UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of report (Date of earliest event reported): March 19, 2012
 
WMI Holdings Corp.
(Exact Name of Registrant as Specified in Its Charter)
 
     
Washington
001-09466
91-1653725
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
(IRS Employer Identification No.)
 
1201 THIRD AVENUE, SUITE 3000
SEATTLE, WASHINGTON
98101
(Address of Principal Executive Offices)
(Zip Code)

(206) 432-8887
(Registrant’s Telephone Number, Including Area Code)
 
Washington Mutual, Inc.
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
 
 
 
 

 
 
 



 
 
 
Item 1.01  Entry into a Material Definitive Agreement

Runoff Notes and Pledge and Security Agreement

On March 19, 2012, WMI Holdings Corp. (formerly known as Washington Mutual, Inc. (the “ Company ” or “ WMI ”)) issued $110 million aggregate principal amount of its 13% Senior First Lien Notes due 2030 (the “ First Lien Notes ”) under an indenture, dated as of March 19, 2012 (the “ First Lien Indenture ”), between the Company and Wilmington Trust, National Association, as Trustee (the “ First Lien Trustee ”). Additionally, the Company issued $20 million aggregate principal amount of its 13% Senior Second Lien Notes due 2030 (the “ Second Lien Notes ” and, together with the First Lien Notes, the “ Runoff Notes ”) under an indenture, dated as of March 19, 2012 (the “ Second Lien Indenture ” and, together with the First Lien Indenture, the “ Indentures ”), between the Company and Law Debenture Trust Company of New York, as Trustee (the “ Second Lien Trustee ” and, together with the First Lien Trustee, the “ Trustees ”).

The Runoff Notes will mature on March 19, 2030. The Company will pay interest on the Runoff Notes on March 1, June 1, September 1 and December 1 of each year, commencing on June 1, 2012. Interest on the Runoff Notes will accrue at a rate of 13% per annum.
 
In connection with the Indentures, the Company also entered into that certain Pledge and Security Agreement (the “ Indenture Pledge and Security Agreement ”) by the Company in favor of the Collateral Agent (as defined therein) for the benefit of the First Lien Secured Parties (as defined therein), the Second Lien Secured Parties (as defined therein) and the Third Lien Secured Parties (as defined therein) in order to grant a security interest on distributions it receives of Runoff Proceeds (as defined within the Indentures) and the equity interests in , and assets of, either WM Mortgage Reinsurance Company, Inc., a Hawaii corporation and direct wholly-owned subsidiary of the Company (“WMMRC”) , or such other entity as holds WMMRC’s existing portfolio of assets, to the extent a lien has been granted therein (with any such lien subject to regulatory approval).  A copy of the Pledge and Security Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Security . The Runoff Notes are secured by, and have a specified priority in right of payment in, (a) a securities or deposit account into which the Company will deposit distributions it receives of Runoff Proceeds (as defined within the Indentures) (the “ Collateral Account ”) and (b) the equity interests in, and assets of, either WMMRC , or such other entity as holds WMMRC’s existing portfolio of assets, to the extent a lien has been granted therein (with any such lien subject to regulatory approval).
Interest Payments . The Company will, and will cause WMMRC to, deposit all distributions, dividends or other receipts in respect of Runoff Proceeds (as defined in the Indentures) on the date paid to the Company directly into the Collateral Account. On any interest payment date, payments are made from the Collateral Account and from any other Runoff Proceeds Distributions (as defined in the Indentures) in the priority set forth in the First Lien Indenture and then, to the extent there are any amounts remaining, in the priority set forth in the Second Lien Indenture. Generally, payments are made first to the Trustees for any fees and expenses, then to the Company for an amount as described in the First Lien Indenture, then to the holders of the First Lien Notes for interest and principal, then to the Company for an amount as described in the Second Lien Indenture, and lastly to the holders of the Second Lien Notes for interest and principal. To the extent that any interest is not paid in cash on any such interest payment date, the interest is payable by increasing the principal amount of the Runoff Notes or by issuing PIK Notes (as defined in the Indentures).

Offer to Purchase; Open Market Purchases . The Company is not required to make any mandatory redemption or sinking fund payments with respect to the Runoff Notes.

 
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Optional Redemption . The Company may redeem some or all of the Runoff Notes at any time at a redemption price equal to 100% of the principal amount of the Runoff Notes redeemed, plus accrued and unpaid interest to the redemption date, subject to the rights of holders on the relevant record date to receive interest due on the relevant interest payment date.

Covenants . The Indentures contain covenants that, among other things: (a) obligate the Company to cause WMMRC to use commercially reasonable efforts to obtain the appropriate regulatory approval of a dividend and to pay to the Company such dividend and deposit such dividend into the Collateral Account; and (b) limit the Company’s ability to create liens on the collateral securing the Runoff Notes.

Events of Default . The Indentures also provide for customary events of default, including, without limitation, payment defaults, covenant defaults and certain events of bankruptcy and insolvency for the Company or WMMRC. If any such event of default occurs and is continuing under the First Lien Indenture or Second Lien Indenture, the First Lien Trustee or Second Lien Trustee, as applicable, or the holders of at least 25% in principal amount of the total outstanding First Lien Notes or Second Lien Notes, as applicable, may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding First Lien Notes or Second Lien Notes, as applicable, issued under the First Lien Indenture or Second Lien Indenture, as applicable, to be due and payable immediately.  However, in the event of a bankruptcy default, all outstanding Runoff Notes will be automatically due and payable without further action or notice.

Transfer Restrictions . The Second Lien Indenture contains certain transfer restrictions. In particular, without the approval of the Company’s board of directors, no person is permitted to acquire, whether directly or indirectly, and whether in one transaction or a series of related transactions, Second Lien Notes, to the extent that after giving effect to such purported acquisition (a) the purported acquirer or any other person by reason of the purported acquirer’s acquisition would hold at least 4.75% of the then outstanding principal amount of the Second Lien Notes (or is a Substantial Holder, as defined in the Company’s Amended and Restated Articles of Incorporation, as filed with the Secretary of State of the State of Washington on March 19, 2012 (the “ Articles ”)), or (b) the beneficial interest of a person that, prior to giving effect to the purported acquisition, holds at least 4.75% of the then outstanding principal amount of the Second Lien Notes (or is a Substantial Holder) would be increased.

The summary set forth above is not intended to be complete and is qualified in its entirety by reference to the full text of the First Lien Indenture attached hereto as Exhibit 4.1 and the Second Lien Indenture attached hereto as Exhibit 4.2.

Financing Agreement and Pledge and Security Agreement

On March 19, 2012, the Company and its wholly-owned subsidiary, WMI Investment Corp. (“ WMI Investment ” and collectively with WMI, the “ Debtors ”) entered into a Financing Agreement (the “ Financing Agreement ”) by and among the Company, as borrower, WMI Investment, as a guarantor, certain lenders party thereto, and U.S. Bank National Association as agent for the lenders (the “ Agent ”) for the purposes of financing the Company’s working capital and general corporate purposes, as well as permitted acquisitions and permitted originations by the Company.  The Financing Agreement is a senior secured multi-draw term loan with a four and one-half (4½) year or five (5) year maturity, as applicable, a three (3) year availability period, and an aggregate original principal amount not to exceed $125 million, to be made available to the Company in three tranches, namely, the Tranche A Credit Facility (including the Tranche A-1 Term Loan) in the aggregate amount of $25 million and the Tranche B Credit Facility of $100 million.  The Company may draw on the Tranche A Credit Facility to fund working capital and for general corporate purposes, as set forth in the Financing Agreement.  The Company may draw on the Tranche B Credit Facility, however, only to fund Permitted Acquisitions and Permitted Originations (as such terms are defined in the Financing Agreement).  A copy of the Financing Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
 
 
The Financing Agreement contains certain affirmative and negative covenants customary for facilities of this type, including, furnishing to lenders periodic financial information of the Company; additional guaranties and collateral security; compliance with laws; maintenance of existence and ability to do business; keeping of books and records, maintenance of properties; maintenance of insurance; limitations on liens and indebtedness; limitations on ability to consolidate, merge, or sell, lease or otherwise transfer all or substantially all assets; limitations on change in business; limitation on certain restricted payments including certain dividends; limitations on transactions with affiliates; limitations on modifications of indebtedness and certain other agreements; limitation on negative pledges; and certain financial covenants including an interest coverage ratio and a business performance test.
 
The Financing Agreement also contains certain events of default customary for facilities of this type (with customary grace periods), including, nonpayment of principal, interest, fees or other amounts when due; material inaccuracies of representations and warranties; violations of covenants; the occurrence of certain bankruptcy events; certain ERISA events; material judgments; changes of control; or the invalidity of the guaranty provided by the guarantors.  Upon the occurrence of an event of default, any outstanding loans under the Financing Agreement may be accelerated and/or the lenders’ commitments may be terminated; provided, however, that upon the occurrence of certain insolvency or bankruptcy related events of default, all amounts payable under the Financing Agreement will automatically become immediately due and payable, and the lenders' commitments will automatically terminate.   A copy of the Financing Agreement is attached hereto as Exhibit 10.2 and is incorporated herein by reference.

           In connection with the Financing Agreement, the Debtors also entered into that certain Pledge and Security Agreement (the “ Financing Agreement Pledge and Security Agreement ”) by the Debtors in favor of the Agent for the benefit of the lenders in order to grant a security interest on substantially all of the Company and WMI Investment’s assets.  A copy of the   Financing Agreement Pledge and Security Agreement is attached hereto as Exhibit 10.3 and is incorporated herein by reference.

 
 
 


Intercreditor Agreement

In respect of the Pledge and Security Agreement, the First Lien Trustee, as Trustee and collateral agent, the Second Lien Trustee, and the Agent entered into that certain Intercreditor Agreement (the “ Intercreditor Agreement ”). The Intercreditor Agreement was acknowledged by the Company and governs the respective secured parties’ rights in the collateral granted pursuant to the Pledge and Security Agreement.  A copy of the Intercreditor Agreement is attached hereto as Exhibit 10.4 and is incorporated herein by reference.

 
Employment Agreements
 
On March 21, 2012, the Company entered into employment agreements with each of Weijia (“Vicky”) Wu and Peter Struck.  These are “at will” employment arrangements, subject to the notice requirements set forth therein.  A copy of such employment agreements are attached hereto as Exhibit 10.5 and Exhibit 10.6, respectively.

 
Transition Services Agreement
 
On March 23, 2012, the Company and the WMI Liquidating Trust (as defined below under Item 1.03) entered into a Transition Services Agreement (the “ TSA ”).  Pursuant to the TSA, each party will make available certain services and employees.  The TSA provides the Company with office space for its current employees and basic infrastructure and support services to allow the Company to operate.  The TSA provides the WMI Liquidating Trust with access to certain of the Company’s employees and use for a limited time of the Company’s health insurance plan for its employees.  The TSA has an initial term of six months and either party may terminate one or more of the services offered upon ten (10) days written notice to the other party.  A copy of the TSA is attached hereto as Exhibit 10.7 and is incorporated herein by reference.

Indemnification Agreements

On March 19, 2012, the Company entered into agreements to indemnify its directors and certain of its officers to the fullest extent allowed under Washington law.  These agreements provide, among other things, that the Company will indemnify its directors and certain of its officers for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by or in the Company’s right, on account of any services undertaken by such person on the Company’s behalf or that person’s status as a director or officer of the Company.  Each agreement is in substantially similar form.  A copy of the form of indemnification agreement is attached hereto as Exhibit 10.8 and is incorporated herein by reference.

Item 1.02  Termination of a Material Definitive Agreement

On the Effective Date, in accordance with the Plan, the Company terminated the following material agreements:

Indentures

·  
Indenture, dated as of April 30, 2001, as supplemented by that certain First Supplemental Indenture, dated as of April 30, 2001, between WMI and The Bank of New York Mellon Trust Company, N.A., as Trustee.
·  
Senior Debt Securities Indenture, dated as of August 10, 1999, as supplemented by that certain First Supplemental Indenture and Second Supplemental Indenture, dated as of August 1, 2002 and November 20, 2002, respectively, between WMI and The Bank of New York Mellon Trust Company, N.A., as Trustee.

 
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·  
Subordinated Debt Securities Indenture, dated as of April 4, 2000, as supplemented by that certain First Supplemental Indenture and Second Supplemental Indenture, dated as of August 1, 2002 and March 16, 2004, respectively, between WMI and The Bank of New York Mellon Trust Company, N.A., as Trustee.

Deferred Compensation Plans

·  
Washington Mutual, Inc. Supplemental Executive Retirement Accumulation Plan, amended and restated effective January 1, 2004, as amended.
·  
Washington Mutual, Inc. Deferred Compensation Plan, amended and restated effective July 20, 2004, as amended.
·  
Washington Mutual, Inc. Executive Target Retirement Income Plan, effective January 1, 2004, as amended.

Equity Securities

On the Effective Date, pursuant to the Plan and the Confirmation Order (as defined in Item 1.03 hereof), all equity interests in the Company, including common stock and any options, warrants, calls, subscriptions or other similar rights or other agreements, commitments or outstanding securities obligations, were cancelled and extinguished.

Item 1.03  Bankruptcy or Receivership
 
Effective Date of Chapter 11 Plan
 
As previously disclosed, on September 26, 2008, the Debtors filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the “ Court ”) (Case No.08-12229 (MFW)).
 
On December 12, 2011, the Debtors filed with the Court the Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code (the “ Filed Plan ”) and a related disclosure statement (the “ Disclosure Statement ”).  The Filed Plan was subsequently modified by the Modification of Seventh Amended Plan dated January 9, 2012, the Second Modification of Seventh Amended Plan dated January 12, 2012, and the Third Modification of Seventh Amended Plan dated February 16, 2012 (collectively, the “ Modifications ”).
 
On February 24, 2012, the Court entered an order (the “ Confirmation Order ”) confirming the Filed Plan as modified by the Modifications (the “ Plan ”).  Copies of the Plan, the Disclosure Statement and the Confirmation Order were attached as Exhibits 2.1, 2.2 and 2.3, respectively, to the Current Report on Form 8-K that WMI filed with the Securities and Exchange Commission (the “ SEC ”) on March 1, 2012, and are incorporated herein by reference.  Unless otherwise specified in this Current Report on Form 8-K, capitalized terms used but not defined herein shall have the meanings set forth in the Plan.

On March 16, 2012, as permitted by the orders of the Court authorizing (but not requiring) the abandonment of their equity interests in the outstanding stock of Washington Mutual Bank (“ WMB ”),   and pursuant to the notice filed with the Court on March 16, 2012, WMI and its chapter 11 estate abandoned their equity interests in the outstanding stock of WMB and surrendered all right, title and interest to such stock.  A copy of the Notice of Abandonment is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On March 19, 2012 (the “ Effective Date ”), the Plan became effective and a notice of the Effective Date of the Plan (the “ Notice of Effective Date ”) was filed with the Court.  A copy of the Notice of Effective Date is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
 
Conditions Precedent to Effective Date
 
 
 
 
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The occurrence of the Effective Date was subject to satisfaction or waiver of the following conditions precedent: (i) satisfaction of certain conditions set forth in the Second Amended and   Restated Settlement Agreement, dated as of February 7, 2011, (ii) the clerk of the Court shall have entered the Confirmation Order, and the Confirmation Order shall have become a final order, and (iii) all other actions and documents necessary to implement the Plan shall have been effected or executed.  Each of the foregoing conditions to the effectiveness of the Plan were satisfied or waived, and the Effective Date occurred on March 19, 2012.
 
The WMI Liquidating Trust
 
As previously disclosed, on March 6, 2012, the Debtors entered into a liquidating trust agreement with William C. Kosturos, as the liquidating trustee (the “ Liquidating Trustee ”), and CSC Trust Company of Delaware, as the Delaware resident trustee (the “ Liquidating Trust Agreement ”).  A copy of the Liquidating Trust Agreement was filed as Exhibit 10.1 to the Current Report on Form 8-K that WMI filed with the SEC on March 12, 2012, and is incorporated herein by reference.  The Liquidating Trust Agreement provides for the creation of a liquidating trust (the “ WMI Liquidating Trust ”) that has 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 Court.  On or shortly after the Effective Date, certain of the Debtors’ assets (the “ Liquidating Trust Assets ”) were transferred to the WMI Liquidating Trust pursuant to the Plan for the benefit of certain holders of claims against, or equity interests in, the Debtors (the “ Liquidating Trust Beneficiaries ”) who are being issued beneficial interests in the WMI Liquidating Trust (each such interest, a “ Liquidating Trust Interest ” or “ LTI ”) in exchange for their claims or equity interests, as applicable.  The Liquidating Trust Interests are not transferable except by will, intestate succession or operation of law.  Pursuant to the Liquidating Trust Agreement, the Liquidating Trustee is responsible for liquidating, converting to cash and distributing the Liquidating Trust Assets to the Liquidating Trust Beneficiaries in accordance with the terms of the Liquidating Trust Agreement.  The WMI Liquidating Trust will not engage in at any time, the conduct of any trade or business other than the liquidation and distribution of the Liquidating Trust Assets, and is intended to qualify as a “liquidating trust” for federal income tax purposes.

The proceeds that are obtained from the liquidation of the Liquidating Trust Assets will be distributed to the Liquidating Trust Beneficiaries in accordance with the distribution procedures and priorities set forth in the Liquidating Trust Agreement.  These distribution procedures include a reserve mechanism to allow for the resolution of claims that are disputed, in whole or in part, as of the Effective Date and the issuance of Liquidating Trust Interests and Runoff Notes in respect thereof if and when such claims are allowed.

Distributions

As previously disclosed, the Plan provides for the distribution of cash, Runoff Notes, LTIs and newly issued shares of common stock in WMI with a par value of $0.00001 per share ( “ New Common Stock ”) to certain holders of claims against, or former equity interests in, the Debtors in accordance with the distribution procedures and priorities set forth in the Plan.  A total of approximately $6.5 billion in cash and other assets will be distributed pursuant to the Plan within 10 days of the Effective Date.  Exhibit 99.3 hereto sets forth the aggregate distributions that are currently anticipated to be made to certain classes of claims against, or equity interests in, the Debtors pursuant to the Plan.
 

 
Assets and Liabilities of the Company
 

Information regarding the projected assets and liabilities of the Company as of the Effective Date is set forth in Part VII (Financial Information and Projections) of the Disclosure Statement.  Further information regarding the assets and liabilities of the Company as of the Effective Date will be contained in the Company’s Monthly Operating Report for the period from February 1, 2012 to February 29, 2012 which the Company intends to file with the Court on or around March 26, 2012.
 

 
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The Division of Corporation Finance's Staff Legal Bulletin No.2 also requires the Company to file an audited balance sheet on the Effective Date; however, it is not practicable for the Company to file an audited balance sheet at this time due to the Company’s limited resources and the fact that the Company has not had an auditor during the pendency of the chapter 11 proceedings.  As soon as reasonably practicable after the date hereof, the Company intends to file an amendment to this Current Report on Form 8-K that will contain the Company’s audited balance sheet as of the Effective Date.
 
 
Additional Information and Press Release
 
On March 19, 2012, the Company issued a press release announcing the occurrence of the Effective Date.  A copy of the press release is attached hereto as Exhibit 99.4 and is incorporated herein by reference.
 

 
Item 2.03  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

Item 3.02  Unregistered Sales of Equity Securities
 

The Articles, which became effective on the Effective Date, authorize the Company to issue up to 500,000,000 shares of New Common Stock and up to 5,000,000 shares of preferred stock, each with a par value of $0.00001 per share.

On or shortly after the Effective Date pursuant to the Plan, the Company issued (i) a total of 200,000,000 shares of New Common Stock to (A) holders of certain allowed claims against, or former equity interests in, the Debtors, and (B) a disputed equity escrow that is administered by the Liquidating Trustee, and (ii) the Runoff Notes pursuant to the terms of the Indentures as discussed further under Item 1.01 of this Current Report on Form 8-K.

As set forth in the Disclosure Statement, the Company relied on Section 1145 of the Bankruptcy Code to issue the New Common Stock and the Runoff Notes described above.  Section 1145(a)(1) exempts the offer and sale of securities under a plan of reorganization from registration under Section 5 of the Securities Act of 1933, as amended, and state laws if three principal requirements are satisfied:
·  
the securities must be issued under a plan of reorganization by the debtor, its successor under a plan or an affiliate participating in a joint plan of reorganization with the debtor;
·  
the recipients of the securities must hold a claim against, an interest in, or a claim for administrative expense in the case concerning the debtor or such affiliate; and
·  
the securities must be issued either (i) in exchange for the recipient’s claim against, interest in or claim for administrative expense in the case concerning the debtor or such affiliate or (ii) “principally” in such exchange and “partly” for cash or property.

Item 3.03  Material Modification to Rights of Security Holders

 
On the Effective Date, all Common Equity Interests and Preferred Equity Interests of the Company were cancelled and extinguished and on or shortly after the Effective Date a total of 200,000,000 shares of New Common Stock were issued pursuant to the Plan to (i) holders of certain allowed claims against, or former equity interests in, the Debtors,, and (ii) the disputed claims reserve that is administered by the Liquidating Trustee pursuant to the terms of the Plan.  In total, the Company has 500,000,000 authorized shares of New Common Stock and 5,000,000 authorized shares of preferred stock, each with a par value of $0.00001 per share.
 

 
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The information regarding the amendments to the Articles and the Company’s Amended and Restated Bylaws set forth in Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03.
 

 
Item 5.01  Changes in Control of Registrant

The information regarding the cancellation of the Common Equity Interests and Preferred Equity Interests and the issuance of New Common Stock set forth above in Item 3.03 of this Current Report on Form 8-K is incorporated by reference into this Item 5.01.

In addition, as discussed under Item 5.02 of this Current Report on Form 8-K, the composition of the Company’s board of directors as of the Effective Date is substantially different than the composition of the Company’s board of directors immediately prior to the Effective Date.

 
Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
 
(a) As of the time the Plan became effective on the Effective Date, Alan Fishman, Stephen Frank, Phillip Matthews, Michael K. Murphy, Regina T. Montoya, Margaret Osmer McQuade, William G. Reed, Jr., Orin Smith and James H. Stever resigned as directors of the Company pursuant to the Plan.  At the time of their resignations, Alan Fishman, Stephen Frank, Margaret Osmer McQuade and James Stever ceased to be members of the Company’s Operations Committee, which was dissolved as of the time the Plan became effective on the Effective Date.

(b) As of the time the Plan became effective on the Effective Date, Alan Fishman, the Company’s chief executive officer, Robert Williams, the Company’s president, William Kosturos, the Company’s chief restructuring officer and John Maciel, the Company’s chief financial officer, each resigned from any and all positions they held with the Company.

(c) On the Effective Date, the Company appointed Charles Edward Smith as the Company’s Interim Chief Executive Officer.  In addition, Mr. Smith currently holds the titles of President, Interim Chief Legal Officer, Secretary and Executive Vice President. On the Effective Date, Mr. Smith, age 42, also became an employee and officer of WMI Liquidating Trust (described above).  Prior to the Effective Date and since November 2008, Mr. Smith served as an officer of the company, and since February 2009, as the general counsel, executive vice president and secretary of the Company.  From November 2002 to September 2008, Mr. Smith was employed by WMB, a savings and loan association that was a wholly-owned subsidiary of the Company until March 16, 2012, serving as assistant general counsel and team lead-corporate finance for part of that time.  In September 2008, following the Office of Thrift Supervision’s closure of WMB, the receivership of WMB by the Federal Deposit Insurance Company, and the eventual sale of substantially all of the assets of WMB to JPMorgan Chase Bank, N.A. (“ JPMC ”), a banking and financial services company, Mr. Smith became an employee of JPMC from September 2008 to November 2008.  Pursuant to the currently contemplated terms of the Transition Services Agreement, as disclosed in Item 1.01 of this Current Report on Form 8-K, the Company will reimburse WMI Liquidating Trust for a portion of Mr. Smith’s compensation from WMI Liquidating Trust in return for up to 40 hours per month of Mr. Smith’s services as an executive with the Company.

(d) As of the effective time of the Plan on the Effective Date, Eugene Davis, Timothy R. Graham, Diane B. Glossman, Mark Holliday, Michael Renoff, Steven D. Scheiwe and Michael Willingham became directors of the Company pursuant to the terms of the Plan (the “ New Board of Directors ”).  On the Effective Date, the New Board of Directors elected Mr. Willingham as Chairman of the New Board of Directors.  Also on the Effective Date, the New Board of Directors established an audit committee comprised of Mark Holliday, Steven D. Scheiwe and Michael Willingham, a compensation committee comprised of Eugene Davis, Steven D. Scheiwe and Timothy R. Graham, and a corporate strategy and development committee comprised of Diane Glossman, Eugene Davis, Timothy R. Graham and Michael Renoff.  Pursuant to the Plan, the lenders party to the Financing Agreement selected Mr. Davis to the New

 
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Board of Directors, while the Equity Committee selected the remaining directors.  The Equity Committee selected Mr. Renoff pursuant to the TPS Stipulation (as defined in the Confirmation Order).

(e) At a board meeting following the Effective Date, the following committees were created and comprised of the following members:
·  
Audit committee: Mark Holliday, Steven D. Scheiwe and Michael Willingham
·  
Compensation Committee: Eugene Davis, Steven D. Scheiwe and Timothy R. Graham
·  
Corporate Strategy and Development Committee: Diane B. Glossman, Eugene Davis, Timothy R. Graham and Michael Renoff

Item 5.03  Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
 
Pursuant to the Plan, on March 19, 2012, the Company filed the Articles with the Secretary of State of the State of Washington to effect certain changes to the structure of the Company as contemplated by the Plan.  The Articles amended and restated in their entirety the articles of incorporation, as amended, of the Company in effect prior to the Effective Date.  Also pursuant to the Plan and on the same date, the Company adopted the Amended and Restated Bylaws of the Company (the “ Bylaws ”) to implement changes to the governance of the Company as contemplated by the Plan.  The Bylaws amended and restated in their entirety the bylaws, as amended, of the Company in effect prior to the Effective Date.  Some of the material differences between the Articles and Bylaws and the articles of incorporation, as amended, and bylaws, as amended, of the Company in effect immediately prior to the Effective Date are as follows:
·  
The number of directors that shall constitute the entire board was reduced to seven (7), one (1) of whom must be approved and recommended by the Required Lenders, as defined in the Financing Agreement, for as long as the Financing Agreement is in effect or any obligations remain outstanding thereunder.
·  
Article VI of the Articles contains certain restrictions on any person owning or that would own at least 4.75% of the issued and outstanding New Common Stock (as more fully defined in the Articles, a “Substantial Holder”).  No person may become a Substantial Holder, and a Substantial Holder is not permitted to increase or decrease its shareholdings without the consent of the Company’s board of directors.
·  
The affirmative vote of the holders of at least eighty percent (80%) of the voting power of the issued and outstanding shares of common stock and the issued and outstanding shares of preferred stock, if any, entitled to vote generally with the common stock on all matters on which the holders of common stock are entitled to vote, voting together as a class, is required to adopt any provision inconsistent with, or to amend or repeal any provision of, Articles VIII (Liability of Directors), IX (Amendment) or X (Business Opportunities), of the Articles.

The Articles and Bylaws are attached hereto as Exhibits 3.1 and 3.2, respectively, and are incorporated herein by reference.

Cautionary Statement Regarding Forward-Looking Statements
 
This Current Report on Form 8-K and the exhibits hereto contain certain statements that may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are based on the Company’s current plans, expectations, estimates and management’s beliefs about the Company’s future performance. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” or variations of such words and similar expressions are intended to identify such forward-looking statements.  These statements are not guarantees of future performance and are subject to risks and uncertainties that are difficult to predict and which may cause the Company’s actual results and performance to differ materially from those expressed or forecasted in any such forward-looking statements.  These risks include, among other factors, changes in business, economic and market conditions, changes in government regulation, and changes in the competitive environment in which the Company operates.  After the Effective Date, some of the risks that are associated with WMI Holdings Corp. include, but are not limited to, the following: (i) WMI Holdings Corp. does not currently intend to have any of its securities listed on an exchange or a national market and, therefore, its common stock may have less liquidity than exchange-traded

 
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securities; (ii) transfers of the common stock of WMI Holdings Corp. will be subject to certain transfer restrictions as set forth in the Articles; (iii) there is no guarantee that WMI Holdings Corp. will be able to successfully utilize the net operating losses that will be retained by WMI Holdings Corp. after the Effective Date; and (iv) WMI Holdings Corp. may need to seek regulatory approval from the Hawaii State Insurance Commissioner from time to time with respect to certain aspects of WMMRC’s operations.  After the Effective Date, some of the risks that are associated with the Runoff Notes include, but are not limited to, the following: (i) holders of the Runoff Notes will have no other recourse against WMI Holdings Corp. or its subsidiaries for payments due on the Runoff Notes, and there can be no assurance that the Runoff Proceeds and other recourse assets will be sufficient in amount to cause any unpaid interest and the outstanding principal amount of the Runoff Notes to be paid in full; (ii) the Runoff Notes will not be guaranteed by any current or future subsidiaries of WMI Holdings Corp., including WMMRC, and will be effectively subordinate to the liabilities of WMMRC; and (iii) WMI Holdings Corp. does not currently intend to have the Runoff Notes listed on an exchange or a national market and, therefore, the Runoff Notes may have less liquidity than exchange-traded securities.  Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements.  However, readers should carefully review the statements set forth in the reports, which the Company files from time to time with the Securities and Exchange Commission, particularly its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

3.1
 
Amended and Restated Articles of Incorporation of WMI Holdings Corp., dated March 19, 2012.
 
3.2
 
Amended and Restated Bylaws of WMI Holdings Corp., dated March 19, 2012.
 
4.1
 
First Lien Indenture, dated March 19, 2012.
 
4.2
 
Second Lien Indenture, dated March 19, 2012.
 
10.1
 
Financing Agreement, dated March 19, 2012, by and among WMI Holdings Corp., as borrower, certain lenders party thereto, and US Bank National Association as agent for the lenders.
 
10.2
 
Pledge and Security Agreement, dated March 19, 2012, by and among WMI Holdings Corp., Wilmington Trust, National Association, Law Debenture Trust Company of New York and U.S. Bank National Association.
 
10.3
 
Pledge and Security Agreement, dated March 19, 2012, by and among WMI Holdings Corp., WMI Investment Corp. and US Bank National Association.
 
10.4
 
Intercreditor Agreement, dated March 19, 2012, by and among Wilmington Trust, National Association, Law Debenture Trust Company of New York, and U.S. Bank National Association.
 
10.5
 
Employment Agreement, dated March 22, 2012, by and between WMI Holdings Corp. and Weijia “Vicky” Wu.
 
10.6
 
Employment Agreement, dated March 22, 2012, by and between WMI Holdings Corp. and Peter Struck.
 
10.7
 
Transition Services Agreement, dated March 23, 2012, by and between WMI Holdings Corp. and the Liquidating Trust.
 
10.8
 
Form of Indemnification Agreement.
 
 
 
 
10
 
 
 
 
 
99.1
 
Notice of Abandonment of Equity Interests in Washington Mutual Bank, dated March 16, 2012.
 
99.2
 
Notice of Effective Date, dated March 19, 2012, filed with the United States Bankruptcy Court for the District of Delaware.
 
