Entry into a Material Definitive Agreement, Financial Statements and Exhibits
Item 1.01 Amendment of a Material Definitive Agreement.
As previously disclosed in the Current Report on Form 8-K that was filed by Washington Mutual, Inc. ("WMI") with the Securities and Exchange Commission on March 12, 2012, WMI and WMI's wholly-owned subsidiary, WMI Investment Corp. (together with WMI, the "Debtors")), entered into a liquidating trust agreement (the "Agreement") with William C. Kosturos, as the liquidating trustee (the "Trustee"), and CSC Trust Company of Delaware, as the Delaware resident trustee, on March 6, 2012, which provides for the creation of a liquidating trust (the "Trust") that will have an initial term of three years, subject to extension for up to an additional three years (subject to certain limited exceptions) with the approval of the United States Bankruptcy Court for the District of Delaware (the "Court").
On August 1, 2012, the Trustee, with the consent of each voting member of the Trust's Trust Advisory Board (the "TAB") and otherwise in accordance with
Section 9.9 of the Agreement, executed Amendment No.1 to the Agreement (the "Amendment"). The Amendment, which is effective as of March 19, 2012, makes several amendments to the Agreement as further described below. A copy of the Amendment is attached hereto as Exhibit 10.1 and is incorporated herein by reference. A copy of the Agreement, as amended by the Amendment, and marked to show the revisions to the original Agreement, is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Summary of Material Amendments to the Agreement
The following is a summary of the material amendments that were made to the Agreement by the Amendment. Capitalized terms used but not defined herein have the meanings ascribed to them in the Agreement, as amended.
� Certain revisions were made to Section 6.3(b) of the Agreement to revise the actions of the Trustee that require the approval of the TAB. As revised,
Section 6.3(b) of the Agreement provides that the Trustee requires the approval of the TAB with respect to the following matters:
o Any transaction involving the sale, assignment or abandonment of any Liquidating Trust Asset or Assets having a value in excess of $500,000.00;
o Any transaction involving the transfer of any Liquidating Trust Asset or Assets having a value in excess of $500,000.00, except where such transfer involves the purchase of liquid investments or the transfer of Cash between one or more bank accounts or investment accounts that are held for the benefit of the Trust;
o The payment of any account payable or other fee or expense in excess of $750,000.00, other than the payment of vendor invoices in the ordinary course where the services to be provided by any such vendor have been approved in accordance with the Trust's internal approval procedures as they may be in effect from time to time;
o Any determination to retain Trust Professionals and any compensation arrangements for such Trust Professionals;
o The determination of the amount and timing of any distribution to the Liquidating Trust Beneficiaries other than a distribution that is made in accordance with Section 4.3(a) of the Agreement; and
o Any determination to initiate lawsuits or proceedings other than claims objections in the ordinary course or immaterial lawsuits or proceedings; and
o The dissolution of the Trust, other than in accordance with the terms of the Agreement
� Section 6.4(b) of the Agreement was revised to provide that (i) one of the three members of the TAB who are to be selected by the Creditors' Committee shall be designated by Wells Fargo Bank N.A. (the "WF Member"), and (ii) one of the four members of the TAB who are to be selected by the Equity Committee shall be designated by PPM America Inc. (the "PPMA Member"). Conforming revisions were also made to Section 6.4(f)(iv) of the Agreement to provide that any vacancies that arise with respect to the WF Member or the PPMA Member, as applicable, shall be filled by a designee appointed by Wells Fargo Bank N.A. ("Wells") or PPM America, Inc. ("PPMA"), as applicable, for so long as they have not relinquished their right to designate a member of the TAB.
� Section 6.4(g) of the Agreement was revised to require each member of the TAB be a natural person and to allow for each of the WF Member and PPMA Member to designate one or more representatives who may attend meetings of and participate in other activities of the TAB on behalf of such member when such member is unavailable. Such representatives shall be an employee of, or other individual designated by, Wells or PPMA, as applicable. In addition, Section 6.4(g) has been revised so that no other TAB member may designate an alternate representative to attend meetings and participate in other activities of the TAB when the representative otherwise designated is unavailable.
� Section 6.5(e) of the Agreement was revised to require each member of the Litigation Subcommittee to be a natural person and to allow the PPMA Member, for so long as he or she is a member of the Litigation Subcommittee, to designate one or more representatives who may attend meetings of and participate in other activities of the Litigation Subcommittee on behalf of such member when such member is unavailable. Such representatives shall be an employee of, or other individual designated by, PPMA.
� Section 6.8(b) of the Agreement was revised so that the Trustee is required, within thirty (30) days of the end of each quarter, to file a notice with the Court setting forth the amounts paid by the Trust during such
quarter (i) pursuant to Section 6.4(m), Section 6.5(k) or 6.11(c) of the Agreement, and (ii) for services rendered and expenses incurred by Trust Professionals. In the event that the Court, the United States Trustee or any then-current beneficiary of the Trust objects to the prior payment of such fees and expenses, the Agreement, as amended, requires the Trustee to file a notice with the Court setting the date, time and place for a hearing to consider any such objection.
� Annex C to the Agreement was revised to clarify that holders of Preferred Equity Interests and Common Equity Interests will be issued Liquidating Trust Interests in Tranche 6 on account of those interests when Tranche 2 through Tranche 5 Liquidating Trust Interests have been satisfied in full, and that the distribution to Tranche 6 will be shared 75% and 25% pro rata between claims on account of Preferred Equity Interests and Common Equity Interests, respectively.
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