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Exhibit 4.5  

 
 

AGREEMENT CONCERNING
  LITIGATION TRACKING WARRANTSTM
  AND REPLACEMENT WARRANT AGENT    
  

        This Agreement Concerning Litigation Tracking WarrantsTM and Replacement Warrant Agent (the "Agreement") dated as of January 4, 2002 is made by
and among Washington Mutual, Inc. ("Washington Mutual"), EquiServe Limited Partnership, and EquiServe Trust Company, N.A. (collectively, "EquiServe"), and Mellon Investor Services LLC, a New
Jersey limited liability company ("Mellon") in connection with the merger (the "Merger") of Dime Bancorp, Inc. ("Dime") with and into Washington Mutual pursuant to an Agreement and Plan of
Merger (the "Merger Agreement") by and between Dime and Washington Mutual) dated as of June 25, 2001. 

        WHEREAS,
EquiServe Limited Partnership, EquiServe Trust Company, N.A. and Dime are party to a Warrant Agreement (the "Warrant Agreement") dated as of December 21, 2000, pursuant
to which EquiServe serves as the Warrant Agent. 

        WHEREAS,
the Merger will constitute a Combination. 

        WHEREAS,
the separate corporate existence of Dime will cease upon the effective time of the Merger and as a result of the Merger Washington Mutual will become Dime's Successor Company. 

        WHEREAS,
Section 4.2 of the Warrant Agreement sets forth the rights of the Holders of Dime's Litigation Tracking WarrantsTM in the event of a Combination. 

        WHEREAS,
the parties to this Agreement desire that at the effective time of the Merger (the "Effective Time") Mellon shall replace EquiServe as the Warrant Agent. 

        THEREFORE,
for good and valuable consideration, the parties agree as follows: 

	1.
	Capitalized
terms used but not defined herein shall have the same meanings herein as in the Warrant Agreement.

	2.
	In
satisfaction of Section 4.2(d) of the Warrant Agreement, and subject to the completion of the Merger, Washington Mutual hereby (i) confirms the rights of the Holders
pursuant to Section 4.2 of the Warrant Agreement, including without limitation Section 4.2(b) thereof, and (ii) agrees to make adjustments as nearly equivalent as may be
practicable to the adjustments provided for in Article IV of the Warrant Agreement.

	3.
	Effective
as of the Effective Time, (i) EquiServe resigns as the Warrant Agent and (ii) Washington Mutual, as successor to Dime, appoints Mellon as the Warrant Agent.
Washington Mutual and EquiServe each waives any and all notices that may be required to be delivered to it by the other pursuant to Section 5.6 of the Warrant Agreement with respect to the
resignation of EquiServe as Warrant Agent and the appointment of Mellon as the replacement Warrant Agent.

	4.
	Effective
as of the Effective Time, Mellon (i) consents to its appointment as the Warrant Agent and (ii) acknowledges and agrees that it is vested with the same powers,
rights, duties and responsibilities of the Warrant Agent under the Warrant Agreement as if it had been originally named as Warrant Agent without further act or deed as contemplated by
Section 5.6 of the Warrant Agreement.

	5.
	Notwithstanding
anything contained herein, the Warrant Agreement shall remain in full force and effect. 

1

 

	6.
	This
Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and the executed counterparts taken together shall be deemed to
be one originally executed document.

	7.
	This
Agreement shall be governed and construed in accordance with the laws of the State of New York, without regard to any applicable conflicts of law. 

[REMAINDER OF PAGE INTENTIONALLY BLANK] 

2

 

        IN
WITNESS WHEREOF, each of Washington Mutual, EquiServe Limited Partnership, EquiServe Trust Company, N.A. and Mellon has caused this Agreement to be executed by their respective
officers hereunto duly authorized as of the date first above written. 

	 WASHINGTON MUTUAL, INC.	 	 
	 	 	 	 	 
	 	 	 	 	 
	By:	 	/s/  FAY L. CHAPMAN      
 Name:  Fay L. Chapman

Title:    Senior Executive Vice President	 	 
	 	 	 	 	 
	 	 	 	 	 
	

MELLON INVESTOR SERVICES LLC	
 	

 
	 	 	 	 	 
	 	 	 	 	 
	By:	 	/s/  U. JULIE ROH      
 Name:  U. Julie Roh

Title:    Assistant Vice President	 	 
	 	 	 	 	 
	 	 	 	 	 
	

EQUISERVE TRUST COMPANY, N.A.	
 	

 
	 	 	 	 	 
	 	 	 	 	 
	By:	 	/s/  KATHERINE ANDERSON      
 Name:  Katherine Anderson

Title:    Managing Director	 	 
	 	 	 	 	 
	 	 	 	 	 
	

EQUISERVE LIMITED PARTNERSHIP	
 	

 
	 	 	 	 	 
	 	 	 	 	 
	By:	 	/s/  KATHERINE ANDERSON      
 Name:  Katherine Anderson

Title:    Managing Director	 	 

3

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AGREEMENT CONCERNING LITIGATION TRACKING WARRANTSTM AND REPLACEMENT WARRANT AGENTQuickLinks
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Exhibit 10.6.2  

 
 

WASHINGTON MUTUAL, INC.    
    