99.3
 
Summary of Certain Distributions.
 
99.4
 
Press Release issued March 19, 2012.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
   
WMI HOLDINGS CORP.
(Registrant)
 
 
         
Date:  March 23, 2011
 
 
By:
 
   /s/  Charles Edward Smith
 
       
Name:
 
Charles Edward Smith
 
 
       
Title:
 
Executive Vice President
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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EXHIBIT INDEX

3.1
 
Amended and Restated Articles of Incorporation of WMI Holdings Corp., dated March 19, 2012.
 
3.2
 
Amended and Restated Bylaws of WMI Holdings Corp., dated March 19, 2012.
 
4.1
 
First Lien Indenture, dated March 19, 2012.
 
4.2
 
Second Lien Indenture, dated March 19, 2012.
 
10.1
 
Financing Agreement, dated March 19, 2012, by and among WMI Holdings Corp., as borrower, certain lenders party thereto, and US Bank National Association as agent for the lenders.
 
10.2
 
Pledge and Security Agreement, dated March 19, 2012, by and among WMI Holdings Corp., Wilmington Trust, National Association, Law Debenture Trust Company of New York and U.S. Bank National Association.
 
10.3
 
Pledge and Security Agreement, dated March 19, 2012, by and among WMI Holdings Corp., WMI Investment Corp. and US Bank National Association.
 
10.4
 
Intercreditor Agreement, dated March 19, 2012, by and among Wilmington Trust, National Association, Law Debenture Trust Company of New York, and U.S. Bank National Association.
 
10.5
 
Employment Agreement, dated March 22, 2012, by and between WMI Holdings Corp. and Weijia “Vicky” Wu.
 
10.6
 
Employment Agreement, dated March 22, 2012, by and between WMI Holdings Corp. and Peter Struck.
 
10.7
 
Transition Services Agreement, dated March 23, 2012, by and between WMI Holdings Corp. and the Liquidating Trust.
 
10.8
 
Form of Indemnification Agreement.
 
99.1
 
Notice of Abandonment of Equity Interests in Washington Mutual Bank, dated March 16, 2012.
 
99.2
 
Notice of Effective Date, dated March 19, 2012, filed with the United States Bankruptcy Court for the District of Delaware.
 
99.3
 
Summary of Certain Distributions.
 
99.4
 
Press Release issued March 19, 2012.
 

 
 
 
 
 
 
 
 
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EXHIBIT 3.1
 
 
 
 
 
 
 
 
WMI HOLDINGS CORP.
 
AMENDED AND RESTATED ARTICLES OF INCORPORATION
 

 
The following Amended and Restated Articles of Incorporation are executed by the undersigned, a Washington corporation:
 
ARTICLE I.  NAME
 
The name of the Corporation is WMI Holdings Corp. (the “ Corporation ”).
 
ARTICLE II. REGISTERED AGENT
 
The address of the registered office of the Corporation in the State of Washington is 300 Deschutes Way SW, Suite 304, Tumwater WA 98501.  The name of the registered agent of the Corporation in the State of Washington at such address is Corporation Service Company.
 
ARTICLE III.  PURPOSE
 
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Washington Business Corporation Act, as from time to time amended (the “ Act ”).
 
ARTICLE IV.  CAPITALIZATION
 
The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is Five Hundred Five Million (505,000,000) shares, of which:
 
Five Hundred Million (500,000,000) shares, par value $0.00001 per share, shall be shares of common stock (the “ Common Stock ”); and
 
Five Million (5,000,000) shares, par value $0.00001 per share, shall be shares of preferred stock (the “ Preferred Stock ”).
 
1.   COMMON STOCK.  Except as (i) otherwise required by law or (ii) expressly provided in these Articles of Incorporation, each share of Common Stock shall have the same powers, rights and privileges and shall rank equally, share ratably and be identical in all respects as to all matters.
 
a.           DIVIDENDS.  Subject to the rights of the holders of Preferred Stock, and to the other provisions of these Articles of Incorporation, holders of Common Stock shall be entitled to receive equally, on a per share basis, such dividends and other distributions in cash, securities or other property of the Corporation as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor.
 
b.           VOTING RIGHTS.  At every annual or special meeting of shareholders of the Corporation, each holder of Common Stock shall be entitled to cast one (1) vote for each share of Common Stock standing in such holder’s name on the stock transfer
 

 
 
 

records of the Corporation; provided, however , that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to these Articles of Incorporation (including, without limitation, to vote on any certificate of designation (or any amendment thereto) relating to any series of Preferred Stock) that solely amends, modifies or alters the terms of one or more outstanding series of Preferred Stock if, pursuant to the terms of such outstanding series, the holders of such Preferred Stock are entitled, either separately or together with the holders of one or more other such series, to the exclusion of the holders of the Common Stock, to vote thereon pursuant to these Articles of Incorporation (including, without limitations, any certificate of designation relating to any series of Preferred Stock).
 
c.           PREEMPTIVE RIGHTS.  Shareholders of the Corporation shall have no preemptive rights to acquire additional shares of stock or securities convertible into shares of stock of the Corporation.
 
2.   PREFERRED STOCK.  The Preferred Stock may be issued from time to time in one or more series in any manner permitted by law and the provisions of these Articles of Incorporation, as determined from time to time by the Board of Directors and stated in the resolution or resolutions providing for its issuance, prior to the issuance of any shares.  The Board of Directors shall have the authority to fix and determine and to amend, subject to these provisions, the designation, preferences, limitations and relative rights of the shares of any series that is wholly unissued or to be established.  Unless otherwise specifically provided in the resolution establishing any series, the Board of Directors shall further have the authority, after the issuance of shares of a series whose number it has designated, to amend the resolution establishing such series to decrease the number of shares of that series, but not below the number of shares of such series then outstanding.  The authority of the Board of Directors under this Section 2 of Article IV may be delegated to a committee of the Board of Directors or to a senior executive officer of the Corporation to the extent permitted under Section 23B.08.250(5)(g) of the Act.
 
ARTICLE V.  NO NON-VOTING EQUITY SECURITIES
 
Pursuant to Section  1123(а)(6) of the title II of the United States Code (the “ Bankruptcy Code ”), notwithstanding any other provision contained herein to the contrary, the Corporation shall not issue non-voting equity securities.
 
ARTICLE VI.  RESTRICTIONS ON TRANSFER OF SECURITIES
 
It is in the best interests of the Corporation and its shareholders that certain restrictions on the transfer or other disposition of shares of Common Stock, as relates to the preservation of certain tax attributes, be established as more fully set forth in this Article VI .
 
1.   Definitions .  As used in this Article VI , the following capitalized terms shall have the following respective meanings (and any references to any portions of Treasury Regulation Section 1. 382-2Т shall include any successor provision thereto):
 
“ Acquire ” means the acquisition, directly or indirectly, of ownership of Corporation Securities by any means, including, without limitation, (i) the exercise of any rights under any option, warrant, convertible security, pledge or other security interest or similar right
 

 
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to acquire shares, (ii) the entering into of any swap, hedge or other arrangement that results in the acquisition of any of the economic consequences of ownership of Corporation Securities, or (iii) any other acquisition or transaction treated under the applicable rules under Section 382 of the Code as a direct or indirect acquisition (including the acquisition of an ownership interest in a Substantial Holder), but shall not include the acquisition of any such rights unless, as a result, the acquiror would be considered an owner within the meaning of the tax laws.  The terms “ Acquires ” and “ Acquisition ” shall have the same meaning.
 
“ Board ” means the board of directors of the Corporation.
 
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
 
“ Corporation Securities ” means (i) shares of Common Stock, (ii) any other interests that would be treated as “stock” of the Corporation pursuant to Treasury Regulation Section 1.382-2T(f)(18), and (iii) warrants, rights or options (including within the meaning of Treasury Regulation Section 1.382-4(d)(9)) to purchase Corporation Securities, but only to the extent such warrants, rights or options are treated as exercised pursuant to Treasury Regulation Section 1.382-4(d).
 
“ Disposition ” means the sale, transfer, exchange, assignment, liquidation, conveyance, pledge, or other disposition or transaction treated under the applicable rules under Section 382 of the Code as a direct or indirect disposition (including the disposition of an ownership interest in a Substantial Holder).  The terms “ Dispose ” and “ Disposition ” shall have the same meaning.
 
“ DTC ” means The Depository Trust Company.
 
“ Effective Date ” means the effective date of the Plan, which shall be the date of filing of these Articles of Incorporation.
 
“ Percentage Stock Ownership ” means percentage stock ownership as determined in accordance with Treasury Regulation Section  1.382-2Т(g), (h) (without regard to the rule that treats stock of an entity as to which the constructive ownership rules apply as no longer owned by that entity), (j) and (k), and Treasury Regulation Section 1.382-4.
 
“ Person ” means an individual, corporation, estate, trust, association, limited liability company, partnership, joint venture or similar organization or “entity” within the meaning of Treasury Regulation Section 1.382-3 (including, without limitation, any group of Persons treated as a single entity under such regulation).
 
“ Plan ” means the Seventh Amended Joint Plan of Washington Mutual, Inc. and WMI Investment Corp. pursuant to Chapter 11 of the Bankruptcy Code.
 
“ Prohibited Transfer ” means any purported Transfer of Corporation Securities to the extent that such Transfer is prohibited and/or void under this Article VI .
 
“ Restriction Release Date ” means the earliest of (i) any date after the Effective Date if the Board in good faith determines that it is in the best interests of the Corporation and its
 

 
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shareholders for the ownership and transfer limitations set forth in this Article VI to expire, (ii) the beginning of a taxable year of the Corporation as of which no Tax Benefits are available, or (iii) December 31, 2030.
 
“ Substantial Holder ” means a Person (including, without limitation, any group of Persons treated as a single “entity” within the meaning of the Treasury Regulation Section 1.382-3) holding Corporation Securities, whether as of the Effective Date, after giving effect to the Plan, or thereafter, representing a Percentage Stock Ownership (including indirect ownership, as determined under applicable Treasury Regulations) in the Corporation of at least 4.75%.
 
“ Tax Benefits ” means the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as well as any “net unrealized built-in loss” within the meaning of Section 382 of the Code, of the Corporation or any direct or indirect subsidiary thereof.
 
“ Transfer ” means any direct or indirect Acquisition or Disposition of Corporation Securities.
 
“ Treasury Regulation ” means a Treasury regulation promulgated under the Code.
 
2.   Ownership Limitations .
 
(a)   To the fullest extent permitted by law, from and after the Effective Date and prior to the Restriction Release Date:
 
(A)   no Person shall be permitted to make an Acquisition, whether in a single transaction or series of related transactions, and any such purported Acquisition will be void ab initio , to the extent that after giving effect to such purported Acquisition (i) the purported acquiror or any other Person by reason of the purported acquiror’s Acquisition would become a Substantial Holder, or (ii) the Percentage Stock Ownership of a Person that, prior to giving effect to the purported Acquisition, is a Substantial Holder would be increased; and
 
(B)   no Substantial Holder shall Dispose of any Corporation Securities without consent of the Board, as provided in Section 2(b) of this Article VI , and any such purported Disposition will be void ab initio .
 
The prior sentence is not intended to prevent the Corporation Securities from being DTC-eligible and shall not preclude the settlement of any transactions in the Corporation Securities entered into through the facilities of a national securities exchange, but such transaction, if prohibited by the prior sentence, shall nonetheless be a Prohibited Transfer.
 
(b)   The restrictions set forth in Section 2(a) of this Article VI shall not apply to a proposed Transfer, and such Transfer shall be permitted notwithstanding anything to the contrary in Section 2(a), if the transferor or the transferee, upon providing at least fifteen (15) days prior written notice of such proposed Transfer to the Board, obtains the written approval or consent to the proposed Transfer from the Board.  The Board will consider whether the proposed Transfer, when considered alone or with other proposed or planned Transfers, will impair the
 

 
4
 

Corporation’s Tax Benefits and may, within its discretion, determine whether to permit the proposed Transfer, or not to permit the proposed Transfer, in order to protect the Corporation’s Tax Benefits.  If a Substantial Holder proposes to Dispose of stock in a transaction that would otherwise be limited by Section  2(а)(В) of this Article VI , the Board shall approve such proposed Disposition, unless the Board determines in good faith that the proposed Disposition, whether considered alone or with other transactions (including, without limitation, past transactions or contemplated transactions), would create a material risk that the Corporation’s Tax Benefits may be jeopardized.  The Board shall endeavor to inform the requesting party of its determination within ten (10) days after receiving such written notice; provided, however , that the failure of the Board to respond during such ten (10) day period shall not be deemed to be a consent to the Transfer.  As a condition to granting its consent (and in the case of Dispositions, subject to the standard set forth in the third sentence of this Section 2(b)), the Board may, in its discretion, require and/or obtain (at the expense of the transferor and/or transferee) such representations and/or agreements from the transferor and/or transferee, such opinions of counsel to be rendered by nationally recognized counsel approved by the Board (which for the avoidance of doubt may include the regular counsel for the transferor or transferee), and such other advice, in each case as to such matters as the Board determines is appropriate.  The Board may waive the restrictions imposed in this Article VI , in whole or in part, in circumstances where it believes doing so would be to be beneficial to shareholders of the Corporation taken as a whole.
 
3.   Treatment of Excess Securities .
 
(a)   No employee or agent of the Corporation shall record any Prohibited Transfer, and the purported transferee (the “ Purported Transferee ”) of a Prohibited Transfer shall not be recognized as a shareholder of the Corporation for any purpose whatsoever in respect of the Corporation Securities which are the subject of the Prohibited Transfer (the “ Excess Securities ”).  Until the Excess Securities are acquired by another Person in a Transfer that is not a Prohibited Transfer, the Purported Transferee shall not be entitled with respect to such Excess Securities to any rights of shareholders of the Corporation, including, without limitation, the right to vote such Excess Securities and to receive dividends or distributions, whether liquidating or otherwise, in respect thereof.  Once the Excess Securities have been acquired in a Transfer that is in accordance with this Section 3 of this Article VI and is not a Prohibited Transfer, such Corporation Securities shall cease to be Excess Securities.
 
(b)   If the Board determines that a Prohibited Transfer has occurred, such Prohibited Transfer and, if applicable, the recording of such Prohibited Transfer, shall, to the fullest extent permitted by law, be void ab initio and have no legal effect and, upon written demand by the Corporation, the Purported Transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the Purported Transferee's possession or control, together with any dividends or other distributions that were received by the Purported Transfer from the Corporation with respect to the Excess Securities (the “ Prohibited Distributions ”), to an agent designated by the Board (the “ Agent ”).
 
(A)   In the case of a Prohibited Transfer described in Section  2(а)(A) of this Article VI , the Agent shall thereupon sell to a buyer or buyers, the Excess Securities transferred to it in one or more arm's-length transactions (including over a national securities exchange on which the Corporation Securities may be traded, if possible);
 

 
5
 

  provided, however , that the Agent, in its sole discretion, shall effect such sale or sales in an orderly fashion and shall not be required to effect any such sale within any specific time frame if, in the Agent’s discretion, such sale or sales would disrupt the market for the Corporation Securities or otherwise would adversely affect the value of the Corporation Securities.  If the Purported Transferee has resold the Excess Securities before receiving the Corporation's demand to surrender the Excess Securities to the Agent, the Purported Transferee shall be deemed to have sold the Excess Securities for the Agent, and shall be required, to the fullest extent permitted by law, to transfer to the Agent any Prohibited Distributions and proceeds of such sale, except to the extent that the Corporation grants written permission to the Purported Transferee to retain a portion of such sales proceeds not exceeding the amount that the Purported Transferee would have received from the Agent pursuant to Section  3(с) of this Article VI if the Agent, rather than the Purported Transferee, had resold the Excess Securities.
 
(B)   In the case of a Prohibited Transfer described in Section  2(а)(В) of this Article VI , the transferor of such Prohibited Transfer (the “ Purported Transferor ”) shall also deliver to the Agent the sales proceeds from the Prohibited Transfer (in the form received, i.e., whether in cash or other property), and the Agent shall thereupon sell any non-cash consideration to a buyer or buyers in one or more arm's-length transactions (including over a national securities exchange, if possible).  If the Purported Transferee is determinable (other than with respect to a transaction entered into through the facilities of a national securities exchange), the Agent shall, to the extent possible, return the Prohibited Distributions to the Purported Transferor, and shall reimburse the Purported Transferee from the sales proceeds received from the Purported Transferor (or the proceeds from the disposition of any non-cash consideration) for the cost of any Excess Securities returned in accordance with Section  3(с) of this Article VI .  If the Purported Transferee is not determinable, or to the extent the Excess Securities have been resold and thus cannot be returned to the Purported Transferor, the Agent shall use the proceeds to acquire on behalf of the Purported Transferor, in one or more arm’s-length transactions (including over a national securities exchange on which the Corporation Securities may be traded, if possible), an equal amount of Corporation Securities in replacement of the Excess Securities sold; provided, however , that, to the extent the amount of proceeds is not sufficient to fund the purchase price of such Corporation Securities and the Agent’s costs and expenses (as described in Section  3(с) of this Article VI ), the Purported Transferor shall promptly fund such amounts upon demand by the Agent.
 
(c)   The Agent shall apply any proceeds or any other amounts received by it and in accordance with Section 3 of this Article VI as follows:
 
(A)   first , such amounts shall be paid to the Agent to the extent necessary to cover its costs and expenses incurred in connection with its duties hereunder;
 
(B)   second , any remaining amounts shall be paid to the Purported Transferee, up to the amount actually paid by the Pur ported Transferee, for the Excess Securities (or in the case of any Prohibited Transfer by gift, devise or inheritance or any other Prohibited Transfer without consideration, the fair market value, (х ) calculated on
 

 
6
 

the basis of the closing market price fo r the Corporation Securities on the day before the Prohibited Transfer or (у ) if the Corporation Securities are not listed or admitted to trading on any stock exchange but are traded in the over-the-counter market, calculated based upon the difference between the highest bid and lowest asked prices, as such prices are reported by the National Association of Securities Dealers through its NASDAQ system or any successor system on the day before the Prohibited Transfer or, if none, on the last preceding day for which such quotations exist, or (z) if the Corporation Securities are neither listed nor admitted to trading on any stock exchange nor traded in the over-the counter market, then as determined in good faith by the Board, which amount (or fair market value) shall be determined at the discretion of the Board); and
 
(C)   third , any remaining amounts, subject to the limitations imposed by the following proviso, shall be paid to one or more organizations qualifying under Section  501(с)(3) of the Code (or any compara ble successor provision) (“ Section 501(c)(3) ”) selected by the Board; provided, however , that, if the Excess Securities (including any Excess Securities arising from a previous Prohibited Transfer not sold by the Agent in a prior sale or sales) represent a 4.75% or greater Percentage Stock Ownership interest in the Corporation, then such remaining amounts shall be paid to two or more organizations qualifying under Section  501 (с)(3) selected by the Board, such that no organization qualifying under Section  501(с)(3) shall possess Percentage Stock Ownership in the Corporation in excess of 4.74%.
 
The recourse of any Purported Transferee in respect of any Prohibited Transfer shall be limited to the amount payable to the Purported Transferee pursuant to clause (B) above.  Except as may be required by law, in no event shall the proceeds of any sale of Excess Securities pursuant to this Article VI inure to the benefit of the Corporation.
 
(d)   If the Purported Transferee or the transferor fails to surrender the Excess Securities (as applicable) or the proceeds of a sale thereof to the Agent within thirty (30) days from the date on which the Corporation makes a demand pursuant to Section (3)(b) of this Article VI , then the Corporation shall use its best efforts to enforce the provisions hereof, including the institution of legal proceedings to compel the surrender.
 
4.   Obligation to Provide Information .
 
(a)   At the request of the Corporation, any Person which is a beneficial, legal or record holder of Corporation Securities, and any proposed transferor or transferee and any Person controlling, controlled by or under common control with the proposed transferor or transferee, shall provide such information as the Corporation may reasonably request as may be necessary from time to time in order to determine compliance with this Article VI or the status of the Corporation’s Tax Benefits.
 
5.   Bylaws; Legends; Compliance .
 
(a)   The bylaws of the Corporation may make appropriate provisions to effectuate the requirements of this Article VI .
 

 
7
 


 
(b)   Until the Restriction Release Date, all certificates representing Corporation Securities shall bear a conspicuous legend as follows:
 
“THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO OWNERSHIP RESTRICTIONS PURSUANT TO ARTICLE VI OF THE ARTICLES OF INCORPORATION OF WMI HOLDINGS CORP. REPRINTED IN SUBSTANTIAL PART ON THE BACK OF THIS CERTIFICATE. THE CORPORATION WILL FURNISH A COPY OF ITS ARTICLES OF INCORPORATION TO THE HOLDER OF RECORD OF THIS CERTIFICATE WITHOUT CHARGE UPON A WRITTEN REQUEST ADDRESSED TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS.”
 
(c)   The Corporation shall have the power to make appropriate notations upon its stock transfer records and instruct any transfer agent, registrar, securities intermediary or depository with respect to the requirements of this Article VI for any uncertificated Corporation Securities or Corporation Securities held in an indirect holding system, and the Corporation shall provide notice of the restrictions on transfer and ownership to holders of uncertificated shares in accordance with applicable law.
 
(d)   The Board shall have the power to determine all matters necessary for determining compliance with this Article VI , including, without limitation, determining (A) the identification of Substantial Holders, (B) whether a Transfer is a Prohibited Transfer, (C) the Percentage Stock Ownership of any Substantial Holder or other Person, (D) whether an instrument constitutes a Corporation Security, (E) the amount (or fair market value) due to a Purported Transferee pursuant to clause (B) of Section 3(c) of this Article VI , and (F) any other matters that the Board determines to be relevant.  The good faith determination of the Board on such matters shall be conclusive and binding for the purposes of this Article VI .
 
ARTICLE VII.  BOARD OF DIRECTORS
 
1.   The business and affairs of the Corporation shall be managed by, or under the direction of, the Board of Directors.  The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or these Articles of Incorporation directed or required to be exercised or done solely by the shareholders.
 
2.   The number of directors that shall constitute the entire Board shall be seven (7).
 
3.   Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or any other cause shall, unless otherwise required by the Act or the bylaws of the Corporation, be filled only by the Board of Directors, provided, that if the directors then in office constitute less than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of the directors then in office.  Directors elected to fill a newly created directorship or other vacancies shall hold office until such director's successor has
 

 
8
 

 been duly elected or until his earlier death, resignation or removal as provided in these Articles of Incorporation.
 
4.   Subject to the rights of the holders of any series of Preferred Stock then outstanding and the bylaws of the Corporation, any director may be removed, with or without cause, from office at any time, at a meeting called for that purpose, and only by the affirmative vote of the holders of a majority of the voting power of the issued and outstanding shares of Common Stock and the issued and outstanding shares of Preferred Stock, if any, entitled to vote generally with the Common Stock on all matters on which the holders of Common Stock are entitled to vote, voting together as a single class.
 
5.   Elections for directors need not be by written ballot unless the bylaws of the Corporation shall otherwise provide.
 
6.   The Board of Directors is expressly authorized to adopt, amend or repeal the bylaws of the Corporation; provided, however, that any amendment to Section 3.2 or Section 3.4 of the bylaws shall require the unanimous consent of the entire Board.  The shareholders shall also have the power to adopt, amend or repeal the bylaws of the Corporation; provided, however , that, in addition to any vote of the holders of any class or series of stock of the Corporation required by the Act, by these Articles of Incorporation or by the bylaws, the affirmative vote of the holders of more than 50% of the voting power of the issued and outstanding shares of Common Stock and the issued and outstanding shares of Preferred Stock, if any, entitled to vote generally with the Common Stock on all matters on which the holders of Common Stock are entitled to vote, voting together as a single class, shall be required to adopt, amend or repeal the bylaws of the Corporation and any amendment to Section 3.2 or Section 3.4 of the bylaws shall require the unanimous consent of the entire Board.
 
7.           The right to cumulate votes in the election of directors shall not exist with respect to shares of stock of the Corporation.
 
ARTICLE VIII.  LIABILITY OF DIRECTORS
 
A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for conduct as a director, except for:
 
(a)           Acts or omissions involving intentional misconduct by the director or a knowing violation of law by the director;
 
(b)           Conduct violating Section 23B.08.310 of the Act (which involves distributions by the Corporation); or
 
(c)           Any transaction from which the director will personally receive a benefit in money, property, or services to which the director is not legally entitled.
 
If the Act is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent not prohibited by the Act, as so amended.
 

 
9
 


 
ARTICLE IX.  AMENDMENT
 
The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon shareholders herein are granted subject to this reservation.  Notwithstanding any other provision of these Articles of Incorporation or the bylaws of the Corporation, and notwithstanding the fact that a lesser percentage or separate class vote may be specified by the Act, these Articles of Incorporation, or otherwise, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock required by the Act, these Articles of Incorporation, or otherwise, the affirmative vote of the holders of at least 80% of the voting power of the issued and outstanding shares of Common Stock and the issued and outstanding shares of Preferred Stock, if any, entitled to vote generally with the Common Stock on all matters on which the holders of Common Stock are entitled to vote, voting together as a class, shall be required to adopt any provision inconsistent with, or to amend or repeal any provision of, Articles VIII , IX or X of these Articles of Incorporation.  Any other amendment to these Articles of Incorporation that is submitted to the shareholders for approval may be approved by a majority of all the votes entitled to be cast on such proposed amendment and majority of the votes entitled to be cast within any voting group entitled to vote separately on such amendment under the Act.
 
ARTICLE X.  BUSINESS OPPORTUNITIES
 
1.   Except as otherwise agreed in writing, to the fullest extent permitted by law, (i) no Original Shareholder (or any of the officers, directors, employees, advisory board members, agents, shareholders, members, partners, affiliates and subsidiaries of any Original Shareholder or any of its affiliates (collectively the “ Original Affiliates ”)) shall have the duty (fiduciary or otherwise) or obligation, if any, to refrain from (a) engaging in the same or similar activities or lines of business as the Corporation, (b)  doing business with any client, customer or vendor of the Corporation or (с ) entering into and performing one or more agreements (or modifications or supplements to pre-existing agreements) with the Corporation, including, without limitation, in the case of any of clause (a), (b) or (c), any such matters as may be corporate opportunities, and (ii) no Original Shareholder nor any Original Affiliate shall be deemed to have breached any duties (fiduciary or otherwise), if any, to the Corporation or its shareholders by reason of any Original Shareholder or any Original Affiliate engaging in any such activity or entering into such transactions, including, without limitation, any corporate opportunities.
 
2.   If any Original Shareholder or Original Affiliate acquires knowledge of a corporate opportunity or is utilizing any corporate opportunity, the Corporation shall have no interest in such corporate opportunity and no expectancy that such corporate opportunity be offered to it, any such interest or expectancy being hereby renounced, so that (i) such Original Shareholder or Original Affiliate shall, to the fullest extent permitted by law, have the right to hold and utilize any such corporate opportunity for its own account (and for the account of its officers, directors, employees, advisory board members, agents, shareholders, members, partners, affiliates and subsidiaries (other than the Corporation)) or to direct, sell, assign or transfer such corporate opportunity to any person other than the Corporation and (ii) such Original Shareholder or Original Affiliate shall have no obligation to communicate or offer such
 

 
10
 

corporate opportunity to the Corporation and shall not, to the fullest extent permitted by law, breach any duty (fiduciary or otherwise) to the Corporation or any of its shareholders or be liable to the Corporation, or any of its shareholders for breach of any duty (fiduciary or otherwise) as a director, officer or shareholder of the Corporation by reason of the fact that any Original Shareholder or Original Affiliate acquires, utilizes, or seeks such corporate opportunity for itself, directs such corporate opportunity to another person, or otherwise does not communicate information regarding such corporate opportunity to the Corporation or any of its shareholders; provided, however , that the Corporation does not renounce any interest or expectancy it may have in any corporate opportunity that is offered to any director or officer of the Corporation (as defined in Securities Exchange Rule 16 а-1(f) who also is an Original Affiliate if such opportunity is expressly offered to such person in his capacity as a director or officer of the Corporation (as defined in Securities Exchange Act Rule 1 6 а-1(f)).
 
3.   For purposes of this Article X , (i) the term “corporate opportunity” shall mean an investment, business opportunity or prospective economic or competitive advantage, including, without limitation, any matter (a) in which the Corporation could have an interest or expectancy, (b) which the Corporation is financially able to undertake, or with respect to which the Corporation would reasonably be able to obtain debt or equity financing, and (c) which is, from its nature, in the line or lines of the Corporation’s business or reasonable expansion thereof, (ii) the term “Corporation” shall mean the Corporation and all corporations, partnerships, joint ventures, associations and other entities in which the Corporation beneficially owns (directly or indirectly) 50% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests, (iii) the term “person” shall mean an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof, or other entity of any kind, and (iv) the term “ Original Shareholder ” shall mean each of the holders of Corporation’s Common Stock as of the Effective Date (as defined Article VI of these Articles of Incorporation) and each of their respective affiliates (as defined in Rule 405 of the Securities Act of 1933, as amended from time to time and any successor provision thereto); provided, however , that for purposes of this definition of “Original Shareholder,” and the definition of “Original Affiliate” above, none of the Original Shareholders, on one hand, or the Corporation, on the other hand, shall be deemed to be an affiliate of one another.
 
4.   Neither the alteration, amendment or repeal of this Article X nor the adoption of any provisions of these Articles of Incorporation inconsistent with this Article X shall eliminate or reduce the effect of this Article X in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article X , would accrue or arise prior to such alteration, amendment, repeal or adoption.
 
ARTICLE XI.  SHAREHOLDER APPROVAL BY CONSENT IN LIEU OF MEETING
 
So long as the Corporation is not a public company (as defined in the Act), corporate action required or permitted to be approved by a shareholder vote at a meeting of shareholders may be taken without a meeting or a vote if the corporate action is approved by a single shareholder consent or multiple counterpart shareholder consents executed by shareholders holding of record, or otherwise entitled to vote, in the aggregate not less than the
 

 
11
 

minimum votes that would be necessary to approve such corporate action at a meeting at which all shares entitled to vote on the corporate action were present and voted.
 
ARTICLE XII.  SHAREHOLDER VOTE REQUIRED ON CERTAIN MATTERS
 
If shareholder approval of any of the following matters is required under the Act, such matter may be approved by a majority of the votes in each voting group entitled to be cast on such matter:  (a) a plan of merger or share exchange of the Corporation with any other corporation; (b) the sale, lease, exchange or other disposition, whether in one transaction or a series of transactions, by the Corporation of all or substantially all of the Corporation's property other than in the usual and regular course of business; or (c) the dissolution of the Corporation.  This Article is intended to reduce the voting requirements otherwise prescribed by the Act with respect to the foregoing matters.
 
