SETTLEMENT AND RELEASE AGREEMENT 

This Settlement and Release Agreement ( 11Agreement") is made as of this 13th day of 

December, 2011, by, between and among the following undersigned parties: 

Plaintiff, the Federal Deposit Insurance Corporation, as Receiver of Washington Mutual 

Bank, Henderson, Nevada, and the Federal Deposit Insurance Corporation, in its corporate 

capacity (collectively, the "FDIC"), on the one hand, and Defendants Kerry Kil1inger 

("Killinger"), Stephen Rotella ("Rotella"), David Schneider ("Schneider"), Linda Killinger and 

Esther Rotella, on the other hand (collectively, "Defendants"). Individually, the FDIC and 

Defendants may be referred to herein as a "Party," and, collectively, as the "Parties." 

RECITALS 

WHEREAS: 

Before September 25, 2008, Washington Mutual Bank ( 11Bank11 ) was a depository 

institution; 

On September 25, 2008, the Bank was closed by the Office of Thrift Supervision and the 

FDIC was appointed receiver (the "Receiver Date''). In accordance with 12 U.S.C. § 182l(d), 

the FDIC. as receiver, succeeded to all rights, titles, powers and privileges of the Bank, including 

those with respect to its assets; 

Among the assets to which the FDIC, as receiver, succeeded were any and all of the 

Bank's claims, demands and causes of actions against its former directors, officers and 

employees arising from the pertonnance, nonperformance and manner of performance of their 

respective functions, duties and acts as directors and/or officers of the Bank; 

On March 16, 2011, the FDIC filed a complaint for money damages against Defendants, 

three of whom had served as directors and/or officers of the Bank. 'n1ose claims for damages are 

now pending in the United States District Court for the Western District of Washington (the 

"District Court") in The Federal Deposit Insurance Corporation, as Receiver of Washington 

Mutual Bank v. Killinger et al., Docket No. 2:11-cv-00459-MJP (the "Litigation"). Defendants 

have denied liability in the Litigation; 
(b)(4) ... 

(b)( 4.). 

(b)(4) ... 

(b)( 4.). 

(b)(4) 

(b)(4) ..... 

(b)(4) 

Defendants have sought coverage for the Litigation under one or more of the following 

insurance policies: 

PolicyKo;l · t \\-ith an aggregate limit of $25,000,000, issued by XL 

Specialty Insurance Company ("XL"); 

HH PolicyH~o:l ·· I, with an aggregate limit of $25,000,000, issued by Federal 

Insurance Company ("Federal"); 

PolicyJ\'o,l ·· t, with an aggregate limit of SlO,OOO,OOO, issued by Twin 

City Fire Insurance Company ("Twin City"); 

HH .Po-licy~o;l I, with an aggregate limit of $5,000,000, issued by Continental 

Casualty Company ("Continental Casualty"); 

H Policyl\'o,-ru\NI-H t, with an aggregate limit of $10,000,000, issued by 

AXIS Reinsurl:lllce Company ("AXIS"); and 

........... Policy:)Io.,--L:-1--····-· """":"""--~(, with an aggregate limit of $25,000,000, issued by Those 

Certain Underwriters at Lloyd's, London Severally Subscribed To Excess Liability 

HPolicy).lo,lH·H· I (''Lloyd's"). 

(collectively, these policies shall be referred to as the "Insurance Policies" and the insurers listed 

above shall be referred to as the "Insurers"); 

The Parties, through their respective counsel, have engaged in extensive ann's length 

negotiations that included numerous in-person and telephonic mediation sessions over the course 

of many months with an experienced mediator, Retired United States District Judge Layn R. 

Phillips ("Judge Phillips"), as well as extensive additional direct settlement discussions and 

negotiations among the Parties and with the Insurers; 

The Parties deem it in their best interests to enter into this Agreement to avoid the 

uncertainty, distraction and expense of further litigation; and 

The Insurers consent and agree to the terms of this Agreement. 

NOW, THEREFORE, in consideration of the promises, undertakings, payments and 

releases stated herein, the sufficiency of which consideration is hereby acknowledged, the 

undersigned Parties agree, each with the other, as follows: 

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SECTION 1: Payment to F.DIC 

A. As an essential covenant and condition to this Agreement, (i) the Insurers will pay 

to the FDIC Thirty-)J"ine Million Five Hundred Seventy-Five Thousand Dollars ($39,575,000) 

(the "Insurance Payment"); (ii) Killinger will pay to the FDIC Two Hundred and Seventy-Five 

Thousand Dollars ($275,000) (the "Killinger Cash Payment"); (iii) Rotella will pay to the FDIC 

One Hundred Thousand Dollars ($1 00,000) (the ''Rotella Cash Payment"); arid (iv) Schneider 

will pay to the FDIC Fifty Thousand Dollars ($50,000) (the "Schneider Cash Payment"), for a 

total of $40 million in cash payments to the FDIC (in aggregate, the "Defendant Payments"). 

B. The Insurance Payment described in Section LA. above and any interest earned 

thereon will be paid out of the Escrow AccoWlt (as defined below) to the FDIC, or, if there is no 

Escrow Account, then the Insurance Payment will be paid directly to the FDIC by check or wire 

transfer, within ten (10) business days after the later of (i) the Insurer Order (as defined in 

Section IV below) has been entered and becomes final and non-appealable, (ii) the judgment of 

dismissal with prejudice in the Litigation becomes final and non-appealable, and (iii) the 

Insurers' receipt of wire information from the FDIC and an executed Form W-9. 

C. The Killinger Cash Payment, the Rotella Cash Payment and the Schneider Cash 

Payment described in Section I.A above shall each be paid within ten ( 1 0) business days after the 

judgment of dismissal with prejudice in the Litigation becomes final and non-appealable, and 

such payments shall each be made in immediately available funds by wire transfer to an account 

designated by the FDIC. 

