”),
certain of the Parties (but not including the Insurers) stipulated to a
contingent reserve under Section 26.3 of the Seventh Amended Plan to provide for
distributions on account of any Allowed Indemnification Claims that may be
granted relating to any litigation, investigation, or demand, which has been or
may be asserted
 
 
 
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against the D&O Claimants and are subject to subordination under section 510(b)
of the Bankruptcy Code (the “Subordinated Reserve” and, together with the
Non-Subordinated Reserve, the “Plan Reserve”).  By order, dated March 9, 2012
[D.I. 9838], the Bankruptcy Court approved the Subordinated Claim Stipulation.
 
The D&O Litigation
 
U. On October 14, 2014, WMILT commenced litigation against certain of the D&O
Claimants with respect to, among other claims, the September Downstream by
filing complaints in the Bankruptcy Court, in an action styled WML Liquidating
Trust v. Thomas W. Casey, et al., Adv. Pro. No. ­­­­­­­­­­­14-50819 (MFW) (the
“Bankruptcy Litigation”), and the King County Superior Court in the State of
Washington, in an action styled WMI Liquidating Trust v. Thomas W. Casey, et
al., Case No. 14-2-28048-3SEA (the “State Litigation” and, collectively with the
Bankruptcy Litigation, the “D&O Litigation”).
 
V. The Parties, upon review of all factual information and after good-faith
arm’s length negotiations, have determined, as set forth more fully below, that,
subject to the terms and conditions contained herein, including, without
limitation, the release of any and all Plan Reserves held under the Seventh
Amended Plan for the Indemnification Claims asserted by the D&O Claimants,
except for reserves for the Retained Subrogation Claims (as defined below), the
D&O Claimants, WMILT and the Insurers have agreed to, among other things,
compromise and settle the D&O Litigation and to provide the releases set forth
in detail in Section 3 hereof.
 
NOW, THEREFORE, the Parties, in consideration of the promises, covenants and
agreements herein described and for other good and valuable consideration
acknowledged by each of them to be satisfactory and adequate, and intending to
be legally bound, do hereby mutually agree as follows:
 
ARTICLE I
DEFINITIONS
 
Section 1.1. Recitals.  The recitals set forth above are true, are incorporated
by reference and are explicitly made a part of this Agreement.
 
Section 1.2. Definitions.  The following definitions shall apply to and
constitute part of this Agreement and all schedules, exhibits and annexes
hereto:
 
“2004-2005 Policies” shall mean the various director and officer liability
insurance policies held by WMI and/or WMILT for claims relating to the period
from May 1, 2004 through May 1, 2005, acquired in connection with WMI’s
indemnification obligations to its officers and directors and to officers and
directors of WMI’s subsidiaries, including certain of the D&O Claimants.
 
“Affiliate” shall mean, with respect to any specified entity, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified entity.
 
 
 
 
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 “Allowed Claim” shall have the meaning ascribed to it in the Seventh Amended
Plan.
 
“Approval Order” shall mean an order of the Bankruptcy Court approving the
compromise and settlement embodied herein, substantially in the form annexed
hereto as Exhibit “E”, or such other form which shall be, in form and substance,
reasonably satisfactory to the Insurers.
 
 “Business Day” shall mean a day other than a Saturday, a Sunday or any other
day on which commercial banks in New York, New York are required or authorized
to close by law or executive order.
 
“Casey” shall mean Thomas W. Casey.
 
 “Claims” shall mean any and all claims, causes of action, liabilities,
obligations, undertakings, damages, losses or other rights or remedies, whether
at law or in equity, including, without limitation, all “claims” as defined in
section 101(5) of the Bankruptcy Code.
 
“Contributing Insurers” shall mean, collectively, (a) of the 2007-2008 Insurers,
Continental Casualty Company, AXIS Insurance Company and Those Certain
Underwriters at Lloyd’s, London and London Companies, Subscribing to Policy
Number 509QA015507 (“Lloyds”), and (b) of the 2008-2009 Insurers, XL Specialty
Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA and
Columbia Casualty Company.
 
“Effective Date” shall mean the first (1st) Business Day on which, unless
otherwise waived by the Parties, all of the events and conditions described in
Section 6.1 of this Agreement have been satisfied; provided, however, that,
unless otherwise waived by the Parties, the Effective Date shall occur no
earlier than the fifteenth (15th) day following entry of the Approval Order.
 
“Excluded Claims” shall mean, collectively, (a) the claims of Casey, Rotella,
Schneider and Williams for severance payments and other employment-related
benefits pursuant to certain employment agreements and other documents,
including various documents with “change in control” provisions, (b) the
Employee Components of the proofs of claim filed by Todd H. Baker, Alfred
Brooks, Debora Horvath and John P. McMurray, Claim Nos. 2274, 2159, 2683 and
2543, respectively, (c) the Retained Subrogation Claims, and (d) WMILT’s
defenses to the Employee Claims, Employee Components and Retained Subrogation
Claims; provided, however, that WMILT shall not assert as defenses to the
Employee Claims, Employee Components or Retained Subrogation Claims (i) the
receipt of one or more avoidable transfers, or (ii) any Insured’s action or
failure to act with respect to any matter alleged in the Committee Letter, the
Demand Letters or the D&O Litigation.
 
“FDIC Settlement Agreement” shall mean that certain Settlement and Release
Agreement, dated as of December 13, 2011, by and among the FDIC, the FDIC
Receiver, Killinger, Rotella, Schneider, Linda Killinger and Esther Rotella.
 
 
 
 
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“Final Order” shall mean an order or judgment of the Bankruptcy Court or other
court of competent jurisdiction which has not been reversed, stayed, modified or
amended and as to which (a) any right to appeal or seek certiorari, review,
reargument, stay or rehearing has expired and no appeal or petition for
certiorari, review, reargument, stay or rehearing is pending, or (b) an appeal
has been taken or petition for certiorari, review, reargument, stay or rehearing
has been filed and (i) such appeal or petition for certiorari, review,
reargument, stay or rehearing has been resolved by the highest court to which
the order or judgment was appealed or from which certiorari, review, reargument,
stay or rehearing was sought or (ii) the time to appeal further or seek
certiorari, review, reargument, stay or rehearing has expired and no such
further appeal or petition for certiorari, review, reargument, stay or rehearing
is pending; provided, however, that the possibility that a motion pursuant to
Rule 60 of the Federal Rules of Civil Procedure or Bankruptcy Rule 9024 or
pursuant to any similar law, rule or principle may be filed relating to such
order shall not cause such order to not be a Final Order.
 
“Person” shall mean an individual, corporation, limited liability corporation,
professional corporation, limited liability partnership, partnership, limited
partnership, association, joint stock company, estate, legal representative,
trust, unincorporated association, government or any political subdivision or
agency thereof, and any business or legal entity and any spouses, heirs,
predecessors, successors, representatives or assignees of any of the foregoing.
 
“Liquidating Trust Agreement” shall mean that certain WMI Liquidating Trust
Agreement, dated as of March 6, 2012, by and among the Debtors, William C.
Kosturos, as liquidating trustee, and CSC Trust Company of Delaware, as resident
trustee.
 
“Related Actions” shall mean, collectively, the Carrier Litigation, the Bermuda
Action and the D&O Litigation.
 
“Released Claims” shall mean, collectively, (a) any and all WMI Released Claims,
D&O Released Claims, Insured Released Claims, Additional Insured Released Claims
and Bermuda Released Claims (each as defined below), (b) claims or causes of
action that arise in, relate to or have been or could have been asserted in the
Chapter 11 Cases or the Receivership, including the “Avoidance Actions”, as
defined in the September 14, 2012 Non-Subordinated Reserve Stipulation, against
only the D&O Claimants (the “Released Avoidance Actions”), except for the
Excluded Claims, and (c) claims that otherwise arise from or relate to the
Seventh Amended Plan, this Agreement, and the negotiations and compromises set
forth in this Agreement and the Seventh Amended Plan, including, without
limitation, in connection with or related to any of the Debtors,  their
Affiliates and their respective subsidiaries, assets, liabilities, operations,
property or estates, the performance of its obligations in accordance with this
Agreement, the Approval Order, the Confirmation Order or the Plan.
 