    SECOND AMENDMENT TO
  1994 STOCK OPTION PLAN
  AMENDED AND RESTATED AS OF FEBRUARY 15, 2000    
  

Article 6
of the Washington Mutual 1994 Stock Option Plan, Amended and Restated as of February 15, 2000, is hereby amended by adding a new section at the end thereof to read as
follows, effective April 17, 2001: 

        6.6  Deferral of Stock Option Gain.    The Committee may authorize, in its discretion, a Participant who exercises a
Nonqualified Option to defer the taxable income attributable to such exercise. To the extent the Committee elects to permit such deferrals, the Committee shall identify the Participants to whom such
deferral elections shall be made available and establish administrative procedures under this Plan or another Company plan for implementing such deferrals. A Participant who makes a deferral under
this Section 6.6 may also be credited with deemed dividends under this Plan on such terms as the Committee shall prescribe. All deferrals and any deemed dividends under this Section 6.6
shall be distributed to Participants in the form of Stock. 

        IN
WITNESS WHEREOF, Washington Mutual, Inc. has caused this Second Amendment to be duly executed on the 17th day of April, 2001. 

	 	 	WASHINGTON MUTUAL, INC.
	

 	
 	

By: /s/ Daryl D. David

Its: Executive Vice President

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WASHINGTON MUTUAL, INC. SECOND AMENDMENT TO 1994 STOCK OPTION PLAN AMENDED AND RESTATED AS OF FEBRUARY 15, 2000WASHINGTON MUTUAL EQUITY INCENTIVE PLAN

 

As Amended and Restated as of
January 16, 2001

 

 

TABLE OF CONTENTS

 

ARTICLE 1.  PURPOSE OF THE PLAN

 

ARTICLE 2. 
DEFINITIONS

	
  2.1

  	
  Affiliate

  	
   

  
	
  2.2

  	
  Agreement

  	
   

  
	
  2.3

  	
  Award

  	
   

  
	
  2.4

  	
  Board

  	
   

  
	
  2.5

  	
  Code

  	
   

  
	
  2.6

  	
  Committee

  	
   

  
	
  2.7

  	
  Company

  	
   

  
	
  2.8

  	
  Exchange Act

  	
   

  
	
  2.9

  	
  Grant Date

  	
   

  
	
  2.10

  	
  Participant

  	
   

  
	
  2.11

  	
  Plan

  	
   

  
	
  2.12

  	
  Restricted Stock

  	
   

  
	
  2.13

  	
  Stock

  	
   

  
	
  2.14

  	
  Stock Units

  	
   

  
	
  2.15

  	
  Unrestricted Stock

  	
   

  
	
   

  	
   

  
	
  ARTICLE 3.  ADMINISTRATION

  	
   

  
	
  3.1

  	
  Administration
  of Plan

  	
   

  
	
  3.2

  	
  Authority
  to Grant Awards

  	
   

  
	
  3.3

  	
  Participants’
  Accounts

  	
   

  
	
  3.4

  	
  Transfer of
  Unrestricted Stock

  	
   

  
	
  3.5

  	
  Discretionary
  Authority of Committee

  	
   

  
	
  3.6

  	
  Persons Subject
  to Section 162(m)

  	
   

  
	
  3.7

  	
  Shareholder Rights

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  4.  ELIGIBILITY AND LIMITATIONS ON
  GRANTS

  	
   

  
	
  4.1

  	
  Participation

  	
   

  
	
  4.2

  	
  Limitations on Grants

  	
   

  
	
   

  	
   

  
	
  ARTICLE 5.  STOCK SUBJECT TO PLAN

  	
   

  
	
  5.1

  	
  Maximum
  Number of Shares

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  6.  RESTRICTIONS AND FORFEITURES

  	
   

  
	
  6.1

  	
  General
  Restrictions

  	
   

  
	
  6.2

  	
  Termination of Employment

  	
   

  
	
  6.3

  	
  Retirement

  	
   

  
	
  6.4

  	
  Lapse of Restrictions –
  General

  	
   

  

 

i

 

	
  6.5

  	
  Employee
  Status

  	
   

  
	
  6.6

  	
  Performance-Based
  Grants

  	
   

  
	
  6.7

  	
  Surrender of Restricted
  Stock

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  7.  ADJUSTMENT UPON CORPORATE CHANGES

  	
   

  
	
  7.1

  	
  Adjustments to Shares

  	
   

  
	
  7.2

  	
  Substitution
  of Awards on Merger or Acquisition

  	
   

  
	
  7.3

  	
  Effect of Certain
  Transactions

  	
   

  
	
  7.4

  	
  No Preemptive Rights

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  8.  COMPLIANCE WITH LAW AND APPROVAL
  OF REGULATORY BODIES

  	
   

  
	
  8.1

  	
  General

  	
   

  
	
  8.2

  	
  Representations by
  Participants

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  9.  TAXES

  	
   

  
	
  9.1

  	
  Immediate Taxation

  	
   

  
	
  9.2

  	
  Deferred Taxation

  	
   

  
	
   

  	
   

  
	