D. Without waiving any other rights that the FDIC may have, in the event that 

(a) any portion of the Defendant Payments has not been received by the FDIC on or before the 

date it is due under the tenns of this Agreement, (b) the FDIC provides notice of such nonpayment to the appropriate representative(s) of the defaulting Party(ics), and copies such notice 

to all other Parties, in accordance with Section VIII.P. below, and (c) the defaulting Party or 

Parties fai]s to cure the payment deficiency within seven (7) business days, then the FDIC (i) 

shall have 60 days thereafter to declare this Agreement null and void as to all Parties, (ii) shall 

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have the right to extend the payment due dates under this Agreement for any period of time until 

it receives all required payments, and/or (iii) shall have the right to enforce this Agreement 

against the Party or Parties failing to deliver his, her or its respective portion of the Defendant 

Payments, in which event the non-delivering Party or Parties agree to jurisdiction in the District 

Court to enforce the terms of this Agreement. Any decision by the FDIC to extend the time 

period for payments under subsection (ii) herein or to enforce the Agreement under subsection 

(iii) herein shall not operate to extend the time within which the FDIC may declare the 

Agreement null and void under subsection (i) herein. Any decision by the FDIC to extend the 

payment due dates under this Agreement or to accept a portion of the settlement funds shall not 

prejudice its rights to enforce the terms of this Agreement or to declare this Agreement null and 

void in accordance with subsection (i) herein by providing written notice of such action to all 

Defendants; provided, however, that in the event the FDIC declares this Agreement null and 

void, the FDIC will immediately return aU amounts previously paid to it under this Agreement to 

the Patties and/or to the Insurers which made such payments. In the event that the Insurance 

Payment is made to an Escrow Account, and the 60-day period in subsection (i) has not expired, 

the Insurance Payment will not be paid to the FDIC under Section I.B. of this Agreement until 

the FDIC either (a) confirms receipt of the Killinger Cash Payment, the Rotella Cash Payment 

and the Schneider Cash Payment or (b) notifies all Parties that it does not intend to enforce its 

right to terminate this Agreement pursuant to subsection (i) herein based on any non-payment of 

the Killinger Cash Payment, the Rotella Cash Payment or the Schneider Cash Payment; 

provided, however, that, in the event the FDIC so notifies the Parties, the FDIC nonetheless 

retains its right to void this Agreement until it receives the Insurance Payment from the Escrow 

Account. 

E. In addition to the Killinger Cash Payment described in Section I.A. above, 

Killinger will also pay to the FDIC a cash amount calculated as follows: 100% of the amount of 

any and all payments actually received by Killinger, if any, net of any applicable taxes (including 

federal, state, social security and Medicare), from the Washington ~utual, Inc. ("W\11") 

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bankruptcy estate in connection with his claims under WMI's ETRIP retirement plan (such claim 

Bankruptcy Claims do not include Killinger's indemnity claims set forth in Proof of Claim No. 

~~~(4).?(9.11. OH 0 

F. In addition to the Rotella Cash Payment described in Section I.A. above, Rotella 

will also pay to the FDIC a cash amount calculated as follows: 100% of the amount of any and 

all payments actually received by Rotella, if any, net of any applicable taxes (including federal, 

state, social security and Medicare), from WYll's bankruptcy estate as set forth and described 

more fully in Exhibit B to Rotella's Proof of Claim "\lo.l · ·· Hksuch·claim{~~(4.),(b) 

~~~( 4 )~(9.) in the amount ofl I plus interest) ("Rotella's Bankruptcy Claim"). Rotella's 