ARTICLE XIII.  VOTING BY VOTING GROUPS
 
Except to the extent otherwise expressly provided in the provisions of these Articles of Incorporation relating to voting or approval rights of the Preferred Stock or particular series of Preferred Stock, or unless the Board of Directors conditions its submission of the proposed shareholder action on a separate vote by one or more smaller voting groups, classes or series, the holders of each outstanding class or series of shares of the C orporation shall not be entitled to vote as a separate voting group (a) on any amendment to these Articles of Incorporation with respect to which such class or series would otherwise be entitled under Section 23B.10.040(1)(a), (e) or (f) to vote as a separate voting group, (b) on any plan of merger or share exchange with respect to which such class or series would otherwise be entitled under Section 23B.11.035 to vote as a separate voting group or (c) on any other matter required or permitted to be submitted to a vote of the C orporation’s shareholders.  To the extent holders of a class or series of shares would otherwise be entitled to vote as a separate voting group with respect to any of the foregoing, such rights are hereby expressly eliminated.
 

 

 
[The Remainder of this Page is Intentionally Left Blank.]
 

 
12
 

 
Dated: March 19, 2012.
WMI HOLDINGS CORP.  
       
 
By:
/s/ Charles Edward Smith  
    Name:  Charles Edward Smith  
    Title:  Executive Vice President & General Counsel   
       
       


 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
 
 
EXHIBIT 3.2


 

 
AMENDED AND RESTATED
BYLAWS
 
 
OF
 
 
WMI HOLDINGS CORP.
(a Washington corporation)
 

 

 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
TABLE OF CONTENTS

Page
 

 
 
ARTICLE I
 
OFFICES
 
1
 
1.1
 
 
Registered Office and Agent
 
1
1.2
 
 
Principal Offices
 
1
1.3
 
 
Other Offices
 
1
ARTICLE II
 
MEETINGS OF SHAREHOLDERS
 
1
 
2.1
 
 
Annual Meeting
 
1
2.2
 
 
Special Meeting
 
1
2.3
 
 
Place of Meetings
 
2
2.4
 
 
Notice
 
2
2.5
 
 
Voting List
 
2
2.6
 
 
Quorum
 
2
2.7
 
 
Required Vote; Withdrawal of Quorum
 
3
2.8
 
 
Method of Voting; Proxies
 
3
2.9
 
 
Record Date
 
3
2.10
 
 
Conduct of Meeting
 
4
2.11
 
 
Inspectors
 
4
2.12
 
 
Approval of Corporate Action by Shareholders Without Meeting
 
5
ARTICLE III
 
DIRECTORS
 
6
 
3.1
 
 
Management
 
6
3.2
 
 
Number; Qualification; Election; Term
 
7
3.3
 
 
Change in Number
 
7
3.4
 
 
Vacancies
 
7
3.5
 
 
Meetings of Directors
 
7
3.6
 
 
Annual Meeting
 
8
3.7
 
 
Regular Meetings
 
8
3.8
 
 
Special Meetings
 
8
3.9
 
 
Notice
 
8
3.10
 
 
Quorum; Majority Vote
 
8
3.11
 
 
Procedure
 
8
3.12
 
 
Compensation
 
8
3.13
 
 
Chairman of the Board
 
9
3.14
 
 
Action by Board or Committees Without Meeting
 
9
ARTICLE IV
 
COMMITTEES
 
9
 
4.1
 
 
Designation
 
9
4.2
 
 
Number; Qualification; Term
 
9
4.3
 
 
Authority
 
9
4.4
 
 
Committee Changes
 
9
4.5
 
 
Regular Meetings
 
9
4.6
 
 
Special Meetings
 
10
4.7
 
 
Quorum; Majority Vote
 
10
4.8
 
 
Minutes
 
10
4.9
 
 
Compensation
 
10
4.10
 
 
Responsibility
 
10
 
 

 
i
 
 
 
 
TABLE OF CONTENTS
(continued)
 

Page
 

 
 
ARTICLE V
 
NOTICE
 
10
 
5.1
 
 
Method
 
10
5.2
 
 
Waiver
 
11
ARTICLE VI
 
OFFICERS
 
11
 
6.1
 
 
Number; Titles; Term of Office
 
11
6.2
 
 
Removal
 
11
6.3
 
 
Vacancies
 
11
6.4
 
 
Authority
 
11
6.5
 
 
Compensation
 
11
6.6
 
 
Chief Executive Officer
 
11
6.7
 
 
President
 
12
6.8
 
 
Chief Financial Officer
 
12
6.9
 
 
Vice Presidents
 
12
6.10
 
 
Treasurer
 
12
6.11
 
 
Assistant Treasurers
 
12
6.12
 
 
Secretary
 
12
6.13
 
 
Assistant Secretaries
 
13
ARTICLE VII
 
CERTIFICATES AND SHAREHOLDERS
 
13
 
7.1
 
 
Certificates for Shares
 
13
7.2
 
 
Replacement of Lost or Destroyed Certificates
 
13
7.3
 
 
Facsimile Signatures
 
13
7.4
 
 
Transfer of Shares
 
14
7.5
 
 
Registered Shareholders
 
14
7.6
 
 
Regulations
 
14
7.7
 
 
Legends
 
14
ARTICLE VIII
 
INDEMNIFICATION
 
14
 
8.1
 
 
Nature of Indemnity
 
14
8.2
 
 
Advances for Expenses
 
15
8.3
 
 
Procedure for Indemnification and Advancement
 
15
8.4
 
 
Other Rights; Continuation of Right to Indemnification
 
15
8.5
 
 
Insurance
 
16
8.6
 
 
Savings Clause
 
16
ARTICLE IX
 
MISCELLANEOUS PROVISIONS
 
16
 
9.1
 
 
Dividends
 
16
9.2
 
 
Reserves
 
16
9.3
 
 
Books and Records
 
16
9.4
 
 
Fiscal Year
 
16
9.5
 
 
Seal
 
16
9.6
 
 
Resignations
 
16
9.7
 
 
Securities of Other Corporations
 
17
9.8
 
 
Telephone Meetings
 
17
9.9
 
 
Treasury Regulation 1.382-3
 
17
 
 
 

 
ii
 
 
 
 
TABLE OF CONTENTS
(continued)
 

Page
 

 
 
 
9.10
 
 
Invalid Provisions
 
17
9.11
 
 
Mortgages, etc
 
17
9.12
 
 
Headings
 
17
9.13
 
 
References
 
17
9.14
 
 
Amendments
 
17



 
iii
 

 
 
 
AMENDED AND RESTATED
 
BYLAWS
 

 
OF
 

 
WMI HOLDINGS CORP.
 
(a Washington corporation)
 
PREAMBLE
 
These Amended and Restated Bylaws (" Bylaws" ) are subject to, and governed by, the Washington Business Corporation Act (" WBCA ") and the Amended and Restated Articles of Incorporation (as amended from time to time, the " Charter ") of WMI Holdings Corp., a Washington   corporation (the " Corporation ").  In the event of a direct conflict between the provisions of these Bylaws and the mandatory provisions of the WBCA or the Charter, such provisions of the WBCA or the Charter, as the case may be, shall control.
 
ARTICLE I
OFFICES
 
1.1   Registered Office and Agent .  The registered office and registered agent of the Corporation shall be as designated from time to time by the appropriate filing by the Corporation in the office of the Secretary of State of the State of Washington.
 
1.2   Principal Offices .  The principal office for the transaction of the business of the Corporation shall be at such place as may be established by the board of directors of the Corporation (the " Board "), within and without the State of Washington.  The Board is granted full power and authority to change said principal office from one location to another.
 
1.3   Other Offices .  The Corporation may also have offices at such other places, both within and without the State of Washington, as the Board may from time to time determine or as the business of the Corporation may require.
 
ARTICLE II
MEETINGS OF SHAREHOLDERS
 
2.1   Annual Meeting .  An annual meeting of shareholders of the Corporation shall be held each calendar year on such date and at such time as shall be designated from time to time by the Board and stated in the notice of the meeting or in a duly executed waiver of notice of such meeting, provided , however , that the first annual meeting shall take place within fifteen (15) months after the Effective Date (as defined in the Seventh Amended Joint Plan of Washington Mutual, Inc. and WMI Investment Corp. Pursuant to chapter 11 of the Bankruptcy Code).  At such meeting, the shareholders shall, subject to Article III hereof, elect directors and transact such other business as may properly be brought before the meeting.
 
2.2   Special Meeting .  A special meeting of the shareholders may be called at any time by the Chairman of the Board, the President, or the Board, and shall be called by the President or the Secretary at the request in writing of the shareholders of record of not less than ten percent (10%) of all shares entitled to vote at such meeting or as otherwise provided by the Charter.  A special meeting shall be held on such date and at such time as shall be designated by the person(s) calling the meeting and stated in the notice of the meeting or in a duly executed waiver of notice of such meeting.  Only such business shall be transacted at a special meeting as may be stated or indicated in the notice of such meeting or in a duly executed waiver of notice of such meeting.
 

 
 
 


 
2.3   Place of Meetings .  An annual meeting of shareholders may be held at any place within or without the State of Washington designated by the Board.  A special meeting of shareholders may be held at any place within or without the State of Washington designated in the notice of the meeting or a duly executed waiver of notice of such meeting.  Meetings of shareholders shall be held at the principal office of the Corporation unless another place is designated for meetings in the manner provided herein.
 
2.4   Notice .  Notice stating the place, if any, day, and time of each meeting of the shareholders, the record date for determining the shareholders entitled to vote at the meeting, if such date is different from the record date for determining shareholders entitled to notice of the meeting, and, in case of a special meeting, the purpose or purposes for which the meeting is called shall, unless otherwise provided by law, the Charter or these Bylaws, be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or person(s) calling the meeting, to each shareholder of record entitled to vote at such meeting.  If such notice is to be sent by mail, it shall be directed to such shareholder at his address as it appears on the records of the Corporation, unless he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, in which case it shall be directed to him at such other address.  Notice of any meeting of shareholders shall not be required to be given to any shareholder who shall attend such meeting in person or by proxy and shall not, at the beginning of such meeting, object to the transaction of any business because the meeting is not lawfully called or convened, or who shall, either before or after the meeting, submit a signed waiver of notice, in person or by proxy.  Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 23B.01.410(2)(c) of the WBCA.
 
2.5   Voting List .  At least ten (10) days before each meeting of shareholders, the Secretary or other officer of the Corporation who has charge of the Corporation’s stock ledger, either directly or through another officer appointed by him or through a transfer agent appointed by the Board, shall prepare a complete list of shareholders entitled to vote thereat ( provided , however , if the record date for determining the shareholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the shareholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order and showing the address of each shareholder and number of shares registered in the name of each shareholder.  For a period of ten (10) days prior to such meeting, such list shall be available for inspection by any shareholder during ordinary business hours, at the principal place of business of the Corporation or at a place specified in the meeting notice in the city where the meeting will be held and shall be open to examination by any shareholder for any purpose germane to the meeting.  Such list shall be produced at such meeting and kept at the meeting at all times during such meeting and may be inspected by any shareholder who is present.
 
2.6   Quorum .  The holders of a majority of the outstanding shares entitled to vote on a matter, present in person or by proxy, shall constitute a quorum at any meeting of shareholders, except as otherwise provided by law, the Charter, or these Bylaws.  Where a separate vote by a class or classes or series is required, a majority of the voting power of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.  If a quorum shall not be present, in person or by proxy, at any meeting of shareholders, the shareholders entitled to vote thereat who are present, in person or by proxy, or, if no shareholder entitled to vote is present, any officer of the Corporation, may adjourn the meeting from time to time.  Notice need not be given of the new date, time or place for the adjourned meeting if the new date, time or place is announced at the meeting before adjournment; provided, however, that if a new record date is fixed for the adjourned meeting, notice of the adjourned meeting must be given to persons who are shareholders as of the new record date.  At any adjourned meeting at which a quorum shall be present, in
 

 
2
 

person or by proxy, any business may be transacted that may have been transacted at the original meeting had a quorum been present.
 
2.7   Required Vote; Withdrawal of Quorum .  When a quorum is present at any meeting, the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote who are present, in person or by proxy, at the meeting and entitled to vote on the subject matter shall decide any question brought before such meeting, unless the question is one on which, by applicable law or any rule or regulation applicable to the Corporation or its stock, or under an express provision of the Charter or these Bylaws, a different vote is required, in which case such applicable law, rule or regulation, or such express provision shall govern and control the decision of such question.  Once a share is represented for any purpose at a meeting other than solely to object to holding a meeting or transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting.
 
2.8   Method of Voting; Proxies .  Except as otherwise provided in the Charter or by law, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders.  Elections of directors need not be by written ballot.  At any meeting of shareholders, every shareholder having the right to vote may vote either in person or by a proxy executed in writing by the shareholder or transmitted by the shareholder as permitted by law, including, without limitation, electronically, via telegram, internet, interactive voice response system, or other means of electronic transmission executed or authorized by such shareholder or by his duly authorized attorney-in-fact.  Each such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting.  Any such proxy transmitted electronically shall set forth information from which it can be determined by the Secretary of the Corporation that such electronic transmission was authorized by the shareholder.  No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.  If no date is stated in a proxy, such proxy shall be presumed to have been executed on the date of the meeting at which it is to be voted.  Each proxy shall be revocable unless expressly provided therein to be irrevocable and coupled with an interest sufficient in law to support an irrevocable power or unless otherwise made irrevocable by law.
 
2.9   Record Date .
 
(a)   For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action (other than shareholder action by written consent, which is governed by Section 2.9(b) hereof), the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, for any such determination of shareholders, such date in any case to be not more than sixty (60) days, and, in the case of a record date for a meeting, not less than ten (10) days prior to such meeting.  If the Board so fixes a record date for a meeting, such date shall also be the record date for determining the shareholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.  If no record date is fixed:
 
(i)   The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
 

 
3
 

(ii)   The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
 
(iii)   A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided , however , that the Board may fix a new record date for the adjourned meeting.
 
(b)   In order that the Corporation may determine the shareholders entitled to approve corporate action by consent without a meeting (including, without limitation, by telegram, cablegram or other electronic transmission as permitted by law), the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board.  Any shareholder of record seeking to have the shareholders authorize or take corporate action by written consent shall, by written notice to the Secretary of the Corporation, request the Board to fix a record date.  Such notice shall specify the action proposed to be consented to by shareholders.  The Board shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date (unless a record date has previously been fixed by the Board pursuant to the first sentence of this paragraph).  If no record date has been fixed by the Board within ten (10) days after the date on which such a request is received, the record date for determining shareholders entitled to approve corporate action by consent without a meeting, when no prior action by the Board is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivering such consent to the Corporation’s registered office in the State of Washington, the Corporation’s principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded.  Delivery made to the Corporation’s registered office in the State of Washington, principal place of business, or such officer or agent shall be by hand or by certified or registered mail, return receipt requested.
 
2.10   Conduct of Meeting .  The Chairman of the Board, if such office has been filled, and, if not, or if the Chairman of the Board is absent or otherwise unable to act, the President, shall preside at all meetings of shareholders.  The Secretary shall keep the records of each meeting of shareholders.  In the absence or inability to act of any such officer, such officer’s duties shall be performed by the officer given the authority to act for such absent or non-acting officer under these Bylaws or by some person appointed by the meeting.
 
2.11   Inspectors .  The Board may, and shall if required by law, in advance of any meeting of shareholders, appoint one or more inspectors to act at such meeting or any adjournment thereof.  If any of the inspectors so appointed shall fail to appear or act, the chairman of the meeting shall, or if inspectors shall not have been appointed, the chairman of the meeting may, appoint one or more inspectors.  Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability.  The inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the validity and effect of proxies and shall receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots, or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all shareholders.  On request of the chairman of the meeting, the inspectors shall
 

 
4
 

make a report in writing of any challenge, request, or matter determined by them and shall execute a certificate of any fact found by them.  No director or candidate for the office of director shall act as an inspector of an election of directors.  Inspectors need not be shareholders.
 
2.12   Approval of Corporate Action by Shareholders Without Meeting .  Any corporate action that may or is required to be approved at a meeting of the shareholders may be approved without a meeting or a vote, pursuant to the provisions of this Section 2.12.
 
(a)   Unanimous Written Consent .  If the Corporation is a public company (as defined in the WBCA), corporate action may be approved by means of execution of a single consent or multiple counterpart consents by all shareholders entitled to vote on the corporate action.
 
(b)   Less Than Unanimous Written Consent .  If the Corporation is not a public company (as defined in the WBCA), and if authorized by a general or limited authorization in the Charter, corporate action may be approved by means of execution of a single consent or multiple counterpart consents by shareholders holding of record or otherwise entitled to vote in the aggregate not less than the minimum number of votes that would be necessary to approve the corporate action at a meeting at which all shares entitled to vote on the corporate action were present and voted.
 
(c)   Requirements for Shareholder Consents .  Any shareholder consent in lieu of a meeting must (i) be in the form of a record; (ii) indicate the date of execution of the consent by each shareholder who executes it, which date must be on or after the applicable record date; (iii) describe the corporate action being approved; (iv) when delivered to each shareholder for execution, include or be accompanied by the same material that would have been required by the WBCA, the Charter or these Bylaws to be delivered to shareholders in or accompanying a notice of meeting at which the proposed corporate action would have been submitted for shareholder approval; and (v) be delivered to the Corporation for filing with the corporate records.
 
(d)   General Provisions .
 
(i)   Notice of Consent .
 

 
(A)            Notice that shareholder consents are being sought under Section 2.12(a) or Section 2.12(b), as applicable, shall be given, by the Corporation or another person soliciting such consents, on or promptly after the record date, to all shareholders entitled to vote on the record date who have not yet executed the shareholder consent and, if the WBCA would otherwise require that notice of a meeting of shareholders to consider the proposed corporate action be given to nonvoting shareholders, to all nonvoting shareholders as of the record date.  Such notice shall include or be accompanied by the same information required to be included in or to accompany the shareholder consent under Sections 2.12(c)(iii) and (iv).
 
(B)            Promptly after delivery to the Corporation of shareholder consents sufficient to approve the corporate action under Section 2.12(a) or Section 2.12(b), as applicable, notice that sufficient shareholder consents have been executed to approve the corporate action shall be
 

 
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given by the Corporation to all shareholders entitled to vote on the record date, and, if the WBCA would otherwise require that notice of a meeting of shareholders to consider the proposed corporate action be given to nonvoting shareholders, to all nonvoting shareholders as of the record date.  If the Corporation receives shareholder consents sufficient to approve the corporate action under Section 2.12(a) or Section 2.12(b), as applicable, as of or promptly after the record date, the notice required under this Section 2.12(d)(i)(B) may be combined with the notice required under Section 2.12(d)(i)(A).
 
(ii)   Record Date .  If not otherwise fixed by the Board, the record date for determining shareholders entitled to take action without a meeting is the date of execution indicated on the earliest dated shareholder consent, even though such shareholder consent may not have been delivered to the Corporation on that date.
 
(iii)   Withdrawal of Consent .  A shareholder may withdraw an executed shareholder consent by delivering a notice of withdrawal in the form of an executed record to the Corporation prior to the time when shareholder consents sufficient to approve the corporate action have been delivered to the Corporation.
 
(iv)   Date of Signature .   Every shareholder consent shall bear the date of execution of each shareholder that executes such consent.
 
(v)   Time Allowed to Complete Execution of Consents .   An executed shareholder consent is not effective to approve the corporate action referred to in the consent unless, within sixty (60) days of the earliest dated shareholder consent delivered to the Corporation, shareholder consents executed by a sufficient number of shareholders to approve the corporate action are delivered to the Corporation.
 
(vi)   Effective Date of Shareholder Approval by Consent .   Unless the shareholder consent specifies a later effective date, shareholder approval of corporate action by consent of the shareholders is effective when (A) executed shareholder consents sufficient to approve the corporate action are delivered to the Corporation, either at an address designated by the Corporation for delivery of such shareholder consents or at the Corporation's registered office, or to such electronic address, location or system as the Corporation may have designated for delivery of such shareholder consents, and (B) if corporate action is approved by less than unanimous consent, the period of advance notice (if any) required by the Charter to be given to any nonconsenting or nonvoting shareholders has been satisfied.
 
(vii)   Inclusion in Corporate Records .   Any shareholder consent obtained in accordance with this Section 2.12 shall be inserted in the Corporation's minute book as if it were the minutes of a meeting of the shareholders.
 
ARTICLE III
DIRECTORS
 
3.1   Management .  The business and affairs of the Corporation shall be managed by or under the direction of the Board.  The Board may exercise all such authority and powers of the Corporation and
 

 
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do all such lawful acts and things as are not by statute or the Charter directed or required to be exercised or done solely by the shareholders.
 
3.2   Number; Qualification; Election; Term .  The number of directors that shall constitute the entire Board shall be seven (7).  The directors as of the date hereof shall be Michael Willingham, Mark Holliday, Diane Glossman, Timothy Graham, Steven Scheiwe, Michael Renoff (the “ TPS Director ”) and Eugene Davis (the “ FA Director ”).  Except as otherwise provided by the Bylaws or the Charter, the directors shall be elected at each annual meeting of shareholders at which a quorum is present.  Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on the election of directors and each director so chosen shall hold office until his successor is elected and qualified or, if earlier, until his death, resignation, or removal from office.  None of the directors need be a shareholder of the Corporation or a resident of the State of Washington.  Each director must have attained the age of majority.  For so long as that certain financing agreement dated March 19, 2012, by and among the Corporation, the lenders from time to time party thereto, U.S. Bank National Association, as agent for the lenders, and certain other parties thereto (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from to time, the “ Financing Agreement ”), remains in effect or any obligations remain outstanding thereunder , no person nominated for election to the Board, as a successor to the FA Director (or his or her successor or subsequent  successor thereof) or appointed to fill a vacancy  in the Board which was held by the FA Director, shall be qualified to serve as a director unless the Required Lenders (as such term is defined in the Financing Agreement), by notice in writing from the Required Lenders to the Corporation, shall have approved and recommended to the Board such nominee or appointee, who shall be acceptable to the Required Lenders in their sole discretion (the “ FA Director Qualification Requirement ”), and no such person shall be entitled to serve, be elected or appointed as a replacement or successor to the FA Director unless  such nomination or appointment has been made in compliance with the foregoing terms.  The FA Director Qualification Requirement is expressly intended to prescribe, pursuant to Section 23B.08.020 of the Act, a qualification requirement for any successor to the FA Director (including any subsequent  successor to his or her successor) so long as the Financing Agreement remains in effect or any obligations remain outstanding thereunder.  If the Financing Agreement expires or is otherwise terminated, provided that in each case all obligations due thereunder or in connection therewith have been indefeasibly paid in full in cash, (i) the FA Director (or his or her successor) shall resign immediately without any further action by the Board or the Corporation’s shareholders, (ii) within seven (7) days of such event, the remaining members of the Board shall appoint a new director to replace the FA Director (or his or her successor), who shall not be required to meet the FA Director Qualification Requirement, and (iii) the FA Director Qualification Requirement shall terminate and no longer be in effect.
 
3.3   Change in Number .  No decrease in the number of directors constituting the entire Board shall have the effect of shortening the term of any incumbent director.
 
3.4   Vacancies .  Except as otherwise provided in the Charter or these Bylaws, newly created directorships resulting from any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal from office or any other cause shall, unless otherwise required by the WBCA, be filled only by the Board, provided that if the directors then in office constitute less than a quorum of the Board, they may fill the vacancy by the affirmative vote of a majority of the directors then in office, and provided further that any vacancy in the seat on the Board held by the FA Director (or any successor thereto) shall be filled by the Board as promptly as practicable and shall only be filled in accordance with the FA Director Qualification Requirement.
 
3.5   Meetings of Directors .  The directors may hold their meetings and may have an office and keep the books of the Corporation, except as otherwise provided by statute, in such place or places
 

 
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within or without the State of Washington as the Board may from time to time determine or as shall be specified in the notice of such meeting or duly executed waiver of notice of such meeting.
 
3.6   Annual Meeting .  The annual meeting of the Board for the purpose of organization, the election of officers and the transaction of other business may be held on the same day and at the same place as the annual meeting of shareholders or at such other  time and place (within or without the State of Washington) as shall be specified in a notice of the annual meeting of the Board given as hereinafter provided in Section 3.9 of this Article III.
 
3.7   Regular Meetings .  Regular meetings of the Board shall be held at such times and places, if any, as shall be designated from time to time by resolution of the Board.
 
3.8   Special Meetings .  Special meetings of the Board shall be held whenever called by the Chairman of the Board, the President, or any two members of the Board.
 
3.9   Notice .  The Secretary shall give notice of each annual, regular or special meeting of the Board to each director for which notice is required, at least (i) twenty-four (24) hours before the meeting if by telephone or by being personally delivered or sent by telex, telecopy, electronic transmission (subject to compliance with Section 23B.01.410(2)(c) of the WBCA) or similar means or (ii) five (5) days before the meeting if delivered by mail to the director's residence or usual place of business.  Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with first class postage prepaid, or when transmitted if sent by telex, telecopy, electronic transmission (subject to compliance with Section 23B.01.410(2)(c) of the WBCA) or similar means.  Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board need be specified in the notice or waiver of notice of such meeting.  Any director may waive notice of any meeting by a writing signed by the director entitled to the notice, or by electronic transmission by the director, and filed with the minutes or corporate records.  Notice of any such meeting need not be given to any director who shall attend such meeting without protesting, prior to or at its commencement, the lack of notice.
 
3.10   Quorum; Majority Vote .  At all meetings of the Board, a majority of the directors fixed in the manner provided in these Bylaws shall constitute a quorum for the transaction of business.  If at any meeting of the Board there be less than a quorum present, a majority of those present or any director solely present may adjourn the meeting from time to time without further notice.  Unless the act of a greater number is required by law, the Charter, or these Bylaws, the act of a majority of the directors present at a meeting at which a quorum is in attendance shall be the act of the Board.  At any time that the Charter provides that directors elected by the holders of a class or series of stock shall have more or less than one vote per director on any matter, every reference in these Bylaws to a majority or other proportion of directors shall refer to a majority or other proportion of the votes of such directors.
 
3.11   Procedure .  At meetings of the Board, business shall be transacted in such order as from time to time the Board may determine.  The Chairman of the Board, if such office has been filled, and, if not or if the Chairman of the Board is absent or otherwise unable to act, the President shall preside at all meetings of the Board.  In the absence or inability to act of either such officer, a chairman shall be chosen by the Board from among the directors present.  The Secretary of the Corporation shall act as the secretary of each meeting of the Board unless the Board appoints another person to act as secretary of the meeting.  The Board shall keep regular minutes of its proceedings which shall be placed in the minute book of the Corporation.
 
3.12   Compensation .  The Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, paid to directors for attendance at regular or special meetings of the
 

 
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Board or any committee thereof; provided , however , that nothing contained in these Bylaws shall be construed to preclude any director from serving the Corporation in any other capacity or receiving compensation therefor.
 
3.13   Chairman of the Board .  The Chairman of the Board, if elected by the Board, shall have such powers and duties as may be prescribed by the Board.  The Chairman of the Board shall have authority to preside at all meetings of the shareholders and of the Board.
 
3.14   Action by Board or Committees Without Meeting .  Any corporate action that could be approved at a meeting of the Board or of any committee created by the Board may be approved without a meeting if one or more consents setting forth the corporate action so approved are executed by all the directors or by all the members of the committee, either before or after the corporate action becomes effective, and are delivered to the Corporation. Each such consent shall be set forth either (i) in an executed record or (ii), if the Corporation has designated an address, location or system to which the consent may be electronically transmitted and the consent is electronically transmitted to the designated address, location or system, in an executed electronically transmitted record.  Corporate action approved by consent of directors without a meeting is effective when the last director executes the consent, unless the consent specifies a later effective date.  The consent shall be inserted in the minute book as if it were the minutes of the Board or a committee meeting.
 
ARTICLE IV
COMMITTEES
 
4.1   Designation .  The Board may, by resolution, designate one or more committees.
 
4.2   Number; Qualification; Term .  Each committee shall consist of two or more directors appointed by resolution adopted by the Board.  The number of committee members may be increased or decreased from time to time by resolution adopted by the Board.  Each committee member shall serve as such until the earliest of (i) the expiration of his term as director, (ii) his resignation as a committee member or as a director, or (iii) his removal as a committee member or as a director.
 
4.3   Authority .  Each committee, to the extent expressly provided in the resolution establishing such committee, shall have and may exercise all of the authority of the Board in the management of the business and property of the Corporation except to the extent expressly restricted by law, the Charter, or these Bylaws.
 
4.4   Committee Changes .  The Board shall have the power at any time to fill vacancies in, to change the membership of, and to discharge any committee.
 
4.5   Regular Meetings .  Regular meetings of any committee may be held at such time and place as may be designated from time to time by the committee and communicated to all members thereof at least (i) twenty-four (24) hours before the meeting if by telephone or by being personally delivered or sent by telex, telecopy, electronic transmission (subject to compliance with Section 23B.01.410(2)(c) of the WBCA) or similar means or (ii) five (5) days before the meeting if delivered by mail to the director’s residence or usual place of business.  Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid, or when transmitted if sent by telex, telecopy, electronic transmission (subject to compliance with Section 23B.01.410(2)(c) of the WBCA) or similar means.
 

 
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4.6   Special Meetings .  Special meetings of any committee may be held whenever called by any committee member.  The committee member calling any special meeting shall cause notice of such special meeting, including therein the time and place of such special meeting, to be given to each committee member at least (i) twenty-four (24) hours before the meeting if by telephone or by being personally delivered or sent by telex, telecopy, electronic transmission (subject to compliance with Section 23B.01.410(2)(c) of the WBCA) or similar means or (ii) five (5) days before the meeting if delivered by mail to the director’s residence or usual place of business.  Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid, or when transmitted if sent by telex, telecopy, electronic transmission (subject to compliance with Section 23B.01.410(2)(c) of the WBCA) or similar means.  Neither the business to be transacted at, nor the purpose of, any special meeting of any committee need be specified in the notice or waiver of notice of any special meeting.
 
4.7   Quorum; Majority Vote .  At meetings of any committee, a majority of the number of members designated by the Board shall constitute a quorum for the transaction of business.  If a quorum is not present at a meeting of any committee, a majority of the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present.  The act of a majority of the members present at any meeting at which a quorum is in attendance shall be the act of a committee, unless the act of a greater number is required by law, the Charter, or these Bylaws.
 
4.8   Minutes .  Each committee shall cause minutes of its proceedings to be prepared and shall report the same to the Board upon the request of the Board.  The minutes of the proceedings of each committee shall be delivered to the Secretary of the Corporation for placement in the minute books of the Corporation.
 
4.9   Compensation .  Committee members may, by resolution of the Board, be allowed a fixed sum and expenses of attendance, if any, for attending any committee meeting or a stated salary.
 
4.10   Responsibility .  The designation of any committee and the delegation of authority to it shall not operate to relieve the Board or any director of any responsibility imposed upon it or such director by law.
 