“Releasees” shall mean, collectively, the WMI Releasees, the Insurer Releasees,
the D&O Releasees and the Additional Insured Releasees, each as defined below.
 
 
 
 
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 “Releasor” shall mean any Person that provides a release to any of the
Releasees pursuant to the terms of this Agreement.
 
“Reorganized Debtors” shall mean WMI and WMIIC, as reorganized.
 
“Retained Subrogation Claims” shall mean the subrogation claims, if any, held by
insurers under the 2004-2005 Policies pursuant to the Subordinated Claim
Stipulation; provided, however, that, under all circumstances, to the extent an
Insurer has a claim under the 2004-2005 Policies pursuant to the Subordinated
Claim Stipulation, such claim shall be deemed to be a Released Claim for
purposes of this Agreement and not included in the definition or calculation of
“Retained Subrogation Claims”.
 
“Rotella” shall mean Stephen J. Rotella.
 
“Schneider” shall mean David C. Schneider.
 
“Subrogation Claims” shall mean the subrogation claims, if any, held by insurers
under the D&O Policies.
 
 “Unknown Claims” shall mean any Released Claim, as defined herein, that any
Releasor, as defined herein, does not know or suspect to exist in his, her or
its favor at the time of giving the release in this Agreement that if known by
him, her or it, might have affected his, her or its settlement and release in
this Agreement. With respect to any and all Released Claims, each Releasor shall
expressly waive or be deemed to have waived, and by operation of the Approval
Order shall have waived the provisions, rights and benefits of California Civil
Code § 1542 (to the extent it applies herein), which provides:
 
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTORS.
 
Each Releasor expressly waives, and shall be deemed to have waived, and by
operation of the Approval Order shall have waived any and all provisions, rights
and benefits conferred by any law of any state or territory of the United
States, or principle of common law or foreign law, that is similar, comparable
or equivalent in effect to California Civil Code § 1542.  The Releasors may
hereafter discover facts in addition to or different from those that any of them
now knows or believes to be true with respect to the subject matter of the
Released Claims, but each Releasor shall expressly have and shall be deemed to
have, and by operation of the Approval Order shall have fully, finally and
forever settled and released any and all Released Claims, known or unknown,
suspected or unsuspected, contingent or non-contingent, whether or not concealed
or hidden, that now exist or heretofore have existed, upon any theory of law or
equity now existing or coming into existence in the future, including conduct
that is negligent,
 
 
 
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reckless, intentional, with or without malice, or a breach of any duty, law or
rule, without regard to the subsequent discovery or existence of such different
or additional facts. Each Releasor acknowledges and shall be deemed to have
acknowledged, and by operation of the Approval Order shall have acknowledged,
that the foregoing waiver was separately bargained for and a key element of the
settlement of which this release is a part.
 
“Williams” shall mean Robert J. Williams, Jr.
 
“WMI Entities” shall mean WMI, WMILT, WMIIC, together with their present and
former subsidiaries, affiliates, successors and assigns, including, without
limitation, WMI Holdings Corp.
 
Section 1.3. Other Terms.  Other terms may be defined elsewhere in this
Agreement and, unless otherwise indicated, shall have such meaning throughout
this Agreement. As used in this Agreement, any reference to any federal, state,
local or foreign law, including any applicable law, will be deemed also to refer
to such law as amended and all rules and regulations promulgated thereunder,
unless the context requires otherwise. The words “include”, “includes”, and
“including” will be deemed to be followed by “without limitation”. Pronouns in
masculine, feminine, or neuter genders will be construed to include any other
gender, and words in the singular form will be construed to include the plural
and vice versa, unless the context otherwise requires. The words “this
Agreement”, “herein”, “hereof”, “hereby”, “hereunder”, and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited.
 
Section 1.4. Interpretation.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof will arise
favoring or disfavoring any party hereto because of the authorship of any
provision of this Agreement.
 
ARTICLE II
SETTLEMENT TERMS
 
Section 2.1. Settlement Consideration.  In consideration for, and in full and
complete satisfaction of, the Indemnification Claims, the Subrogation Claims,
the Asserted Claim, the Carrier Litigation, the D&O Litigation and the 2007-2008
Policies, the following actions shall be taken or deemed to be taken as the case
may be:
 
(a) Payment.  Within ten (10) days of the execution and delivery of this
Agreement, WMILT shall provide the Contributing Insurers written notice, to the
address and in the manner set forth in Section 7.10 of this Agreement, of
instructions for the payments contemplated herein which may be made, by wire
transfer of immediately available funds or check.  Within ten (10) days of the
Effective Date, the Contributing Insurers, on behalf of the D&O Claimants, shall
pay to WMILT, by wire transfer of immediately available funds or check,
Thirty-Seven Million Dollars ($37,000,000.00) (the “Settlement Amount”) as
follows:  (1) AXIS Reinsurance Company shall pay One Million Three Hundred
Thirty-Three Thousand Three Hundred
 
 
 
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Thirty-Four Dollars ($1,333,334.00); (2) Continental Casualty Company shall pay
Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six Dollars ($666,666.00); (3)
Lloyds shall pay Twenty-Five Million Dollars ($25,000,000.00); (4)  XL Specialty
Insurance Company shall pay Five Million Dollars ($5,000,000.00); (5) National
Union Fire Insurance Company of Pittsburgh, PA shall pay Two Million Five
Hundred Thousand Dollars ($2,500,000.00); and (6) Columbia Casualty Company
shall pay Two Million Five Hundred Thousand Dollars ($2,500,000.00).  The
obligation of the Contributing Insurers to make payments of their portion of the
Settlement Amount shall be several and not joint.  Notwithstanding the
foregoing, should any amount remain unexhausted on the 2007-2008 Policies issued
by AXIS Reinsurance Company or Continental Casualty Company after subtracting
from the policy limits the amounts to be paid pursuant to this Section 2.1 and
any amounts paid under those policies to date, AXIS Reinsurance Company and
Continental Casualty Company shall pay any such unexhausted amount towards
covered Defense Expenses (as defined pursuant to XL Specialty Insurance Company
Policy No. ELU097685-7), if any, until such policies are exhausted according to
their terms.  For the avoidance of doubt, under no circumstances will any
Contributing Insurer under the 2007-2008 Policies pay more than its policy limit
for any reason.
 
(b) Chapter 11 Claims.  Except as expressly provided herein or pursuant to the
terms and provisions of the Seventh Amended Plan, from and after the Effective
Date, the D&O Claimants and the Insurers shall not object to, or take any action
to prevent, the withdrawal, with prejudice, or the expungment of the
Indemnification Claims (or, where applicable, the partial withdrawal of the
Indemnification Component of a given proof of claim) and the Outside Director
Non-Indemnity Claims, as applicable. Without in any way limiting the foregoing,
from and after the Effective Date, and upon payment of the Settlement Amount as
provided in Section 2.1(a) hereof, WMILT shall (1) direct Kurtzman Carson
Consultants, LLC, the Bankruptcy Court-appointed claims agent in the Chapter 11
Cases, to remove from the claims registry of the Chapter 11 Cases the
Indemnification Claims (or Indemnification Components, as applicable) and the
Outside Director Non-Indemnity Claims, as applicable, except as expressly set
forth herein and pursuant to the terms and provisions of the Seventh Amended
Plan and (2) release all amounts or distributions from the Plan Reserve or the
disputed claims reserve or the disputed equity escrow created pursuant to the
Seventh Amended Plan, the Non-Subordinated Reserve Stipulations and the
Subordinated Claim Stipulation, as the case may be, other than amounts or
distributions associated with the Retained Subrogation Claims, and redistribute
such amounts or distributions to holders of allowed claims in accordance with
the terms and provisions of Section 26.3 of the Seventh Amended Plan and the
Liquidating Trust Agreement.
 