  ARTICLE 10.  GENERAL PROVISIONS

  	
   

  
	
  10.1

  	
  Effect on Employment

  	
   

  
	
  10.2

  	
  Unfunded Plan

  	
   

  
	
  10.3

  	
  Rules of Construction

  	
   

  
	
  10.4

  	
  Governing Law

  	
   

  
	
  10.5

  	
  Compliance
  With Section 16 of the Exchange Act

  	
   

  
	
  10.6

  	
  Amendment

  	
   

  
	
  10.7

  	
  Effective Date of Plan

  	
   

  

 

ii

 

WASHINGTON MUTUAL EQUITY INCENTIVE PLAN

 

As Amended and Restated as of January 16, 2001

 

ARTICLE
1.  PURPOSE OF THE PLAN

 

The purpose of the Plan is to
advance the interests of the Company, to provide a performance incentive and to
align the interests of the Participants with the interests of the Company, its
Affiliates and its shareholders through increased stock ownership by the
Participants.  It is intended that
Participants may acquire or increase their proprietary interests in the Company
and that Participant employees will be encouraged to remain in the employ of
the Company or of its Affiliates.

 

The Plan was established
January 1, 1986 as the WM Financial, Inc. Restricted Stock Plan.  Washington Mutual Savings Bank, the prior
Plan sponsor, amended the Plan by a First Amendment, effective as of July 1,
1987, a Second Amendment, effective as of March 31, 1988, a Third
Amendment, effective as of June 30, 1991, a Fourth Amendment, effective as
of June 18, 1991, and a Fifth Amendment, effective as of October 20,
1992.

 

By action of the respective
boards of directors of Washington Mutual Savings Bank and the Company, the
Company became the sponsor of the Plan, effective November 29, 1994, after
which the Company adopted an amendment and restatement of the Plan, effective
November 29, 1994, that incorporated all material provisions of the Plan
prior to such date and amended the Plan in certain respects.

 

The Company amended and
restated the Plan, effective February 18, 1997, and amended the Amended and
Restated Plan twice in 1999.  The
Company amended and restated the Plan effective January 18, 2000.  Finally, the Plan was amended by action of
the Board of Directors on January 16, 2001, subject to approval by the
shareholders of the Company.

 

The Board approved this
restatement of the Plan to incorporate all such amendments.

 

ARTICLE
2.  DEFINITIONS

 

2.1           Affiliate.  A “parent corporation,” as defined in
section 424(e) of the Code, or “subsidiary corporation,” as defined in
section 424(f) of the Code, of the Company.

 

2.2           Agreement.  A written agreement (including any amendment
or supplement thereto) between the Company or an Affiliate and a Participant
specifying the terms and conditions of an Award granted to such Participant.

 

2.3           Award.  An award under the Plan that is expressed as
a stated number of whole shares of Restricted Stock or denominated in Stock
Units.  An Award shall be subject to the
terms of an Agreement.

 

2.4           Board.  The board of directors of the Company.

 

 

2.5           Code.  The Internal Revenue Code of 1986, as
amended.

 

2.6           Committee.  A committee composed of two or more members
of the Board who are not officers or employees of the Company or an Affiliate,
who are otherwise qualified as Non-Employee Directors as defined under
Rule 16b-3(b)(3)(i) of the Exchange Act, and who qualify as outside
directors as defined in Section 162(m) of the Code.

 

2.7           Company.  Washington Mutual, Inc., successor to
Washington Mutual Savings Bank as Plan sponsor, and its successors.

 

2.8           Exchange
Act.  The Securities Exchange
Act of 1934, as amended.

 

2.9           Grant
Date.  The date that an Award is
granted to a Participant hereunder.

 

2.10         Participant.  A person who is granted an Award
hereunder.  Members of the Board, and
employees, consultants and advisors of the Company or of an Affiliate, are the
only persons who are eligible to be Participants.

 

2.11         Plan.  The Washington Mutual Equity Incentive Plan,
as embodied herein and as amended from time to time, and including all
predecessor versions of the Plan.

 

2.12         Restricted Stock.  Stock that is awarded subject to restrictions hereunder and has
not become Unrestricted Stock in accordance with Article 6.

 

2.13                           Stock.  The common stock of the Company.

 

2.14         Stock
Units.  An Award denominated in
units of Stock that have not vested in accordance with the terms of the Award.

 

2.15         Unrestricted Stock.  Shares of Stock granted under the Plan that are no longer subject
to restrictions that constitute a substantial risk of forfeiture, in accordance
with Article 6, or shares of Stock paid in respect of the vesting of an
Award of Stock Units.

 

ARTICLE
3.  ADMINISTRATION

 

3.1           Administration of Plan.  The Plan shall be administered by the
Committee.  The express grant in the
Plan of any specific power to the Committee shall not be construed as limiting
any power or authority of the Committee. 
Any decision made or action taken by the Committee to administer the
Plan shall be final and conclusive.  No
member of the Committee shall be liable for any act done in good faith with
respect to the Plan or any Agreement or Award. 
The Company shall bear all expenses of Plan administration.