Bankruptcy Claim does not include Rotella's retirement benefit or indemnity claims set forth in 

~~~( {l:>) ProofofClaimNos:l··· I 

G. In addition to the Schneider Cash Payment described in Section I.A. above, 

Schneider will also pay to the FDIC a cash amount calculated as follows: 100% of the amount of 

any and all payments actually received by Schneider, if any, net of any applicable taxes 

(including federal, state, social security and Medicare), from WMI's bankruptcy estate based 

upon (i) Schneider's Change in Control Agreement (such claim in the amount of~l:>)(4.),(b) 

plus interest) and (ii) Schneider's bonus claim (such claim in the amount orl ~J(4),(b) 

interest), as set forth and described more fully in Proof of Claim N ol {~!(4), (b l 

("Schneider's Bankruptcy Claims," and, together with Killinger's Bankruptcy Claims and 

Rotella's Bankruptcy Claim, the "Bankruptcy Claims"). Schneider's Bankruptcy Claims do not 

include Schneider's retirement benefit or indemnity claims set forth in Proof of Claim KoG·~~~(4.J,(b) 

H. For purposes of Sections I.E., l.F. and I.G. above, "net of any applicable taxes" 

shall mean that Killinger, Rotella and Schneider will deduct from their respective payments to 

the FDIC such amounts that each actually pays in taxes resulting from his receipt of his 

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respective Bankruptcy Claims. Killinger, Rotella and Schneider will provide the FDIC with 

relevant supporting documentation reasonably requested by the FDIC related to the 

determination of the taxes owed, and will confer with the FDIC in connection with such 

determination. The final determination of the taxes owed shall be made by Killinger, Rotella and 

Schneider in their respective sole discretion; provided, however, that the FDIC reserves the right 

to challenge the amount of the deduction from their payments to the FDIC on the basis that such 

deductions are unreasonable in light of the applicable tax laws. Any such dispute shall be fully 

and finally decided by Judge Phillips in accordance with the dispute resolution procedure set 

forth in Section VITT.E. below. 

I. Defendants' additional payments to the FDIC under Sections I.E., I.F. and I.G. 

above shall be due within thirty (30) days of receipt of their respective payments from the 

Debtors' (as defined below) bankruptcy estate, and shall be made in immediately available funds 

by wire transfer to an account designated by the FDIC. For purposes of this Agreement, 

"Debtors" is defined as: WMJ and WYII Investment Corp., as debtors and debtors in possession, 

in In re Washington Mutual, inc., et al., Case 1\o. 08-12229, United States Bankruptcy Court, 

District of Delaware (the "Bankruptcy Court"). 

SECTION II: Stipulation and Dismissal 

A. Upon execution of this Agreement by each of the undersigned Parties and the 

entry of the Insurer Order (as defined in Section IV below), the Parties shall promptly file a joint 

stipulation to dismiss the Litigation with prejudice, with each Party to bear his, her or its own 

costs. 

B. In connection with seeking dismissal with prejudice of the Litigation, the FDIC 

will support Defendants' pursuit of a final judgment from the District Court that shall contain: 

(i) a bar order in a form satisfactory to Defendants and the FDIC, which shall, to the fullest 

extent permitted by federal and state law, permanently and forever bar any claims for 

contribution or indemnity against any Defendant by any other person or entity arising out of or 

relating to the facts and circumstances of the Litigation or the matters released herein by the 

6 
FDIC ("District Court Bar Order"); and (ii) a finding consistent with RCW 4.22.060 that this 

settlement was fair and reasonable, the product of arm's length negotiations, and not the result of 

collusion ("Fairness Finding"). The Parties agree that this Agreement is not contingent upon the 

entry by the District Court of a final judgment containing the District Court Bar Order specified 

in clause (i) of the preceding sentence. If the District Court does not enter a final judgment 

containing the Fairness Finding in clause (ii) of the first sentence of this Section II.B., the Parties 

agree to submit the failure of this condition and its effect upon the settlement to Judge Phillips 

for binding resolution in accordance with the dispute resolution procedure set forth in Section 

VIlLE. below. The Parties also agree to request that Judge Phillips submit a declaration in 

support of the proposed Fairness Finding in the final judgment. 

C. If Defendants are unable to secure the District Court Bar Order contemplated by 

Section II.B. above, the FDIC agrees that if (i) the FDIC asserts a claim against any person or 

entity other than Defendants ("Third-Party Defendant"), (ii) the FDIC obtains a judgment or 

settlement against such Third-Party Defendant that was not reduced on the basis of comparative 

fault, apportionment of liability or set-off ("FDIC Judgment or Settlement"), and (iii) such ThirdParty Defendant asserts a claim for contribution against any Defendant with respect to the 

amount of the FDIC Judgment or Settlement, then the FDIC will either obtain a release from 

such Third-Party Defendant, or take such other action with respect to the FDIC Judgment or 

Settlement as may be required to ensure that such Defendant pays nothing as contribution for the 

FDIC Judgment or Settlement. 

SECTION III: Releases 

A. FDIC's Release of Defendants. Effective upon receipt in full of the Defendant 

Payments plus any accrued interest, if applicable, or upon the FDIC's decision that it does not 

intend to enforce its right to terminate this Agreement based upon any non-payment of the 

Defendant Payments as set forth in Section J.D., and except as provided in Section JII.B. below, 

the FDIC, in all capacities, including its corporate capacity, will release all claims, kno\\11 or 

unknown, against Defendants, the Insured Releasees (as defined below) and the Insurers with 

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respect to the specified D&O policies listed in this Agreement: (i) arising out of or relating to 

Defendants' or the Insured Releasees' conduct as officers, directors, trustees, comptrollers, 

governors or employees of the Bank or WMI or any of its current or former subsidiaries, 

(ii) alleged in the Litigation, and/or (iii) that otherv.~se belong to the FDIC in its capacity as 

receiver for the Bank under FIRREA, 12 U.S.C. §1821 et seq. The FDIC will not pursue any 

administrative enforcement proceedings seeking removal, prohibition, civil money penalties or 