Section 2.2. Outside Director Claims.  In consideration for, and in full and
complete satisfaction of, the Outside Director Non-Indemnity Claims, on the
Effective Date, the Outside Director Non-Indemnity Claims shall be deemed
allowed in the amounts set forth on Exhibit “D” hereto.  On the first date
scheduled for distributions in accordance with the terms and conditions of the
Seventh Amended Plan following the Effective Date, WMILT shall make cash
distributions to the Outside Director Claimants in an amount equal to the
Outside Director Non-Indemnity Claims, as allowed, plus an amount equal to four
percent (4%) thereof, net of applicable taxes, if any.  Without in any
 
 
 
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way limiting the foregoing, all other amounts or distributions reserved on
account of Outside Director Non-Indemnity Claims shall be deemed waived by the
Outside Director Claimants and such other amounts or distributions shall be
released from the Plan Reserve or the disputed claims reserve or disputed equity
reserve created pursuant to the Seventh Amended Plan, the Non-Subordinated
Reserved Stipulations and the Subordinated Claim Stipulation, as the case may
be, and redistributed to holders of allowed claims in accordance with the terms
and provisions of Section 26.3 of the Seventh Amended Plan and the Liquidating
Trust Agreement.
 
Section 2.3. Killinger Non-Indemnity Claim.  Within ten (10) Business Days of
the execution and delivery of this Agreement, Killinger shall elect one of the
two forms of distribution set forth on Exhibit “F” hereto and provide WMILT
written notice of such election to the address and in the manner set forth in
Section 7.10 of this Agreement.  In consideration for, and in full and complete
satisfaction of, the Killinger Non-Indemnity Claim, on the Effective Date, the
Killinger Non-Indemnity Claim shall be deemed allowed in an amount based upon
the election made by Killinger from the forms of distribution set forth on
Exhibit “F”.  On the first date scheduled for distributions to be made in
accordance with the terms and provisions of the Seventh Amended Plan following
the Effective Date, and periodically thereafter in the event of an election for
periodic payments pursuant to Exhibit “F” hereto, WMILT shall pay such amount,
net of applicable taxes, if any, to the FDIC pursuant to the terms and
provisions of Section I(E) of the FDIC Settlement Agreement.  Without in any way
limiting the foregoing, all other amounts or distributions reserved on account
of the Killinger Non-Indemnity Claim shall be deemed waived by Killinger and
such other amounts or distributions shall be released from the Plan Reserve or
the disputed claims reserve or disputed equity reserve created pursuant to the
Seventh Amended Plan, the Non-Subordinated Reserved Stipulations and the
Subordinated Claim Stipulation, as the case may be, and redistributed to holders
of allowed claims in accordance with the terms and provisions of Section 26.3 of
the Seventh Amended Plan and the Liquidating Trust Agreement.
 
Section 2.4. Stay and Dismissal of Actions.  As soon as practicable following
payment of the Settlement Amount provided in Section 2.1(a) hereof, but in no
event later than five (5) Business Days subsequent thereto, WMILT, the D&O
Claimants and the Insurers shall take any and all action as is appropriate or as
another Party may reasonably request to cause the respective clerks’ offices to
record the dismissal, with prejudice, of the Bermuda Action and the D&O
Litigation, including, without limitation, filing a request, stipulation or
motion for dismissal with prejudice of such actions with the applicable court.
 
Section 2.5. Insurers.  Notwithstanding anything contained in this agreement to
the contrary, the releases, representations and warranties, covenants and
agreements provided by the Insurers herein are limited to their role and
position as the insurer of one or more of the D&O Policies, their rights and
obligations under one or more of the D&O Policies and the Settlement Amount to
be paid hereunder.
 
 
 
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ARTICLE III
RELEASES AND BAR ORDER
 
Section 3.1.Release of WMI Entities.  On and effective as of the Effective Date,
and without the need for the execution and delivery of additional documentation
or the entry of any additional orders of the Bankruptcy Court, except as
expressly provided in this Agreement, (i) the Insurers and each of their
respective subsidiaries and Affiliates and the predecessors, successors and
assigns of any of them and any other Person that claims or might claim through,
on behalf of or for the benefit of any of the foregoing whether directly or
derivatively (including, without limitation, by or through the Receivership or
otherwise) (collectively, the “Insurer Releasors”), and (ii) the D&O Claimants
and each of their respective assigns, advisors, representatives, members of his
or her immediate family, heirs, executors, estates and administrators or any
other Person that claims or might claim through, on behalf of or for the benefit
of any of the foregoing whether directly or derivatively (the “D&O Releasors”
and, together with the Insurer Releasors, the “Non-Debtor Releasors”) shall be
deemed to have irrevocably and unconditionally, fully, finally, and forever
waived, released, acquitted and discharged the WMI Entities, WMB, each of the
Debtors’ estates, the Reorganized Debtors, their respective past or present
parent entities, subsidiaries, Affiliates, directors, officers, employees,
professionals, including, without limitation, any and all professionals retained
by WMI or WMILT in the Chapter 11 Cases pursuant to an order of the Bankruptcy
Court other than ordinary course professionals and the predecessors, successors
and assigns of any of them (collectively, the “WMI Releasees”) from any and all
past, present and future claims, demands, rights, liabilities, or causes of
action of any and every kind, character or nature whatsoever, in law or in
equity, known or unknown (including Unknown Claims), whether asserted or
unasserted, which the Insurers or D&O Claimants, or any of them, or anyone
claiming through them, on their behalf or for their benefit have or may have or
claim to have, now or in the future, against any WMI Releasee that are Released
Claims or otherwise are based upon, related to, or arise out of or in connection
with any of the Indemnification Claims (as applicable), the Subrogation Claims,
the Asserted Claim (including, without limitation, the Committee Letter and the
Demand Letters) the D&O Litigation, the Carrier Litigation, the Outside Director
Non-Indemnity Claims (as applicable), or any claim, act, fact, transaction,
occurrence, statement or omission in connection with, or alleged or that could
have been alleged in any of the foregoing, including, without limitation, any
such claim, demand, right, liability, or cause of action for indemnification,
contribution, or any other basis in law or equity for damages, costs or fees
incurred by the Non-Debtor Releasors arising directly or indirectly from or
otherwise relating to the foregoing (the “WMI Released Claims”). Further, the
D&O Releasors shall be deemed to have irrevocably and unconditionally, fully,
finally, and forever granted the releases provided for in Sections 41.6, 41.7
and 41.8 of the Seventh Amended Plan, the forms of which are annexed hereto as
Exhibit “G”.  Notwithstanding anything contained in this Section 3.1 or
elsewhere to the contrary, the foregoing is not intended to release, nor shall
it have the effect of releasing, (i) the Excluded Claims, or (ii) the WMI
Releasees from the performance of their obligations in accordance with this
Agreement.
 
 
 
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Section 3.2. Release of the D&O Claimants.  Subject to the payment in full of
the Settlement Amount, on and effective as of the Effective Date, and without
the need for the execution and delivery of additional documentation or the entry
of any additional orders of the Bankruptcy Court, except as expressly provided
in this Agreement, (i) the Insurer Releasors and (ii) the WMI Entities, each of
the Debtors’ estates, and the Reorganized Debtors and each of the foregoing’s
respective subsidiaries and Affiliates and the predecessors, successors and
assigns of any of them and any other Person that claims or might claim through,
on behalf of or for the benefit of any of the foregoing, whether directly or
derivatively (including, without limitation, by or through the Debtors, the
receivership of WMB’s assets or otherwise) (the “WMI Releasors” and, together
with the Insurer Releasors, the “Non-D&O Releasors”), shall be deemed to have
irrevocably and unconditionally, fully, finally and forever waived, released,
acquitted and discharged the D&O Claimants, Rotella, Schneider, Casey, Williams,
and each of their respective assigns, advisors, representatives, members of his
or her immediate family, heirs, executors, estates and administrators
(collectively, the “D&O Releasees”), from any and all past, present and future
claims, demands, rights, liabilities, or causes of action of any and every kind,
character or nature whatsoever, in law or in equity, known or unknown (including
Unknown Claims), whether asserted or unasserted, which the Non-D&O Releasors, or
any of them, or anyone claiming through them, on their behalf or for their
benefit, have or may have or claim to have, now or in the future, against any
D&O Releasee that are Released Claims or otherwise are based upon, related to,
or arise out of or in connection with any of the Committee Letter, the Demand
Letters, the Asserted Claim, the D&O Litigation, the Indemnification Claims (as
applicable), the Subrogation Claims, the Carrier Litigation, the Released
Avoidance Actions and the Outsider Director Non-Indemnity Claims (as
applicable), or any claim, act, fact, transaction, occurrence, statement or
omission in connection with or alleged or that could have been alleged in
relation to any of the foregoing including, without limitation, any such claim,
demand, right, liability, or cause of action for indemnification, contribution,
or any other basis in law or equity for damages, costs or fees incurred by the
Non-D&O Releasors arising directly or indirectly from or otherwise relating to
the Committee Letter, the Demand Letters, the Asserted Claim, the D&O
Litigation, the Indemnification Claims, the Subrogation Claims, the Carrier
Litigation, the Released Avoidance Actions or the Outside Director Non-Indemnity
Claims (collectively, the “D&O Released Claims”); provided, however, that,
notwithstanding anything contained in this Agreement to the contrary, the
Insurers may assert against Rotella, Schneider, Casey and Williams any defense
or counterclaim they deem necessary to the extent that Rotella, Schneider, Casey
or Williams assert any claim against them or seek coverage from the Insurers
notwithstanding the terms of this Agreement; and, provided, further,
that,  notwithstanding anything contained in this Section 3.2 or elsewhere to
the contrary, the foregoing is not intended to release, nor shall it have the
effect of releasing, (i) the Excluded Claims and (ii) the D&O Releasees from the
performance of their obligations in accordance with this Agreement.
 