ARTICLE V
NOTICE
 
5.1   Method .  Whenever by statute, the Charter, or these Bylaws, notice is required to be given to any director, committee member or shareholder and no provision is made as to how such notice shall be given, personal notice shall not be required and any such notice may be given (i) in writing, by mail, postage prepaid, addressed to such committee member, director or shareholder at his address as it appears on the books or (in the case of a shareholder) the stock transfer records of the Corporation, or (ii) by any other method permitted by law (including, without limitation, by electronic transmission or facsimile telecommunication (in the case of a director or committee member who has consented to receive electronically transmitted notices or facsimile telecommunications, as applicable, and has designated (i) the address, location or system to which such notices may be electronically transmitted, or (ii) in the case of facsimile telecommunication, the number to which such notices may be sent) or by facsimile telecommunication, when directed to a number at which a shareholder has consented to receive notice, electronic mail, when directed to an electronic mail address at which a shareholder has consented to receive notice, posting on an electronic network together with separate notice to a shareholder of such specific posting and by any other form of electronic transmission, when directed to a shareholder).  Any notice required or permitted to be given by overnight courier service shall be deemed effective  when
 

 
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dispatched with all charges prepaid and addressed as aforesaid.  Any notice required or permitted to be given by telegram, cablegram or other electronic transmission as permitted by law shall be deemed effective at the time it is dispatched with all charges prepaid and addressed as aforesaid.
 
5.2   Waiver .  Whenever any notice is required to be given to any shareholder, director, or committee member of the Corporation by statute, the Charter, or these Bylaws, a waiver thereof in writing, or by electronic transmission (subject to compliance with applicable law), executed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice.  Attendance of a shareholder, director, or committee member at a meeting shall constitute a waiver of notice of such meeting, except where such person attends for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
 
ARTICLE VI
OFFICERS
 
6.1   Number; Titles; Term of Office .  The officers of the Corporation shall be a Chief Executive Officer, a President, a Chief Financial Officer, a Secretary, and such other officers as the Board may from time to time elect or appoint, including, without limitation, one or more Vice Presidents (with each Vice President to have such descriptive title, if any, as the Board shall determine), and a Treasurer.  Each officer shall hold office until his successor shall have been duly elected and shall have qualified, or, if earlier, until his death, or until he shall resign or shall have been removed in the manner hereinafter provided.  Any two or more offices may be held by the same person.  None of the officers need be a shareholder or a director of the Corporation or a resident of the State of Washington.
 
6.2   Removal .  Any officer or agent elected or appointed by the Board may be removed by the Board whenever in its judgment the best interest of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Election or appointment of an officer or agent shall not of itself create contract rights.
 
6.3   Vacancies .  Any vacancy occurring in any office of the Corporation (by death, resignation, removal, or otherwise) may be filled by the Board.
 
6.4   Authority .  Officers shall have such authority and perform such duties in the management of the Corporation as are provided in these Bylaws or as may be determined by resolution of the Board not inconsistent with these Bylaws.
 
6.5   Compensation .  The compensation, if any, of officers and agents shall be fixed from time to time by the Board; provided , however , that the Board may delegate the power to determine the compensation of any officer and agent (other than the officer to whom such power is delegated) to the Chairman of the Board or the President.
 
6.6   Chief Executive Officer .  The Chief Executive Officer shall be the chief executive officer of the Corporation and shall have the powers and perform the duties incident to that position.  If the Chief Executive Officer is a director, he shall, in the absence of the Chairman of the Board, or if a Chairman of the Board shall not have been elected, preside at each meeting of the Board or the shareholders.  Subject to the powers of the Board, he shall be in the general and active charge of the entire business and affairs of the Corporation, including authority over its officers, agents and employees, and shall have such other duties as may from time to time be assigned to him by the Board.  The Chief Executive Officer shall see that all orders and resolutions of the Board are carried into effect, and execute bonds, mortgages and other
 

 
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contracts requiring a seal under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board to some other officer or agent of the Corporation.
 
6.7   President .  The President shall be the chief operating officer of the Corporation.  He shall perform all duties incident to the office of President, and be responsible for the general direction of the operations of the business, reporting to the Chief Executive Officer, and shall have such other duties as may from time to time be assigned to him by the Board or as may be provided in these Bylaws.  At the written request of the Chief Executive Officer, or in his absence or in the event of his inability to act, the President shall perform the duties of the Chief Executive Officer, and, when so acting, shall have the powers of and be subject to the restrictions placed upon the Chief Executive Officer in respect of the performance of such duties.
 
6.8   Chief Financial Officer .  The Chief Financial Officer shall (i)  have charge and custody of, and be responsible for, all the funds and securities of the Corporation, (ii) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, (iii) deposit all moneys and other valuables to the credit of the Corporation in such depositories as may be designated by the Board or pursuant to its direction, (iv) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever, (v) disburse the funds of the Corporation and supervise the investments of its funds, taking proper vouchers therefor, (vi) render to the Board, whenever the Board may require, an account of the financial condition of the Corporation, and (vii) in general, perform all duties incident to the office of Chief Financial Officer and such other duties as from time to time may be assigned to him by the Board.  The Chief Financial Officer may also be the Treasurer if so determined by the Board and perform the duties hereinafter provided in Section 6.10 of this Article VI.
 
6.9   Vice Presidents .  Each Vice President shall have such powers and duties as may be assigned to him by the Board or the President, and (in order of their seniority as determined by the Board or, in the absence of such determination, as determined by the length of time they have held the office of Vice President) shall exercise the powers of the President during that officer’s absence or inability to act.  As between the Corporation and third parties, any action taken by a Vice President in the performance of the duties of the President shall be conclusive evidence of the absence or inability to act of the President at the time such action was taken.
 
6.10   Treasurer .  The Treasurer shall have custody of the Corporation’s funds and securities, shall keep full and accurate account of receipts and disbursements, shall deposit all monies and valuable effects in the name and to the credit of the Corporation in such depository or depositories as may be designated by the Board, and shall perform such other duties as may be prescribed by the Board or the President.
 
6.11   Assistant Treasurers .  Each Assistant Treasurer shall have such powers and duties as may be assigned to him by the Board or the President.  The Assistant Treasurers (in the order of their seniority as determined by the Board or, in the absence of such a determination, as determined by the length of time they have held the office of Assistant Treasurer) shall exercise the powers of the Treasurer during that officer’s absence or inability to act.
 
6.12   Secretary .  Except as otherwise provided in these Bylaws, the Secretary shall keep the minutes of all meetings of the Board and of the shareholders in books provided for that purpose, and he shall attend to the giving and service of all notices.  The Secretary shall have custody of the corporate seal of the Corporation (if any) and shall have authority to affix the same to any instrument requiring it and to attest it.  He shall have charge of the certificate books, transfer books, and stock papers as the Board may
 

 
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direct, all of which shall at all reasonable times be open to inspection by any director upon application at the office of the Corporation during ordinary business hours.  He shall in general perform all duties incident to the office of the Secretary, subject to the control of the Board and the President.
 
6.13   Assistant Secretaries .  Each Assistant Secretary shall have such powers and duties as may be assigned to him by the Board or the President.  The Assistant Secretaries (in the order of their seniority as determined by the Board or, in the absence of such a determination, as determined by the length of time they have held the office of Assistant Secretary) shall exercise the powers of the Secretary during that officer’s absence or inability to act.
 
ARTICLE VII
CERTIFICATES AND SHAREHOLDERS
 
7.1   Certificates for Shares .  The Board may issue stock certificates, or may provide by resolution or resolutions that some or all of any or all classes or series of stock of the Corporation shall be uncertificated shares of stock.  Any issued stock certificates for shares of stock or series of stock of the Corporation shall be in such form as shall be approved by the Board.  The certificates shall be signed by the Chairman of the Board or the President or a Vice President and also by the Secretary or an Assistant Secretary or by the Treasurer or an Assistant Treasurer.  Any and all signatures on the certificate may be sealed with the seal of the Corporation or a facsimile thereof.  If any officer, transfer agent, or registrar who has signed, or whose facsimile signature has been placed upon, a certificate has ceased to be such officer, transfer agent, or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.  The certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder’s name and the number of shares.  A certificate representing shares issued by the Corporation shall, if the Corporation is authorized to issue more than one class or series of stock, set forth upon the face or back of the certificate, or shall state that the Corporation will furnish to any shareholder upon request and without charge, a full statement of the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.  The Corporation shall furnish to any holder of uncertificated shares, upon request and without charge, a full statement of the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
 
7.2   Replacement of Lost or Destroyed Certificates .  The Board may direct a new certificate or certificates to be issued in place of a certificate or certificates theretofore issued by the Corporation and alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate or certificates representing shares to be lost or destroyed.  When authorizing such issue of a new certificate or certificates the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond with a surety or sureties satisfactory to the Corporation in such sum as it may direct as indemnity against any claim, or expense resulting from a claim, that may be made against the Corporation in respect of the certificate or certificates alleged to have been lost or destroyed.
 
7.3   Facsimile Signatures .  Any or all of the signatures on a certificate may be a facsimile, engraved or printed.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar
 

 
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before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
 
7.4   Transfer of Shares .  Shares of stock of the Corporation shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives.  Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate (if any) representing shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, the Corporation or its transfer agent shall issue (if requested) a new certificate to the person entitled thereto, cancel the old certificate (if any), and record the transaction upon its books, provided , however , that the Corporation shall be entitled to recognize and enforce any lawful restriction on transfer.
 
7.5   Registered Shareholders .  The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.
 
7.6   Regulations .  The Board shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, and registration or the replacement of certificates for shares of stock of the Corporation.
 
7.7   Legends .  The Board shall have the power and authority to provide that certificates representing shares of stock bear such legends as the Board deems appropriate to assure that the Corporation does not become liable for violations of federal or state securities laws or other applicable law.
 
ARTICLE VIII
INDEMNIFICATION
 
8.1   Nature of Indemnity .  Each person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a " proceeding "), by reason of the fact that he is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation or of a partnership, limited liability company, joint venture, trust or other enterprise, including, without limitation, service with respect to an employee benefit plan (hereinafter, an " Indemnitee "), whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while so serving, shall be indemnified and held harmless by the Corporation to the full extent permitted by the WBCA, as the same exists or may hereafter be amended, or by other applicable law as then in effect, against all expense, liability and loss (including, without limitation, attorneys’ fees, costs and charges, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended from time to time (" ERISA "), penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such Indemnitee in connection therewith; provided , however , that except as provided in Section 8.3 of this Article VIII with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such Indemnitee in connection with a proceeding (or part thereof) initiated by such Indemnitee only if such proceeding (or part thereof) was authorized by the Board.  Each person who is or was serving as a director or officer of a majority-owned subsidiary of the Corporation shall be deemed to be serving, or have served, at the request of the Corporation.
 

 
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8.2   Advances for Expenses .  Reasonable expenses (including, without limitation, attorneys’ fees, costs and charges) incurred by an Indemnitee in defending a proceeding shall be paid by the Corporation in advance of the final disposition of such proceeding upon receipt of (a) a written affirmation of the director's good faith belief that the director has met the standard of conduct described in Section 23B.08.510 of the WBCA, and (b) an undertaking by or on behalf an Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article VIII.  The Board may, upon approval of such Indemnitee, authorize the Corporation’s counsel to represent such person in any proceeding, whether or not the Corporation is a party to such proceeding.
 
8.3   Procedure for Indemnification and Advancement .  Any indemnification or advance of expenses (including, without limitation, attorney’s fees, costs and charges) under this Article VIII shall be made promptly, and in any event within 60 days, or, in the case of a claim for an advancement of expenses, within 20 days, upon the written request of an Indemnitee (and, in the case of advance of expenses, receipt of a written undertaking by or on behalf of such Indemnitee to repay such amount if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified therefor pursuant to the terms of this Article VIII).  The right to indemnification or advancement as granted by this Article VIII shall be enforceable by such Indemnitee in any court of competent jurisdiction, if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days (or 20 days with respect to advancement of expenses).  Such Indemnitee’s costs and expenses incurred in connection with successfully establishing his right to indemnification or advancement, in whole or in part, in any such action shall also be indemnified by the Corporation to the fullest extent permitted by law.  It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of expenses (including, without limitation, attorney’s fees, costs and charges) under this Article VIII where the required affirmation and undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in the WBCA, as the same exists or hereafter may be amended, but the burden of proving such defense shall be on the Corporation.  Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the WBCA, as the same exists or hereafter may be amended, nor the fact that there has been an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
 
8.4   Other Rights; Continuation of Right to Indemnification .  The indemnification and advancement of expenses provided by this Article VIII shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), bylaw, agreement, vote of shareholders or directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, and shall continue as to a person who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administers of such person.  All rights to indemnification and advancement of expenses under this Article VIII shall be deemed to be a contract between the Corporation and each Indemnitee.  Any repeal or modification of this Article VIII or any repeal or modification of relevant provisions of the WBCA or any other applicable laws shall not in any way diminish any rights to indemnification  or to advancement of expenses of such Indemnitee or the obligations of the Corporation arising hereunder with respect to any proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such repeal or modification.
 

 
15
 

8.5   Insurance .  The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, limited liability company, joint venture, trust or other enterprise (including, without limitation, with respect to an employee benefit plan), against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VIII; provided , however , that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the Board.
 
8.6   Savings Clause .  If this Article VIII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each person entitled to indemnification under the first paragraph of this Article VIII as to all expense, liability and loss (including, without limitation, attorneys’ fees, costs and charges, fines, ERISA excise taxes and penalties, penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person and for which indemnification is available to such person pursuant to this Article VIII to the full extent permitted by any applicable portion of this Article VIII that shall not have been invalidated and to the full extent permitted by applicable law.
 
ARTICLE IX
MISCELLANEOUS PROVISIONS
 
9.1   Dividends .  Subject to provisions of law and the Charter, dividends may be declared by the Board at any regular or special meeting and may be paid in cash, in property, or in shares of stock of the Corporation.  Such declaration and payment shall be at the discretion of the Board.
 
9.2   Reserves .  There may be created by the Board out of funds of the Corporation legally available therefor such reserve or reserves as the Board from time to time, in its discretion, considers proper to provide for contingencies, to equalize dividends, or to repair or maintain any property of the Corporation, or for such other purpose as the Board shall consider beneficial to the Corporation, and the Board may modify or abolish any such reserve in the manner in which it was created.
 
9.3   Books and Records .  The Corporation shall keep correct and complete books and records of account, shall keep minutes of the proceedings of its shareholders and Board and shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each.
 
9.4   Fiscal Year .  The fiscal year of the Corporation shall be fixed by the Board; provided , however , that if such fiscal year is not fixed by the Board and the selection of the fiscal year is not expressly deferred by the Board, the fiscal year shall be the calendar year.
 
9.5   Seal .  The seal of the Corporation shall be such as from time to time may be approved by the Board.
 
9.6   Resignations .  Any director, committee member, or officer may resign by so stating at any meeting of the Board or by giving written notice to the Board, the Chairman of the Board, the President, or the Secretary.  Such resignation shall take effect at the time specified therein or, if no time is specified therein, immediately upon its receipt.  Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
 

 
16
 

9.7   Securities of Other Corporations .  The Chairman of the Board, the President, or any Vice President of the Corporation shall have the power and authority to transfer, endorse for transfer, vote, consent, or take any other action in respect of any securities of another issuer that may be held or owned by the Corporation and to make, execute, and deliver any waiver, proxy, or consent in respect of any such securities.
 
9.8   Telephone Meetings .  Members of the Board, members of a committee of the Board and the shareholders may participate in and hold a meeting by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 9.8 shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
 
9.9   Treasury Regulation 1.382-3 .  For purposes of applying Article VI of the Charter, if the Board reasonably believes that any person may have violated the Article VI provisions (including whether a person is part of an single entity under Treasury Regulation Section 1.382-3 and thus is a Substantial Holder), then the Board shall be authorized to require such person to provide such information, representations, agreements and/or opinions of counsel (which if required shall be "should" level opinions issued by nationally recognized counsel approved by the Board, and for the avoidance of doubt, can include the shareholder’s regular counsel) in support of the position that no violation has occurred.
 
9.10   Invalid Provisions .  If any part of these Bylaws shall be held invalid or inoperative for any reason, the remaining parts, so far as it is possible and reasonable, shall remain valid and operative.
 
9.11   Mortgages, etc .  In respect of any deed, deed of trust, mortgage, or other instrument executed by the Corporation through its duly authorized officer or officers, the attestation to such execution by the Secretary of the Corporation shall not be necessary to constitute such deed, deed of trust, mortgage, or other instrument a valid and binding obligation against the Corporation unless the resolutions, if any, of the Board authorizing such execution expressly state that such attestation is necessary.
 
9.12   Headings .  The headings used in these Bylaws have been inserted for administrative convenience only and do not constitute matter to be construed in interpretation.
 
9.13   References .  Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender should include each other gender where appropriate.
 
9.14   Amendments .  These Bylaws may be amended or repealed or new Bylaws adopted only in accordance with Article VII of the Charter.
 

 

 

 
[The Remainder of this Page is Intentionally Left Blank.]
 

 
17
 


 
The undersigned, the Secretary of the Corporation, hereby certifies that the foregoing Bylaws were adopted by unanimous consent by the directors of the Corporation on March 19, 2012.
 

 
 
 
/s/  Charles Edward Smith  
   
Charles Edward Smith, Secretary
 

 

 

 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDED AND RESTATED BYLAWS OF WMI HOLDINGS CORP.]

 
Execution Version


 
 
 

 
SENIOR FIRST LIEN NOTES INDENTURE
 

 
Dated as of March 19, 2012
 

 
by and between
 

 
 
 
WMI HOLDINGS CORP.
 
 
 
 
 
 
and
 
Wilmington Trust, National Association
 
as Trustee
 

 
 
13% SENIOR FIRST LIEN NOTES DUE 2030
 


 
 
 

CROSS-REFERENCE TABLE*
 
Trust Indenture Act Section
 
Indenture Section
310(a)(1)
8.10
(a)(2)                                                                                                       
8.10
(a)(3)                                                                                                       
N.A.
(a)(4)                                                                                                       
N.A.
(a)(5)                                                                                                       
8.10
(b)                                                                                                       
8.10
311(a)
8.11
(b)                                                                                                       
8.11
312(a)
2.05
(b)                                                                                                       
13.03
(c)                                                                                                       
13.03
313(a)
8.06
(b)(1)                                                                                                       
8.06
(b)(2)                                                                                                       
8.06; 8.07
(c)                                                                                                       
8.06; 13.02
(d)                                                                                                       
8.06
314(a)
5.05; 5.06; 13.05
(b)                                                                                                       
12.01
(c)(1)                                                                                                       
13.04
(c)(2)                                                                                                       
13.04
(c)(3)                                                                                                       
N.A.
(d)                                                                                                       
N.A.
(e)                                                                                                       
13.05
(f)                                                                                                       
N.A.
315(a)
8.01
(b)                                                                                                       
8.05; 13.02
(c)                                                                                                       
8.01
(d)                                                                                                       
8.01
(e)                                                                                                       
7.15
316(a)(1)(A)
7.06
(a)(1)(B)                                                                                                       
7.05
(a)(2)                                                                                                       
N.A.
(b)                                                                                                       
10.02
(c)                                                                                                       
2.12; 10.04
317(a)(1)
7.09
(a)(2)                                                                                                       
7.13
(b)                                                                                                       
2.04
318(a)
13.01
(b)                                                                                                       
N.A.
(c)                                                                                                       
13.01

N.A. means not applicable.
 
*  This Cross-Reference Table is not part of this Indenture.

 
 
 

TABLE OF CONTENTS
 

     
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
1
 
SECTION 1.01.
Definitions
1
 
SECTION 1.02.
Other Definitions
9
 
SECTION 1.03.
Incorporation by Reference of Trust Indenture Act
9
 
SECTION 1.04.
Rules of Construction
10
 
SECTION 1.05.
Acts of Holders
10
ARTICLE II
THE NOTES
12
 
SECTION 2.01.
Form and Dating; Terms
12
 
SECTION 2.02.
Execution and Authentication
12
 
SECTION 2.03.
Registrar and Paying Agent
13
 
SECTION 2.04.
Paying Agent to Hold Money in Trust
13
 
SECTION 2.05.
Holder Lists
13
 
SECTION 2.06.
Transfer and Exchange
14
 
SECTION 2.07.
Replacement Notes
15
 
SECTION 2.08.
Outstanding Notes
16
 
SECTION 2.09.
Treasury Notes
16
 
SECTION 2.10.
Temporary Notes
16
 
SECTION 2.11.
Cancellation
16
 
SECTION 2.12.
Defaulted Interest
16
 
SECTION 2.13.
CUSIP/ISIN Numbers
17
 
SECTION 2.14.
Calculation of Principal Amount of Securities
17
 
SECTION 2.15.
No Gross Up; Withholding
17
ARTICLE III
REDEMPTION
17
 
SECTION 3.01.
Notices to Trustee
17
 
SECTION 3.02.
Selection of Notes to Be Redeemed
18
 
SECTION 3.03.
Notice of Redemption
18
 
SECTION 3.04.
Effect of Notice of Redemption
19
 
SECTION 3.05.
Deposit of Redemption Price
19
 
SECTION 3.06.
Notes Redeemed in Part
19
 
SECTION 3.07.
Optional Redemption
20
 
 

 
-i-
 

 
 
     
Page
 
SECTION 3.08.
Mandatory Redemption
20
ARTICLE IV
ESTABLISHMENT OF FUNDS AND APPLICATION AND INVESTMENT OF MONIES THEREIN
20
 
SECTION 4.01.
Maintenance of Collateral Account
20
 
SECTION 4.02.
Deposit of Runoff Proceeds and Application Thereof.
20
 
SECTION 4.03.
Investment of Funds
21
 
SECTION 4.04.
Trustees Fees Account
21
ARTICLE V
COVENANTS
21
 
SECTION 5.01.
Payment of Notes
21
 
SECTION 5.02.
Deposit of Runoff Proceeds Distributions
22
 
SECTION 5.03.
Liens
22
 
SECTION 5.04.
Maintenance of Office or Agency
23
 
SECTION 5.05.
Reports and Other Information
23
 
SECTION 5.06.
Compliance Certificate
23
 
SECTION 5.07.
Limitation on Business Activities
23
 
SECTION 5.08.
Prohibition on Commingling
23
 
SECTION 5.09.
Stay, Extension and Usury Laws
24
 
SECTION 5.10.
Corporate Existence
24
 
SECTION 5.11.
Security Documents
24
 
SECTION 5.12.
Reporting of Debt for Tax Purposes
24
 
SECTION 5.13.
Prohibition on Sale of Interests in Trusts
24
ARTICLE VI
SUCCESSORS
24
 
SECTION 6.01.
Merger, Consolidation or Sale of All or Substantially All Assets
24
 
SECTION 6.02.
Successor Corporation Substituted
25
ARTICLE VII
DEFAULTS AND REMEDIES
25
 
SECTION 7.01.
Events of Default
25
 
SECTION 7.02.
Acceleration
26
 
SECTION 7.03.
Other Remedies
27
 
SECTION 7.04.
Specific Performance
27
 
SECTION 7.05.
Waiver of Past Defaults
27
 
SECTION 7.06.
Control by Majority
27
 
SECTION 7.07.
Limitation on Suits
28
 
SECTION 7.08.
Rights of Holders of Notes to Receive Payment
28
 
SECTION 7.09.
Collection Suit by Trustee
28

 
-ii-
 

 
 
     
Page
 
SECTION 7.10.
Restoration of Rights and Remedies
28
 
SECTION 7.11.
Rights and Remedies Cumulative
28
 
SECTION 7.12.
Delay or Omission Not Waiver
29
 
SECTION 7.13.
Trustee May File Proofs of Claim
29
 
SECTION 7.14.
Priorities
29
 
SECTION 7.15.
Undertaking for Costs
29
 
SECTION 7.16.
Limitation on the Issuer’s Obligations
30
ARTICLE VIII
TRUSTEE
30
 
SECTION 8.01.
Duties of Trustee
30
 
SECTION 8.02.
Rights of Trustee
31
 
SECTION 8.03.
Individual Rights of Trustee
32
 
SECTION 8.04.
Trustee’s Disclaimer
32
 
SECTION 8.05.
Notice of Defaults
32
 
SECTION 8.06.
Reports by Trustee to Holders of the Notes
32
 
SECTION 8.07.
Compensation and Indemnity
33
 
SECTION 8.08.
Replacement of Trustee
33
 
SECTION 8.09.
Successor Trustee by Merger, etc.
34
 
SECTION 8.10.
Eligibility; Disqualification
34
 
SECTION 8.11.
Preferential Collection of Claims Against Issuer
34
ARTICLE IX
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
35
 
SECTION 9.01.
Option to Effect Legal Defeasance or Covenant Defeasance
35
 
SECTION 9.02.
Legal Defeasance and Discharge
35
 
SECTION 9.03.
Covenant Defeasance
35
 
SECTION 9.04.
Conditions to Legal or Covenant Defeasance
36
 
SECTION 9.05.
Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions
37
 
SECTION 9.06.
Repayment to Issuer
37
 
SECTION 9.07.
Reinstatement
37
ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
38
 
SECTION 10.01.
Without Consent of Holders of Notes
38
 
SECTION 10.02.
With Consent of Holders of Notes
39
 
SECTION 10.03.
Compliance with Trust Indenture Act
40
 
SECTION 10.04.
Revocation and Effect of Consents
40
 
SECTION 10.05.
Notation on or Exchange of Notes
41

 
-iii-
 

 
 
 
SECTION 10.06.
Trustee to Sign Amendments, etc.
41
ARTICLE XI
SATISFACTION AND DISCHARGE
41
 
SECTION 11.01.
Satisfaction and Discharge
41
 
SECTION 11.02.
Application of Trust Money
42
ARTICLE XII
SECURITY
42
 
SECTION 12.01.
Security Documents
42
 
SECTION 12.02.
Collateral Agent
43
 
SECTION 12.03.
Authorization of Actions to Be Taken
43
 
SECTION 12.04.
Release of Collateral; Substitution
44
 
SECTION 12.05.
Powers Exercisable by Receiver or Trustee
44
 
SECTION 12.06.
No Fiduciary Duties; Collateral
44
 
SECTION 12.07.
Intercreditor Agreement Controls
45
ARTICLE XIII
MISCELLANEOUS
45
 
SECTION 13.01.
Trust Indenture Act Controls
45
 
SECTION 13.02.
Notices
45
 
SECTION 13.03.
Communication by Holders of Notes with Other Holders of Notes
46
 
SECTION 13.04.
Certificate and Opinion as to Conditions Precedent
46
 
SECTION 13.05.
Statements Required in Certificate or Opinion
46
 
SECTION 13.06.
Rules by Trustee and Agents
47
 
SECTION 13.07.
No Personal Liability of Directors, Officers, Employees and Stockholders
47
 
SECTION 13.08.
Governing Law
47
 
SECTION 13.09.
Waiver of Jury Trial
47
 
SECTION 13.10.
Force Majeure
47
 
SECTION 13.11.
No Adverse Interpretation of Other Agreements
47
 
SECTION 13.12.
Successors
47
 
SECTION 13.13.
Severability
48
 
SECTION 13.14.
Counterpart Originals
48
 
SECTION 13.15.
Table of Contents, Headings, etc.
48

 
EXHIBITS
 
Exhibit A
Form of Note


 
-iv-
 

SENIOR FIRST LIEN NOTES INDENTURE, dated as of March 19, 2012, between WMI Holdings Corp., a Washington corporation (“ Issuer ”), and Wilmington Trust, National Association, as trustee.
 
W I T N E S S E T H
 
WHEREAS, the Issuer has duly authorized the creation of an issue of $110,000,000 aggregate principal amount of 13% Senior First Lien Notes due 2030 (together with any increases in the aggregate principal amount thereof, or any PIK Notes, the “ Notes ”); and
 
WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture.
 
NOW, THEREFORE, the Issuer and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes.
 
ARTICLE I

 
DEFINITIONS AND INCORPORATION BY REFERENCE
 
SECTION 1.01.   Definitions .
 
“ Acquisition Credit Facility ” means that financing agreement dated as of March 19, 2012, by and among the Issuer, the guarantors party thereto, the lenders party thereto and U.S. Bank National Association, as agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings or replacements (whether upon or after termination or otherwise) thereof in whole or in part from time to time, including any agreement that replaces, refunds or refinances any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof or adds or removes borrowers or guarantors, and whether with the same or another agent, lender or group of lenders.
 
“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
 
“ Agent ” means any Registrar or Paying Agent.
 
“ Applicable Procedures ” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer, redemption or exchange.
 
 “ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal law or Chapter 431, Article 15 of the Hawaii Code or any similar state law.
 
“ Business Day ” means each day which is not a Legal Holiday.
 

 
 
 

“ Capital Stock ” means:
 
(1)           in the case of a corporation, corporate stock;
 
(2)           in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
 
(3)           in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
 
(4)           any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
 
" Cash Equivalents " means (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case, maturing within six months from the date of acquisition thereof, (b) commercial paper, maturing not more than 270 days after the date of issue rated P-1 by Moody's or A-1 by Standard & Poor's, (c) certificates of deposit maturing not more than 270 days after the date of issue, issued by commercial banking institutions and money market or demand deposit accounts maintained at commercial banking institutions, each of which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000 and a Thomson Bank Watch Rating of “BBB” or better, (d) money market accounts maintained with mutual funds having assets in excess of $2,500,000,000, and (e) marketable tax exempt securities rated A or higher by Moody's or A+ or higher by Standard & Poor's, in each case, maturing within six months from the date of acquisition thereof.
 
“ Clearstream ” means Clearstream Banking, Société Anonyme.
 
“ Collateral ” means all assets and property in which a security interest is granted to secure the Notes Obligations.
 
“ Collateral Account ” means a separate securities and/or deposit account established and maintained by the Issuer in which the Collateral Agent has a valid perfected first and second priority security interest and exclusive dominion and control in accordance with the terms of the Security Documents.
 
“ Collateral Agent ” means Wilmington Trust, National Association, in its capacity as collateral agent under the Security Documents, until a successor replaces it in accordance with the applicable provisions of the Intercreditor Agreement and thereafter means the successor serving thereunder.
 
“ Control Agreement ” means the Securities Account Control Agreement, dated as of March 19, 2012, among the Issuer, Collateral Agent and Wells Fargo Bank, National Association, as depository bank and/or securities intermediary, and any other agreement providing to the Collateral Agent “control” of the Collateral Account and the Trustees Fees Account within the meaning of Articles 8 and 9 or the Uniform Commercial Code.
 
“ Corporate Trust Office of the Trustee ” shall be at the address of the Trustee specified in Section 13.02 hereof or such other address as to which the Trustee may give notice to the Holders and the Issuer.
 

 
2
 

“ Credit Facility ” means, with respect to the Issuer or any of its subsidiaries, one or more debt facilities, including the Acquisition Credit Facility, or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit or other long-term indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or replacements (whether or not upon or after termination or otherwise) thereof and any indentures or credit facilities or commercial paper facilities that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount permitted to be borrowed thereunder or alters the maturity thereof or adds subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders.
 
“ Custodian ” means the Trustee, as custodian with respect to the Notes, each in global form, or any successor entity thereto.
 
“ Default ” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
 
“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto, except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
 
“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, any Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
 
“ Euroclear ” means Euroclear S.A./N.V., as operator of the Euroclear system.
 
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
 
“ Global Note Legend ” means the legend set forth in Section 2.06(b) hereof, which is required to be placed on all Global Notes issued under this Indenture.
 
“ Global Notes ” means, individually and collectively, each of the Global Notes, substantially in the form of Exhibit A hereto, issued in accordance with Section 2.01 or 2.06 hereof.
 
“ Government Securities ” means securities that are:
 
(1)           direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged; or
 
(2)           obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,
 
which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities
 

 
3
 

Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.
 