restitution, or take any other actions seeking relief against Defendants arising out of or relating to 

their conduct as officers, directors, trustees, comptrollers, governors or employees ofthe Bank or 

WMI or any of its current or former subsidiaries. "Insured Releasees" is defined as: Defendants 

or any past, present or future officer, director, trustee, comptroller, governor or employee of 

WY11 or any of its current or fanner subsidiaries, or any of their lawful spouses or domestic 

partners. 

B. FDIC's Express Reservations From Releases. ~otwithstanding any other 

provision of this Agreement or otherwise, the FDIC does not release, and expressly preserves 

fully and to the same extent as if this Agreement had not been executed, any claims or causes of 

action: 

1. against Defendants or the Insured Releasees for liability incurred, if any, 

as the maker, endorser or guarantor of any promissory note or indebtedness payable or owed by 

them to the FDIC, the Bank or any other person or entity, including, without limitation, any 

claims acquired by FDIC as successor in interest to the Bank or any person or entity other than 

the Bank; and 

2. against any person, other than Defendants, currently listed under 

paragraphs B and C of Exhibit BB to that certain Second Amended and Restated Settlement 

Agreement, dated as of February 7, 2011, between, among others, WMI and the FDIC, and any 

amendments thereto (the "Global Settlement Agreement"); and 

3. for administrative enforcement proceedings seeking removal, prohibition 

or any other administrative enforcement action which may arise by operation of law, rule or 

8 
regulation against any person other than Defendants; and 

4. involving any rights the FDIC may have based upon any validly issued 

subpoena; and 

5. against any person, other than Defendants, who is currently a party in an 

existing lawsuit in which the FDIC is also a party; and 

6. for cross- or counter-claims against any person or entity in a suit or claim 

brought against the FDIC by such person in the future; and 

7. any claims asserting a breach of this Agreement. 

C. Defendants' Release of FDIC. Effective simultaneously with the release granted 

in Section liLA. above, Defendants, on behalf of themselves individually, and their respective 

heirs, executors, administrators, agents, representatives, successors and assigns, release and 

discharge the FDIC in all of its capacities, and its employees, officers, directors, representatives, 

successors and assigns, from any and all claims, demands, obligations, damages, actions and 

causes of action, direct or indirect, known or unknown, in law or in equity; provided, however, 

that Defendants shall not release any claims asserting a breach of this Agreement. 

D. Defendants' and Insurers' Release of Indemnification and Subrogation Claims 

Against WMI. Effective simultaneously with the release granted in Section III.A. above, 

Defendants release all claims they have or may have against the WMI bankruptcy estate for 

indemnification of attorneys' fees, costs and settlement payments made by Defendants, or on 

their behalf, in connection with their defense and settlement of the FDIC's investigation of 

Defendants or the Litigation. Effective simultaneously with the release granted in Section liLA. 

above, the Insurers release their subrogation rights against the WMI bankruptcy estate with 

respect to defense fees, costs and settlement payments made on behalf of Defendants in 

connection with the defense and settlement of the FDIC's investigation of Defendants and the 

Litigation. Defendants and the Insurers also covenant not to file any claim or lawsuit that arises 

out of or relates to their defense and settlement of the FDIC's investigation of Defendants or the 

Litigation or that may implicate the judgment or settlement reduction terms in Section 3.6 of the 

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Global Settlement Agreement. 

E. No Release to WMI for Defendants' Bankruptcy Claims or Under Global 

Settlement Agreement. This Agreement is not intended to and will not operate to release WMI 

with respect to its obligations to pay any bankruptcy claim by Killinger, Rotella or Schneider or 

any ob1igations due to the FDIC pursuant to the Global Settlement Agreement. 

F. No Release of Other Government Agencies. Notwithstanding any other 

provision, this Agreement does not waive any claims or actions that could be brought by any 

agency or instrumenta1ity of the United States government other than the FDIC. 

G. Express Reservation of Rights of Bond Carrier. Nothing in this Agreement shall 

release or prejudice the rights of any underwriter of any financial institution bond, fidelity bond, 

or banker's blanket bond on which the Bank is an insured, to bring any claims by way of 

subrogation to the claims of the FDIC, against (a) any directors, officers or employees of the 

Bank, including, but not limited to, Killinger, Rotella and Schneider, in their capacity as 

directors, officers or employees of the Bank or in any other capacity, or (b) any other individual 

or entity for dishonest or fraudulent conduct that directly caused any losses to the Bank. Nothing 

herein shall be construed to admit the existence of, or to establish, any claim or cause of action 

on the part of any financial institution bond carrier or any other bond underwriter by way of 

subrogation to claims of the FDIC that would not exist had this Agreement not been executed. 

SECTION IV: Bankruptcy Court Orders 

To the extent not previously done by the time this Agreement is executed, the Parties will 

move promptly for an order from the Bankruptcy Court authorizing the Insurers to pay the 

Insurance Payment into an interest bearing escrow account ("Escrow Account") in accordance 

with the provisions of this Agreement ("Interim Order)'). The Interim Order will contain, in 

substantially the same or materially equivalent language and form, the following: 

ORDERED that the automatic stay, extant pursuant to section 362 of the Bankruptcy 

Code, to the extent applicable, is hereby modified so as to permit, and the Insurers are 

hereby authorized, to the extent necessary, to pay the Insurance Payment into an interest 

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bearing escrow account (the "Escrow Account") from which escrow fees will be 

deducted; and, 

ORDERED that the Escrow Account will remain in eflect until the first of the following 

occurs: ( 1) this Court issues a final and non·appealable Order discharging the Insurers 