Section 3.3. Release of the Insurers.  Subject to the payment in full of the
Settlement Amount, on and effective as of the Effective Date, and without the
need for the execution and delivery of additional documentation or the entry of
any additional orders of the Bankruptcy Court, except as expressly provided in
this Agreement, (i) the
 
 
 
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D&O Releasors and (ii) the WMI Releasors (collectively, the “Insured
Releasors”), shall be deemed to have irrevocably and unconditionally, fully,
finally and forever waived, released, acquitted and discharged the Insurers, and
each of their respective assigns, advisors, representatives, predecessors,
successors, parent companies, subsidiaries, affiliates, directors, officers,
employees, reinsurers, members of his or her immediate family, heirs, executors,
estates and administrators (collectively, the “Insurer Releasees”), from any and
all past, present and future claims, demands, rights, liabilities, or causes of
action of any and every kind, character or nature whatsoever, in law or in
equity, (including any claims for “bad faith”, breach of the duty of good faith
and fair dealing, unfair claims handling, unfair or deceptive trade produces, or
any violation of any insurance law, statute or regulation) known or unknown
(including Unknown Claims), whether asserted or unasserted, which the Insured
Releasors, or any of them, or anyone claiming through them, on their behalf or
for their benefit, have or may have or claim to have, now or in the future,
against any Insurer Releasee that are Released Claims or otherwise are based
upon, related to, or arise out of or in connection with any of the Committee
Letter, the Demand Letters, the Asserted Claim, the D&O Litigation, the
Indemnification Claims, the Subrogation Claims, the Carrier Litigation, the
Outsider Director Non-Indemnity Claims (as applicable), and/or the 2007-2008
Policies or any claim, act, fact, transaction, occurrence, statement or omission
in connection with or alleged or that could have been alleged in relation to any
of the foregoing, including, without limitation, any claim, demand, right,
liability or cause of action for indemnification, contribution, or any other
basis in law or equity for damages, costs or fees incurred by the Insured
Releasors, arising directly or indirectly from or otherwise relating to the
Committee Letter, the Demand Letters, the Asserted Claim, the D&O Litigation,
the Indemnification Claims, the Subrogation Claims, the Carrier Litigation or
the Outside Director Non-Indemnity Claims (collectively, the “Insured Released
Claims”); provided, however, that, notwithstanding anything contained in this
Section 3.3 or elsewhere to the contrary, the foregoing is not intended to
release, nor shall it have the effect of releasing, (i) the Excluded Claims and
(ii) the Insurer Releasees from the performance of their obligations in
accordance with this Agreement.
 
Section 3.4. Release of Additional Insureds.  Without limiting the generality of
the foregoing releases, subject to the payment in full of the Settlement Amount,
on and effective as of the Effective Date, the WMI Releasors shall release all
“Insureds” and “Insured Persons” under the 2007-2008 Policies and/or 2008-2009
Policies (as defined therein, respectively) (collectively, the “Additional
Insured Releasees”) from any and all claims, demands, rights, liabilities, or
causes of action of any and every kind, character or nature whatsoever, in law
or in equity, known or unknown (including Unknown Claims), whether asserted or
unasserted, which the WMI Releasors, or any of them, or anyone claiming through
them, on their behalf or for their benefit, have or may have or claim to have,
now or in the future, against any Additional Insured Releasee that are Released
Claims or otherwise are based upon, related to, or arise out of or in connection
with any of the Committee Letter, the Demand Letters, the Asserted Claim, the
D&O Litigation, the Indemnification Claims, the Subrogation Claims, the Carrier
Litigation and the Outside Director Non-Indemnity Claims (as applicable) or any
claim, act, fact, transaction, occurrence, statement or omission in connection
with or alleged or that could have been alleged in any of the foregoing
 
 
 
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including, without limitation, any such claim, demand, right, liability, or
cause of action for indemnification, contribution, or any other basis in law or
equity for damages, costs or fees incurred by the Insured Releasors arising
directly or indirectly from or otherwise relating to the Committee Letter, the
Demand Letters, the Asserted Claim, the D&O Litigation, the Indemnification
Claims, the Subrogation Claims, the Carrier Litigation or the Outside Director
Non-Indemnity Claims (the “Additional Insured Released Claims”).
 
Section 3.5. Mutual Release of Bermuda Action.  Without limiting the generality
of the foregoing releases, on and effective of the Effective Date, (a) Allied
shall release the Bermuda Action Defendants from all claims, demands, rights,
liabilities, or cause of action of any and every kind, character of nature
whatsoever, in law or in equity, known or unknown (including Unknown Claims),
whether asserted or unasserted, including any costs associated with the Bermuda
Action, which Allied, or anyone claiming through it or on its behalf of for its
benefit, have or may have or claim to have, now or in the future, against any of
the Bermuda Action Defendants that are based up on, related to, or arise out of
or in connection with the Bermuda Action or the Bermuda Claims (the “Bermuda
Released Claims”) and (b) the Bermuda Action Defendants shall release Allied
from the Bermuda Released Claims.  The parties to the Bermuda Action shall
consent to the Bermuda Action being discontinued on the basis that there be no
order as to costs.
 
Section 3.6. Release of Defense and Indemnity Claims.  Without limiting the
generality of the foregoing releases, on and effective as of the Effective Date,
the D&O Claimants and Insurers (whatever the nature of their claims), shall
waive any and all rights to advancement, indemnity, subrogation, recoupment,
clawback, and similar forms of legal and equitable relief against WMILT and each
of the Debtors’ bankruptcy estates for all defense, indemnity and other costs
paid, incurred, or to be paid or incurred by the D&O Claimants or the Insurers
except for the Retained Subrogation Claims.
 
Section 3.7. Release of Reserves.  Notwithstanding anything contained in this
Agreement to the contrary, on and effective as of the Effective Date, except for
reserves for Retained Subrogation Claims, any reserves held under the Seventh
Amended Plan for proofs of claims by the D&O Claimants for advancement,
settlement, indemnification and defense costs paid, incurred, or to be paid or
incurred by the D&O Claimants or the Insurers, including the Indemnification
Claims (or Indemnification Components, as applicable), shall be released to
WMILT and distributed in accordance with the terms and provisions of Section
26.3 of the Seventh Amended Plan and the Liquidating Trust Agreement.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
 
Section 4.1. Representation and Warranties of the D&O Claimants.  Each of the
D&O Claimants hereby represents and warrants for itself, that:  (a) he or she
has full requisite power and authority to execute and deliver and to perform his
or her obligations under this Agreement, and the execution, delivery and
performance hereof,
 
 
 
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and the instruments and documents required to be executed by him or her in
connection herewith (i) have been duly and validly authorized by him or her and
(ii) are not in contravention of any organizational documents or any agreements
specifically applicable to him or her; and (b) no proceeding, litigation or
adversary proceeding before any court, arbitrator or administrative or
governmental body is pending against him or her which would adversely affect his
or her ability to enter into this Agreement or to perform his or her obligations
hereunder.
 
Section 4.2. Representation and Warranties of the Insurers.  Each of the
Insurers hereby represents and warrants for itself, that (a) it has full
requisite power and authority to execute and deliver and to perform its
obligations under this Agreement, and the execution, delivery and performance
hereof, and the instruments and documents required to be executed by it in
connection herewith have been duly and validly authorized by it and (b) it owns
the Subrogation Claims it is releasing as of the date of the executive hereof.
 