" Governmental Authority " means any nation or government, any Federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
 
“ guarantee ” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any indebtedness or other Obligations.
 
“ Holder ” means the Person in whose name a Note is registered on the Registrar’s books.
 
“ Indenture ” means this Senior First Lien Notes Indenture, as amended or supplemented from time to time.
 
“ Insurance Book Closing ” means the transfer by WMMRC of (i) all Runoff Proceeds held on the date of such transfer, (ii) the right to receive all future Runoff Proceeds and (iii) the Trusts and their assets along with all insurance liabilities associated therewith as of the date of transfer to a protected cell established and maintained pursuant to § 431:19-303 of Title 24 of the Hawaii Insurance Code in conformance with all applicable Requirements of Law, which complies with the following requirements: (w) the protected cell shall be organized as a direct wholly owned subsidiary of the Issuer;  (x) the assets of the protected cell shall not be chargeable with liabilities arising out of any other business WMMRC may conduct; (y) the business plan establishing the protected cell shall restrict its business to the administration and management of the Trusts and the assets thereof along with the liabilities associated therewith, and the distribution of the Runoff Proceeds; and (z) the governing documents of the protected cell shall provide that no dividend or distribution may be made to any Person other than the Issuer as provided for in the Notes Documentation and the Second Lien Documentation.
 
“ Intercreditor Agreement ” means the Intercreditor Agreement, dated as of March 19, 2012, among the Trustee, the Second Lien Trustee and the Third Lien Agent (as defined therein), as amended, modified and supplemented from time to time.
 
“ Interest Payment Date ” has the meaning set forth in paragraph 1 of each Note.
 
“ Issue Date ” means March 19, 2012.
 
“ Issuer ” means WMI Holdings Corp., a Washington corporation, and any of its successors.
 
“ Issuer Incremental Amount ” means an amount accruing on the outstanding Issuer Priority Amount or the Issuer Secondary Amount, as applicable, at 13% per annum, payable quarterly in arrears on each Interest Payment Date, to the Issuer.
 

 
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“ Issuer Order ” means a written request or order signed on behalf of the Issuer by an Officer of the Issuer, who must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Issuer, and delivered to the Trustee or the Collateral Agent.
 
“ Issuer Priority Amount ” means (i) a principal amount equal to $4.0 million plus (ii) any amounts added due to unpaid Issuer Incremental Amounts in respect of the Issuer Priority Amount, less (iii) any repayments of the Issuer Priority Amounts to the Issuer.
 
“ Issuer Secondary Amount ” means (i) a principal amount equal to $6.0 million plus (ii) any amounts added due to unpaid Issuer Incremental Amounts in respect of the Issuer Secondary Amount, less (iii) any repayments of the Issuer Secondary Amounts to the Issuer.
 
“ Legal Holiday ” means a Saturday, a Sunday or a day on which commercial banking institutions are not required to be open in the State of New York, the place of payment or the State of Washington, as the case may be. In any case where any Interest Payment Date, Redemption Date or maturity date of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of principal (or premium, if any) or interest need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the maturity date; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or maturity date, as the case may be, through such next succeeding Business Day.
 
“ Lien ” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.
 
“ Moody's ” means Moody's Investors Service, Inc. and any successor thereto.
 
“ Notes ” means the Notes authenticated and delivered under this Indenture including any PIK Notes subsequently issued under this Indenture.
 
“ Notes Documentation ” means the Notes, this Indenture and the Security Documents.
 
“ Notes Obligations ” means Obligations in respect of this Indenture, the Notes and to the extent relating to this Indenture or the Notes, the Security Documents, including for the avoidance of doubt, Obligations in respect of guarantees thereof.
 
“ Obligations ” means any principal, interest, penalties, fees, indemnifications, reimbursements and all other present and future indebtedness, obligations, and liabilities under the documentation governing any indebtedness, whether or not the right of payment in respect of such indebtedness, obligations and liabilities is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether or not such indebtedness, obligations, interest and liabilities are discharged, allowed, stayed or otherwise affected by any proceeding (including whether or not allowed in any proceeding under any Bankruptcy Law).
 

 
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“ Officer ” means the Chairman of the Board, the Chief Executive Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Issuer.
 
“ Officer’s Certificate ” means a certificate signed on behalf of the Issuer by an Officer of the Issuer, who must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Issuer, that meets the requirements set forth in this Indenture.
 
“ Opinion of Counsel ” means a written opinion from legal counsel who is reasonably acceptable to the Trustee.  The counsel may be an employee of or counsel to the Issuer or the Trustee.
 
“ Owner ” means (x) WMMRC until the occurrence of an Insurance Book Closing and (y) the protected cell created by such Insurance Book Closing to which the Runoff Proceeds, the Trusts and the assets thereof are transferred, thereafter, in accordance with the terms of the Notes Documentation.
 
“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively, (and, with respect to DTC, shall include Euroclear and Clearstream).
 
“ Permitted Lien ” means a Lien securing Obligations of the Issuer under (i) the Notes Documentation, (ii) the Second Lien Documentation and (iii) the Acquisition Credit Facility, in each case, subject to the terms of the Intercreditor Agreement.
 
“ Person ” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
 
“ PIK Interest ” means interest paid with respect to the Notes in the form of increasing the outstanding principal amount of the Notes or issuing PIK Notes.
 
“ PIK Notes ” mean additional Notes issued under this Indenture on the same terms and conditions as the Notes issued on the Issue Date in connection with a PIK Payment. For purposes of this Indenture, all references to “PIK Notes” shall include the Related PIK Notes.
 
“ PIK Paymen t” means an interest payment with respect to the Notes made by increasing the outstanding principal amount of the Notes or issuing PIK Notes.
 
“ Record Date ” for the interest payable on any applicable Interest Payment Date means with respect to the Notes, the May 15, August 15, November 15 or February 15 (whether or not a Business Day) immediately preceding such Interest Payment Date.
 
“ Related PIK Notes ” means, with respect to a Note, (i) each PIK Note issued in connection with a PIK Payment on such Note and (ii) each additional PIK Note issued in connection with a PIK Payment on a Related PIK Note with respect to such Note.
 
“ Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of, any Governmental Au-
 

 
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thority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
 
“ Responsible Officer ” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.
 
“ Runoff Proceeds ” means (a)(i) all net premiums, reinsurance recoverables, net revenue resulting from commutation of insurance contracts, net interest income, reserve releases and other revenues derived from the reinsurance contracts, investments and other assets of the Trusts less, without duplication, (ii)(A) the reasonable and necessary costs and expenses of the Trusts and the Owner (including, but not limited to, general and administrative expenses, audit fees, required regulatory capital contributions (which capital contributions will be added back to the Runoff Proceeds if applicable regulations permit such distributions thereof), expenses of regulatory compliance, including all costs associated with the Insurance Book Closing, expenses of administering this Indenture and taxes) attributable to the administration of the Trusts or the assets thereof and the collection of premiums and/or management of investments in connection therewith (which expenses shall include reasonable and customary expenses attributable to the foregoing paid under any administrative services agreement, investment management agreement or similar agreement), and (B) claims paid for covered losses and (b) the proceeds from the foregoing received by the Owner or the Issuer in cash, securities and/or other property from any sale, liquidation, merger or other disposition in respect of the Owner or its interests in the Trusts or the assets thereof. The inclusion of clause (b) of this definition shall not be construed as a consent to any sale, liquidation, merger or other disposition or waiver of compliance with any covenant related thereto. For the avoidance of doubt, to the extent that Issuer or WMMRC pays any such cost , capital contribution or expense described in clause (ii)(A), payment by Issuer or WMMRC will be deemed a cost or expense of the Trusts.
 
“ SEC ” means the U.S. Securities and Exchange Commission.
 
“ Second Lien Collateral ” means all assets and property in which a security interest is granted to secure the Second Lien Notes.
 
“ Second Lien Documentation ” means the Second Lien Notes, the Second Lien Indenture and the Second Lien Notes Security Documents.
 
“ Second Lien Indenture ” means that certain Senior Second Lien Notes Indenture, dated as of March 19, 2012, between the Issuer and the Second Lien Trustee with respect to the Second Lien Notes, as amended or supplemented from time to time.
 
“ Second Lien Notes ” means $20.0 million aggregate principal amount of the Issuer’s 13% Senior Second Lien Notes due 2030 issued pursuant to and in accordance with the Second Lien Indenture.
 
“ Second Lien Notes Obligations ” means Obligations in respect of the Second Lien Indenture, the Second Lien Notes and to the extent relating to the Second Lien Indenture or the Second Lien Notes, the Second Lien Security Documents, including for the avoidance of doubt, Obligations in respect of guarantees thereof.
 

 
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“ Second Lien Notes Security Documents ” means , collectively, the Intercreditor Agreement and any security agreements, control agreements and directions to pay relating to the  Second Lien Collateral executed and delivered and/or filed and recorded in appropriate jurisdictions to preserve and protect the Liens on the Collateral (including, without limitation, financing statements under the Uniform Commercial Code of the relevant states) related to the security interests granted by any of the foregoing documents and any other document or instrument evidencing, creating or providing for a Lien on any real or personal tangible or intangible property as security for any or all of the obligations under the Second Lien Documentation.
 
“ Second Lien Trustee ” means Law Debenture Trust Company of New York, as trustee under the Second Lien Indenture, until a successor trustee replaces it in accordance with the applicable provisions of the Second Lien Indenture, after which time such term shall mean the successor trustee serving thereunder.
 
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
 
“ Security Agreement ” means the Pledge and Security Agreement, dated as of March 19, 2012, by and among the Issuer, the Trustee, the Second Lien Trustee, the Collateral Agent, and U.S. Bank National Association, as Third Lien Agent (as defined therein), as the same may be amended, restated, amended and restated, renewed, replaced, supplemented or otherwise modified from time to time.
 
“ Security Documents ” means, collectively, the Security Agreement, the Intercreditor Agreement, the Control Agreement, other security agreements and directions to pay relating to the Collateral executed and delivered and/or filed and recorded in appropriate jurisdictions to preserve and protect the Liens on the Collateral (including, without limitation, financing statements under the Uniform Commercial Code of the relevant states) related to the security interests granted by any of the foregoing documents and any other document or instrument evidencing, creating or providing for a Lien on any real or personal tangible or intangible property as security for any or all of the Note Obligations under the Note Documents or any of the foregoing documents (including, without limitation, all such documents, agreements and instruments evidencing Liens required to be granted pursuant to Section 5.03(b)).
 
“ Standard & Poor's ” means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.
 
“ Subsidiary ” means, with respect to any Person:
 
(1)           any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; and
 
(2)           any partnership, joint venture, limited liability company or similar entity of which
 
(x)           more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiar-
 

 
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ies of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and
 
(y)           such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
 
“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).
 
“ Trustee ” means Wilmington Trust, National Association, as trustee, until a successor replaces it in accordance with Section 8.08 or Section 8.09 and thereafter means the successor serving hereunder.
 
“ Trusts ” means (a) Home Loan Reinsurance Co. United Guaranty Residential Insurance Company Reinsurance Agreement (Acct. No. x6401); (b) Home Loan Reinsurance Co. Genworth Reinsurance Co. Trust Agreement (Acct. No. x6403); (c) Mortgage Guaranty Insurance Corporation/WM MTG Reinsurance Co. Trust; (Acct. No. x2400); (d) Reinsurance Escrow Agreement among WM Mortgage Reinsurance Co. PMI Mortgage Insurance Company and US Bank (Acct. No. x6404); (e) Radian Guaranty Inc. and WM Mortgage Reinsurance Company Agreement, dated March 27, 2001 (Acct. No. x5700); (f) Home Loan Reinsurance Co. Republic Mortgage Co. Reinsurance Agreement, dated December 14, 1998 (Acct. No. x6402); (g) Washington Mutual Custody Account (Acct. No. x6406); and (h) WM Mortgage Reinsurance Company Inc. (Acct. No. x4202).
 
“ Uniform Commercial Code ” means the New York Uniform Commercial Code as in effect from time to time.
 
“ WMMRC ” means WM Mortgage Reinsurance Company, Inc., a Hawaii corporation and direct wholly-owned subsidiary of the Issuer.
 
SECTION 1.02.   Other Definitions
 
.
 
Term
Defined
in Section
“Authentication Order”                                                                                                                         
2.02
“Covenant Defeasance”                                                                                                                         
9.03
“DTC”                                                                                                                         
2.03
“Event of Default”                                                                                                                         
7.01
“Legal Defeasance”                                                                                                                         
9.02
“Note Register”                                                                                                                         
2.03
“Paying Agent”                                                                                                                         
2.03
“Redemption Date”                                                                                                                         
3.07
“Registrar”                                                                                                                         
2.03
“Runoff Payment Date”                                                                                                                         
4.02(b)
“Runoff Proceeds Distribution”                                                                                                                         
4.02(a)
“Successor Company”                                                                                                                         
6.01
“Trustees Fees Account”                                                                                                                         
4.04(a)

SECTION 1.03.   Incorporation by Reference of Trust Indenture Act .  Whenever this Indenture refers to a provision of the Trust Indenture Act (“ TIA ”), the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings:
 

 
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“ indenture securities ” means the Notes;
 
“ indenture security Holder ” means a Holder of a Note;
 
“ indenture to be qualified ” means this Indenture;
 
“ indenture trustee ” or “ institutional trustee ” means the Trustee; and
 
“ obligor ” on the Notes means the Issuer and any successor obligor upon the Notes.  All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by SEC rule under the Trust Indenture Act have the meanings so assigned to them.
 
SECTION 1.04.   Rules of Construction
 
.  Unless the context otherwise requires:
 
(a)   a term has the meaning assigned to it;
 
(b)   an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
 
(c)   “or” is not exclusive;
 
(d)   “including” means including without limitation;
 
(e)   words in the singular include the plural, and in the plural include the singular;
 
(f)   “will” shall be interpreted to express a command;
 
(g)   provisions apply to successive events and transactions;
 
(h)   references to sections of, or rules under, the Securities Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;
 
(i)   unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture; and
 
(j)   the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision.
 
SECTION 1.05.   Acts of Holders
 
.
 
(a)   Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing.  Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Issuer.  Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 8.01) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 1.05.
 

 
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(b)   The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof.  Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same.  The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
 
(c)   The ownership of Notes shall be proved by the Note Register.
 
(d)   Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.
 
(e)   The Issuer may, at its option in the circumstances permitted by the Trust Indenture Act, set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders, but the Issuer shall have no obligation to do so.
 
(f)   Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.  Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.
 
(g)   Without limiting the generality of the foregoing, a Holder, including the Depositary, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and the Depositary may provide its proxy to the beneficial owners of interests in any such Global Note through such Depositary’s standing instructions and customary practices.
 
(h)   The Issuer may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by DTC entitled under the procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders.  If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date.  No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date.
 

 
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ARTICLE II

 
THE NOTES
 
SECTION 2.01.   Form and Dating; Terms .
 
(a)   General .  The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto.  The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage.  Each Note shall be dated the date of its authentication.  The Notes shall be issued in whole dollar ($1.00) amounts and integral multiples of $1.00, subject to the issuance of PIK Interest pursuant to Section 4.02  hereof, in which case the aggregate principal amount of Notes may be increased by, or PIK Notes may be issued in, an aggregate principal amount equal to the amount of PIK Interest paid by the Issuer for the applicable period, rounded up to the nearest whole dollar.
 
(b)   Global Notes .  Notes issued in global form shall be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form shall be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Each Global Note shall represent such of the outstanding Notes as shall be specified on the face of such Global Note, as increased or decreased in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and by the payment of PIK Interest and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions and the payment of PIK interest by increasing or reducing the aggregate principal amount of such Global Note.  Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof or the Issuer in accordance with Section 2.01(d).
 
(c)   Terms .  The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Issuer and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
 
(d)   Issuance of PIK Notes .  In connection with the payment of PIK Interest, the Issuer is entitled to, without the consent of the Holders, increase the outstanding principal amount of the Notes or issue PIK Notes.
 
SECTION 2.02.   Execution and Authentication .  At least one Officer of the Issuer shall execute the Notes on behalf of the Issuer by manual, facsimile or electronic (e.g. .pdf) signature.
 
If an Officer of the Issuer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall nevertheless be valid.
 
A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A attached hereto, as the case may be, by the manual signature of the Trustee.  The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.
 

 
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On the Issue Date, the Trustee shall, upon receipt of an Issuer Order (an “ Authentication Order ”), which order shall set forth the number of separate Note certificates, the principal amount of each of the Notes to be authenticated, the date on which the Notes are to be authenticated, the registered holder of each Note and delivery instructions, authenticate and deliver the Notes.  In addition, at any time, from time to time, the Trustee shall upon  receipt of an Authentication Order authenticate and deliver any PIK Notes.
 
The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate Notes.  An authenticating agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuer.
 
SECTION 2.03.   Registrar and Paying Agent .  The Issuer shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (“ Registrar ”) and (ii) an office or agency where Notes may be presented for payment (“ Paying Agent ”).  The Registrar shall keep a register of the Notes (“ Note Register ”) reflecting the ownership of the Notes outstanding from time to time and of their transfer.  The Registrar shall also facilitate the transfer of the Notes on behalf of the Issuer in accordance with Section 2.06 hereof.  The Issuer may appoint one or more co-registrars and one or more additional paying agents.  The term “ Registrar ” includes any co-registrar, and the term “ Paying Agent ” includes any additional paying agents.  The Issuer initially appoints the Trustee as Paying Agent.  The Issuer may change any Paying Agent or Registrar without prior notice to any Holder.  The Issuer shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture.  If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall, to the extent that it is capable, act as such.
 
The Issuer initially appoints The Depository Trust Company (“ DTC ”) to act as Depositary with respect to the Global Notes representing the Notes.
 
The Issuer initially appoints the Trustee to act as the Registrar and Paying Agent for the Notes and the Trustee agrees to initially so act.
 
SECTION 2.04.   Paying Agent to Hold Money in Trust .  The Issuer shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Issuer in making any such payment.  While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or a Subsidiary) shall have no further liability for such funds.  If the Issuer or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all funds held by it as Paying Agent.  Upon any Event of Default pursuant to Section 7.01(5), (6) or (7), the Trustee shall serve as Paying Agent for the Notes.
 
SECTION 2.05.   Holder Lists .  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with Trust Indenture Act Section 312(a).  If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least five (5) Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Issuer shall otherwise comply with Trust Indenture Act Section 312(a).
 

 
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SECTION 2.06.   Transfer and Exchange .
 
(a)   When Notes are presented to the Registrar with a request to register the transfer or to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met; provided, however, that any Note presented or surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar and the Trustee duly executed by the Holder thereof or by his attorney duly authorized in writing. To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Issuer's order or at the Registrar's request.
 
The Registrar shall not be required to register the transfer of or exchange any Note selected for prepayment in whole or in part, except the portion not being paid of any Note being prepaid in part.
 
The Issuer shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of selection of Notes to be redeemed under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the portion not being paid of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date.
 
No service charge shall be made to any Holder of a Note for any registration of transfer or exchange (except as otherwise permitted herein), but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.10 and 3.06 hereof, which shall be paid by the Issuer).
 
Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and Interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.
 
(b)   Each Global Note shall bear a legend in substantially the following form:
 
“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
 
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS
 

 
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OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH  IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.”
 
(c)   Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or the Issuer has repurchased a particular Global Note or a particular Global Note has been prepaid, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Custodian at the direction of the Trustee to reflect such reduction; and if the beneficial interest or a Definitive Note is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in the Global Note or in another Global Note, the Trustee will, in the case of exchange or transfer of a Definitive Note for an interest in a Global Note, cancel such Definitive Note, and, in either case, the applicable Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Custodian, at the direction of the Trustee, to reflect such increase, subject, in the case of the exchange or transfer of a Definitive Note for an interest in a Global Note, to prior receipt by the Trustee of exchange or assignment documentation from the Holder satisfactory to the Trustee directing such exchange or transfer.
 
(d)   Owners of interests in the Global Note will be entitled to have individual Definitive Notes registered in their names and to receive certificates in respect thereof if (i) DTC notifies the Issuer in writing that it is no longer willing or able to discharge properly its responsibilities as Depositary with respect to the Notes, or ceases to be a “clearing agency” under applicable law, or is at any time  no longer eligible to act as such and the Issuer is not able to appoint a qualified successor within 90 days of receiving notice or becoming aware of such ineligibility, or (ii) DTC or any alternative clearing system on behalf of which the Notes evidenced by a Global Note may be held is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or in fact does so, the Issuer will cause sufficient certificates for individual Definitive Notes to be issued, executed and delivered to the Registrar and upon receipt of an Issuer Order by the Trustee, such Notes shall be authenticated and dispatched to the relevant Holders.  In connection with any such delivery, a person having an interest in the Global Note must provide to the Registrar a written order containing instructions and such other information and certifications as the Issuer and the Trustee may require to complete, execute and deliver such certificates in respect of individual Definitive Notes.
 
SECTION 2.07.   Replacement Notes
 
If any mutilated Note is surrendered to the Trustee, the Registrar or the Issuer or the Trustee receives evidence to its satisfaction of the ownership and destruction, loss or theft of any Note, the Issuer shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met.  If required by the Trustee or the Issuer an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced.  The Issuer and the Trustee may charge the Holder for their expenses in replacing a Note.
 

 
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Every replacement Note issued in accordance with this Section 2.07 is a contractual obligation of the Issuer and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
 
SECTION 2.08.   Outstanding Notes .  The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof and those described in this Section 2.08 as not outstanding.  Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note.
 
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser (as defined in Section 8-303 of the Uniform Commercial Code).
 
If the principal amount of any Note is considered paid under Section 5.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
 
If the Paying Agent holds, on a Redemption Date or maturity date, money sufficient to pay the principal amount of the Notes (or portions thereof) payable on that date and accrued but unpaid interest thereon, then on and after that date such Notes (or portions thereof) shall be deemed to be no longer outstanding and shall cease to accrue interest.
 
SECTION 2.09.   Treasury Notes .  In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer or by any Affiliate of the Issuer, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee knows are so owned shall be so disregarded.
 
SECTION 2.10.   Temporary Notes .  Until certificates representing Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes.  Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee.  Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes.
 
Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.
 
SECTION 2.11.   Cancellation .  The Issuer at any time may deliver Notes to the Trustee for cancellation.  The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act).  Upon the request of the Issuer, certification of the destruction of all cancelled Notes shall be delivered to the Issuer.  The Issuer may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
 
SECTION 2.12.   Defaulted Interest .  If the Issuer defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest pay
 

 
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able on the defaulted interest, in each case at the rate provided in the Notes and in Section 5.01 hereof to the Persons who are Holders on a subsequent special record date.  The Issuer shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Issuer shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as provided in this Section 2.12.  The Issuer shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest.  At least 15 days before any such special record date, the Issuer (or, upon the written request of the Issuer, the Trustee in the name and at the expense of the Issuer) shall mail or cause to be mailed, first-class postage prepaid, to each Holder, with a copy to the Trustee, a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.
 
Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
 
SECTION 2.13.   CUSIP/ISIN Numbers .  The Issuer in issuing the Notes may use CUSIP and ISIN numbers (in each case, if then generally in use) and, if so, the Trustee shall use CUSIP and ISIN numbers in notices of redemption as a convenience to Holders; provided , that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Issuer will as promptly as practicable notify the Trustee in writing of any change in the CUSIP and ISIN numbers.
 
SECTION 2.14.   Calculation of Principal Amount of Securities .  The aggregate principal amount of the Notes, at any date of determination, shall be the principal amount of the Notes, including any PIK Notes issued in respect thereof, and any increase in the principal amount thereof, as a result of a PIK Payment at such date of determination.  With respect to any matter requiring consent, waiver, approval or other action of the Holders of a specified percentage of the principal amount of all the Notes, such percentage shall be calculated, on the relevant date of determination, by dividing (a) the principal amount, as of such date of determination, of Notes, the Holders of which have so consented by (b) the aggregate principal amount, as of such date of determination, of the Notes then outstanding, in each case, as determined in accordance with the preceding sentence, Section 2.08 and Section 2.09 of this Indenture.  Any such calculation made pursuant to this Section 2.14 shall be made by the Issuer and delivered to the Trustee pursuant to an Officer’s Certificate.
 
SECTION 2.15.   No Gross Up; Withholding . The Issuer shall not be obligated to pay additional amounts to the Holders or beneficial owners of the Notes as a result of any withholding or deduction for, or an account of, any present or future taxes, duties, assessments, withholding or governmental change with respect to the Notes. Because the status of the Second Lien Notes is unclear, it is anticipated that distributions on the Second Lien Notes are subject to U.S. federal income withholding tax.
 

 
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ARTICLE III

 
REDEMPTION
 
SECTION 3.01.   Notices to Trustee .  If the Issuer elects to redeem the Notes pursuant to Section 3.07 hereof, it shall furnish to the Trustee, at least five (5) Business Days (or such shorter period as allowed by the Trustee) before notice of redemption is required to be mailed or caused to be mailed to Holders pursuant to Section 3.03 hereof but not more than 60 days before a Redemption Date, an Officer’s Certificate of the Issuer setting forth (i) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of the Notes, to be redeemed and (iv) the redemption price.
 
SECTION 3.02.   Selection of Notes to Be Redeemed .  If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes of such series to be redeemed (a) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed or (b) on a pro rata basis to the extent practicable, or, if the pro rata basis is not practicable for any reason, by lot or by such other method the Trustee shall deem fair and appropriate.  In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the Redemption Date by the Trustee from the outstanding Notes not previously called for redemption.
 
The Trustee shall promptly notify the Issuer in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed.  Notes and portions of Notes selected shall be in whole dollar ($1.00) amounts or whole dollar multiples in excess thereof.  Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
 
SECTION 3.03.   Notice of Redemption .  The Issuer shall request and the Trustee shall be authorized to provide a list of record holders, as of a date determined by the Issuer. The Issuer shall mail or cause to be mailed by first-class mail notices of redemption at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder’s registered address appearing in the Note Register or otherwise in accordance with Applicable Procedures.  Notices of redemption may not be conditional.
 
The notice shall identify the Notes to be redeemed and shall state:
 
(a)   the Redemption Date;
 
(b)   if any Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder of the Notes upon cancellation of the original Note;
 
(c)   the name and address of the Paying Agent;
 
(d)   that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
 
(e)   that, unless the Issuer defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;
 

 
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(f)   the paragraph or subparagraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
 
(g)   the CUSIP and ISIN number, if any, printed on the Notes being redeemed and that no representation is made as to the correctness or accuracy of any such CUSIP and ISIN number that is listed in such notice or printed on the Notes.
 
At the Issuer’s request, the Trustee shall give the notice of redemption in the Issuer’s name and at its expense; provided that the Issuer shall have delivered to the Trustee, at least five (5) Business Days before notice of redemption is required to be mailed or caused to be mailed to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate of the Issuer requesting that the Trustee give such notice (in which case the Issuer shall provide to the Trustee the complete form of such notice in the name and at the expense of the Issuer) and setting forth the information to be stated in such notice as provided in the preceding paragraph.
 
The Issuer may provide in the notice of redemption that payment of the redemption price and performance of the Issuer’s obligations with respect to such redemption or purchase may be performed by another Person.
 
SECTION 3.04.   Effect of Notice of Redemption .  Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price.  The notice, if mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice.  In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note.  Subject to Section 3.05 hereof, on and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption.
 
SECTION 3.05.   Deposit of Redemption Price .
 
(a)   Prior to 11:00 a.m. (New York City time) on the Redemption Date, the Issuer shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Notes to be redeemed on that Redemption Date.  The Trustee or the Paying Agent shall promptly, and in any event within two (2) Business Days after the Redemption Date, return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed.
 
(b)   If the Issuer complies with the provisions of the preceding paragraph (a), on and after the Redemption Date, interest shall cease to accrue on the applicable series of Notes or the portions of Notes called for redemption, whether or not such Notes are presented for payment.  If a Note is redeemed on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the Redemption Date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date.  If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the Redemption Date until such principal is paid, and to the extent lawful on any interest accrued to the Redemption Date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 5.01 hereof.
 
SECTION 3.06.   Notes Redeemed in Part .  Upon surrender of a Note that is redeemed in part, the Issuer shall issue and the Trustee shall authenticate for the Holder at the expense of the Issuer
 

 
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a new Note equal in principal amount to the unredeemed portion of the Note surrendered representing the same indebtedness to the extent not redeemed; provided that each new Note will be in a whole dollar ($1.00) principal amount.  It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate of the Issuer is required for the Trustee to authenticate such new Note.
 
SECTION 3.07.   Optional Redemption .  At any time the Notes may be redeemed or purchased (by the Issuer or any other Person designated by the Issuer), in whole or in part, at a redemption price equal to 100% of the principal amount of Notes redeemed (the “ Redemption Date ”) and, without duplication, accrued and unpaid interest to the Redemption Date, subject to the rights of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date.  Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
 
SECTION 3.08.   Mandatory Redemption .  The Issuer shall not be required to make any mandatory redemption or sinking fund payments with respect to the Notes (other than pursuant to Section 4.02).
 
ARTICLE IV

 
ESTABLISHMENT OF FUNDS AND APPLICATION AND INVESTMENT OF MONIES THEREIN
 
SECTION 4.01.   Maintenance of Collateral Account .  The Issuer shall maintain the Collateral Account at all times.
 
SECTION 4.02.   Deposit of Runoff Proceeds and Application Thereof .
 
(a)   Issuer shall, and shall cause the Owner to, deposit all distributions, dividends or other receipts in respect of Runoff Proceeds on the date paid to the Issuer (“ Runoff Proceeds Distributions ”) directly into the Collateral Account; provided that the foregoing shall not apply to any Runoff Proceeds Distributions made prior to the execution and delivery of this Indenture for the purpose of deposit into the Trustees Fees Account pursuant to Section 4.04. If Issuer shall nevertheless receive any Runoff Proceeds Distributions other than by deposit directly into the Collateral Account, it shall cause all such Runoff Proceeds Distributions to be deposited into the Collateral Account on the same Business Day on which they are received. Runoff Proceeds Distributions shall not be deposited in any deposit or securities account other than the Collateral Account, and all such Runoff Proceeds Distributions, while not held in the Collateral Account shall be held by the Issuer in trust for the Collateral Agent and shall not be commingled with any other assets of the Issuer; provided that the foregoing shall not apply to any Runoff Proceeds Distributions made prior to the execution and delivery of this Indenture for the purpose of deposit into the Trustees Fees Account pursuant to Section 4.04.
 
(b)   Subject to Section 7.14, on each Interest Payment Date, the Issuer shall direct the Collateral Agent to apply all amounts on deposit in the Collateral Account and any other Runoff Proceeds Distributions (other than any such Runoff Proceeds Distributions made prior to the execution and delivery of this Indenture for the purpose of deposit into the Trustees Fees Account pursuant to Section 4.04) in the following order (each such date of application, a “ Runoff Payment Date ”):
 
(i)   FIRST:  To the extent not paid pursuant to Section 4.04 or otherwise, to the pro rata payment of any compensation, fees and expenses, if any, due to the Trustee, the Second Lien Trustee and the Collateral Agent on such Runoff Payment Date for any services rendered under the Indenture, the Second Lien Indenture or the Security Documents.
 