 

3.2           Authority to Grant Awards.  The Committee shall have authority to grant
Awards upon such terms as the Committee deems appropriate and that are not
inconsistent with the provisions of Articles 4 and 5 of the Plan.  Such terms may include restrictions on the
transfer of all or any portion of the Stock or Stock Units granted under an
Award.

 

2

 

3.3           Participants’ Accounts.  The Committee shall establish and maintain
adequate records to disclose the names of the Participants and their respective
Awards, the restrictions thereon, the stock certificates related thereto, any
dividends or distributions payable or paid thereon, any votes taken with
respect thereto, and such other matters as may be relevant to the proper
administration of the Plan.

 

(a)           Dividends and Distributions.  All cash dividends and other cash
distributions paid in respect of an Award shall be credited to the account of
the Participant and invested in Stock or Stock Units pursuant to the terms of
the Company’s general dividend reinvestment program for shareholders of the
Company.  All such amounts and their
proceeds shall be subject to the same restrictions on the same basis as the
underlying Restricted Stock or Stock Units and shall be treated as Restricted
Stock or Stock Units for all purposes under the Plan.

 

(b)           Forfeitures.  Upon the occurrence of a forfeiture
hereunder, all shares of Restricted Stock or Stock Units subject to an Award
(including any Restricted Stock or Stock Units purchased with dividends paid on
the underlying Restricted Stock or Stock Units) shall be retained by the
Company or cancelled, as appropriate.

 

3.4           Transfer of Unrestricted Stock.  The Company shall generally transfer
Unrestricted Stock to the Participant at an administratively feasible time
after the lapse of restrictions hereunder on an Award of Restricted Stock or
the vesting of an Award of Stock Units. 
Any fractional shares of Unrestricted Stock shall be paid to the
Participant in cash.

 

(a)           Termination of Employment.  Upon the termination of employment for any
reason of a Participant who is an employee of the Company or an Affiliate
(including upon the Participant’s death), or upon such a Participant’s
retirement or permanent and total disability, the Company shall deliver to the
Participant (or his personal representative) all Unrestricted Stock held for
his account.

 

(b)           Death of Participant.  Each Participant shall have the right, at
any time, to designate any person or persons as his beneficiary or
beneficiaries (both principal as well as contingent) to whom all amounts that
are otherwise due hereunder after termination of employment shall be paid upon
his death.  Each beneficiary designation
shall become effective only when filed in writing with the Committee during the
Participant’s lifetime on a form acceptable to the Committee.

 

(1)           If the Participant is married as of
the date of filing a beneficiary designation and names a principal beneficiary
other than his spouse, such designation shall not be effective unless the
spouse consents to the beneficiary designation in writing, witnessed by a
notary public.

 

(2)           The filing of a new beneficiary
designation form as provided herein shall cancel all beneficiary designations
previously filed.  Any finalized divorce
or marriage (other than a common law marriage) of a Participant subsequent to
the date of filing a beneficiary designation form, which divorce or marriage is

 

3

 

communicated to
the Committee in writing, shall revoke any prior designation.  As used herein “divorce” includes a
dissolution of a marriage or an annulment of a marriage.

 

(3)           If all designated beneficiaries
predecease a Participant or die prior to complete distribution, the Committee
shall make distributions to the Participant’s personal representative or
executor.  If a Participant fails to
designate a beneficiary as provided above, the Committee shall make
distributions to the Participant’s personal representative or executor.

 

3.5           Discretionary Authority of Committee.  The Committee shall have full discretionary
power, subject to, and within the limits of, Articles 4 and 5 of the Plan:

 

(a)           To determine from time to time who of
the eligible persons shall be granted Awards, and the time or times when, and
the number of shares of Restricted Stock or Stock Units for which, an Award or
Awards shall be granted to such persons.

 

(b)           To prescribe the other terms and
provisions (which need not be identical) of each Award granted under the Plan
to eligible persons.

 

(c)           To modify or amend any term or
provision of any Award granted under the Plan (including without limitation in
the ways described in Sections 3.5 (f), (g) and (h) below), provided that
the consent of the holder thereof must be obtained for any modification or
amendment that reduces the benefits to the holder of the Award.

 

(d)           To construe and interpret the Plan
and Awards granted hereunder, and to establish, amend, and revoke rules and
regulations for administration.  The
Committee, in the exercise of this power, may correct any defect or supply any
omission, or reconcile any inconsistency in the Plan, or in any Award or
Agreement, in the manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.  In
exercising this power the Committee may retain counsel at the expense of the
Company.  All decisions and
determinations by the Committee in exercising this power shall be final and
binding upon the Company and the Participants.

 

(e)           To determine the duration and
purposes of leaves of absence which may be granted to a Participant without
constituting a termination of his or her employment for purposes of the Plan or
an Agreement.

 

(f)            To accelerate the time at which the
restrictions on Restricted Stock 
granted under an Award will lapse, or the time at which Stock Units will
vest, or otherwise modify the restrictions on Awards in a manner favorable to
the Participant.

 

(g)           To determine, for any group or class
of Participants, that restrictions on Awards 
shall lapse upon specified events occurring upon or after a change in
control of the Company or an Affiliate, subject to such terms and limitations
as the Committee may determine.