Section 4.3. Representation and Warranties of WMILT.  WMILT hereby represents
and warrants for itself, and on behalf of the other Debtors, that:  (a) it is
duly organized and validly existing under the laws of the jurisdiction of
organization with all requisite power and authority to carry on the business in
which it is engaged, to own the properties it owns, to execute this Agreement
and to consummate the transactions contemplated hereby; (b) it has full
requisite power and authority to execute and deliver and, upon entry of the
Approval Order, to perform its obligations under this Agreement, and the
execution, delivery and performance hereof, and the instruments and documents
required to be executed by it in connection herewith (i) have been duly and
validly authorized by it and (ii) are not in contravention of its organization
documents or any material agreement specifically applicable to it; and (c) no
proceeding, litigation or adversary proceeding before any court, arbitrator or
administrative or governmental body is pending against it which would adversely
affect its ability to enter into this Agreement or to perform its obligations
hereunder.
 
Section 4.4. Representations of the Parties as to this Agreement.  Each Party
represents and acknowledges that:  (a) in executing this Agreement, he, she or
it does not rely, and has not relied, upon any representation or statement made
by any other Party or any of such other Party’s representative, agents or
attorneys, with regard to the subject matter, basis or effect of this Agreement
or otherwise, other than as may be stated specifically in this Agreement; (b) in
executing this Agreement, he, she or it has relied entirely upon his, her or its
own judgment, beliefs and interest and the advice of his, her or its counsel and
that he, she or it has had a reasonable period of time to consider the terms of
this Agreement before entering into it; and (c) he, she or it has reviewed this
Agreement and that he, she or it fully understands and voluntarily accepts all
of the provisions contained herein.  Each Party further represents, acknowledges
and agrees that this Agreement was the product of negotiations among the Parties
and that any rule of construction as to ambiguities being resolved against the
drafting party shall not apply in the interpretation of this Agreement.
 
 
 
 
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ARTICLE V
COVENANTS
 
Section 5.1. Covenants of the D&O Claimants.  Each of the D&O Claimants hereby
covenants and agrees as follows:
 
(a) None of the D&O Claimants shall sell, transfer, pledge, hypothecate or
assign any of the Indemnification Claims (or, where applicable, Indemnification
Components), the Outside Director Non-Indemnity Claims or any voting rights or
participations or other interests therein during the period from the date hereof
up to and including the Effective Date; provided, however, that, if required by
an insurance carrier party to the 2004-2005 Policies and not a party to this
Agreement, Killinger may assign the portion of his Indemnification Claim
relating to his pro rata portion of the Subordinated Reserve for the 2004-2005
Policies to any such insurance carrier.
 
(b) None of the D&O Claimants shall, except as expressly provided herein, (i)
file any additional claims or proofs of claim, whatsoever, with the Bankruptcy
Court against any of the Debtors (including secured, unsecured, administrative,
priority or substantial contribution claims), (ii) file any additional claims,
commence or prosecute any pending or additional litigation, proceeding, action
or matter or seek to recover damages or to seek any other type of relief against
(1) any of the Insurer Releasees based upon, arising from or relating to the
Insured Released Claims, and (2) any of the WMI Releasees based upon, arising
from or relating to the WMI Released Claims, or any of the claims or causes of
action asserted or which could have been asserted in the Chapter 11 Cases, or
(iii) directly or indirectly aid any person in taking any action with respect to
the WMI Released Claims, that is prohibited by this Section 5.1(b).
 
(c) Each of the D&O Claimants shall support, and otherwise take no action to
impede or preclude, the administration of the Chapter 11 Cases, or the
consummation, implementation and administration of the Seventh Amended Plan.
 
(d) On the Effective Date, and without limiting the generality of the foregoing,
each of the D&O Claimants shall be deemed to have covenanted not to sue (1) the
Insurer Releasees with respect to the Insured Released Claims, and to be
permanently barred and enjoined from instituting, prosecuting, pursuing or
litigating, in any manner, the Insured Released Claims against the Insurer
Releasees, and (2) the WMI Releasees with respect to the WMI Released Claims,
and to be permanently barred and enjoined from instituting, prosecuting,
pursuing or litigating, in any manner, the WMI Released Claims against the WMI
Releasees.
 
(e) Each of the D&O Claimants shall not object to, or otherwise directly or
indirectly aid any person in taking any action to oppose, the release of amounts
or distributions reserved in the Plan Reserve, the disputed claims reserve or
disputed equity reserve pursuant to the Seventh Amended Plan on account of the
Retained Subrogation Claims being released and redistributed to holders of
allowed claims in accordance with the terms and provisions of Section 26.3 of
the Seventh Amended Plan.
 
 
 
 
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(f) On the Effective Date, each of the D&O Claimants shall confirm in writing to
the WMI Entities and the Insurers that each of the representations and
warranties set forth in Sections  4.1 and 4.4 of this Agreement are true and
correct as of the Effective Date.
 
Section 5.2. Covenants of the Insurers.  The Insurers hereby covenant and agree
as follows:
 
(a) None of the Insurers shall sell, transfer, pledge, hypothecate or assign any
of the Subrogation Claims or any voting rights or participations or other
interests therein during the period from the date hereof up to and including the
Effective Date.
 
(b) None of the Insurers shall, except as expressly provided herein, (i) file
any additional claims or proofs of claim, whatsoever, with the Bankruptcy Court
against any of the Debtors (including secured, unsecured, administrative,
priority or substantial contribution claims), (ii) file any additional claims,
commence or prosecute any pending or additional litigation, proceeding, action
or matter or seek to recover damages or to seek any other type of relief against
(1) any of the D&O Releasees based upon, arising from or relating to the D&O
Released Claims, and (2) any of the WMI Releasees based upon, arising from or
relating to the WMI Released Claims or Bermuda Released Claims, or any of the
claims or causes of action asserted or which could have been asserted in the
Chapter 11 Cases, or (iii) directly or indirectly aid any person in taking any
action with respect to the WMI Released Claims or the D&O Released Claims, that
is prohibited by this Section 5.2(b).
 
(c) Each of the Insurers shall support, and otherwise take no action to impede
or preclude, the administration of the Chapter 11 Cases, or the consummation,
implementation and administration of the Seventh Amended Plan.
 
(d) On the Effective Date, and without limiting the generality of the foregoing,
each of the Insurers shall be deemed to have covenanted not to sue, the WMI
Releasees with respect to the WMI Released Claims, and to be permanently barred
and enjoined from instituting, prosecuting, pursuing or litigating, in any
manner, the WMI Released Claims against the WMI Releasees and (2) the D&O
Releasees with respect to the D&O Released Claims, and to be permanently barred
and enjoined from instituting, prosecuting, pursuing or litigating, in any
manner, the D&O Released Claims against the D&O Releasees.
 
(e) Each of the Insurers shall not object to, or otherwise directly or
indirectly aid any person in taking any action to oppose, the release of amounts
or distributions reserved in the Plan Reserve or the disputed claims reserve or
the disputed equity reserve pursuant to the Seventh Amended Plan on account of
the Retained Subrogation Claims being released and redistributed to holders of
allowed claims in accordance with the terms and provisions of Section 26.3 of
the Seventh Amended Plan and the Liquidating Trust Agreement.
 
 
 
 
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(f) On the Effective Date, each of the Insurers shall confirm in writing to the
WMI Entities and the D&O Claimants that each of the representations and
warranties set forth in Sections 4.2 and 4.4 of this Agreement are true and
correct as of the Effective Date.
 
Section 5.3. Covenants of WMILT.  WMILT hereby covenants and agrees as follows:
 
(a) WMILT shall take, all actions reasonably necessary to obtain, and shall take
no action to impede or preclude, the approval of this Agreement, including, but
not be limited to, filing on or prior to November 25, 2014, a motion for entry
of the Approval Order, authorizing and approving the compromise and settlement
set forth herein in accordance with Rule 9019 of Federal Rules of Bankruptcy
Procedure.
 