 
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(ii)   SECOND:  To the payment to the Issuer of an amount equal to the Issuer Incremental Amount accrued, if any, since the immediately preceding Interest Payment Date on the Issuer Priority Amount.
 
(iii)   THIRD:  To the payment to the Issuer of an amount equal to any unpaid Issuer Priority Amount.
 
(iv)   FOURTH:  To the Paying Agent for payment to the Holders of any accrued and unpaid interest, if any, with respect to the Notes; provided, however, that if on any Runoff Payment Date the Runoff Proceeds Distributions are not sufficient for such purposes, then any accrued and unpaid interest, if any, shall be paid as PIK Interest or as additional principal in accordance with the terms of the Notes.
 
(v)   FIFTH:  To the Paying Agent for payment to the Holders of any unpaid principal and other Notes Obligations, if any, with respect to the Notes.
 
After the payments required by paragraphs FIRST, SECOND, THIRD, FOURTH and FIFTH above have been made, the balance on deposit in the Collateral Account shall be paid as provided in Section 2.4(a) of the Intercreditor Agreement.
 
(c)   Any Issuer Incremental Amount not paid with respect to the Issuer Priority Amount or the Issuer Secondary Amount on any Interest Payment Date, shall be added to the then outstanding Issuer Priority Amount or Issuer Secondary Amount, as applicable.
 
SECTION 4.03.   Investment of Funds .  All moneys in the Collateral Account shall be invested at the written direction of an Officer of the Issuer in cash and Cash Equivalents. On each Interest Payment Date on which any Cash Equivalents are held in or credited to the Collateral Account, the Collateral Agent shall sell or otherwise convert such Cash Equivalents to cash in order to make the payments provided above.
 
SECTION 4.04.   Trustees Fees Account
 
(a)   On or about the date of execution and delivery of this Indenture, the Issuer shall establish an account, in which the Collateral Agent has a valid perfected first and second priority security interest and exclusive dominion and control in accordance with the terms of the Security Documents (the “ Trustees Fees Account ”), and shall deposit an amount not to exceed $250,000 in such account from Runoff Proceeds Distributions made prior to the date of execution and delivery of this Indenture for the purpose of paying the compensation, fees and expenses due to the Trustee, the Second Lien Trustee and Collateral Agent on or before March 19, 2014.
 
(b)   The Issuer shall pay any compensation, fees and expenses due to the Trustee, the Second Lien Trustee and the Collateral Agent pursuant to this Indenture, the Second Indenture or the Security Documents, first from the Trustees Fees Account and then from the application of monies pursuant to Section 4.02(b).
 
(c)   On March 15, 2014, the Issuer shall deposit any funds remaining in the Trustees Fees Account directly into the Collateral Account.
 

 
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ARTICLE V
COVENANTS
 
SECTION 5.01.   Payment of Notes .  The Issuer shall pay or cause to be paid the principal of and interest on the Notes on the dates and in the manner provided in the Notes (in the case of the payment of principal and interest in cash, only to the extent funds are available therefor) as provided for in paragraphs FOURTH and FIFTH of Section 4.02(b) herein.  Principal and interest shall be considered paid on the date due if the Paying Agent holds as of 11:00 a.m. Eastern Time on the due date money deposited by the Issuer or transferred from the Collateral Account in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. PIK Interest shall be considered paid on the date due if the Trustee is directed on or prior to such date to issue PIK Notes or increase the principal amount of the applicable Notes, in each case in an amount equal to the amount of the applicable PIK Interest.
 
The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law whether or not allowed) on, (i) overdue principal at the rate that is 2% higher than the then applicable interest rate on the Notes to the extent lawful, and (ii) overdue installments of interest (without regard to any applicable grace period) at the rate then applicable to the Notes to the extent lawful, provided, however that with respect to clauses (i) and (ii) above, payments of interest shall only be made in cash to the extent moneys are in or should have been deposited in the Collateral Account in accordance with Article IV or are available to be applied in accordance with Section 7.14 herein, and such payment of interest shall otherwise be paid in PIK Interest.
 
SECTION 5.02.   Deposit of Runoff Proceeds Distributions . (a) So long as the Owner shall have accumulated Runoff Proceeds at such time, the Issuer shall cause the Owner to use commercially reasonable efforts to obtain the appropriate regulatory approval on or before the ninetieth (90th) day following the end of each fiscal year (or more frequently as the Issuer may in good faith determine to be commercially reasonable), of a dividend or distribution of the maximum amount of undistributed Runoff Proceeds that could reasonably be expected to be approved after consulting with the Owner’s Hawaiian regulatory advisers and counsel, and within three (3) Business Days of the receipt of such approval, to pay to the Issuer such dividend or distribution and deposit such dividend or distribution on the date paid directly into the Collateral Account.
 
(b) On the Issue Date, the Issuer will irrevocably instruct and authorize WMMRC in writing (which instruction shall be applicable to the protected cell following an Insurance Book Closing) to deposit all Runoff Proceeds Distributions into the Collateral Account.
 
SECTION 5.03.   Liens .  (a) The Issuer will not, and will cause the Owner not to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind (except Permitted Liens) on the Collateral, the equity interests issued by the Owner, any interests of the Owner in any of the Trusts or assets thereof, Runoff Proceeds Distributions or any Runoff Proceeds, or any proceeds of any of the foregoing.
 
(b) The Issuer will, and will cause WMMRC to, use commercially reasonable efforts to obtain approval from the applicable regulatory authorities to: (i) effect, as soon as reasonably practicable, the Insurance Book Closing and (ii) grant a first priority perfected security interest (subject to whatever limitations or conditions any such authority may impose) under the Security Documents in the equity issued by the Owner (including, upon the Insurance Book Closing, the protected cell to which the Trusts and their assets are transferred) and, after the Insurance Book Closing, the excess assets of the Owner and the Trusts.  As soon as reasonably practicable following receipt of the necessary regulatory approvals, the
 

 
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Issuer will, and will cause WMMRC, the Owner and the Trusts, as applicable, to, consummate the Insurance Book Closing and grant such security interests, pursuant to the Security Agreement or a separate Security Document, which shall be in a form and with terms substantially  similar to the Security Agreement, which for clarification purposes, may occur at different times depending on the timing of the receipt of such necessary regulatory approvals.
 
SECTION 5.04.   Maintenance of Office or Agency .  The Issuer shall maintain the offices or agencies (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) in the Borough of Manhattan, The City of New York, as required under Section 2.03 where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
 
The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Issuer of its obligation to maintain such offices or agencies as required by Section 2.03 for such purposes.  The Issuer shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
 
The Issuer hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Issuer in accordance with Section 2.03 hereof.
 
SECTION 5.05.   Reports and Other Information . The Issuer shall, and shall cause the Owner to, provide to the Holders and to the Trustee (a) an annual audited balance sheet and income statement of the Issuer and the Owner within 90 days following the end of each fiscal year, commencing with the fiscal year ending December 31, 2012, and (b) monthly unaudited balance sheets and income statements of the Owner and each of the Trusts and the account statement of each segregated account into which any Runoff Proceeds are deposited within 45 days following the end of each month.  The Issuer shall, and shall cause the Owner to, provide to the Holders and to the Trustee a monthly statement of the Collateral Account, including the amount and nature of any of its investments and any gain or loss associated therewith, within 30 days following the end of each month.
 
SECTION 5.06.   Compliance Certificate
 
. So long as any of the Notes are outstanding, the Issuer will deliver to the Trustee, within 5 Business Days after any Officer becomes aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Issuer is taking or propose to take with respect thereto. The Issuer shall furnish to the Trustee not less than annually, an Officers’ Certificate as to his or her knowledge of the Issuer’s compliance with all conditions and covenants under the Indenture.
 
SECTION 5.07.   Limitation on Business Activities .  The Issuer shall cause the Owner (i) to engage in no activities, other than administering the Trusts, collecting premiums and depositing the Runoff Proceeds Distributions into the Collateral Account and activities incidental thereto, (ii) to not originate any new insurance policies, and (iii) to not create, incur, issue, assume, guarantee or suffer to exist any indebtedness. The Issuer shall not permit the Owner to invest, or allow to be invested, any of the assets of the Trusts except in accordance with the applicable trust documents and substantially in accordance with past practices.
 

 
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SECTION 5.08.   Prohibition on Commingling . The Issuer shall cause the Owner to deposit all Runoff Proceeds released to it from the Trusts into a segregated account, which account shall consist solely of such Runoff Proceeds and proceeds thereof or interest thereon, and to hold such amounts in the segregated account until such time as they are distributed as Runoff Proceeds Distributions as provided for in Article IV hereof and will invest the same only in cash and Cash Equivalents. The Issuer shall cause the Owner to not deposit such Runoff Proceeds and other amounts in any deposit or securities account other than the segregated account referred to in the preceding sentence, and all such amounts shall be held by the Owner in trust for distribution as provided for in Article IV hereof and shall not be commingled with any other assets of the Owner or the Issuer. To the extent applicable, this Section 5.08 shall not prohibit the deposit of any funds to the Trustees Fees Account pursuant to Section 4.04.
 

 
SECTION 5.09.   Stay, Extension and Usury Laws .  The Issuer covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenant that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
 
SECTION 5.10.   Corporate Existence .  Except as permitted by Article VI or required by 5.03(b), the Issuer shall do or cause to be done all things necessary (i) to preserve and keep in full force and effect its corporate existence, and the corporate, partnership or other existence of the Owner in accordance with the respective organizational documents of the Issuer or the Owner (which, in the case of the Owner, will not be amended except as necessary to comply with regulatory requirements, effect the Insurance Book Closing and to maintain the ability to pay dividends), (ii) to maintain its direct ownership and voting control over 100% of the equity issued by the Owner (iii) to preserve and keep in full force and effect the rights (charter and statutory), licenses and franchises of the Issuer and the Owner;  provided  that the Issuer shall not be required to preserve any such right, license or franchise described in this clause (iii) if the preservation thereof is no longer necessary for the administration of the Trusts or collection of the Runoff Proceeds and that the loss thereof is not adverse in any material respect to the Holders of the Notes, taken as a whole, and (iv) to not consolidate or merge the Owner with or into another Person.
 
SECTION 5.11.   Security Documents .  The Issuer will and will cause the Owner to comply with the terms of each Security Document to which it is a party.
 
SECTION 5.12.   Reporting of Debt for Tax Purposes . The Issuer shall treat the Runoff Notes as debt for federal income tax purposes, and shall use commercially reasonable efforts to defend such treatment in connections with any examination or subsequent proceedings.
 
SECTION 5.13.   Prohibition on Sale of Interests in Trusts .  Except pursuant to an Insurance Book Closing and required by this Indenture, the Issuer will cause the Owner not to, directly or indirectly, (a) sell, lease, transfer or otherwise dispose of any of its interest in any of the Trusts, (b) permit any Trust to sell, lease, transfer or otherwise dispose of any of its assets other than in the ordinary course of administering and managing the assets of the Trust in accordance with the trust documents and invest-
 
 
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ment policies of the Owner or (c) enter into any contract, agreement or understanding to effectuate (a) or (b) above.
 
ARTICLE VI
 

 
SUCCESSORS
 
SECTION 6.01.   Merger, Consolidation or Sale of All or Substantially All Assets .
 
The Issuer shall not, directly or indirectly, consolidate or merge with or into or wind up into (whether or not the Issuer is the surviving corporation), and shall not sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer, in one or more related transactions, to any Person unless:
 
(1)           the Issuer is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or the Person to whom such sale, assignment, transfer, lease, conveyance or other disposition will have been made, is a Person organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia (such Person, as the case may be, being herein called the “ Successor Company ”); provided that in the case where the Successor Company is not a corporation, a co-obligor of the Notes is a corporation, organized or existing under any such laws;
 
(2)           the Successor Company, if other than the Issuer, expressly assumes all the Notes Obligations pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee (subject to the non-recourse provisions contained herein);
 
(3)           at the time of such transaction, no Default exists and after giving effect to such transaction, no Default would exist;
 
(4)           immediately after such transaction, WMMRC continues to be a direct or indirect wholly-owned subsidiary of the Successor Company; and
 
(5)           the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures, if any, comply with this Indenture, the Notes and the Security Documents.
 
SECTION 6.02.   Successor Corporation Substituted .  Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer in accordance with Section 6.01(a) hereof, the successor corporation formed by such consolidation or into or with which the Issuer is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture and the Security Documents referring to the Issuer shall refer instead to the successor corporation and not to the Issuer), and may exercise every right and power of the Issuer under this Indenture and the Security Documents with the same effect as if such successor Person had been named as the Issuer herein and therein; provided that the predecessor Issuer shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale, assignment, transfer, conveyance or other disposition of all of the Issuer’s assets that meets the requirements of Section 6.01 hereof.
 

 
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ARTICLE VII

 
DEFAULTS AND REMEDIES
 
SECTION 7.01.   Events of Default .  An “ Event of Default ” wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
 
(1)           default in payment when due and payable, at maturity, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes;
 
(2)           default for five Business Days or more in the payment when due of interest on or with respect to the Notes;
 
(3)           the failure by the Issuer to perform, observe or comply with Sections 4.02, 5.02, 5.03, 5.06, 5.07, 5.08, 5.10 and 5.13 of this Indenture;
 
(4)           failure by the Issuer for 30-days after receipt of written notice given by the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes to perform, observe or comply with any other covenant or agreement on its part under Article V of this Indenture (other than Sections 5.02, 5.03, 5.06, 5.07, 5.08, 5.10 and 5.13), provided that, it shall not constitute an Event of Default if, within 30-days after receipt of such written notice, corrective action is instituted and thereafter diligently pursued until the Default is cured;
 
(5)           the Owner or the Issuer, pursuant to or within the meaning of any Bankruptcy Law:
 
(A)           commences proceedings to be adjudicated bankrupt or insolvent;
 
(B)           consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under applicable Bankruptcy law;
 
(C)           consents to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or a substantial part of its property; or
 
(D)           makes a general assignment for the benefit of its creditors;
 
(6)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
 
(A)           is for relief against the Owner or the Issuer, in a proceeding in which the Owner or the Issuer, is to be adjudicated bankrupt or insolvent;
 
(B)           appoints a receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Owner or the Issuer, or for all or a substantial part of the property of the Issuer or the Owner; or
 
(C)           orders the liquidation of the Owner or the Issuer;
 

 
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and the order or decree remains unstayed and in effect for 60 consecutive days;
 
(7)           the Insurance Division of the Hawaii Department of Commerce and Consumer Affairs commences a dissolution, liquidation, insolvency or other similar proceeding against the Owner or the Issuer, or petitions a court of competent jurisdiction for an order of rehabilitation in accordance with applicable law.
 
SECTION 7.02.   Acceleration .
 
(a)   If any Event of Default (other than an Event of Default specified in clause (5), (6) or (7) of Section 7.01 hereof) occurs and is continuing under this Indenture, the Trustee by notice to the Issuer or the Holders of at least 25% in aggregate principal amount of the then total outstanding Notes by notice to the Issuer and the Trustee, in either case specifying in such notice the respective Event of Default and that such notice is a “notice of acceleration,” may declare the principal, interest and premium, if any, on all the then outstanding Notes to be due and payable.  Upon the effectiveness of such declaration, such principal and interest shall be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default arising under clause (5), (6) or (7) of Section 7.01 hereof, all outstanding Notes shall be due and payable without further action or notice.
 
(b)   The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of the Holders of all of the Notes rescind any acceleration with respect to the Notes and its consequences if such rescission would not conflict with any judgment or decree of a court of competent jurisdiction and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.
 
SECTION 7.03.   Other Remedies .  If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture or the Security Documents, subject to Section 7.16 herein.
 
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent permitted by law.
 
SECTION 7.04.   Specific Performance . The Issuer agrees that irreparable damage would occur and that the Trustee, the Collateral Agent and the Holders would not have any adequate remedy at law in the event that any of the provisions of this Indenture were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the Trustee, Collateral Agent and the Holders shall be entitled to an injunction or injunctions to prevent breaches of this Indenture and to enforce specifically the terms and provisions of this Indenture, including but not limited to Sections 4.02, 5.01, 5.02, 5.03, 5.07, 5.08, 5.11 and 5.13, in any court of competent jurisdiction, without proof of actual damages (and each party hereby waives any requirement for the securing or posting of any bond or other security in connection therewith); specific performance being in addition to any other remedy to which the parties are entitled at law or in equity.
 
SECTION 7.05.   Waiver of Past Defaults .  Holders of not less than a majority in aggregate principal amount of the then outstanding Notes (unless a higher percentage would be required under Section 10.02 to consent to an amendment of the relevant provision, in which case such higher per
 

 
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centage shall apply) by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default (other than a Default under Section 5.01). Holders of not less than all affected then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default under Section 5.01 and its respective consequences hereunder. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. This Section 7.05 is subject to Section 7.02 hereof.
 
SECTION 7.06.   Control by Majority .  Holders of a majority in principal amount of the then total outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.  The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder of a Note or that would involve the Trustee in personal liability.
 
SECTION 7.07.   Limitation on Suits .  Subject to Sections 7.04 and 7.08 hereof, no Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless:
 
(a)   such Holder has previously given the Trustee notice that an Event of Default has occurred and is continuing;
 
(b)   Holders of at least 25% in aggregate principal amount of the total outstanding Notes have requested the Trustee to pursue the remedy;
 
(c)   Holders of the Notes have offered the Trustee satisfactory security or indemnity against any loss, liability or expense;
 
(d)   the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and
 
(e)   Holders of a majority in principal amount of the total outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.
 
A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.
 
SECTION 7.08.   Rights of Holders of Notes to Receive Payment .  Notwithstanding any other provision of this Indenture and subject to Section 7.16, the right of any Holder of a Note to receive payment of principal of, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
 
SECTION 7.09.   Collection Suit by Trustee .  If an Event of Default specified in Section 7.01(1) or (2) hereof occurs and is continuing, the Trustee is authorized to recover judgment, subject to the limitation in Section 7.16 hereof, in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the compensation and reasonable expenses, disbursements and advances of the Trustee, its agents and counsel.
 

 
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SECTION 7.10.   Restoration of Rights and Remedies .  If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Issuer, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
 
SECTION 7.11.   Rights and Remedies Cumulative .  Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, and subject to Section 7.16 hereof, no right or remedy herein or in the Security Documents conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder or in the Security Documents, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
 
SECTION 7.12.   Delay or Omission Not Waiver .  No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
 
SECTION 7.13.   Trustee May File Proofs of Claim .  The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation and reasonable expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Notes), its creditors or its property and to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the compensation and reasonable expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07 hereof.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
 

 
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SECTION 7.14.   Priorities .  If the Trustee or any Agent collects any money or property pursuant to the enforcement of this Article VII, it shall pay out the money in the order set forth in Section 2.4(b) of the Intercreditor Agreement, provided that, in the case of a Recourse Action, other than in an Insolvency Proceeding, each as defined in the Intercreditor Agreement, such money or property shall be paid out in the order set forth in Section 2.4(e) of the Intercreditor Agreement.
 
The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 7.14.
 
SECTION 7.15.   Undertaking for Costs .  In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 7.15 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 7.08 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.
 
SECTION 7.16.   Limitation on the Issuer’s Obligations . Notwithstanding any other provision of the Indenture, the Notes, the Intercreditor Agreement and the other Security Documents to the contrary, the Trustee, on behalf of itself and the Holders, agrees that it and the Holders shall not have or take recourse (other than actions for specific performance under Section 7.04) with respect to the Notes Documentation against the Issuer or its assets and property or against WMMRC or the Owner or their respective assets and property (other than assets that were required to be transferred to the protected cell pursuant to the Insurance Book Closing), except (i) to the Collateral Account, (ii) if the Issuer fails to comply with its obligations pursuant to Sections 4.02(a), 4.02(b), 5.02 or 5.08, to the assets of the Issuer in an amount equal to the aggregate amount of any Runoff Proceeds or Runoff Proceeds Distributions that were not deposited into the Collateral Account, (iii) to the equity interests in and the excess assets of the Owner and the Trusts to the extent a Lien has been granted therein pursuant to Section 5.03(b) herein in favor of the Collateral Agent and (iv) to the Owner or the Issuer for costs and expenses, including reasonable attorney’s fees, related to the enforcement of Sections 4.01, 4.02, 4.03, 5.02, 5.03, 5.07, 5.08, 5.10 and 5.13 herein, if the Holders or the Trustee, as applicable, are the prevailing party in such enforcement action.
 
ARTICLE VIII   
 

 
TRUSTEE
 
SECTION 8.01.   Duties of Trustee .
 
(a)   If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by the Notes Documentation, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
 
(b)   Except during the continuance of an Event of Default:
 
(i)   the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
 

 
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(ii)   in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the form required in this Indenture.  However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
 
(c)   The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
 
(i)   this paragraph does not limit the effect of paragraph (b) of this Section 8.01;
 
(ii)   the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and
 
(iii)   the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.02, 8.04 or 8.05 hereof.
 
(d)   Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 8.01.
 
(e)   The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders of the Notes unless the Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense.
 
(f)   The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
 
SECTION 8.02.   Rights of Trustee .
 
(a)   The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer and its Subsidiaries, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
 
(b)   Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate of the Issuer or an Opinion of Counsel or both.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.  The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
 

 
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(c)   The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.
 
(d)   The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
 
(e)   Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer shall be sufficient if signed by an Officer of the Issuer.
 
(f)   None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.
 
(g)   The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.
 
(h)   The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
 
(i)   In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
 
SECTION 8.03.   Individual Rights of Trustee .  The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee.  However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign.  Any Agent may do the same with like rights and duties.  The Trustee is also subject to Sections 8.10 and 8.11 hereof.
 
SECTION 8.04.   Trustee’s Disclaimer .  The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuer’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.  The recitals and statements contained herein and in the Notes, except those contained in any Trustee’s certificate of authentication, shall be taken as the recitals and statements of the Issuer, and the Trustee or any authenticating agent assumes no responsibility for their correctness.
 
SECTION 8.05.   Notice of Defaults .  If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default within 90 days after it occurs.  Except in the case of a Default relating to the payment of principal, premium, if any, or
 

 
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interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers, in each case, of the Trustee in good faith determines that withholding the notice is in the interests of the Holders of the Notes.  The Trustee shall not be deemed to know of any Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is such a Default is received by the Trustee in accordance with Section 13.02 hereof at the Corporate Trust Office of the Trustee and such notice references the Notes and this Indenture. During any period in which an Event of Default has occurred and is continuing, the Trustee shall be entitled to have all Agents and Collateral Agents act at its direction.
 
SECTION 8.06.   Reports by Trustee to Holders of the Notes .  Within 60 days after each April 15, beginning with the April 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with Trust Indenture Act Section 313(a) (but if no event described in Trust Indenture Act Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with Trust Indenture Act Section 313(b)(1) and Section 313(b)(2) (to the extent applicable).  The Trustee shall also transmit by mail all reports as required by Trust Indenture Act Section 313(c).
 
A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Issuer and filed with each stock exchange on which the Notes are listed and the SEC in accordance with Trust Indenture Act Section 313(d).  The Issuer shall promptly notify the Trustee when the Notes are listed on any stock exchange.
 
SECTION 8.07.   Compensation and Indemnity .  The Issuer shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree in writing from time to time.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Issuer shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services.  Such expenses shall include the compensation and reasonable disbursements and expenses of the Trustee’s agents and counsel.
 
The Issuer shall indemnify the Trustee and its officers, directors, employees, agents and any predecessor trustee (in its capacity as trustee) and its officers, directors, employees and agents for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including reasonable attorneys’ fees) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the costs and expenses of enforcing this Indenture against the Issuer (including this Section 8.07) or defending itself against any claim whether asserted by any Holder or the Issuer, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder).  The Trustee shall notify the Issuer promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder except to the extent the Issuer has been materially prejudiced thereby.  The Issuer shall defend the claim and the Trustee may have separate counsel and the Issuer shall pay the fees and expenses of such counsel.  The Issuer need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.  The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct or negligence.
 
The obligations of the Issuer under this Section 8.07 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.
 

 
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To secure the payment obligations of the Issuer in this Section 8.07, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee. Such Lien shall survive the satisfaction and discharge of this Indenture.
 
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 7.01(5), (6) or (7) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
 
SECTION 8.08.   Replacement of Trustee .  A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 8.08.  The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuer.  The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuer in writing.  The Issuer may remove the Trustee if:
 
(a)   the Trustee fails to comply with Section 8.10 hereof or Section 310 of the Trust Indenture Act;
 
(b)   the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
 
(c)   a custodian or public officer takes charge of the Trustee or its property; or
 
(d)   the Trustee becomes incapable of acting.
 
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.
 
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Issuer’s expense), the Issuer or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
 
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 8.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
 
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer.  Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Holders.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 8.07 hereof.  Notwithstanding replacement of the Trustee pursuant to this Section 8.08, the Issuer’s obligations under Section 8.07 hereof shall continue for the benefit of the retiring Trustee.
 

 
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SECTION 8.09.   Successor Trustee by Merger, etc .
 
  If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
 
SECTION 8.10.   Eligibility; Disqualification .  There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has, together with its parent, a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.
 
This Indenture shall always have a Trustee who satisfies the requirements of Trust Indenture Act Sections 310(a)(1), (2) and (5).  The Trustee is subject to Trust Indenture Act Section 310(b).
 
SECTION 8.11.   Preferential Collection of Claims Against Issuer .  The Trustee is subject to Trust Indenture Act Section 311(a), excluding any creditor relationship listed in Trust Indenture Act Section 311(b).  A Trustee who has resigned or been removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated therein.
 
ARTICLE IX

 
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
 
SECTION 9.01.   Option to Effect Legal Defeasance or Covenant Defeasance .  The Issuer may, at its option and at any time, elect to have either Section 9.02 or 9.03 hereof applied to all outstanding Notes upon compliance with the conditions set forth below in this Article IX.
 
SECTION 9.02.   Legal Defeasance and Discharge .  Upon the Issuer’s exercise under Section 9.01 hereof of the option applicable to this Section 9.02, the Issuer shall, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, be deemed to have been discharged from their Obligations with respect to all outstanding Notes (including their Obligations under the Security Documents with respect to the Notes Obligations) on the date the conditions set forth below are satisfied (“ Legal Defeasance ”).  For this purpose, Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 9.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other Obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:
 
(a)   the rights of Holders of Notes to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due solely out of the trust created pursuant to this Indenture referred to in Section 9.04 hereof;
 
(b)   the Issuer’s obligations with respect to Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;
 
(c)   the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s obligations in connection therewith; and
 

 
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(d)   this Section 9.02.
 
If the Issuer exercises under Section 9.01 the option applicable to this Section 9.02, subject to satisfaction of the conditions set forth in Section 9.04 hereof, payment of the Notes may not be accelerated because of an Event of Default under clauses (3), (4), (5), (6) and (7) of Section 7.01.  Subject to compliance with this Article IX, the Issuer may exercise its option under this Section 9.02 notwithstanding the prior exercise of its option under Section 9.03 hereof.
 
SECTION 9.03.   Covenant Defeasance .  Upon the Issuer’s exercise under Section 9.01 hereof of the option applicable to this Section 9.03, the Issuer shall, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, be released from their obligations under the covenants contained in Sections 5.03, 5.05, 5.06, 5.07, 5.09, 5.10 and 5.13 and from the applicability of clauses (3) and (4) of Section 6.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 9.04 hereof are satisfied (“ Covenant Defeasance ”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes).  For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 7.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby.  In addition, upon the Issuer’s exercise under Section 9.01 hereof of the option applicable to this Section 9.03 hereof, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, Sections 7.01(3) (solely with respect to the covenants that are released upon a Covenant Defeasance), 7.01(5), 7.01(6) and 7.01(7) hereof shall not constitute Events of Default.
 
SECTION 9.04.   Conditions to Legal or Covenant Defeasance .  The following shall be the conditions to the application of either Section 9.02 or 9.03 hereof to the outstanding Notes:
 
In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:
 
(a)   the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal amount of, premium, if any, and interest due on the Notes on the stated maturity date or on the Redemption Date, as the case may be, of such principal amount, premium, if any, or interest on such Notes and the Issuer must specify whether such Notes are being defeased to maturity or to a particular Redemption Date.
 
(b)   in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions,
 
(i)   the Issuer has received from, or there has been published by, the United States Internal Revenue Service a ruling, or
 

 
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(ii)   since the issuance of the Notes, there has been a change in the applicable U.S. federal income tax law,
 
in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
 
(c)   in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
 
(d)   no Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other indebtedness, and in each case, the granting of Liens in connection therewith) shall have occurred and be continuing on the date of such deposit;
 
(e)   the Issuer shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer; and
 
(f)   the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.
 
SECTION 9.05.   Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions .  Subject to Section 9.06 hereof, all money and Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 9.05, the “ Trustee ”) pursuant to Section 9.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.
 
The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or Government Securities deposited pursuant to Section 9.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.  Anything in this Article IX to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from time to time upon the request of the Issuer any money or Government Securities held by it as provided in Section 9.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 9.04(a) hereof),
 

 
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are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
 
SECTION 9.06.   Repayment to Issuer .  Subject to any applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Issuer on its request or (if then held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease.
 
SECTION 9.07.   Reinstatement .  If the Trustee or Paying Agent is unable to apply any United States dollars or Government Securities in accordance with Section 9.02 or 9.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuer’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 9.02 or 9.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 9.02 or 9.03 hereof, as the case may be; provided that, if the Issuer makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.
 
ARTICLE X

 
AMENDMENT, SUPPLEMENT AND WAIVER
 
SECTION 10.01.   Without Consent of Holders of Notes .  Notwithstanding Section 10.02 hereof, the Issuer and the Trustee (or the Collateral Agent, as applicable) may amend or supplement this Indenture, the Notes, any Security Document or the Intercreditor Agreement without the consent of any Holder:
 
(a)   to cure any ambiguity, omission, mistake, defect or inconsistency;
 
(b)   to provide for uncertificated Notes of such series in addition to or in place of Definitive Notes;
 
(c)   to comply with Section 6.01 hereof;
 
(d)   to provide for the assumption of the Issuer’s obligations to the Holders;
 
(e)   to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Indenture, the Notes, the Security Documents or the Intercreditor Agreement of any such Holder;
 
(f)   to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuer;
 
(g)   to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act;
 

 
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(h)   to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee hereunder pursuant to the requirements hereof;
 
(i)   to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, without limitation to facilitate the issuance and administration of the Notes; provided , however , that (i) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Notes;
 
(j)   to add or release Collateral from, or subordinate, the Lien of the Security Documents only as expressly set forth in this Indenture, the Security Documents or the Intercreditor Agreement; and
 
(k)   to mortgage, pledge, hypothecate or grant any other Lien in favor of the Trustee or the Collateral Agent for the benefit of the Holders of the Notes, as additional security for the payment and performance of all or any portion of the Notes Obligations, on any property or assets, including any which are required to be mortgaged, pledged or hypothecated, or on which a Lien is required to be granted to or for the benefit of the Trustee or the Collateral Agent pursuant to this Indenture, any of the Security Documents or otherwise.
 
Upon the request of the Issuer accompanied by a resolution of its board of directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 8.02 hereof, the Trustee shall join with the Issuer in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall have the right, but not be obligated to, enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.
 