 

4

 

(h)           To waive or modify the application of
Section 6.2 (forfeiture of Restricted Stock or Stock Units  upon termination of employment) as to any
Award, in whole or in part.

 

(i)            To authorize any person to execute
on behalf of the Company any instrument required to effectuate the grant of an
Award previously granted hereunder.

 

(j)            To interpret the Plan and make any
determinations that are necessary or desirable in the administration of the
Plan.

 

(k)           To exercise such powers and to make
all other determinations deemed necessary or expedient to promote the best
interests of the Company with respect to the Plan.

 

3.6           Persons Subject to Section 162(m).  Notwithstanding anything in the Plan to the
contrary, the Committee, in its absolute discretion, may bifurcate the Plan so
as to restrict, limit or condition the use of certain provisions of the Plan by
Participants who are officers subject to Section 162(m) of the Code,
without so restricting, limiting or conditioning the Plan with respect to other
Participants.

 

3.7           Shareholder Rights.  Except as provided in Section 6.1, each
Participant shall have, with respect to Restricted Stock, all the rights of a
shareholder of Stock including the right to vote the shares.

 

ARTICLE 4. 
ELIGIBILITY AND LIMITATIONS ON GRANTS

 

4.1           Participation. 
The Committee may from time to time designate persons to whom Awards are
to be granted from among those who are eligible to become Participants.  Such designation shall specify the number of
shares of Restricted Stock or Stock Units subject to each Award.  All Awards granted under the Plan shall be
evidenced by Agreements which shall be subject to applicable provisions of the
Plan or such other provisions as the Committee may adopt that are not inconsistent
with the Plan.

 

4.2           Limitations on Grants.  Awards may be granted only to persons who
are eligible to be Participants.  The
maximum aggregate number of shares of Stock with respect to which Awards may be
granted to any Participant in any calendar year under the Plan is 225,000.  The maximum aggregate number of shares of
Restricted Stock subject to restrictions based solely on continuous employment
that may be issued under the Plan is 6,000,000.

 

ARTICLE
5.  STOCK SUBJECT TO PLAN

 

5.1           Maximum Number of Shares.  The maximum aggregate number of shares of
Stock that may be issued pursuant to Awards under the Plan (including all
predecessors of the Plan) is 12, 075,122 shares, subject to adjustments as
provided in Article 7 made after January 16, 2001.

 

5

 

ARTICLE 6.  RESTRICTIONS AND FORFEITURES

 

6.1           General Restrictions.  A Participant shall not be permitted
(i) to sell, transfer, pledge (as collateral for a loan or as security for
the performance of an obligation or for any other purpose) or assign shares of
Restricted Stock or Stock Units awarded (or purchased through dividend or
distribution reinvestment) under the Plan, (ii) to receive payment of any
dividends or distributions made in respect of Awards, or (iii) to receive
a stock certificate representing Awards, until, in each case, the restrictions
stated in the Participant’s Agreement lapse.

 

6.2           Termination of Employment.  Unless otherwise provided in the Agreement,
upon the termination of employment for any reason of a Participant who is an
employee of the Company or an Affiliate before the Participant has attained age
60 (including termination because of the death or permanent disability of the
Participant), all Restricted Stock or Stock Units shall be forfeited without
compensation to the Participant, unless otherwise determined by the Committee.

 

6.3           Retirement.  In the event of a Participant’s retirement
from the Company and its Affiliates or a Participant’s death or permanent
disability after the Participant has attained age 60, all remaining
restrictions on such Participant’s Restricted Stock that relate solely to the
Participant’s length of service with the Company or an Affiliate shall
automatically be waived.  Restrictions
not related solely to the Participant’s length of service with the Company or
an Affiliate (such as restrictions tied to the performance of the Company)
shall remain in effect unless otherwise determined by the Committee.

 

6.4           Lapse of Restrictions - General.  Each Award of Restricted Stock granted to a
Participant shall become Unrestricted Stock according to the terms established
by the Committee and specified in the Participant’s Agreement.  The Committee is authorized but not required
to subject an Award to the restrictions described in Schedule A or
Schedule B below by setting forth this determination in the Participant’s
Agreement.

 

Schedule A

 

	
  Years of Continued
  Employment

  	
   

  	
  Percentage Unrestricted

  	
   

  
	
  Less than 1

  	
   

  	
  0

  	
  %

  
	
  1 but less than 2

  	
   

  	
  20

  	
  %

  
	
  2 but less than 3

  	
   

  	
  40

  	
  %

  
	
  3 but less than 4

  	
   

  	
  60

  	
  %

  
	
  4 but less than 5

  	
   

  	
  80

  	
  %

  
	
  5 or more

  	
   

  	
  100

  	
  %

  

 

6

 

Schedule B

 

	
  Years of Continued
  Employment

  	
   

  	
  Percentage Unrestricted

  	
   

  
	
  Less than 3

  	
   

  	
  0

  	
  %

  
	
  3 but less than 4

  	
   

  	
  33.33

  	
  %

  
	
  4 but less than 5

  	
   

  	
  66.67

  	
  %

  
	
  5 or more

  	
   

  	
  100

  	
  %

  

 

For purposes of
Schedules A and B, unless otherwise determined by the Committee and stated
in the relevant Agreement, a Year of Continued Employment shall be credited to
a Participant with respect to each Award on each March 31, beginning in
the calendar year that follows the Grant Date of an Award, provided that the
Participant has been continuously employed by the Company or one of its
Affiliates since the Grant Date of the Award.