(b)WMILT shall not:  (i) file any additional claims, commence or prosecute any
pending or additional litigation, proceeding, action, or matter or seek to
recover damages or to seek equitable relief against any of the Non-Debtor
Releasees arising from or relating to the Insured Released Claims, Additional
Insured Released Claims, or the D&O Released Claims, or (ii) directly or
indirectly aid any Person in taking any act prohibited by clause (i) of this
Section 5.3(b); provided, however, that WMILT may take such actions as are
necessary to comply with applicable laws and rules, including Rev. Code Wash.
(ARCW) §4.16.170, and generally to assure that the D&O Litigation is neither
dismissed nor prejudiced pending the Effective Date.
 
(c) On the Effective Date, and without limiting the generality of the foregoing,
WMILT shall be deemed to have covenanted not to sue (i) the D&O Releasees with
respect to the D&O Released Claims, (ii) the Insurer Releasees with respect to
the Insured Released Claims, (iii) the Additional Insured Releasees with respect
to the Additional Insured Released Claims, and to be permanently barred and
enjoined from instituting, prosecuting, pursuing or litigating in any manner the
foregoing Released Claims against the foregoing Releasees.
 
(d) On the Effective Date, WMILT shall confirm in writing to the D&O Claimants
and the Insureds that each of the representations and warranties set forth in
Sections 4.3 and 4.4 of this Agreement are true and correct as of the Effective
Date.
 
ARTICLE VI
CLOSING AND TERMINATION
 
Section 6.1. Conditions to Effective Date.  Except with regard to the covenants
of the D&O Claimants set forth in Section 5.1 hereof, the covenants of the
Insureds set forth in Section 5.2 hereof and the covenants of WMILT set forth in
Section 5.3 hereof, the terms and provisions of this Agreement are expressly
subject to the following conditions unless waived, in writing, by the Parties:
 
(a) the execution and delivery of this Agreement by each of the entities
identified on the signature pages of this Agreement; and
 
 
 
 
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(b) the entry of the Approval Order by the Bankruptcy Court, and such Approval
Order becomes a Final Order; provided, however, that, upon notice to the
Contributing Insurers by WMILT, and with the consent of the Contributing
Insurers, the Final Order condition of this subsection 6.1(b) may be waived.
 
Section 6.2. Termination of Agreement.  This Agreement may be terminated by any
Party, at such Party’s sole option and discretion, in the event that (a) the
WMILT Trust Advisory Board shall have failed to approve this Agreement, (b) any
other Party hereto materially breaches any of the covenants set forth in Article
V hereof or any of its other undertakings in this Agreement, or (c) the Approval
Order is not entered by the Bankruptcy Court and the Effective Date does not
occur on or prior to January 15, 2015.
 
Section 6.3. Effect of Termination.  Except as otherwise provided herein, in the
event of the termination of this Agreement, this Agreement shall become null and
void and be deemed of no force and effect, with no liability on the part of any
Party hereto (or of any of its directors, officers, employees, consultants,
contractors, agents, legal and financial advisors or other representatives), and
no Party shall have any obligations to any other Party arising out of this
Agreement. Any payments made pursuant to Section 2.1(a) hereof shall be returned
in full to the payor within ten (10) days of termination of this
Agreement.  Upon termination, except for the purpose of recovery of any payments
made pursuant to Section 2.1(a) hereof or as otherwise provided herein, neither
this Agreement nor any terms or provisions set forth herein shall be admissible
in any dispute, litigation, proceeding or controversy among the Parties and
nothing contained herein shall constitute or be deemed to be an admission by any
Party as to any matter, it being understood that the statements and resolutions
reached herein were as a result of negotiations and compromises of the
respective positions of the Parties.  In addition, except for the purpose of
recovery of any payments made pursuant to Section 2.1(a) hereof or as otherwise
provided herein, no Party shall seek to take discovery concerning this Agreement
or admit this Agreement or any part of it into evidence against any other Party
hereto.
 

ARTICLE VII
MISCELLANEOUS
 
Section 7.1. Amendments.  This Agreement may not be modified, amended or
supplemented except by a written agreement executed by each Party to be
affected, or whose constituency may be affected, by such modification, amendment
or supplement.
 
Section 7.2. No Admission of Liability.
 
(a) The execution of this Agreement is not intended to be, nor shall it be
construed as, an admission or evidence in any pending or subsequent suit,
action, proceeding or dispute of any liability, wrongdoing, or obligation
whatsoever (including as to the merits of any claim or defense) by any Party to
any other Party or any other Person with respect to any of the matters addressed
in this Agreement.
 
 
 
 
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(b) None of this Agreement (including, without limitation, the Recitals and
Exhibits hereto), the settlement or any act performed or document executed
pursuant to or in furtherance of this Agreement or the settlement:  (i) is or
may be deemed to be or may be used as an admission or evidence of the validity
of any claim, or any allegation made in the Related Actions or of any wrongdoing
or liability of any Party; (ii) is or may be deemed to be or may be used as an
admission or evidence of any liability, fault or omission of any Party in any
civil, criminal or administrative proceeding in any court, administrative agency
or other tribunal; or (iii) is or may be deemed to be or used as an admission or
evidence against the Reorganized Debtors or the Debtors with respect to the
validity of any of the Released Claims.  None of this Agreement, the settlement,
or any act performed or document executed pursuant to or in furtherance of this
Agreement or the settlement shall be admissible in any proceeding for any
purposes, except to enforce the terms of the Agreement, and except that any
Party may file this Agreement in any action to effectuate the promises and
obligations set forth herein, including, but not limited to, in order to support
a defense or counterclaim based on the principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or reduction or any other
theory of claim preclusion or issue preclusion or similar defense of
counterclaim.
 
Section 7.3. Good Faith Negotiations.  The Parties recognize and acknowledge
that each of the Parties hereto is represented by counsel, and such Party
received independent legal advice with respect to the advisability of entering
into this Agreement.  Each of the Parties acknowledges that the negotiations
leading up to this Agreement were conducted regularly and at arm’s length; this
Agreement is made and executed by and of each Party’s own free will; that each
knows all of the relevant facts and his or its rights in connection therewith;
and that he or it has not been improperly influenced or induced to make this
settlement as a result of any act or action on the part of any party or
employee, agent, attorney or representative of any party to this Agreement. The
Parties further acknowledge that they entered into this Agreement because of
their desire to avoid the further expense and inconvenience of litigation and
other disputes, and to compromise permanently and settle the claims between the
Parties settled by the execution of this Agreement.
 
Section 7.4. Third Party Beneficiaries.  Nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon, or to give to, any
Person other than the Parties hereto, the Reorganized Debtors, the Releasees,
and their respective successors and assigns, any right, remedy or claim under or
by reason of this Agreement or any covenant, condition or stipulation thereof;
and the covenants, stipulations and agreements contained in this Agreement are
and shall be for the sole and exclusive benefit of the Parties hereto, the
Releasees and their respective successors and assigns.
 
Section 7.5.Governing Law; Retention of Jurisdiction; Service of Process.  This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware and applicable federal law.  By its execution and
delivery of this Agreement, each of WMILT, the D&O Claimants and the Insurers
hereby irrevocably and unconditionally agrees for itself that any legal action,
suit or proceeding between any or all of the foregoing with respect to any
matter under or arising out of or in
 
 
 
22

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connection with this Agreement or for recognition or enforcement of any judgment
rendered in any such action, suit or proceeding, shall be brought in the
Bankruptcy Court for that purpose only, and, by execution and delivery of this
Agreement, each hereby irrevocably accepts and submits itself to the
jurisdiction of such court, generally and unconditionally, with respect to any
such action, suit or proceeding, subject to a Party’s rights pursuant to
applicable law.  In the event any such action, suit or proceeding is commenced,
the Parties hereby agree and consent that service of process may be made, and
personal jurisdiction over any Party hereto in any such action, suit or
proceeding may be obtained, by service of a copy of the summons, complaint and
other pleadings required to commence such action, suit or proceeding upon the
Party at the address of such Party set forth in Section 7.10 hereof, unless
another address has been designated by such Party in a notice given to the other
Parties in accordance with Section 7.10 hereof.
 
Section 7.6. Headings.  The headings of the sections, paragraphs and subsections
of this Agreement are inserted for convenience only and are not part of this
Agreement and do not in any way limit or modify the terms or provisions of this
Agreement and shall not affect the interpretation hereof.
 