SECTION 10.02.   With Consent of Holders of Notes .  Except as provided below in this Section 10.02, the Issuer and the Trustee (or the Collateral Agent, as applicable) may amend or supplement this Indenture, the Notes, the Intercreditor Agreement or any Security Documents with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Subject to Sections 7.04 and 7.08 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes, the Intercreditor Agreement or any Security Documents may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes).  Section 2.08 hereof, Section 2.09 hereof and Section 2.14 hereof shall determine which Notes are considered to be “outstanding” for the purposes of this Section 10.02.
 
Upon the request of the Issuer accompanied by a resolution of its board of directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 8.02 hereof, the Trustee shall join with the Issuer in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or
 

 
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otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture.
 
It shall not be necessary for the consent of the Holders of Notes under this Section 10.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.
 
After an amendment, supplement or waiver under this Section 10.02 becomes effective, the Issuer shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.
 
Without the consent of each affected Holder of Notes, an amendment or waiver under this Section 10.02 may not, with respect to any Notes held by a non-consenting Holder:
 
(a)           reduce the principal amount of such Notes whose Holders must consent to an amendment, supplement or waiver;
 
(b)           reduce the principal amount of or change the fixed final maturity of any such Note or alter or waive the provisions with respect to the redemption of such Note;
 
(c)           reduce the rate of or change the time for payment of interest on any Note;
 
(d)           waive a Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration) or in respect of a covenant or provision contained in this Indenture which cannot be amended or modified without the consent of each Holder affected thereby;
 
(e)           make any Note payable in money or a currency other than that stated therein;
 
(f)           make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes;
 
(g)           make any change in these amendment and waiver provisions;
 
(h)           impair the right of any Holder to receive payment of principal of, or interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;
 
(i)           amend, supplement, waive or modify the provisions of this Indenture dealing with the Security Documents or application of Runoff Proceeds in any manner, in each case that would subordinate the Lien of the Collateral Agent to the Liens securing any other Obligations (other than as contemplated under clause (j) of Section 10.01) or otherwise release any material portion of the Collateral, in each case other than in accordance with this Indenture, the Security Documents and the Intercreditor Agreement; or
 
(j)           to amend the definition of Runoff Proceeds, Runoff Proceeds Distribution and Section 4.02.
 

 
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In addition, without the consent of the Holders of at least two-thirds in aggregate principal amount of Notes then outstanding, no amendment, supplement or waiver may modify Sections 5.02, 5.03, 5.07, 5.08, 5.10 and 5.13 of this Indenture.
 
SECTION 10.03.   Compliance with Trust Indenture Act .  Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended or supplemental indenture that complies in all material respects with the Trust Indenture Act as then in effect.
 
SECTION 10.04.   Revocation and Effect of Consents .  Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
 
The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement, or waiver.  If a record date is fixed, then, notwithstanding the preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled to consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effective for more than 120 days after such record date unless the consent of the requisite number of Holders has been obtained.
 
SECTION 10.05.   Notation on or Exchange of Notes .  The Trustee may but shall not be obligated to place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated.  The Issuer in exchange for all Notes may but shall not be obligated to issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
 
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
 
SECTION 10.06.   Trustee to Sign Amendments, etc .
 
  The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article X if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  The Issuer may not sign an amendment, supplement or waiver until the board of directors (or similar governing body) approves it.  In executing any amendment, supplement or waiver, the Trustee shall be entitled to receive, and (subject to Section 8.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 13.04 hereof, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Issuer, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 10.03).
 

 
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ARTICLE XI

 
SATISFACTION AND DISCHARGE
 
SECTION 11.01.   Satisfaction and Discharge .  This Indenture shall be discharged and shall cease to be of further effect as to all Notes, when either:
 
(a)   all Notes heretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has heretofore been deposited in trust, have been delivered to the Trustee for cancellation; or
 
(b)   (A)  all Notes not heretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption and redeemed within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer, and the Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on the Notes not heretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;
 
(B)           no Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness to the extent such Indebtedness is simultaneously being discharged or repaid and the granting of Liens in connection therewith) with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under any other material agreement or instrument to which the Issuer is a party or by which the Issuer is bound;
 
(C)           the Issuer has paid or caused to be paid all sums payable by it under this Indenture; and
 
(D)           the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.
 
In addition, the Issuer shall deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
 
Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to subclause (A) of clause (b) of this Section 11.01, the provisions of Section 11.02 and Section 9.07 hereof shall survive.
 
SECTION 11.02.   Application of Trust Money .  Subject to the provisions of Section 9.07 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
 

 
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If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Issuer has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.
 
ARTICLE XII

 
SECURITY
 
SECTION 12.01.   Security Documents
 
(a)   .  The payment of the principal of and interest (including without limitation, any PIK Interest) and premium, if any, on the Notes when due, whether at maturity, by acceleration, repurchase, redemption or otherwise and whether by the Issuer pursuant to the Notes, the payment of all other Notes Obligations and the performance of all other Notes Obligations are secured as provided in the Security Documents which the Issuer has entered into and will be secured by Security Documents hereafter delivered as required or permitted by this Indenture.  The Issuer shall comply with all provisions and covenants, make all filings (including filings of continuation statements and amendments to Uniform Commercial Code financing statements that may be necessary to continue the effectiveness of such Uniform Commercial Code financing statements) and take all other actions required by the Security Documents or necessary to maintain (at the sole cost and expense of the Issuer) the security interest created by the Security Documents in the Collateral (other than with respect to any Collateral the security interest in which is not required to be perfected or maintained under the Security Documents) as a perfected security interest.  The Issuer shall deliver an Opinion of Counsel to the Trustee within 30 calendar days following the end of each annual period beginning with the annual period beginning on January 1, 2013, to the effect that all actions required to maintain the Lien of the Security Documents with respect to items of Collateral that may be perfected solely by the filing of financing statements under the Uniform Commercial Code have been taken.
 
SECTION 12.02.   Collateral Agent .
 
(a)   The Collateral Agent shall have all the rights and protections provided in the Security Documents and the Intercreditor Agreement and shall have no responsibility to exercise any discretionary power or right provided in any Security Document except as expressly required pursuant to the Security Documents or the Intercreditor Agreement or to ensure the existence, genuineness, value or protection of any Collateral or to ensure the legality, enforceability, effectiveness or sufficiency of the Security Documents or the creation, perfection, priority, sufficiency or protection of any Lien or any defect or deficiency as to any such matters.
 
(b)   The Trustee is authorized and directed to (i) enter into the Intercreditor Agreement, (ii) acknowledge the Collateral Agent as the Collateral Agent and to authorize the Collateral Agent  (and the Holders hereby authorize the Collateral Agent) to enter into the Security Documents for the benefit of the Holders, (iii) bind the Holders on the terms as set forth in the Security Documents and the Intercreditor Agreement and (iv) perform and observe its obligations and exercise its rights (and the Holders hereby authorize the Collateral Agent to perform and observe its obligations and exercise its rights) under the Intercreditor Agreement and the Security Documents.
 

 
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(c)   Subject to Section 8.01, neither the Trustee nor the Collateral Agent nor any of their officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral, for the legality, enforceability, effectiveness or sufficiency of the Security Documents, for the creation, perfection, priority, sufficiency or protection of any Lien or any defect or deficiency as to any such matters.
 
SECTION 12.03.   Authorization of Actions to Be Taken .
 
(a)   Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of each Security Document and the Intercreditor Agreement, as originally in effect and as amended, restated, amended and restated, renewed, modified, supplemented or replaced from time to time in accordance with its terms or the terms of this Indenture, authorizes and directs the Trustee to authorize the Collateral Agent to enter into the Security Documents for the benefit of the Holders, authorizes and empowers the Trustee and the Collateral Agent to enter into each of the Security Agreements and the Intercreditor Agreement and authorizes and empowers the Trustee and the Collateral Agent to bind the Holders of Notes pursuant to the terms of the Intercreditor Agreement and to perform their respective obligations and exercise their respective rights and powers thereunder.
 
(b)   The Trustee is authorized and empowered to receive for the benefit of the Holders of Notes any funds collected or distributed under the Security Documents to which the Trustee is entitled pursuant to the terms of the Intercreditor Agreement and to make further distributions of such funds to the Holders of Notes according to the provisions of this Indenture and the Intercreditor Agreement.
 
(c)   Subject to the Intercreditor Agreement, the Trustee is authorized and empowered to institute and maintain, or direct the Collateral Agent to institute and maintain, such suits and proceedings as it may deem expedient to protect or enforce the Liens of the Security Documents or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Security Documents.
 
SECTION 12.04.   Release of Collateral ; Substitution .
 
(a)   Liens granted pursuant to the Security Documents securing the Notes Obligations shall automatically terminate and/or be released in full all without delivery of any instrument or performance of any act by any party as of the date upon which (i) all the Notes Obligations and this Indenture (other than contingent or unliquidated obligations or liabilities not then due) have been paid in full in cash or immediately available funds or (ii) a Legal Defeasance or Covenant Defeasance under Article VIX or a discharge in accordance with Article XI has occurred.
 
Upon the receipt of an Officer’s Certificate from the Issuer, as described in Section 12.04(b) below and any necessary or proper instruments of termination, satisfaction or release prepared by the Issuer, the Collateral Agent shall execute, deliver or acknowledge such instruments or releases to evidence the release of any Collateral permitted to be released pursuant to this Indenture or the Security Documents or the Intercreditor Agreement.
 
(b)   Notwithstanding anything herein to the contrary, in connection with (x) any release of Collateral pursuant to Section 12.04(a) above, such Collateral may not be released from the Lien and security interest created by the Security Documents and (y) any release of Collateral pursuant to Section 12.04(a), the Collateral Agent shall not be required to execute, deliver or acknowledge any instruments of termination, satisfaction or release unless, in each case, an Officer’s Certificate and Opinion of Counsel certifying that all conditions precedent, including, without limitation, this Section 12.04, have been met and stating under which of the circumstances set forth in Section 12.04(a) above the Collateral is being released have been delivered to the Collateral Agent on or prior to the date of such release or, in
 

 
44
 

the case of clause (y) above, the date on which the Collateral Agent executes any such instrument.  The Trustee shall be entitled to receive and rely on Officer’s Certificates and Opinions of Counsel delivered to the Collateral Agent under this Section 12.04(b).
 
(c)   Notwithstanding anything to the contrary contained in the Notes Documentation or any Security Document upon the Insurance Book Closing, any Lien in the equity of WMMRC held by the Collateral Agent shall be deemed automatically released.
 
SECTION 12.05.   Powers Exercisable by Receiver or Trustee .  In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article XII upon the Issuer with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Issuer or of any officer or officers thereof required by the provisions of this Article XII; and if the Trustee or the Collateral Agent shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Trustee or the Collateral Agent, as the case may be.
 
SECTION 12.06.   No Fiduciary Duties; Collateral . The Trustee shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and the Trustee shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral. The Trustee shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Trustee in good faith.
 
SECTION 12.07.   Intercreditor Agreement Controls .  Upon the Trustee’s entry into the Intercreditor Agreement, the Holders of the Notes and the Trustee will be subject to and bound by the provisions of the Intercreditor Agreement.  Notwithstanding anything herein to the contrary, (i) the liens and security interests granted to the Collateral Agent pursuant to the Security Documents and all rights and obligations of the Trustee hereunder are expressly subject to the Intercreditor Agreement and (ii) the exercise of any right or remedy by the Trustee hereunder is subject to the limitations and provisions of the Intercreditor Agreement.  Subject to Section 7.16 and except for Article VIII, in the event of any conflict or inconsistency between the terms of the Intercreditor Agreement and the terms of this Indenture, the terms of the Intercreditor Agreement shall govern.
 
ARTICLE XIII

 
MISCELLANEOUS
 
SECTION 13.01.   Trust Indenture Act Controls .  If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Trust Indenture Act Section 318(c), the imposed duties shall control.
 
SECTION 13.02.   Notices .  Any notice or communication by the Issuer or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), fax or overnight air courier guaranteeing next day delivery, to the others’ address:
 

 
45
 

If to the Issuer:
 

 
WMI Holdings Corp.
1201 Third Avenue, Suite 3000
Seattle, Washington  98101
Attention:  General Counsel
 
Telephone No.: (206) 432-8731
Facsimile No.:  (206) 432-8879
Email: chad.smith@wamuinc.net
 
with a copy to:
 
Weil Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention:  Todd R. Chandler
 
Telephone No.: (212) 310-8000
Facsimile No.:  (212) 310-8007
Email: todd.chandler@weil.com
 
If to the Trustee:

Wilmington Trust, National Association
Corporate Capital Markets
50 South Sixth Street, Suite 1290
Minneapolis, MN, 55402
Attention: WMI Holdings Corp. Administrator
 
Facsimile No.: (612) 217-5651
 

 
The Issuer or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
 
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.
 
Any notice or communication to a Holder shall be mailed by first-class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the Note Register kept by the Registrar.  Any notice or communication shall also be so mailed to any Person described in Trust Indenture Act Section 313(c), to the extent required by the Trust Indenture Act.  Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
 

 
46
 

If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
 
If the Issuer mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.
 
SECTION 13.03.   Communication by Holders of Notes with Other Holders of Notes .  Holders may communicate pursuant to Trust Indenture Act Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes.  The Issuer, the Trustee, the Registrar and anyone else shall have the protection of Trust Indenture Act Section 312(c).
 
SECTION 13.04.   Certificate and Opinion as to Conditions Precedent .
 
(a)   Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee an Officer’s Certificate of the Issuer in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 13.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
 
(b)   an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 13.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
 
SECTION 13.05.   Statements Required in Certificate or Opinion .  Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 5.06 hereof or Trust Indenture Act Section 314(a)(4)) shall comply with the provisions of Trust Indenture Act Section 314(e) and shall include:
 
(a)   a statement that the Person making such certificate or opinion has read such covenant or condition;
 
(b)   a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
 
(c)   a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with (and, in the case of an Opinion of Counsel, may be limited to reliance on an Officer’s Certificate, certificates of public officials or reports or opinions of experts as to matters of fact); and
 
(d)   a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
 
SECTION 13.06.   Rules by Trustee and Agents .  The Trustee may make reasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
 
SECTION 13.07.   No Personal Liability of Directors, Officers, Employees and Stockholders .  No past, present or future director, officer, employee, incorporator or stockholder of the Issuer or any of their parent companies shall have any liability for any obligations of the Issuer under the Notes or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation.
 

 
47
 

Each Holder by accepting Notes waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.
 
SECTION 13.08.   Governing Law .  THIS INDENTURE AND THE NOTES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 13.09.   Waiver of Jury Trial .  THE ISSUER AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
SECTION 13.10.   Force Majeure .  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.
 
SECTION 13.11.   No Adverse Interpretation of Other Agreements .  This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Subsidiaries or of any other Person.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
 
SECTION 13.12.   Successors .  All agreements of the Issuer in this Indenture and the Notes shall bind its successors.  All agreements of the Trustee in this Indenture shall bind its successors.
 
SECTION 13.13.   Severability .  In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
 
SECTION 13.14.   Counterpart Originals .  The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.
 
SECTION 13.15.   Table of Contents, Headings, etc .
 
  The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
 
[Signatures on following page]


 
48
 
 
 
WMI HOLDINGS CORP.
 
       
 
By:
/s/   
    Name:  
    Title:  
       


[Signature Page to Senior First Lien Notes Indenture]
 
 

 
Wilmington Trust, National Association
as Trustee
 
       
 
By:
/s/   
    Name:  
    Title:  
       

 


[Signature Page to Senior First Lien Notes Indenture]
 
 

EXHIBIT A
 
[Face of Note]
 
[Insert the Global Note Legend, if applicable]
 

A-1 
 
 

CUSIP [ ]
 
13% Senior First Lien Note due 2030
 
No. ___
[$______________]

WMI HOLDINGS CORP.
 
promises to pay, subject to the terms of the Indenture, to __________ or registered assigns, the principal sum [set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto] [of ________________________ Dollars] ($_________________) on  March 19, 2030.
 
Interest Payment Dates:  March 1, June 1, September 1 and December 1, commencing June 1, 2012
 
Record Dates:  February 15, May 15, August 15 or November 15
 

A-2 
 
 

IN WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.
 
Dated:  [ ]
 
 
 
WMI HOLDINGS CORP.
 
       
 
By:
/s/   
    Name:  
    Title:  
       

 

A-3 
 
 

This is one of the Notes referred to in the within-mentioned Indenture:
 
Dated:  _______________
 

 
Wilmington Trust, National Association
as Trustee
 
       
 
By:
/s/   
    Authorized Signatory  
       
       

 
 

A-4
 
 

[Back of Note]
 
13% Senior First Lien Note due 2030
 
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
 
1.            Interest .  WMI Holdings Corp., a Washington corporation (the “ Issuer ”), promises to pay, subject to the terms of the Indenture, interest on the principal amount of this Note at a rate per annum set forth below from the Issue Date until paid in full.  The Issuer will pay interest on this Note quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on June 1, 2012, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “ Interest Payment Date ”), and no interest shall accrue on such payment for the intervening period.  The Issuer will make each interest payment to the Holder of record of this Note on the immediately preceding February 15, May 15, August 15 and November 15 (each, a “ Record Date ”).  Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date.  The Notes will mature on March 19, 2030. The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law whether or not allowed) on overdue principal at the rate that is 2% higher than the rate then applicable to this Note; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) at the rate then applicable to this Note to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
 
To the extent there are sufficient Runoff Proceeds Distributions on any Interest Payment Date to pay interest on the Notes in accordance with Section 4.02 of the Indenture, interest on this Note shall be paid entirely in cash (“Cash Interest”); provided to the extent there are insufficient Runoff Proceeds Distributions to pay interest on the Notes in accordance with Section 4.02 of the Indenture, interest shall be payable on such Interest Payment Date in cash to the extent of funds available for payment of cash payments and any excess interest payable shall be paid by increasing the principal amount of this Note or by issuing PIK Notes in an amount equal to such excess. The Issuer must notify the Trustee at least five (5) Business Days prior to any Interest Payment Date whether Cash Interest and/or a PIK Payment will be paid on such Interest Payment Date to the Holders of the Notes. The Trustee shall promptly deliver a corresponding notice to the Holder of this Note. The Trustee will, at the request of the Issuer, authenticate and deliver such PIK Notes for original issuance to such Holder of this Note on the relevant record date, as shown by the records of the Note Register. Following an increase in the principal amount of this Note as a result of a PIK Payment, this Note will bear interest on such increased principal amount from and after the date of such PIK Payment. Any PIK Notes will be dated as of the applicable Interest Payment Date and will bear interest from and after such date. All PIK Notes issued pursuant to a PIK Payment will mature on March 19, 2030 and will be governed by, and subject to the terms, provisions and conditions of, the Indenture and shall have the same rights and benefits as the Notes issued on the Issue Date. Any PIK Notes will be issued with the description “PIK” on the face of such PIK Note.
 
Interest on this Note and any PIK Notes will accrue at the rate of 13% per annum.
 
2.            Method of Payment .  The Issuer or the Trustee will pay interest on this Note to the Person who is the registered Holder of this Note at the close of business on the Record Date (whether or not a Business Day) next preceding the Interest Payment Date, even if this Note is canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest.  Cash payment of interest may be made by check mailed to the Holders at their addresses set forth in the Register, provided that all cash payments of principal, premium,
 

A-5
 
 

if any, and interest on, this Note will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).  Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
 
3.            Paying Agent and Registrar .  Initially, Wilmington Trust, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Issuer may change any Paying Agent or Registrar without notice to the Holders.
 
4.            Indenture .  The Issuer issued the Notes under a Senior First Lien Notes Indenture, dated as of March 19, 2012 (the “ Indenture ”), among WMI Holdings Corp. and the Trustee.  This Note is one of a duly authorized issue of notes of the Issuer designated as its 13% Senior First Lien Notes due 2030.  The Notes and any PIK Notes issued under the Indenture shall be treated as a single class of securities under the Indenture.  The terms of the Notes include those stated in the Indenture and those incorporated by reference into the Indenture from the Trust Indenture Act of 1939, as amended (the “ Trust Indenture Act ”).  The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. Upon the Trustee’s entry into the Indenture, the Holders of the Notes and the Trustee will be bound by the terms of the Indenture.
 
5.            Optional Redemption .  At any time the Notes may be redeemed or purchased (by the Issuer or any other Person), in whole or in part, at a redemption price equal to 100% of the principal amount of Notes redeemed and, without duplication, accrued and unpaid interest, if any, to the date of redemption (the “ Redemption Date ”), subject to the rights of Holders of Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date.  Any redemption pursuant to this paragraph 5 shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.
 
6.            Notice of Redemption .  Subject to Section 3.03 of the Indenture, notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed at its registered address.  Notes and portions of the Notes in whole dollar ($1.00) denominations may be redeemed.  On and after the Redemption Date, interest ceases to accrue on this Note or portions thereof called for redemption.
 
8.            Collateral and Intercreditor Agreement .  These Notes are secured by a security interest in the Collateral pursuant to certain security documents.  The Liens securing the Notes are subject to the terms of the Intercreditor Agreement.
 
9.            Limitation on the Issuer’s Obligations . Notwithstanding any other provision of the Indenture, the Intercreditor Agreement, the Notes and the Security Documents to the contrary, the Holder of this Note agrees that it shall not have or take recourse (other than actions for specific performance under Section 7.04 of the Indenture) with respect to the Notes Documentation against the Issuer or its assets and property, or against WMMRC or the Owner or their respective assets and property (other than assets that were required to be transferred to the protected cell pursuant to the Insurance Book Closing), except (i) to the Collateral Account, (ii) if the Issuer fails to comply with its obligations pursuant to Sections 4.02(a), 4.02(b), 5.02 or 5.08, to the assets of the Issuer in an amount equal to the aggregate amount of any Runoff Proceeds or Runoff Proceeds Distributions that were not deposited into the Collateral Account, (iii) to the equity interests in and the excess assets of the Owner and the Trusts to the extent
 

A-6
 
 

a Lien has been granted therein pursuant to Section 5.03(b) of the Indenture in favor of the Collateral Agent and (iv) to the Owner or the Issuer for costs and expenses, including reasonable attorney’s fees, related to the enforcement of Sections 4.01, 4.02, 4.03, 5.02, 5.03, 5.07, 5.08, 5.10 and 5.13 of the Indenture, if the Holders or the Trustee, as applicable, are the prevailing party in such enforcement action.
 
10.            Denominations, Transfer, Exchange .  The Notes are in registered form without coupons in whole dollar ($1.00) denominations and integral multiples of $1.00 rounded up to the nearest whole dollar.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Issuer need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part.  Also, the Issuer need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed.
 
11.            Persons Deemed Owners .  The registered Holder of a Note may be treated as its owner for all purposes.
 
12.            Amendment, Supplement and Waiver .  The Indenture, the Notes, the Security Documents and the Intercreditor Agreement may be amended or supplemented as provided in the Indenture.
 
13.            Defaults and Remedies .  The Events of Default relating to the Notes are defined in Section 7.01 of the Indenture.  If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the Notes notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest.  The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder.  The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required within five (5) Business Days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Issuer is taking or proposes to take with respect thereto.
 
14.            Authentication .  This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
 
15.            GOVERNING LAW .  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
 
16.            CUSIP and ISIN Numbers .  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP and ISIN numbers to be printed on the Notes and the Trustee may use CUSIP and ISIN numbers in notices of redemp-
 

A-7
 
 

tion as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
 
The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to the Issuer at the following address:
 
WMI Holdings Corp.
1201 Third Avenue
Seattle, Washington  98101
Attention:  General Counsel
 

 
 
 

ASSIGNMENT FORM
 
To assign this Note, fill in the form below:
 
(I) or (we) assign and transfer this Note to:
 


(Insert assignee’s legal name)
 
(Insert assignee’s soc. sec. or tax I.D. no.)
 
 
 
 
 
 
 
(Print or type assignee’s name, address and zip code)


 
and irrevocably appoint
to transfer this Note on the books of the Issuer.  The agent may substitute another to act for him.
 
Date:  _____________________
 
     
     
Your Signature:
   
   (Sign exactly as your name appears  
  on the face of this Note)  
     
 
 
 
Signature Guarantee*:
 
*
Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A-9
 
 


SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
 
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, or increased for a PIK Payment, have been made:
 
Date of Exchange/Transfer
Amount of decrease in
Principal Amount
Amount of increase in Principal Amount of this Global Note
Principal Amount of this Global Note following such decrease or increase
Signature of authorized officer of Trustee or Custodian
         





_______________________
 
*
This schedule should be included only if the Note is issued in global form.

A-10
 


 
Execution Version



 
SENIOR SECOND LIEN NOTES INDENTURE
 

 

 
Dated as of March 19, 2012
 

 

 
by and between
 

 
WMI HOLDINGS CORP.
 
and
 

 
Law Debenture Trust Company of New York
 

 
as Trustee
 

 

 

 

 
13% SENIOR SECOND LIEN NOTES DUE 2030
 


 
 
 
Execution Version

CROSS-REFERENCE TABLE*
 
Trust Indenture Act Section
Indenture Section
310(a)(1)
8.10
(a)(2)                                                                                                       
8.10
(a)(3)                                                                                                       
N.A.
(a)(4)                                                                                                       
N.A.
(a)(5)                                                                                                       
8.10
(b)                                                                                                       
8.10
311(a)
8.11
(b)                                                                                                       
8.11
312(a)
2.05
(b)                                                                                                       
13.03
(c)                                                                                                       
13.03
313(a)
8.06
(b)(1)                                                                                                       
8.06
(b)(2)                                                                                                       
8.06; 8.07
(c)                                                                                                       
8.06; 13.02
(d)                                                                                                       
8.06
314(a)
5.05; 5.06; 13.05
(b)                                                                                                       
12.01
(c)(1)                                                                                                       
13.04
(c)(2)                                                                                                       
13.04
(c)(3)                                                                                                       
N.A.
(d)                                                                                                       
N.A.
(e)                                                                                                       
13.05
(f)                                                                                                       
N.A.
315(a)
8.01
(b)                                                                                                       
8.05; 13.02
(c)                                                                                                       
8.01
(d)                                                                                                       
8.01
(e)                                                                                                       
7.15
316(a)(1)(A)
7.06
(a)(1)(B)                                                                                                       
7.05
(a)(2)                                                                                                       
N.A.
(b)                                                                                                       
10.02
(c)                                                                                                       
2.12; 10.04
317(a)(1)
7.09
(a)(2)                                                                                                       
7.13
(b)                                                                                                       
2.04
318(a)
13.01
(b)                                                                                                       
N.A.
(c)                                                                                                       
13.01

N.A. means not applicable.
 
*  This Cross-Reference Table is not part of this Indenture.

 
 
 
 


TABLE OF CONTENTS
 


     
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
1
 
SECTION 1.01.
Definitions
1
 
SECTION 1.02.
Other Definitions
9
 
SECTION 1.03.
Incorporation by Reference of Trust Indenture Act
9
 
SECTION 1.04.
Rules of Construction
10
 
SECTION 1.05.
Acts of Holders
10
ARTICLE II
THE NOTES
12
 
SECTION 2.01.
Form and Dating; Terms
12
 
SECTION 2.02.
Execution and Authentication
12
 
SECTION 2.03.
Registrar and Paying Agent
13
 
SECTION 2.04.
Paying Agent to Hold Money in Trust
13
 
SECTION 2.05.
Holder Lists
13
 
SECTION 2.06.
Transfer and Exchange
14
 
SECTION 2.07.
Replacement Notes
15
 
SECTION 2.08.
Outstanding Notes
16
 
SECTION 2.09.
Treasury Notes
16
 
SECTION 2.10.
Temporary Notes
16
 
SECTION 2.11.
Cancellation
16
 
SECTION 2.12.
Defaulted Interest
16
 
SECTION 2.13.
CUSIP/ISIN Numbers
17
 
SECTION 2.14.
Calculation of Principal Amount of Securities
17
 
SECTION 2.15.
No Gross Up; Withholding
17
ARTICLE III
REDEMPTION
17
 
SECTION 3.01.
Notices to Trustee
17
 
SECTION 3.02.
Selection of Notes to Be Redeemed
18
 
SECTION 3.03.
Notice of Redemption
18
 
SECTION 3.04.
Effect of Notice of Redemption
19
 
SECTION 3.05.
Deposit of Redemption Price
19
 
SECTION 3.06.
Notes Redeemed in Part
19
 
SECTION 3.07.
Optional Redemption
20
 
SECTION 3.08.
Mandatory Redemption
20

 
 
 

 
     
Page
ARTICLE IV
ESTABLISHMENT OF FUNDS AND APPLICATION AND INVESTMENT OF MONIES THEREIN
20
 
SECTION 4.01.
Maintenance of Collateral Account
20
 
SECTION 4.02.
Deposit of Runoff Proceeds and Application Thereof.
20
 
SECTION 4.03.
Investment of Funds
21
 
SECTION 4.04.
Trustees Fees Account
21
 
ARTICLE V
COVENANTS
21
 
SECTION 5.01.
Payment of Notes
21
 
SECTION 5.02.
Deposit of Runoff Proceeds Distributions
22
 
SECTION 5.03.
Liens
22
 
SECTION 5.04.
Maintenance of Office or Agency
22
 
SECTION 5.05.
Reports and Other Information
23
 
SECTION 5.06.
Compliance Certificate
23
 
SECTION 5.07.
Limitation on Business Activities
23
 
SECTION 5.08.
Prohibition on Commingling
23
 
SECTION 5.09.
Stay, Extension and Usury Laws
23
 
SECTION 5.10.
Corporate Existence
24
 
SECTION 5.11.
Security Documents
24
 
SECTION 5.12.
Reporting of Debt for Tax Purposes
24
 
SECTION 5.13.
Prohibition on Sale of Interests in Trusts
24
ARTICLE VI
SUCCESSORS
24
 
SECTION 6.01.
Merger, Consolidation or Sale of All or Substantially All Assets
24
 
SECTION 6.02.
Successor Corporation Substituted
25
ARTICLE VII
DEFAULTS AND REMEDIES
25
 
SECTION 7.01.
Events of Default
25
 
SECTION 7.02.
Acceleration
26
 
SECTION 7.03.
Other Remedies
27
 
SECTION 7.04.
Specific Performance
27
 
SECTION 7.05.
Waiver of Past Defaults
27
 
SECTION 7.06.
Control by Majority
27
 
SECTION 7.07.
Limitation on Suits
27
 
SECTION 7.08.
Rights of Holders of Notes to Receive Payment
28
 
SECTION 7.09.
Collection Suit by Trustee
28
 
SECTION 7.10.
Restoration of Rights and Remedies
28

 
 
 


 
     
Page
 
SECTION 7.11.
Rights and Remedies Cumulative
28
 
SECTION 7.12.
Delay or Omission Not Waiver
28
 
SECTION 7.13.
Trustee May File Proofs of Claim
28
 
SECTION 7.14.
Priorities
29
 
SECTION 7.15.
Undertaking for Costs
29
 
SECTION 7.16.
Limitation on the Issuer’s Obligations
29
ARTICLE VIII
TRUSTEE
30
 
SECTION 8.01.
Duties of Trustee
30
 
SECTION 8.02.
Rights of Trustee
31
 
SECTION 8.03.
Individual Rights of Trustee
31
 
SECTION 8.04.
Trustee’s Disclaimer
32
 
SECTION 8.05.
Notice of Defaults
32
 
SECTION 8.06.
Reports by Trustee to Holders of the Notes
32
 
SECTION 8.07.
Compensation and Indemnity
32
 
SECTION 8.08.
Replacement of Trustee
33
 
SECTION 8.09.
Successor Trustee by Merger, etc.
34
 
SECTION 8.10.
Eligibility; Disqualification
34
 
SECTION 8.11.
Preferential Collection of Claims Against Issuer
34
ARTICLE IX
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
34
 
SECTION 9.01.
Option to Effect Legal Defeasance or Covenant Defeasance
34
 
SECTION 9.02.
Legal Defeasance and Discharge
34
 
SECTION 9.03.
Covenant Defeasance
35
 
SECTION 9.04.
Conditions to Legal or Covenant Defeasance
35
 
SECTION 9.05.
Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions
36
 
SECTION 9.06.
Repayment to Issuer
37
 
SECTION 9.07.
Reinstatement
37
ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
38
 
SECTION 10.01.
Without Consent of Holders of Notes
38
 
SECTION 10.02.
With Consent of Holders of Notes
39
 
SECTION 10.03.
Compliance with Trust Indenture Act
40
 
SECTION 10.04.
Revocation and Effect of Consents
40
 
SECTION 10.05.
Notation on or Exchange of Notes
41
 
SECTION 10.06.
Trustee to Sign Amendments, etc.
41

 
 
 


 
     
Page
ARTICLE XI
SATISFACTION AND DISCHARGE
41
 
SECTION 11.01.
Satisfaction and Discharge
41
 
SECTION 11.02.
Application of Trust Money
42
ARTICLE XII
SECURITY
42
 
SECTION 12.01.
Security Documents
42
 
SECTION 12.02.
Collateral Agent
43
 
SECTION 12.03.
Authorization of Actions to Be Taken
43
 
SECTION 12.04.
Release of Collateral; Substitution
44
 
SECTION 12.05.
Powers Exercisable by Receiver or Trustee
44
 
SECTION 12.06.
No Fiduciary Duties; Collateral
44
 
SECTION 12.07.
Intercreditor Agreement Controls
45
ARTICLE XIII
MISCELLANEOUS
45
 
SECTION 13.01.
Trust Indenture Act Controls
45
 
SECTION 13.02.
Notices
45
 
SECTION 13.03.
Communication by Holders of Notes with Other Holders of Notes
46
 
SECTION 13.04.
Certificate and Opinion as to Conditions Precedent
46
 
SECTION 13.05.
Statements Required in Certificate or Opinion
46
 
SECTION 13.06.
Rules by Trustee and Agents
47
 
SECTION 13.07.
No Personal Liability of Directors, Officers, Employees and Stockholders
47
 
SECTION 13.08.
Governing Law
47
 
SECTION 13.09.
Waiver of Jury Trial
47
 
SECTION 13.10.
Force Majeure
47
 
SECTION 13.11.
No Adverse Interpretation of Other Agreements
47
 
SECTION 13.12.
Successors
47
 
SECTION 13.13.
Severability
47
 
SECTION 13.14.
Counterpart Originals
48
 
SECTION 13.15.
Table of Contents, Headings, etc.
48
ARTICLE XIV
OTHER TRANSFER RESTRICTIONS
48
 
SECTION 14.01.
Definitions
48
 
SECTION 14.02.
Restriction on Transfer
49
 
SECTION 14.03.
Deemed Representation
49
 
SECTION 14.04.
Transfer Restriction Legend
49
 
SECTION 14.05.
Disgorgement.
49
 
 
 
 
 
 
 
SECTION 14.06.
Information Request.
51
 
SECTION 14.07.
Board Consent to Transfer
51
 
SECTION 14.08.
No Liability
52
 
EXHIBITS
 
Exhibit A
 
 
Form of Note

 
 
 

SENIOR SECOND LIEN NOTES INDENTURE, dated as of March 19, 2012, between WMI Holdings Corp., a Washington corporation (“Issuer”), and Law Debenture Trust Company of New York, as trustee (the “Trustee”).
 