 

The lapse of restrictions on
Restricted Stock (including, if applicable, the number of Years of Continued
Employment) shall be calculated separately with respect to each Award granted
to a Participant.

 

6.5           Employee Status.  As provided in Section 3.5(e), the Committee shall determine
the extent to which a leave of absence for military or government service,
illness, temporary disability, or other reasons shall be treated as termination
or interruption of employment for purposes of determining questions of
forfeiture and Years of Continued Employment for purposes of the lapse of
restrictions on Restricted Stock.

 

6.6           Performance-Based Grants.  The Committee may provide in any Award for
the restrictions on Restricted Stock to lapse or the Stock Units to vest upon
the Company’s attainment of performance-based goals established by the
Committee.  Any such Award may, but need
not be, granted under and pursuant to the terms of this Section 6.6.  In addition, the Committee may determine
that any performance-based Award granted by the Committee before the adoption
of the Plan shall be treated as if granted under this Section 6.6,
provided that the Award is modified so as to comply with the terms of this
Section 6.6.

 

(a)           Intent to Qualify Under
Section 162(m).  This
Section 6.6 is intended to qualify the Awards granted under it as
performance-based compensation under Section 162(m) of the Code.  All Awards granted pursuant to this
Section 6.6 shall be construed in a manner consistent with that intent.

 

(b)           Shareholder Approval.  As to Awards granted under this
Section 6.6, no restrictions on Awards may lapse or Awards vest until
after the material terms of the performance goals set out below are disclosed
to and approved by the Company’s shareholders. 
To the extent necessary for Awards under this Section 6.6 to
qualify as performance–based compensation under Section 162(m) of
the Code under then applicable law, the material terms of the performance goals
shall be disclosed to and reapproved by the shareholders no later than the
first shareholder meeting that occurs in 

 

7

 

the fifth year following the
year in which shareholders previously approved the performance goals.

 

(c)           Business Criteria on Which
Performance Goals Shall be Based. 
The lapse of restrictions on or vesting of Awards granted under this
Section 6.6 shall be based on the Company’s attainment of performance
goals based on one or more of the following business criteria, where such goals
may be stated in absolute terms or relative to comparison companies, as the
Committee shall determine, in its sole discretion:

 

Return on
average common shareholders’ equity.

 

Return on
average equity.

 

Total
shareholder return.

 

Stock price
appreciation.

 

Efficiency
ratio (other expense as a percentage of other income plus net interest income),
either before or after amortization of intangible assets (goodwill).

 

Net operating
expense (other income less other expense), either before or after amortization
of intangible assets (goodwill).

 

Earnings per
diluted share of common stock.

 

Operating
earnings (earnings before transaction-related expense) per diluted share of
common stock, either before or after amortization of intangible assets
(goodwill).

 

Net operating
earnings (earnings before transaction-related expense) per diluted share of
common stock, either before or after amortization of intangible assets
(goodwill).

 

Return on
average assets.

 

Ratio of
nonperforming to performing assets.

 

Return on an
investment in an affiliate.

 

Net interest
income.

 

Net interest
margin.

 

Ratio of
common equity to total assets.

 

These business
criteria shall be construed consistent with the use of the same terms in the
Company’s published financial statements. 
All business criteria other than earnings per 

 

8

 

diluted share
of common stock shall exclude transaction-related expense unless otherwise
determined by the Committee in selecting the business criteria for a particular
Award pursuant to Section 6.6(d) below. 
In selecting any business criteria other than earnings per diluted share
of common stock, the Committee may elect, pursuant to Section 6.6(d)
below, to exclude amortization of intangible assets (goodwill), or to exclude
depreciation and amortization.

 

(d)           Establishing Performance Goals.  The Committee shall establish, for each
Award granted under this Section 6.6: 
(i) the measurement period(s) to which the performance goals will
be applied; (ii) the specific business criterion or criteria, or
combination thereof, that will be used; (iii) the specific performance
targets that will be used for the selected business criterion or criteria;
(iv) any special adjustments that will be applied in calculating whether
the performance targets have been met to factor out extraordinary items; and
(v) the formula for calculating the lapse of restrictions in relation to
the performance targets.  These
determinations shall be set out in the Agreement for each Award.  Except as otherwise permitted under Section 162(m)
of the Code, each Award under this Section 6.6 shall be granted no later than
90 days after the start of any applicable measurement period, on or before the
date that 25 percent of each applicable measurement period has elapsed, and
while the outcome is substantially uncertain.

 

(e)           Determination of Attainment of
Performance Goals.  The Committee
shall determine, pursuant to the performance goals and other elements
established pursuant to Section 6.6(d) above, whether the criteria for the
lapse of restrictions or vesting have been satisfied.  The Committee’s determinations shall be final and binding on all
Participants.  These determinations must
be certified in writing before Stock is transferred to the Participant.  This requirement may be satisfied by a
writing that sets out the determinations made by the Committee that is signed
on behalf of the Committee by the Committee’s secretary.