from liability to Insured Releasees or other claimants for having paid the Insurance 

Payment and the District Court has entered a judgment of dismissal with prejudice in the 

Litigation that has become final and non-appealable; (2) thirty (30) days after this Court 

denies a request to discharge the Insurers from any liability to any Insured Releasees or 

other claimants as required by the Insurer Order as defined below; or (3) upon entry of an 

order by this Court refusing to allow the settlement to go forward for any reason other 

than subparagraph (2) above. 

The Insurers will pay the Insurance Payment into the Escrow Account within ten ( 1 0) 

business days after the ]ater of (1) the entry of the Interim Order, (2) the execution of an escrow 

agreement, mutually agreeable to the FDIC and the Insurers, and (3) the Insurers' receipt of wire 

information from the FDIC and an executed Fonn W-9 (the "Escrow Agreement"). The FDIC 

will have the right to consent to the Insurers' selection of an Escrow Account agent, such consent 

not to be unreasonably withheld. The Escrow Agreement also will provide that any accrued 

interest will be for the benef-it of the FDIC unless the escrowed funds are returned to the Insurers 

pursuant to the terms of this Agreement or the Escrow Agreement, as applicable. Any escrow 

fees are to be paid out of the Insurance Payment and any accrued interest thereon. To the extent 

the settlement is not finalized and the amount returned from the Escrow Account to the Insurers 

is less than the Insurance Payment, the shortfaJI wilJ be deemed "Loss" under the terms of the 

Directors' and Officers' Insurance Policies. 

If the Bankruptcy Court refuses to enter the Interim Order for any reason, then the 

Insurers agree that the Insurance Payment will not be committed to, or paid on behalf of, any 

other insured until the first of the following occurs: (I) thirty (30) days after the Bankruptcy 

Court denies a request to discharge the Insurers from any liability to any Insured Releasees or 

other claimants as required by the Insurer Order (as defined below); or (2) upon entry of an order 

by the Bankruptcy Court refusing to allow the settlement to go forward for any reason other than 

as provided in clause ( 1) of this paragraph. 

Within five (5) business days after the execution of this Agreement, the Parties and/or 

11 
Debtors will seek an order from the Bankruptcy Court allowing the settlement to go forward and 

which authorizes the Insurers to make the Insurance Payment and specifically provides that, on 

and effective as of the order, the Insurers will be deemed discharged from any liability to any 

Insured Releasees or other claimants for having paid the Insurance Payment (the "Insurer 

Order"). Specifically, the Insurer Order will contain, in substantially the same or materially 

equivalent language and form, the following provisions: 

ORDERED that the automatic stay, extant pursuant to section 362 of the Bankruptcy 

Code, to the extent applicable, is hereby modified so as to permit, and the Insurers are 

hereby authorized, to the extent necessary, to pay the Insurance Payment [if applicable: 

from the Escrow Account with all earned interest] to the FDIC in accordance with the 

terms of the Settlement Agreement; and 

ORDERED that, on and effective as of the date of the payment by the Insurers of the 

Insurance Payment [(f applicable: into the Escrow Account], the Insurers will be deemed 

discharged from any liability to all Insured Releasees (as defined by the Settlement 

Agreement) or other claimants for having paid the Insurance Payment. 

Defendants, the FDIC and the Insurers will support and take all reasonable actions that 

may be required to obtain the Interim Order and the Insurer Order. If the Bankruptcy Court 

denies a motion to enter the Insurer Order, or has neither denied nor entered the Insurer Order by 

February 24, 2012, the Parties and the Insurers agree to submit to non·binding mediation before 

Judge Phillips within thirty (30) days thereafter to address whether any additional efforts should 

be undertaken to obtain and/or modify the Insurer Order and whether modifications should be 

made to this Agreement. If the Bankruptcy Court does not ultimately enter the Jnsurer Order and 

it does not become final and non·appealable, this Agreement shall become null and void, except 

for any provisions related to the return of the Insurance Payment. In the event this Agreement 

becomes null and void and if the Insurance Payment has been made into the Escrow AccoWit, the 

escrow agent will return the Insurance Payment, together with any interest earned thereon, less 

any fees and costs of the escrow agent, to the Insurers in accordance with written instructions to 

be provided to the escrow agent. 

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SECTION V: Defendants' Pursuit of Bankruptcy Claims 

A. Killinger, Rotella and Schneider will take all reasonable actions to pursue their 

respective Bankruptcy Claims described in Sections I.E., I.F. and I.G. above in order to collect 

the full amount to which they are lawfully entitled. Killinger, Rotella and Schneider will, upon 

request by the FDIC, promptly provide to the FDIC all relevant, non-privileged information and 

documents regarding their Bankruptcy Claims. Killinger, Rotella and Schneider may not 

compromise, impair, reduce, offset or settle their respective Bankruptcy Claims without the 

express written consent of the FDlC, such consent not to be unreasonably withheld. If any 

dispute arises about whether Killinger, Rotella or Schneider or the FDIC have complied with the 

provisions of this Section V, the Parties agree to resolve any such disputes before U.S. District 

Judge Phillips in accordance with the dispute resolution procedure set forth in Section VIlLE. 

below. In resolving any such dispute, Judge Phil1ips shall consider whether Killinger, Rotella 

and Schneider would incur an undue burden in their additional expenditure of fees and costs and 

whether such additional expenditures would be cost-effective given the probable monetary 

recovery on their claims; provided, however, that in making any such determination, no weight 

shal1 be given to whether it would be advantageous for Killinger, Rotella and Schneider to settle 

or offset any portion of their Bankruptcy Claims to gain an advantage for themselves in 

connection with their defense or prosecution of any other claim, or to eliminate any amounts they 

may owe to others. A breach of this provision shall not affect the validity and enforceability of 