Section 7.7. Binding Agreement; Successors and Assigns; Joint and Several
Obligations.  This Agreement shall be binding only upon the execution and
delivery of this Agreement by the Parties listed on the signature pages hereto,
subject to Bankruptcy Court approval as to the Debtors.  This Agreement is
intended to, and shall be deemed to, bind and inure to the benefit of the
Parties and their respective successors, assigns, administrators, constituents
and representatives. The agreements, representations, covenants and obligations
of the Parties under this Agreement are several only and not joint in any
respect and none shall be responsible for the performance or breach of this
Agreement by another.
 
Section 7.8. Entire Agreement.  This Agreement (including the exhibits hereto)
and the Approval Order constitute the full and entire agreement among the
Parties with regard to the subject hereof, and supersedes all prior
negotiations, representations, promises or warranties (oral or otherwise) made
by any Party with respect to the subject matter hereof.  No Party has entered
into this Agreement in reliance on any other Party’s prior representation,
promise or warranty (oral or otherwise) except for those that may be expressly
set forth in this Agreement.
 
Section 7.9. Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original copy of this Agreement
and all of which, when taken together, shall constitute one and the same
Agreement. Copies of executed counterparts transmitted by telecopy or other
electronic transmission service shall be considered original executed
counterparts, provided receipt of copies of such counterparts is confirmed.
 
Section 7.10. Notices.  All demands, notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (i) when personally delivered by courier service or messenger, (ii)
upon actual receipt (as established by confirmation of receipt or otherwise)
during normal business hours, otherwise on the first business day thereafter if
transmitted electronically (by e-
 
 
 
23

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mail transmission), by facsimile or telecopier, with confirmation of receipt, or
(iii) three (3) Business Days after being duly deposited in the mail, by
certified or registered mail, postage prepaid-return receipt requested, to the
following addresses, or such other addresses as may be furnished hereafter by
notice in writing, to the following Parties:
 
If to the WMI Entities, to:
 
WMI Liquidating Trust.
1201 Third Avenue, Suite 3000
Seattle, Washington  98101
Attn:  Charles Edward Smith, General Counsel
Facsimile:  (206) 432-8879
Email:  chad.smith@wamuinc.net
 
with a copy given in like manner to:
 
Alvarez & Marsal LLP
100 Pine Street, Suite 900
San Francisco, California 94111
Attn:  William C. Kosturos
Facsimile:  (415) 837-1684
Email:  bkosturos@alvarezandmarsal.com
 
- and -
 
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn:  Brian S. Rosen, Esq.
Facsimile:  (212) 310-8007
Email:  brian.rosen@weil.com
 
If to the Outside Director Claimants, to:
 
Perkins Coie LLP
1201 Third Avenue
Suite 4800
Seattle, Washington 98101-3099
Attn:  Ronald L. Berenstain, Esq.
Telephone: (206) 359-8477
Facsimile:  (206) 359-9477
Email: rberenstain@perkinscoie.com

If to Killinger, to:
 
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
 
 
 
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--------------------------------------------------------------------------------

 
 
 
 
Attn: Jerome F. Birn, Jr., Esq.
Facsimile:  (650) 493-6811
Email: jbirn@wsgr.com
 
- and -
 
Monzack Mersky McLaughlin
      & Browder, P.A.
1201 N. Orange Street
Wilmington, DE 19801
Attn: Rachel B. Mersky, Esq.
Facsimile:  (302) 656-2769
Email: rmerksy@monlaw.com
If to Fishman, to:
 
Schulte, Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attn:  Howard O. Godnick, Esq.
Facsimile:  (212) 593-5955
Email: howard.godnick@srz.com

If to Bonderman, to:
 
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
Attn:  Mitchell A. Lowenthal, Esq.
Facsimile:  (212) 225-3999
Email: mlowenthal@cgsh.com

If to XL, to:
 
Wiley Rein LLP
1776 K Street NW
Washington, DC 20006
Attn:  Charles C. Lemley, Esq.
Facsimile:  (202) 719-7049
Email: clemley@wileyrein.com

If to National Union Fire Insurance Company of Pittsburgh, PA, to:
 
D’Amato & Lynch, LLP
2 World Financial Center
225 Liberty Street
New York, NY 10281

 
25

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

 

Attn:  Deborah Collins, Esq.
Facsimile: (212) 269-3559
Email: dcollins@damato-lynch.com

If to AXIS Insurance Company or AXIS Reinsurance Company, to:
 
BatesCarey LLP
191 N. Wacker Drive
Chicago, IL 60606
Attn: Ommid C. Farashahi, Esq.
Facsimile (312) 762-3200
Email: ofarashahi@batescarey.com

If to Continental Casualty Company or Columbia Casualty Company, to:
 
DLA Piper LLP (US)
1251 Avenue of the Americas
New York, NY 10020
Attn:  Stephen P. Davidson, Esq.
Facsimile: (212) 884-8456
Email: Stephen.davidson@dlapiper.com

If to Lloyds, to:
 
Sedgwick LLP
333 Bush Street, 30th Floor
San Francisco, CA 94104
Attn:  Eugene Elsbree, Esq.
Facsimile: (415) 781-2635
Email: Eugene.elsbree@sedgwicklaw.com

 
 
Section 7.11. Further Assurances.  Each of the Parties hereto agrees to execute
and deliver, or to cause to be executed and delivered, all such instruments, and
to take all such action as the other Parties may reasonably request in order to
effectuate the intent and purposes of, and to carry out the terms of, this
Agreement.
 
 
 
 
 

 
26

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date set forth above.
 
 
 

  WMI LIQUIDATING TRUST                   
 
By:
/s/  Charles Edward Smith       Name: Charles Edward Smith       Title: General
Counsel   

 

  TODD H. BAKER          
 
By:
   

 

  DAVID BONDERMAN          
 
By:
/s/  David Bonderman  

 

  ALFRED BROOKS          
 
By:
   

  STEPHEN I. CHAZEN          
 
By:
/s/  Stephen I. Chazen  

  ANNE V. FARRELL          
 
By:
/s/  Anne V. Farrell  

 

  ALAN H. FISHMAN          
 
By:
/s/  Howard Godwick,
Attorney for Alan H. Fishman
 

 
27

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

 

 

  STEPHEN E. FRANK          
 
By:
/s/  Stephen E. Frank  

  DEBORA D. HORVATH          
 
By:
   

 

  KERRY K. KILLLINGER          
 
By:
/s/  Kerry K. Killinger  

 
 

  THOMAS C. LEPPERT          
 
By:
/s/  Thomas C. Leppert  

 

  CHARLES M. LILLIS          
 
By:
/s/  Charles M. Lillis  

  PHILLIP D. MATTHEWS          
 
By:
/s/  Phillip D. Matthews  

 

  JOHN P. McMURRAY          
 
By:
   

 
 

 
MARGARET OSMER McQUADE
         
 
By:
/s/  Margaret Osmer McQuade  

 
 
28

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REGINA T. MONTOYA
         
 
By:
/s/  Regina T. Montoya  

 

 
MICHAEL K. MURPHY
         
 
By:
/s/  Michael K. Murphy  

 

 
MARY E. PUGH
         
 
By:
/s/  Mary E. Pugh  

 

 
WILLIAM G. REED, JR.
         
 
By:
/s/  William G. Reed, Jr.  

 

 
ORIN C. SMITH
         
 
By:
/s/  Orin C. Smith  

 

 
JAMES H. STEVER
         
 
By:
/s/  James H. Stever  

 

 
WILLIS B. WOOD, JR.
         
 
By:
/s/  Willis B. Wood, Jr.  

 

 
ACE AMERICAN INSURANCE
COMPANY
                 
 
By:
/s/  Sean Simpson       Name: Sean Simpson       Title: Sedgwick LLP, as
authorized to sign on behalf of ACE American Insurance Company  

 
 
 
 
29

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  ALLIED WORLD ASSURANCE COMPANY LTD.                  
 