 

(f)            Lapse of Restrictions Upon Death,
Disability or Change of Ownership or Control.  Notwithstanding the other terms of this Section 6.6, the
performance-related criteria for the lapse of restrictions on an Award made
under this Section 6.6: 
(i) may lapse (A) as provided in Section 7.3, or
(B) upon a Participant’s disability or upon a change of ownership or
control, to the extent so provided in any Agreement, employment agreement or
action of the Committee, and (ii) shall lapse upon the Participant’s
death.

 

(g)           Other Restrictions.  In addition to the performance goals
described above, the Committee may determine to subject any Award granted under
this Section 6.6 to other, additional restrictions, including restrictions
requiring the Participant to remain in the employ of the Company or an
Affiliate for specified lengths of time.

 

6.7           Surrender of Restricted Stock.  A Participant who also is a participant in
the Washington Mutual Deferred Compensation Plan for Directors and Certain
Highly Compensated Employees (the “DCP’’) may surrender to the Company all or a
portion of an Award pursuant to 

 

9

 

the terms and provisions of the
DCP relating to surrender of restricted stock in return for a contribution
credit under the DCP.

 

ARTICLE 7. 
ADJUSTMENT UPON CORPORATE CHANGES

 

7.1           Adjustments to Shares.  The maximum number and kind of shares of
Stock with respect to which Awards hereunder may be granted and which are the
subject of outstanding Awards shall be adjusted by way of increase or decrease
as the Committee determines (in its sole discretion) to be appropriate, in the
event that:

 

(a)           the Company effects one or more stock
dividends, stock splits, reverse stock splits, subdivisions, consolidations or
other similar events;

 

(b)           the Company or an Affiliate engages
in a transaction to which Section 424 of the Code applies; or

 

(c)           there occurs any other event which in
the judgment of the Committee necessitates such action.

 

Provided,
however, that if an event described in paragraph (a) or (b) above occurs,
the Committee shall make adjustments to the limits on Awards specified in
Section 4.2 and in the limitation on aggregate Awards under
Section 5.1 that are proportionate to the modifications of the Stock that
are on account of such corporate changes.

 

7.2           Substitution of Awards on Merger or
Acquisition.  The Committee may
grant Awards in substitution for stock awards, stock options, stock
appreciation rights or similar awards held by an individual who becomes an
employee of the Company or an Affiliate in connection with a transaction to
which Section 424(a) of the Code applies. 
The terms of such substituted Awards shall be determined by the
Committee in its sole discretion, subject only to the limitations of
Article 5.

 

7.3           Effect of Certain Transactions.  Upon a merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation of the Company, as
a result of which the shareholders of the Company receive cash, stock or other
property in exchange for their shares of Stock (an “Event”), restrictions on
any Award of Restricted Stock granted hereunder shall lapse and any Award of
Stock Units shall vest, whether or not the requirements for lapse of
restrictions or vesting set forth in any Agreement have been satisfied, unless
otherwise specifically stated in the Agreement.  The foregoing notwithstanding, an Event shall not cause
restrictions on Restricted Stock related solely to the Participant’s length of
service with the Company or any Affiliate to lapse on any Awards that the
Committee elects, before the Event, to convert into restricted stock of an
acquiring corporation.  If the Committee
so elects to convert the Awards, the number of shares of such converted
restricted stock shall be determined by adjusting the amount and price of the
Awards granted hereunder in the same proportion as used for determining the
number of shares of stock of the acquiring corporation the holders of the Stock
receive in such merger, consolidation, acquisition of property or stock,
separation or reorganization, and the schedule for lapse of restrictions set
forth in the Agreement shall continue 

 

10

 

to apply to the converted
restricted stock.  Nothing in this
Section 7.3 or elsewhere in the Plan shall authorize the Committee to take
any action contrary to any provision regarding lapse of restrictions that is contained
in any Agreement or employment agreement if the action would reduce the
benefits to the Participant, unless the Participant consents to the action.

 

7.4           No Preemptive Rights.  The issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
for cash or property, or for labor or services rendered, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, outstanding Awards.

 

ARTICLE 8. 
COMPLIANCE WITH LAW AND APPROVAL OF

REGULATORY BODIES

 

8.1           General.  No Award shall be granted, no Stock shall be
issued, and no certificates for shares of Stock shall be delivered under the
Plan except in compliance with all federal and state laws and regulations
(including, without limitation, withholding tax requirements), federal and
state securities laws and regulations and the rules of all national securities
exchanges or self-regulatory organizations on which the Company’s shares may be
listed.  The Company shall have the
right to rely on an opinion of its counsel as to such compliance.  Any certificate issued to evidence shares of
Stock awarded hereunder may bear such legends and statements as the Committee
upon advice of counsel may deem advisable to assure compliance with federal and
state laws and regulations.  No Award
shall be granted, no Stock shall be issued, and no certificate for shares shall
be delivered under the Plan until the Company has obtained such consent or
approval as the Committee may deem advisable from any regulatory bodies having
jurisdiction over such matters.