this Agreement or the releases provided herein. Nothing in this Agreement shall be interpreted 

to mean that Killinger, Rotella or Schneider are guaranteeing any outcome (i.e., the FDIC 

assumes all risks of an unsuccessful outcome) or be interpreted to require Killinger, Rotella or 

Schneider to appeal any adverse verdict in the Bankruptcy Court. 

B. Rotella shall bear the costs of the prosecution of Rotella's Bankruptcy Claim; 

provided, however, that if Rotella actually receives from WMI's bankruptcy estate more than 

$3,819,127 with respect to the Bankruptcy Claims (prior to the deduction of any applicable 

taxes), then Rotella may deduct from the cash amount payable to the FDIC as a result of such 

l3 
recovery Rotella's reasonable attorneys' fees and costs expended directly in connection with the 

prosecution ofRotella's Bankruptcy Claim (and not expended in defense of any claim(s) brought 

by W:MI or other parties against Rotella or the prosecution of any other claim(s)), provided that, 

in such circumstance: 

(1) the amount payable to the FDIC will be at least $3,819,127, less any 

applicable taxes (including federal, state, social security and Medicare); and 

(2) the FDIC shall have the opportunity to review the attorneys' fees and costs 

for reasonableness, with any disputes as to reasonableness submitted to 

Judge Phillips for binding resolution in accordance with the dispute 

resolution procedure set forth in Section VIlLE. below. 

C. Schneider shall bear the costs of the prosecution of Schneider's Bankruptcy 

Claims; provided, however, that if Schneider actually receives from WMI's bankruptcy estate 

more than $1,631,562 with respect to the Bankruptcy Claims (prior to the deduction of any 

applicable taxes), then Schneider may deduct from the cash amount payable to the FDIC as a 

result of such recovery Schneider's reasonable attorneys' fees and costs expended directly in 

connection with the prosecution of Schneider's Bankruptcy Claims (and not expended in defense 

of any claim(s) brought by WMI or other parties against Schneider or the prosecution of any 

other claim(s)), provided that, in such circumstance: 

(1) the amount payable to the FDIC will be at least $1,631,562, less any 

applicable taxes (including federal, state, social security and :Medicare); and 

(2) the FDIC shall have the opportunity to review the attorneys' fees and costs 

for reasonableness, with any disputes as to reasonableness submitted to 

Judge Phillips for binding resolution in accordance with the dispute 

resolution procedure set forth in Section VIII. E. below. 

SECTION VI: FDIC's Motion to Intervene and Dismiss 

If any other person or entity files an action or asserts a claim against Defendants or any 

Insured Releasee that involves or relates to their conduct as officers, directors, trustees, 

14 
comptrollers, governors or employees of the Bank or any of its current or former subsidiaries, or 

as the lawful spouses or domestic partners of any of the foregoing, and such claim belongs 

exclusively to the FDIC as receiver for the Bank under FIRREA, 12 U.S.C. § 1821 et seq. or 

other applicable state or federal law (including any action or claim asserted by WMI, any person 

or entity acting on behalf of WMI, the Official Committee of Unsecured Creditors or the Official 

Committee of Equity Holders), then the FDIC will move to intervene and dismiss such action or 

claim. The FDIC shall have the sole discretion to prosecute any appeal from an order denying 

the FDIC's motion to intervene or dismiss; provided, however, that nothing in this Section shall 

preclude any Defendants from seeking an appeal of any order denying the FDIC's motion to 

intervene or dismiss if the FDIC elects not to pursue an appeal. 

SECTIO'K VII: Allocation of Settlement Proceeds 

The proceeds of the above settlement shall be allocated by the FDIC among the losses 

that the Bank incurred on its single family residential mortgage loan portfolios involving 

HELOC, Option ARM and Subprimc loans originated or acquired by the Bank between 

September 25, 2005 and September 25, 2008, which loans were held by the Bank at the Receiver 

Date, on a pro rata basis based upon the amount of loss, if any, associated with each such loan. 

The allocation shall have no effect on any of the releases provided tor under Section III of this 

Agreement and shall not be construed to limit those releases in any way. 

SECTION VIII: Representations, Acknowledgements and Miscellaneous Provisions 

A. ~o Admission of Liability. The undersigned Parties each acknowledge and agree 

that this Agreement and all negotiations, discussions and proceedings in connection with this 

settlement shall not be deemed or constitute an admission by Defendants of fault, liability or 

\\TOngdoing as to any facts or claims alleged or asserted in the Litigation or in any other actions 

or proceedings, and shall not be received in evidence or otherwise used by any person in the 

Litigation, or in any other action or proceeding for any purpose, except in connection with a 

proceeding to enforce this Agreement. 

B. Execution in Counterparts. This Agreement may be executed in counterparts by 

15 
one or more of the Parties named herein and all such counterparts when so executed shall 

together constitute the final Agreement, as if one document had been signed by all Parties hereto; 

and each such counterpart, upon execution and delivery, shall be deemed a complete original, 

binding the Party or Parties subscribed thereto upon the execution by all Parties to this 

Agreement. Signed signature pages may be delivered by facsimile, e-mail or pdf transmission, 

which will constitute complete delivery without the necessity of delivery of originally signed 

signature pages. 

C. Binding Effect. Each of the undersigned represents and warrants that they are a 

Party hereto or arc authorized to sign this Agreement on behalf of the respective Party, and that 

they have the full power and authority to bind such Party to each and every provision of this 

Agreement. This Agreement shall be binding upon and inure to the benefit of the undersigned 

Parties and their respective heirs, executors, administrators, representatives, successors and 

assigns. However, if this Agreement does not become effective or is voided for any of the 

reasons set forth in this Agreement, then the Parties will revert to their respective litigation 

positions as if this Agreement never existed. 

D. Tolling of Limitations in the Event of Dismissal. In the event (i) the Court 

dismisses the Litigation subject to reinstatement prior to the completion of any contingencies to 