By:
/s/  JaneE. Haylett        Name: JaneE. Haylett        Title: Vice
President Professional Loan Claims  

 
 

  ARCH INSURANCE GROUP                  
 
By:
/s/  Kim W. West       Name: Kim W. West        Title: Partner   

 
 

  AXIS INSURANCE COMPANY                  
 
By:
/s/  Timothy C. Vazquez       Name: Timothy C. Vazquez        Title: Assistant
Vice President - Claims   

 
 

  AXIS REINSURANCE COMPANY                  
 
By:
/s/  Timothy C. Vazquez        Name: Timothy C. Vazquez         Title: Assistant
Vice President - Claims    

 
 

 
AIG CLAIMS, INC., AS AUTHORIZED
REPRESENTATIVE OF CHARTIS
PROPERTY CASUALTY COMPANY
                 
 
By:
/s/  Maureen Conboy       Name: Maureen Conboy       Title: Assistant Vice
President   

 
 
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  COLUMBIA CASUALTY COMPANY                  
 
By:
/s/  David Philips       Name: David Philips       Title: Senior Claim Counsel  

 
 

 
CONTINENTAL CASUALTY
COMPANY
                 
 
By:
/s/  David Philips       Name: David Philips        Title: Senior Claim Counsel 
 

 
 

  HOUSTON CASUALTY COMPANY                  
 
By:
/s/  Evelyn Williams       Name: Evelyn Williams        Title: Authorized
Representative   

 
 

 
AIG CLAIMS, INC., AS AUTHORIZED
REPRESENTATIVE OF NATIONAL
UNION FIRE INSURANCE COMPANY
OF PITTSBURGH, PA
                 
 
By:
/s/  Maureen Conboy       Name: Maureen Conboy        Title: Assistant Vice
President    

 
 

  RSUI INDEMNITY COMPANY                  
 
By:
/s/  Scott Fahy        Name: Scott Fahy        Title: Assistant Vice President
- RSUI Group, Inc.   

 
 
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  SCOTTSDALE INDEMNITY COMPANY                  
 
By:
/s/  John D. Briggs       Name: John D. Briggs        Title: Assistant General
Counsel   

 
 

 
THOSE CERTAIN UNDERWRITERS AT
LLOYD’S, LONDON AND LONDON
COMPANIES, SUBSCRIBING TO
POLICY NUMBER 509QA01550707
                 
 
By:
/s/  Eugene  V. Elsbree       Name: Eugene  V. Elsbree       Title: Authorized
Representative   

 
 

 
THOSE CERTAIN UNDERWRITERS AT
LLOYD’S, LONDON, SUBSCRIBING TO
POLICY NUMBER B0509QA027908
                 
 
By:
/s/  Sean Simpson        Name: Sean Simpson        Title: Sedgwick LLP, as
authorized to sign on behalf of those certain underwriters at Lloyd's London,
subscribing to Policy No. B0509QAO27908  

 
 

 
XL SPECIALTY INSURANCE
COMPANY
                 
 
By:
/s/  Michael P.Morabito       Name: Michael P.Morabito        Title: Vice
President, Claims   

 
32

 
 

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Execution Copy

EXHIBIT B

The following are relevant excerpts of the Seventh Amended Plan, a complete copy
of which can be found at http://www.kccllc.net/wamu.

 
“41.6 Releases by Holders of Claims. (a) Global Third Party Releases. On the
Effective Date, for good and valuable consideration, and to the fullest extent
permissible under applicable law, each Entity (Creditor or holder of an Equity
Interest) that (i) has held, currently holds or may hold a Released Claim or any
Released Third Party Causes of Action, (ii) is entitled to receive, directly or
indirectly, a distribution or satisfaction of its Claim or Equity Interest
pursuant to the Plan, and (iii) elects, by not checking or checking the
appropriate box on its Ballot or election form, as the case may be, to grant the
releases set forth in this Section 41.6, on their own behalf and on behalf of
anyone claiming through them, shall be deemed to have and hereby does
irrevocably and unconditionally, fully, finally and forever waive, release,
acquit and discharge (1) each and all of the Released Parties, from any and all
Released Claims and/or any claim, act, fact, transaction, occurrence, statement,
or omission in connection with or alleged in the Actions or in the Texas
Litigation, or that could have been alleged in respect of the foregoing or other
similar proceeding, including, without limitation, any such claim demand, right,
liability, or cause of action for indemnification, contribution or any other
basis in law or equity for damages, costs or fees incurred by the releasors
herein arising directly or indirectly from or otherwise relating thereto and (2)
each of (a) the AAOC Releasees, (b) the Senior Notes Claims Releasees, (c) the
Senior Subordinated Notes Claims Releasees, (d) the PIERS Claims Releasees and
(e) the CCB Releasees from any and all Released Third Party Causes of Action;
provided, however, that each Entity that has elected not to grant the releases
set forth in this Section 41.6, including, without limitation, any Entity that
fails to execute and deliver a release following notice in accordance  with the
provisions of Section 31.6(c) hereof, shall not be entitled to, and shall not
receive, any payment, distribution or other satisfaction of its claim pursuant
to the Plan; and, provided, further, that, notwithstanding anything contained in
this Section 41.6(a) to the contrary, the release set forth in Section
41.6(a)(1) shall not extend to acts of gross negligence or willful misconduct of
any Released Parties (other than with respect to the JPMC Entities and their
respective Related Persons); and, provided, further, that, notwithstanding the
foregoing, solely for purposes of this Section 41.6(a), “Released Parties” shall
not include Related Persons other than (i) Related Persons of the JPMC Entities
and (ii) Related Persons of the FDIC Receiver and FDIC Corporate.”
 
“41.7 Injunction Related to Releases. As of the Effective Date, all Entities
that hold, have held, or may hold a Released Claim, an Estate Claim, any
Released Third Party Causes of Action or an Equity Interest that is released
pursuant to Sections
 
41.5 and 41.6 of the Plan, are, and shall be, permanently, forever and
completely stayed, restrained, prohibited, barred and enjoined from taking any
of the following actions, whether directly or indirectly, derivatively or
otherwise, on account of or based on the subject matter of such discharged
Released Claims, Estate Claim, Released Third Party Causes of Action or such
Equity Interests: (i) commencing, conducting or continuing in any manner,
directly or indirectly, any suit, action or other proceeding (including, without
limitation, any judicial, arbitral, administrative or other proceeding) in any
forum;  (ii) enforcing, attaching (including, without limitation, any
prejudgment attachment), collecting, or in any way seeking to recover any
judgment, award, decree, or other order; (iii) creating, perfecting or in any
way enforcing in any matter, directly or indirectly, any Lien; (iv) setting off,
seeking reimbursement or contributions from, or subrogation against, or
otherwise recouping in any manner, directly or indirectly, any amount against
any liability or obligation owed to any Entity released under Sections 41.5 and
41.6 hereof; and (v) commencing or continuing in any manner, in any place of any
judicial, arbitration or administrative proceeding in any forum, that does not
comply with or is inconsistent with the provisions of the Plan or the
Confirmation Order.”
 
“41.8 Exculpation.  The Debtors, the Debtors’ officers and directors serving
during the period from the Petition Date up to and including the Effective Date,
the Creditors’ Committee and each of its members in their capacity as members of
the Creditors’ Committee, the Equity Committee and each of its members in their
capacity as members of the Equity Committee, and each of their respective
professionals shall not have or incur any liability to any Entity for any act
taken or omitted to be taken in connection with the Chapter 11 Cases (including
any actions taken by the Creditors’ Committee after the Effective Date), the
formulation, preparation, dissemination, implementation, confirmation or
approval of the Plan or any compromises or settlements contained therein, the
Disclosure Statement and the Supplemental Disclosure Statement related thereto,
the Global  Settlement  Agreement, or any contract, instrument, release or
other  agreement or document provided for or contemplated in connection with the
consummation of the transactions set forth in the Plan and the Global Settlement
Agreement; provided, however, that the foregoing provisions of this Section
41.8, shall not affect the liability of any Entity that otherwise would result
from any such act or omission to the extent that such act or omission is
determined in a Final Order to have constituted gross negligence or willful
misconduct.  Nothing in the foregoing Section 41.8 shall prejudice the right of
any of the Debtors, the Debtors’ officers and directors serving during the
period from the Petition Date up to and including the Effective Date, the
Creditors’ Committee and each of its members in their capacity as members of the
Creditors’ Committee, the Equity Committee and each of its members in their
capacity as members of the Equity Committee, and each professionals to assert
reliance upon advice of counsel as a defense with respect to their duties and
responsibilities under the Plan.”