 

8.2           Representations by Participants.  As a condition to receiving an Award, the
Company may require a Participant to represent and warrant at the time of any
such award that the shares are being held only for investment and without any
present intention to sell or distribute such shares, if, in the opinion of
counsel for the Company, such representation is required by any relevant
provision of the laws referred to in Section 8.1.  At the option of the Company, a stop
transfer order against any shares of Stock may be placed on the official stock
books and records of the Company, and a legend indicating that the Stock may
not be pledged, sold or otherwise transferred unless an opinion of counsel is
provided (concurred in by counsel for the Company) and stating that such
transfer is not in violation of any applicable law or regulation may be stamped
on the stock certificate in order to assure exemption from registration.  The Committee may also require such other
action or agreement by the Participants as may from time to time be necessary
to comply with the federal and state securities laws.  This provision shall not obligate the Company or any Affiliate to
undertake registration of Stock hereunder.

 

ARTICLE
9.  TAXES

 

9.1           Immediate Taxation.  If an employee elects, pursuant to
Section 83(b) of the Code, to include in gross income for federal income
tax purposes an amount equal to the fair 

 

11

 

market value of Restricted
Stock subject to an Award, the employee shall make arrangements satisfactory to
the Company to pay to the Company or its Affiliate any federal, state or local
taxes required to be withheld with respect to such Stock.  If an employee who makes such an election
fails to pay the necessary amounts to the Company or its Affiliate, the Company
or its Affiliate shall, to the extent permitted by law, have the right to
deduct from any payment of any kind otherwise due to the employee any taxes of
any kind required by law to be withheld with respect to the Stock covered by
the Award.

 

9.2           Deferred Taxation.  If an election under Section 83(b) of the Code has not been
made, then at the time Restricted Stock becomes Unrestricted Stock or an Award
otherwise becomes taxable, the Participant shall, upon notification of the
amount due and prior to or concurrently with the delivery of the certificates
representing the shares of Stock to which the Participant is entitled
hereunder, pay to the Company or its Affiliate amounts necessary to satisfy
applicable federal, state and local withholding tax requirements or shall
otherwise make arrangements satisfactory to the Company for such
requirements.  The Company or its
Affiliate shall, to the extent permitted by law, have the right to deduct from
any payment of any kind otherwise due to the employee any federal, state or
local taxes of any kind required by law to be withheld with respect to the
Restricted Stock becoming Unrestricted Stock or an Award otherwise becoming
taxable.

 

ARTICLE
10.  GENERAL PROVISIONS

 

10.1         Effect on Employment.  Neither the adoption of the Plan, its
operation, nor any documents describing or referring to the Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.

 

10.2         Unfunded
Plan.  The Plan shall be
unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under the Plan.  Any liability of the Company to any person
with respect to any grant under the Plan shall be based solely upon contractual
obligations that may be created hereunder. 
No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.

 

10.3         Rules of Construction.  Headings are given to the articles and
sections of the Plan solely as a convenience to facilitate reference.  The masculine gender when used herein refers
to both masculine and feminine.  The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.

 

10.4         Governing
Law.  The laws of the State of
Washington shall apply to all matters arising under the Plan, to the extent
that federal law does not apply.

 

10.5         Compliance With Section 16 of
the Exchange Act.  With respect
to persons subject to Section 16 of the Exchange Act, transactions under
the Plan are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the Exchange Act.  To the

 

12

 

extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null and
void to the extent permitted by law and deemed advisable by the Committee.

 

10.6         Amendment.  The Committee may amend or terminate the
Plan at any time; provided, however, an amendment that would have a material
adverse effect on the rights of a Participant under an outstanding Award is not
valid with respect to such Award without the Participant’s consent.  Provided further that the shareholders of
the Company must approve any amendment that changes the number of shares in the
aggregate which may be issued pursuant to Awards granted under the Plan, the
maximum number of shares with respect to which any Participant may be granted
Awards in any calendar year, or the maximum number of shares that may be
granted as Awards of Restricted Stock that are subject to restrictions based
solely on continuous employment, except pursuant to Article 7.

 

10.7         Effective Date of Plan.  No Award under the terms of the Plan as
amended and restated as of January 16, 2001, will be effective unless and
until the amendments approved by the Board on January 16, 2001, are
approved by shareholders holding a majority of the Company’s outstanding voting
stock present or represented by proxy and entitled to vote at the Company’s
next annual shareholders’ meeting, which is duly held, that occurs after
January 16, 2001, the date that the Board authorized the Company to adopt
the amendments to the Plan which are being submitted to the shareholders in
such annual shareholders meeting.  If
such amendments are not so approved by the shareholders of the Company, then
the Plan as amended and restated as of January 16, 2001 shall be of no force or
effect and the Plan as amended and restated as of January 18, 2000 shall
continue to govern.

 

IN WITNESS WHEREOF, the Company
has caused the Plan to be executed on this the __ day of ___, 2001, but to be
effective on January 16, 2001.

 

	
   

  	
  WASHINGTON
  MUTUAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
					

 

13

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