final settlement or (ii) after any dismissal of the Litigation, this Agreement does not become 

effective or is voided for any of the reasons set forth in this Agreement, the Parties agree that any 

applicable statutes of limitations will be tolled from the date of the filing of the FDIC's March 

16, 2011, Complaint in the Litigation through the date of any re-filing of the FDIC's Complaint 

or reinstatement of the Litigation. 

E. Dispute Resolution. Where this Agreement provides that particular disputes be 

submitted to Judge Phillips for resolution, such disputes shall be resolved first by way of nonbinding expedited telephonic mediation and, if unsuccessful, then by way of final, binding, 

nonappealable resolution by Judge Phillips. If Judge Phillips is unable to fulfill his obligations 

under this Section, the parties shall mutually select another person or persons in his place. The 

16 
costs for such dispute resolution will be split evenly among the Parties and/or Insurers involved 

in the dispute. 

F. Choice of Law. This Agreement shall be interpreted, construed and enforced 

according to applicable Federal laws and the laws of the State of Washington without regard to 

its internal choice-of-law rules. 

G. Entire Agreement and Amendments. This Agreement constitutes the entire 

agreement and understanding between and among the undersigned Parties concerning the matters 

set forth herein and supersedes and preempts any prior agreements and understandings 

concerning the subject matter hereof. This Agreement may not be amended or modified except 

by another written instrument signed by the Party or Parties to be bound thereby. 

H. No Construction Against Drafter. This Agreement shall not be construed more 

strictly against one Party than another merely by virtue of the fact that it, or any part of it, may 

have been prepared by counsel for one of the Parties, it being recognized that this Agreement is 

the result of arm's length negotiations among the Parties, and all Parties have contributed 

substantially and materially to the preparation of this Agreement. 

I. Specific Representations. Warranties and Disclaimers. The Parties expressly 

acknowledge that, in determining to settle the claims released herein, the FDIC has reasonably 

and justifiably relied upon the accuracy of financial information in the financial statement and 

affidavit forms submitted by Killinger, Rotella, and Schneider. If, in their financial statement 

and affidavit forms submitted to the FDIC, Killinger, Rotella, or Schneider has failed to disclose 

any asset or group of related assets with a value in excess of $25,000 owned by Killinger, 

Rotella, or Schneider, respectively, and not otherwise disclosed to the FDIC prior to the 

execution of this Agreement, such asset or group of related assets will be forfeited to the FDIC; 

provided, however, that any such nondisclosure of an asset or group of related assets to the FDIC 

shal1 not have been the result of inadvertent error. 

J. Reasonable Cooperation. 

The undersigned Parties and the Insurers agree to cooperate in good faith to 

17 
effectuate all the terms and conditions of this Agreement, including doing, or causing their 

agents and attorneys to do, whatever is reasonably necessary to effectuate the signing, delivery, 

execution, tiling, recording and entry of any documents necessary to conclude the Litigation and 

to otherwise perform the terms of this Agreement. 

K. Consent of Insurers. Within three (3) business days after this Agreement is 

executed by all of the Parties, each of the Insurers will execute and deliver a signed writing in the 

form attached hereto as Exhibit A; otherwise, this Agreement may be deemed null and void by 

any Party hereto. Such consent may be electronically delivered. 

L. Press Release. The Parties will use their best efforts to reach agreement on both 

the content and timing of any press releases. Any press releases issued or other statements made 

to the press concerning this settlement shall contain no disparaging statements. 

M. No Confidentiality. The Parties acknowledge and agree that this Agreement is a 

public document that will need to be disclosed pursuant to applicable laws and regulations. 

N. Advice of Counsel. Each Party hereby acknowledges that it has consulted with 

and obtained the advice of counsel prior to executing this Agreement, and that this Agreement 

has been explained to that Party by his or her counsel. 

0. Construction. The descriptive headings of this Agreement are for convenience 

only and shall not affect the construction or interpretation of this Agreement. 

P. Notices. If any Party is required to give notice to another Party under this 

Agreement, such notice shall be (i) delivered personally, (ii) sent by Federal Express (or another 

recognized overnight or two-day courier) requesting next or second business day delivery, (iii) 

sent by facsimile, or (iv) sent by United States certified or registered mail, postage prepaid, 

return receipt requested. Any such notice shall be deemed given when (i) so delivered 

personally, (ii) if sent by express courier, one or two business days (as the case may be) 

following delivery to the courier, (iii) on the date sent by facsimile, with confirmation of 

transmission, if sent during normal business hours of the recipient, or, if not, then on the next 

business day, or (iv) if sent by certified or registered mail, three business days after the date of 

18 
deposit in the Cnited States mail to the respective address of the Party as set forth below, with 

copies sent to the persons indicated below: 

If to the FDIC: 

If to Defendants Kerry 

and Linda Killinger: 

If to Defendants Stephen 

and Esther Rotella and 

David Schneider: 

Barry S. Rosen 

Reed Smith LLP 

10 S. Wacker Dr., 401h Floor 

Chicago, IL 60606 

Telephone: (312) 207-6483 

Facsimile: (312) 207-6400 

Leonard J. DePasquale 

Supervisory Counsel 

Federal Deposit Insurance Corporation 

3501 North Fairfax Drive, VS-B-7058 

Arlington, VA 22226 

Telephone: (703) 562-2063 

Jerome F. Birn, Jr. . 

Wilson Sonsini Goodrich & Rosati 

650 Page \Ifill Road 

Palo Alto, California 94304 

Telephone: (650) 493-9300 

Facsimile: (650) 493-6811 

Barry R. Ostrager 

Simpson Thacher & Bartlett LLP 

425 Lexington Avenue 

New York, New York 10017-3954 

Telephone: (212) 455-3093 

Facsimile: (212) 455-2502 

or to such other address as the recipient party has specified by prior written notice to the sending 

party (or in the case of counsel, to such other readily ascertainable business address as such 

counsel may hereafter maintain). If more than one method for sending notice as set fonh above 

is used, the earliest notice date established as set forth above shall control. 

THE RE~AI~DER OF THIS PAGE HAS I~TE~TIO~ALLY BEEN LEFT BLA~K 

19 
r.--1 WIDJESS WHEREOF, the Parties hereto have caused this Agreement to be executed 

by each of them or their duly authorized representatives on the dates hereinafter subscribed. 

Date: December_, 2011 

Date: December_, 2011 

Date: December_, 2011 

FEDERAL DEPOSIT INSURANCE CORPORA T!ON 

as Receiver for Washington Mutual Bank 

PRINT NAME: Leonard J. DePasquale 

FEDERAL DEPOSIT NSURANCE CORPORA TlON 

PRTI\T ~AME: Leonard J. DePasquale 

BY: KERRY KILLINGER 

PRINT NAME: 

BY: STEPHEN ROTELLA 

PRINT KAME: 

BY: DAVID SCHNEIDER 

PRP.\T NAME: 

20 
IN WITNESS WHEREOF, the Panics hereto have caused this Agreement to be executed 

by each of them or their duly authorii:ed representatives on the dates hereinafter subscribed. 

FEDERAL DEPOSIT INSURANCE CORPORATlO]'I 

as Receiver for Washington Mutual Bank 

Date: December _. 20 11 BY: 

Date: December_, 20 11 

Date: December 1.3 2011 

Date: December _, 20 II 

Date: December _, 20 II 

TITLE: Supervisory Counsel, FDIC 

PRINT NAME: Leonard 1. DePasquale 

.FEDERAL DEPOSIT INSURANCE CORPORATION 

BY: 

TITLE: Supervisory Counsel, FDIC 

PRINT NAME: Leonard 1. DePasquale 

········································· ·····································-

BY: KERRY K/LLINGER ~ 

PRINT NAME: J< ~r r 1 K i // ,· fl 6 (:'R_ 

BY: STEPHEN ROTELLA 

PRINT NAME: 

BY: DA VTD SCHNEIDER 

PRINT NAME: 

20 
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed 

by each of them or their duly authorized representatives on the dates hereinafter subscribed. 

FEDERAL DEPOSIT INSURANCE CORPORATION 

as Receiver for Washington Mutual Bank 

Date: December_, 2011 BY: -----·-----

TITLE: Supervisory Counsel, FDIC 

PRINT NAME: Leonard J. DePasquale 

FEDERAL DEPOSIT INSURANCE CORPORATION 

Date: December _, 201 1 BY: ---------

TITLE: Supervisory Counsel, FDIC 

PRINT NAME: Leonard J. DePasquale 

Date: December-' 2011 

BY: KERRY KILLINGER 

(b)( 6) ...................................................... ...................................... ..... .... I .. ......................... .._ __ ..,......_ ...... _ ....... _ ....... _ ........ _ ....... _ ....... _ ........ ______ ----1 

Date: December 13, 2011 _ 

D 

BY: STEPHEN ROTELLA 

Date: December 13, 2011 

BY: DAVID SCHNEIDER 

?0 
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed 

by each of them or their duly authorized representatives on the dates hereinafter subscribed. 

Date: December _, 20 II 

Date: Decem her_, 2011 

Date: December_, 2011 

Date: December 13, 2011 

Date: December 13,2011 

FEDERAL DEPOSIT INSURANCE CORPORATION 

as Receiver for Washington Mutual Bank 

BY: ----------------------

TITLE: Supervisory Counsel, FDIC 

PRINT NAME: Leonard J. DePasquale 

FEDERAL DEPOSIT INSURANCE CORPORATION 

BY: ----------------------

TITLE: Supervisory CounseL FDIC 

PRINT NAME: Leonard J. DePasquale 

BY: KERRY KILLINGER 

BY: STEPHEN ROTELLA 

BY: DA VJD SC EIDER 

20 
(b)(6_)______ ~ ___ j __ Date: December\_, 2011 I 

Date: Dece::mber _ , 20 11 

~--------------------~ BY: LINDA KILLINGER 

..¥\Ui.~ PRINT NAME: 

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

BY: ESTHER ROTELLA 

PRfNTNAME 

21 
Date: December _, 2011 

BY: LINDA KILLINGER 

(b )(6) .................................... 

Date: December 13, 2011 

BY: ESTHER ROTELLA 

)I 
Exhibit A 

In connection with the Settlement and Release Agreement (the "Agreement") executed on 

December_, 2011 by the Federal Deposit Insurance Corporation, as Receiver for Washington 

Mutual Bank, Henderson, Nevada, and the Federal Deposit Insurance Corporation, in its 

corporate capacity (collectively, the "FDIC"), on the one part, and Kerry Killinger, Stephen 

Rotella, David Schneider, Linda Killinger, and Esther Rotella (the "Insured Defendants"), on the 

other part, the Insured Defendants have sought coverage under one or more of the follovving 

insurance policies: 

(b)( 4) • Policy No;J t, with an aggregate limit of S25,000,000, issued by XL 

Specialty Insurance Company ("XL"); 

(b)( 4).. • .. Policy~o.l···· I, with an aggregate limit of S25,000,000, issued by Federal 

Insurance Company ("Federal"); 

(b)(4) ... • Policyl\!o;l····· · I, with an aggregate limit of $10,000,000, issued by Twin 

City Fire Insurance Company ("Twin City"); 

(b)( 4) .................•. Policy~o·;l· L with an aggregate limit of $5,000,000, issued by Continental 

Casualty Company ("Continental Casualty11 ); 

(b)( 4) • Policy ...No..l- - · ·· I, with an aggregate limit of S I 0,000,000, issued by 

AXIS Reinsurance Company ("AXIS"); 

(b)( 4) ............• PolicyNo:f····· I, with an aggregate limit of $25,000,000, issued by Those 

Certain Cnderwriters at Lloyd's, London Severally Subscribed To Excess Liability 

(b)( 4) .. Policyl'ol· F ("Lloyd's"). 

(XL, Federal, Twin City, Continental Casualty, AXIS, and Lloyd's are collectively the 

"Insurers"). Capitalized terms used herein but not otherwise defined shall have the meanings 

ascribed to such terms in the Agreement. 

The Insurers have reviewed the Agreement and consent to the Insured Defendants entering into 

the settlement on the terms stated in the Agreement, including, without limitation, the provisions 

of Section III.D. concerning the insurers' release of subrogation rights. 

The Insurers hereby agree that the Insurance Payment will not be committed to, or paid on behalf 

· ot: any other insured, except in accordance with the specific terms and conditions set forth in the 

Agreement. 

[Signature Page Follows.] 

22 
(b)(6) ..... 

IN WITNESS WHEREOF, the FDIC and the undersigned Insurers, themselves or through their 

duly authorized representatives, have caused this Exhibit A to the Agreement to be executed as 

of the dates indicated below: 

For the Insurers: 

XL Specialty Insurance Company 

By: --------------------------- Name: 

Position: 

Date: 

Twin City Fire Insurance Company 

By: ______________________ __ 

Name: 

Position: 

Date: 

Continental Casualty Company 

By:--------··--· ... -- - . ·--- Name: 

Position: 

Date: 

For the FDIC: 

Chubb & Son, a Division oC:Federal 

Insurance Company 

By: __ 

Name: 

Position: 

Date: 

AXIS Reinsurance Company 

By:-· .-------- --------- Name: 

Position: 

Date: 

Lloyd's Underwriters and Companies 

By: ____ --------- Name: 

Position: 

Date: 

p, A~~IL 

'5up¢rl/l~oP-y ~I.J"'''St.l- 1 ~DIC... 

12~1'-4-11 

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