W I T N E S S E T H
 
WHEREAS, the Issuer has duly authorized the creation of an issue of $20,000,000 aggregate principal amount of 13% Senior Second Lien Notes due 2030 (together with any increases in the aggregate principal amount thereof, or any PIK Notes, the “ Notes ”); and
 
WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture.
 
NOW, THEREFORE, the Issuer and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes.
 
ARTICLE I

 
DEFINITIONS AND INCORPORATION BY REFERENCE
 
SECTION 1.01.   Definitions .
 
“ Acquisition Credit Facility ” means that financing agreement dated as of March 19, 2012, by and among the Issuer, the guarantors party thereto, the lenders party thereto and U.S. Bank National Association, as agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings or replacements (whether upon or after termination or otherwise) thereof in whole or in part from time to time, including any agreement that replaces, refunds or refinances any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof or adds or removes borrowers or guarantors, and whether with the same or another agent, lender or group of lenders.
 
“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
 
“ Agent ” means any Registrar or Paying Agent.
 
“ Applicable Procedures ” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer, redemption or exchange.
 
 “ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal law or Chapter 431, Article 15 of the Hawaii Code or any similar state law.
 
“ Business Day ” means each day which is not a Legal Holiday.
 

 
 
 

“ Capital Stock ” means:
 
(1)           in the case of a corporation, corporate stock;
 
(2)           in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
 
(3)           in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
 
(4)           any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
 
" Cash Equivalents " means (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case, maturing within six months from the date of acquisition thereof, (b) commercial paper, maturing not more than 270 days after the date of issue rated P-1 by Moody's or A-1 by Standard & Poor's, (c) certificates of deposit maturing not more than 270 days after the date of issue, issued by commercial banking institutions and money market or demand deposit accounts maintained at commercial banking institutions, each of which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000 and a Thomson Bank Watch Rating of “BBB” or better, (d) money market accounts maintained with mutual funds having assets in excess of $2,500,000,000, and (e) marketable tax exempt securities rated A or higher by Moody's or A+ or higher by Standard & Poor's, in each case, maturing within six months from the date of acquisition thereof.
 
“ Clearstream ” means Clearstream Banking, Société Anonyme.
 
“ Collateral ” means all assets and property in which a security interest is granted to secure the Notes Obligations.
 
“ Collateral Account ” means a separate securities and/or deposit account established and maintained by the Issuer in which the Collateral Agent has a valid perfected first and second priority security interest and exclusive dominion and control in accordance with the terms of the Security Documents.
 
“ Collateral Agent ” means Wilmington Trust, National Association, in its capacity as collateral agent under the Security Documents, until a successor replaces it in accordance with the applicable provisions of the Intercreditor Agreement and thereafter means the successor serving thereunder.
 
“ Control Agreement ” means the Securities Account Control Agreement, dated as of March 19, 2012 among the Issuer, Collateral Agent and Wells Fargo Bank, National Association, as depository bank and/or securities intermediary, and any other agreement providing to the Collateral Agent “control” of the Collateral Account and the Trustees Fees Account within the meaning of Articles 8 and 9 or the Uniform Commercial Code.
 
“ Corporate Trust Office of the Trustee ” shall be at the address of the Trustee specified in Section 13.02 hereof or such other address as to which the Trustee may give notice to the Holders and the Issuer.
 

 
-2-
 

“ Credit Facility ” means, with respect to the Issuer or any of its subsidiaries, one or more debt facilities, including the Acquisition Credit Facility, or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit or other long-term indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or replacements (whether or not upon or after termination or otherwise) thereof and any indentures or credit facilities or commercial paper facilities that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount permitted to be borrowed thereunder or alters the maturity thereof or adds subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders.
 
“ Custodian ” means the Trustee, as custodian with respect to the Notes, each in global form, or any successor entity thereto.
 
“ Default ” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
 
“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto, except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
 
“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, any Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
 
“ Euroclear ” means Euroclear S.A./N.V., as operator of the Euroclear system.
 
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
 
“ First Lien Collateral ” means all assets and property in which a security interest is granted to secure the First Lien Notes Obligations.
 
“ First Lien Documentation ” means the First Lien Notes, the First Lien Indenture and the First Lien Notes Security Documents.
 
“ First Lien Indenture ” means that certain Senior First Lien Notes Indenture, dated as of March 19, 2012, between the Issuer and the First Lien Trustee with respect to the First Lien Notes, as amended or supplemented from time to time.
 
“ First Lien Notes ” means the Issuer’s 13% Senior First Lien Notes due 2030 issued pursuant to and in accordance with the First Lien Indenture.
 
“ First Lien Notes Obligations ” means Obligations in respect of the First Lien Indenture, the First Lien Notes and to the extent relating to the First Lien Indenture or the First Lien Notes, the First Lien Notes Security Documents, including for the avoidance of doubt, Obligations in respect of guarantees thereof.
 

 
-3-
 

“ First Lien Notes Security Documents ” means , collectively, the Intercreditor Agreement and any security agreements, control agreements and directions to pay relating to the First Lien Collateral executed and delivered and/or filed and recorded in appropriate jurisdictions to preserve and protect the Liens on the First Lien Collateral (including, without limitation, financing statements under the Uniform Commercial Code of the relevant states) related to the security interests granted by any of the foregoing documents and any other document or instrument evidencing, creating or providing for a Lien on any real or personal tangible or intangible property as security for any or all of the obligations under the First Lien Documentation.
 
“ First Lien Trustee ” means Wilmington Trust, National Association, as trustee under the First Lien Indenture, until a successor trustee replaces it in accordance with the applicable provisions of the First Lien Indenture, after which time such term shall mean the successor trustee serving thereunder.
 
“ Global Note Legend ” means the legend set forth in Sections 2.06(b) and 14.04 hereof, which is required to be placed on all Global Notes issued under this Indenture.
 
“ Global Notes ” means, individually and collectively, each of the Global Notes, substantially in the form of Exhibit A hereto, issued in accordance with Section 2.01 or 2.06 hereof.
 
“ Government Securities ” means securities that are:
 
(1)           direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged; or
 
(2)           obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,
 
which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.
 
" Governmental Authority " means any nation or government, any Federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
 
“ guarantee ” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any indebtedness or other Obligations.
 
“ Holder ” means the Person in whose name a Note is registered on the Registrar’s books.
 
“ Indenture ” means this Senior Second Lien Notes Indenture, as amended or supplemented from time to time.
 

 
-4-
 

 “ Insurance Book Closing ” means the transfer by WMMRC of (i) all Runoff Proceeds held on the date of such transfer, (ii) the right to receive all future Runoff Proceeds and (iii) the Trusts and their assets along with all insurance liabilities associated therewith as of the date of transfer to a protected cell established and maintained pursuant to § 431:19-303 of Title 24 of the Hawaii Insurance Code in conformance with all applicable Requirements of Law, which complies with the following requirements: (w) the protected cell shall be organized as a direct wholly owned subsidiary of the Issuer;  (x) the assets of the protected cell shall not be chargeable with liabilities arising out of any other business WMMRC may conduct; (y) the business plan establishing the protected cell shall restrict its business to the administration and management of the Trusts and the assets thereof along with the liabilities associated therewith, and the distribution of the Runoff Proceeds; and (z) the governing documents of the protected cell shall provide that no dividend or distribution may be made to any Person other than the Issuer as provided for in the Notes Documentation and the First Lien Documentation.
 
“ Intercreditor Agreement ” means the Intercreditor Agreement, dated as of March 19, among the Trustee, the First Lien Trustee and the Third Lien Agent (as defined therein), as amended, modified and supplemented from time to time.
 
“ Interest Payment Date ” has the meaning set forth in paragraph 1 of each Note.
 
“ Issue Date ” means March 19, 2012.
 
“ Issuer ” means WMI Holdings Corp., a Washington corporation, and any of its successors.
 
“ Issuer Incremental Amount ” means an amount accruing on the outstanding Issuer Priority Amount or the Issuer Secondary Amount, as applicable, at 13% per annum, payable quarterly in arrears on each Interest Payment Date, to the Issuer.
 
“ Issuer Order ” means a written request or order signed on behalf of the Issuer by an Officer of the Issuer, who must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Issuer, and delivered to the Trustee or the Collateral Agent.
 
“ Issuer Priority Amount ” means (i) a principal amount equal to $4.0 million plus (ii) any amounts added due to unpaid Issuer Incremental Amounts in respect of the Issuer Priority Amount, less (iii) any repayments of the Issuer Priority Amounts to the Issuer.
 
“ Issuer Secondary Amount ” means (i) a principal amount equal to $6.0 million plus (ii) any amounts added due to unpaid Issuer Incremental Amounts in respect of the Issuer Secondary Amount, less (iii) any repayments of the Issuer Secondary Amounts to the Issuer.
 
“ Legal Holiday ” means a Saturday, a Sunday or a day on which commercial banking institutions are not required to be open in the State of New York, the place of payment or the State of Washington, as the case may be. In any case where any Interest Payment Date, Redemption Date or maturity date of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of principal (or premium, if any) or interest need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the maturity date; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or maturity date, as the case may be, through such next succeeding Business Day.
 

 
-5-
 

“ Lien ” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.
 
“ Moody's ” means Moody's Investors Service, Inc. and any successor thereto.
 
“ Notes ” means the Notes authenticated and delivered under this Indenture including any PIK Notes subsequently issued under this Indenture.
 
“ Notes Documentation ” means the Notes, this Indenture and the Security Documents.
 
“ Notes Obligations ” means Obligations in respect of this Indenture, the Notes and to the extent relating to this Indenture or the Notes, the Security Documents, including for the avoidance of doubt, Obligations in respect of guarantees thereof.
 
“ Obligations ” means any principal, interest, penalties, fees, indemnifications, reimbursements and all other present and future indebtedness, obligations, and liabilities under the documentation governing any indebtedness, whether or not the right of payment in respect of such indebtedness, obligations and liabilities is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether or not such indebtedness, obligations, interest and liabilities are discharged, allowed, stayed or otherwise affected by any proceeding (including whether or not allowed in any proceeding under any Bankruptcy Law).
 
 “ Officer ” means the Chairman of the Board, the Chief Executive Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Issuer.
 
“ Officer’s Certificate ” means a certificate signed on behalf of the Issuer by an Officer of the Issuer, who must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Issuer, that meets the requirements set forth in this Indenture.
 
“ Opinion of Counsel ” means a written opinion from legal counsel who is reasonably acceptable to the Trustee.  The counsel may be an employee of or counsel to the Issuer or the Trustee.
 
“ Owner ” means (x) WMMRC until the occurrence of an Insurance Book Closing and (y) the protected cell created by such Insurance Book Closing to which the Runoff Proceeds, the Trusts and the assets thereof are transferred, thereafter, in accordance with the terms of the Notes Documentation.
 
“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively, (and, with respect to DTC, shall include Euroclear and Clearstream).
 
“ Permitted Lien ” means a Lien securing Obligations of the Issuer under (i) the Notes Documentation, (ii) the First Lien Documentation and (iii) the Acquisition Credit Facility, in each case, subject to the terms of the Intercreditor Agreement.
 

 
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“ Person ” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
 
“ PIK Interest ” means interest paid with respect to the Notes in the form of increasing the outstanding principal amount of the Notes or issuing PIK Notes.
 
“ PIK Notes ” mean additional Notes issued under this Indenture on the same terms and conditions as the Notes issued on the Issue Date in connection with a PIK Payment. For purposes of this Indenture, all references to “PIK Notes” shall include the Related PIK Notes.
 
“ PIK Paymen t” means an interest payment with respect to the Notes made by increasing the outstanding principal amount of the Notes or issuing PIK Notes.
 
“ Record Date ” for the interest payable on any applicable Interest Payment Date means with respect to the Notes, the May 15, August 15, November 15 or February 15 (whether or not a Business Day) immediately preceding such Interest Payment Date.
 
“ Related PIK Notes ” means, with respect to a Note, (i) each PIK Note issued in connection with a PIK Payment on such Note and (ii) each additional PIK Note issued in connection with a PIK Payment on a Related PIK Note with respect to such Note.
 
“ Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of, any Governmental Authority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
 
“ Responsible Officer ” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.
 
“ Runoff Proceeds ” means (a)(i) all net premiums, reinsurance recoverables, net revenue resulting from commutation of insurance contracts, net interest income, reserve releases and other revenues derived from the reinsurance contracts, investments and other assets of the Trusts less, without duplication, (ii)(A) the reasonable and necessary costs and expenses of the Trusts and the Owner (including, but not limited to, general and administrative expenses, audit fees, required regulatory capital contributions (which capital contributions will be added back to the Runoff Proceeds if applicable regulations permit such distributions thereof), expenses of regulatory compliance, including all costs associated with the Insurance Book Closing, expenses of administering this Indenture and taxes) attributable to the administration of the Trusts or the assets thereof and the collection of premiums and/or management of investments in connection therewith (which expenses shall include reasonable and customary expenses attributable to the foregoing paid under any administrative services agreement, investment management agreement or similar agreement), and (B) claims paid for covered losses and (b) the proceeds from the foregoing received by the Owner or the Issuer in cash, securities and/or other property from any sale, liq-
 

 
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uidation, merger or other disposition in respect of the Owner or its interests in the Trusts or the assets thereof. The inclusion of clause (b) of this definition shall not be construed as a consent to any sale, liquidation, merger or other disposition or waiver of compliance with any covenant related thereto. For the avoidance of doubt, to the extent that Issuer or WMMRC pays any such cost, capital contribution or expense described in clause (ii)(A), payment by Issuer or WMMRC will be deemed a cost or expense of the Trusts.
 
“ SEC ” means the U.S. Securities and Exchange Commission.
 
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
 
“ Security Agreement ” means the Pledge and Security Agreement, dated as of March 19, 2012, by and among the Issuer, the Trustee, the First Lien Trustee, the Collateral Agent and U.S. Bank National Association, as Third Lien Agent (as defined therein), as the same may be amended, restated, amended and restated, renewed, replaced, supplemented or otherwise modified from time to time.
 
“ Security Documents ” means, collectively, the Security Agreement, the Intercreditor Agreement, the Control Agreement, other security agreements and directions to pay relating to the Collateral executed and delivered and/or filed and recorded in appropriate jurisdictions to preserve and protect the Liens on the Collateral (including, without limitation, financing statements under the Uniform Commercial Code of the relevant states) related to the security interests granted by any of the foregoing documents and any other document or instrument evidencing, creating or providing for a Lien on any real or personal tangible or intangible property as security for any or all of the Note Obligations under the Note Documents or any of the foregoing documents (including, without limitation, all such documents, agreements and instruments evidencing Liens required to be granted pursuant to Section 5.03(b)).
 
“ Standard & Poor's ” means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.
 
“ Subsidiary ” means, with respect to any Person:
 
(1)           any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; and
 
(2)           any partnership, joint venture, limited liability company or similar entity of which
 
(x)           more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and
 
(y)           such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
 

 
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“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).
 
“ Trustee ” means Law Debenture Trust Company of New York, as trustee, until a successor replaces it in accordance with Section 8.08 or Section 8.09 and thereafter means the successor serving hereunder.
 
“ Trustees Fees Account ” means an account established pursuant to and in accordance with the First Lien Indenture containing an amount not to exceed $250,000 in which the Collateral Agent has a valid perfected first and second priority security interest and exclusive dominion and control in accordance with the terms of the Security Documents.
 
“ Trusts ” means (a) Home Loan Reinsurance Co. United Guaranty Residential Insurance Company Reinsurance Agreement (Acct. No. x6401); (b) Home Loan Reinsurance Co. Genworth Reinsurance Co. Trust Agreement (Acct. No. x6403); (c) Mortgage Guaranty Insurance Corporation/WM MTG Reinsurance Co. Trust; (Acct. No. x2400); (d) Reinsurance Escrow Agreement among WM Mortgage Reinsurance Co. PMI Mortgage Insurance Company and US Bank (Acct. No. x6404); (e) Radian Guaranty Inc. and WM Mortgage Reinsurance Company Agreement, dated March 27, 2001 (Acct. No. x5700); (f) Home Loan Reinsurance Co. Republic Mortgage Co. Reinsurance Agreement, dated December 14, 1998 (Acct. No. x6402); (g) Washington Mutual Custody Account (Acct. No. x6406); and (h) WM Mortgage Reinsurance Company Inc. (Acct. No. x4202).
 
“ Uniform Commercial Code ” means the New York Uniform Commercial Code as in effect from time to time.
 
“ WMMRC ” means WM Mortgage Reinsurance Company, Inc., a Hawaii corporation and direct wholly-owned subsidiary of the Issuer.
 
SECTION 1.02.   Other Definitions
 
.
 
Term
Defined
in Section
“Authentication Order”                                                                                                                         
2.02
“Covenant Defeasance”                                                                                                                         
9.03
“DTC”                                                                                                                         
2.03
“Event of Default”                                                                                                                         
7.01
“Legal Defeasance”                                                                                                                         
9.02
“Note Register”                                                                                                                         
2.03
“Paying Agent”                                                                                                                         
2.03
“Redemption Date”                                                                                                                         
3.07
“Registrar”                                                                                                                         
2.03
“Runoff Payment Date”                                                                                                                         
4.02(b)
“Runoff Proceeds Distribution”                                                                                                                         
4.02(a)
“Successor Company”                                                                                                                         
6.01

SECTION 1.03.   Incorporation by Reference of Trust Indenture Act .  Whenever this Indenture refers to a provision of the Trust Indenture Act (“ TIA ”), the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings:
 
“ indenture securities ” means the Notes;
 

 
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“ indenture security Holder ” means a Holder of a Note;
 
“ indenture to be qualified ” means this Indenture;
 
“ indenture trustee ” or “ institutional trustee ” means the Trustee; and
 
“ obligor ” on the Notes means the Issuer and any successor obligor upon the Notes.  All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by SEC rule under the Trust Indenture Act have the meanings so assigned to them.
 
SECTION 1.04.   Rules of Construction .  Unless the context otherwise requires:
 
(a)   a term has the meaning assigned to it;
 
(b)   an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
 
(c)   “or” is not exclusive;
 
(d)   “including” means including without limitation;
 
(e)   words in the singular include the plural, and in the plural include the singular;
 
(f)   “will” shall be interpreted to express a command;
 
(g)   provisions apply to successive events and transactions;
 
(h)   references to sections of, or rules under, the Securities Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;
 
(i)   unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture; and
 
(j)   the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision.
 
SECTION 1.05.   Acts of Holders .
 
(a)   Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing.  Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Issuer.  Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 8.01) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 1.05.
 
(b)   The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public
 

 
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or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof.  Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same.  The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
 
(c)   The ownership of Notes shall be proved by the Note Register.
 
(d)   Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.
 
(e)   The Issuer may, at its option in the circumstances permitted by the Trust Indenture Act, set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders, but the Issuer shall have no obligation to do so.
 
(f)   Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.  Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.
 
(g)   Without limiting the generality of the foregoing, a Holder, including the Depositary, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and the Depositary may provide its proxy to the beneficial owners of interests in any such Global Note through such Depositary’s standing instructions and customary practices.
 
(h)   The Issuer may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by DTC entitled under the procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders.  If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date.  No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date.
 

 
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ARTICLE II

 
THE NOTES
 
SECTION 2.01.   Form and Dating; Terms .
 
(a)   General .  The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto.  The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage.  Each Note shall be dated the date of its authentication.  The Notes shall be issued in whole dollar ($1.00) amounts and integral multiples of $1.00, subject to the issuance of PIK Interest pursuant to Section 4.02  hereof, in which case the aggregate principal amount of Notes may be increased by, or PIK Notes may be issued in, an aggregate principal amount equal to the amount of PIK Interest paid by the Issuer for the applicable period, rounded up to the nearest whole dollar.
 
(b)   Global Notes .  Notes issued in global form shall be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form shall be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).  Each Global Note shall represent such of the outstanding Notes as shall be specified on the face of such Global Note, as increased or decreased in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and by the payment of PIK Interest and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions and the payment of PIK interest by increasing or reducing the aggregate principal amount of such Global Note.  Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof or the Issuer in accordance with Section 2.01(d).
 
(c)   Terms .  The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Issuer and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.  However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
 
(d)   Issuance of PIK Notes .  In connection with the payment of PIK Interest, the Issuer is entitled to, without the consent of the Holders, increase the outstanding principal amount of the Notes or issue PIK Notes.
 
SECTION 2.02.   Execution and Authentication .  At least one Officer of the Issuer shall execute the Notes on behalf of the Issuer by manual, facsimile or electronic (e.g. .pdf) signature.
 
If an Officer of the Issuer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall nevertheless be valid.
 
A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A attached hereto, as the case may be, by the manual signature of the Trustee.  The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.
 

 
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On the Issue Date, the Trustee shall, upon receipt of an Issuer Order (an “ Authentication Order ”), which order shall set forth the number of separate Note certificates, the principal amount of each of the Notes to be authenticated, the date on which the Notes are to be authenticated, the registered holder of each Note and delivery instructions, authenticate and deliver the Notes.  In addition, at any time, from time to time, the Trustee shall upon receipt of an Authentication Order authenticate and deliver any PIK Notes.
 
The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate Notes.  An authenticating agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuer.
 
SECTION 2.03.   Registrar and Paying Agent .  The Issuer shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (“ Registrar ”) and (ii) an office or agency where Notes may be presented for payment (“ Paying Agent ”).  The Registrar shall keep a register of the Notes (“ Note Register ”) reflecting the ownership of the Notes outstanding from time to time and of their transfer.  The Registrar shall also facilitate the transfer of the Notes on behalf of the Issuer in accordance with Section 2.06 and Article XIV hereof.  The Issuer may appoint one or more co-registrars and one or more additional paying agents.  The term “ Registrar ” includes any co-registrar, and the term “ Paying Agent ” includes any additional paying agents.  The Issuer initially appoints the Trustee as Paying Agent.  The Issuer may change any Paying Agent or Registrar without prior notice to any Holder.  The Issuer shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture.  If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall, to the extent that it is capable, act as such.
 
The Issuer initially appoints The Depository Trust Company (“ DTC ”) to act as Depositary with respect to the Global Notes representing the Notes.
 
The Issuer initially appoints the Trustee to act as the Registrar and Paying Agent for the Notes and the Trustee agrees to initially so act.
 
SECTION 2.04.   Paying Agent to Hold Money in Trust .  The Issuer shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Issuer in making any such payment.  While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or a Subsidiary) shall have no further liability for such funds.  If the Issuer or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all funds held by it as Paying Agent.  Upon any Event of Default pursuant to Section 7.01(5), (6) or (7), the Trustee shall serve as Paying Agent for the Notes.
 
SECTION 2.05.   Holder Lists .  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with Trust Indenture Act Section 312(a).  If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least five (5) Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Issuer shall otherwise comply with Trust Indenture Act Section 312(a).
 

 
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SECTION 2.06.   Transfer and Exchange .
 
(a)   When Notes are presented to the Registrar with a request to register the transfer or to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met; provided, however, that any Note presented or surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar and the Trustee duly executed by the Holder thereof or by his attorney duly authorized in writing. To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Issuer's order or at the Registrar's request.
 
The Registrar shall not be required to register the transfer of or exchange any Note selected for prepayment in whole or in part, except the portion not being paid of any Note being prepaid in part.
 
The Issuer shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of selection of Notes to be redeemed under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the portion not being paid of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date.
 
No service charge shall be made to any Holder of a Note for any registration of transfer or exchange (except as otherwise permitted herein), but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.10 and 3.06 hereof, which shall be paid by the Issuer).
 
Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and Interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.
 
(b)   Each Global Note shall bear a legend in substantially the following form:
 
“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
 
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS
 

 
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OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH  IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.”
 
(c)   Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or the Issuer has repurchased a particular Global Note or a particular Global Note has been prepaid, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Custodian at the direction of the Trustee to reflect such reduction; and if the beneficial interest or a Definitive Note is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in the Global Note or in another Global Note, the Trustee will, in the case of exchange or transfer of a Definitive Note for an interest in a Global Note, cancel such Definitive Note, and, in either case, the applicable Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Custodian, at the direction of the Trustee, to reflect such increase, subject, in the case of the exchange or transfer of a Definitive Note for an interest in a Global Note, to prior receipt by the Trustee of exchange or assignment documentation from the Holder satisfactory to the Trustee directing such exchange or transfer.
 
(d)   Owners of interests in the Global Note will be entitled to have individual Definitive Notes registered in their names and to receive certificates in respect thereof if (i) DTC notifies the Issuer in writing that it is no longer willing or able to discharge properly its responsibilities as Depositary with respect to the Notes, or ceases to be a “clearing agency” under applicable law, or is at any time  no longer eligible to act as such and the Issuer is not able to appoint a qualified successor within 90 days of receiving notice or becoming aware of such ineligibility, or (ii) DTC or any alternative clearing system on behalf of which the Notes evidenced by a Global Note may be held is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or in fact does so, the Issuer will cause sufficient certificates for individual Definitive Notes to be issued, executed and delivered to the Registrar and upon receipt of an Issuer Order by the Trustee, such Notes shall be authenticated and dispatched to the relevant Holders.  In connection with any such delivery, a person having an interest in the Global Note must provide to the Registrar a written order containing instructions and such other information and certifications as the Issuer and the Trustee may require to complete, execute and deliver such certificates in respect of individual Definitive Notes.
 
SECTION 2.07.   Replacement Notes
 
If any mutilated Note is surrendered to the Trustee, the Registrar or the Issuer or the Trustee receives evidence to its satisfaction of the ownership and destruction, loss or theft of any Note, the Issuer shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met.  If required by the Trustee or the Issuer, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced.  The Issuer and the Trustee may charge the Holder for their expenses in replacing a Note.
 

 
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Every replacement Note issued in accordance with this Section 2.07 is a contractual obligation of the Issuer and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
 
SECTION 2.08.   Outstanding Notes .  The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof and those described in this Section 2.08 as not outstanding.  Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note.
 
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser (as defined in Section 8-303 of the Uniform Commercial Code).
 
If the principal amount of any Note is considered paid under Section 5.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
 
If the Paying Agent holds, on a Redemption Date or maturity date, money sufficient to pay the principal amount of the Notes (or portions thereof) payable on that date and accrued but unpaid interest thereon, then on and after that date such Notes (or portions thereof) shall be deemed to be no longer outstanding and shall cease to accrue interest.
 
SECTION 2.09.   Treasury Notes .  In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer or by any Affiliate of the Issuer, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee knows are so owned shall be so disregarded.
 
SECTION 2.10.   Temporary Notes .  Until certificates representing Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes.  Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee.  Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes.
 
Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.
 
SECTION 2.11.   Cancellation .  The Issuer at any time may deliver Notes to the Trustee for cancellation.  The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act).  Upon the request of the Issuer, certification of the destruction of all cancelled Notes shall be delivered to the Issuer.  The Issuer may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
 
SECTION 2.12.   Defaulted Interest .  If the Issuer defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest pay
 

 
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able on the defaulted interest, in each case at the rate provided in the Notes and in Section 5.01 hereof to the Persons who are Holders on a subsequent special record date.  The Issuer shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Issuer shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as provided in this Section 2.12.  The Issuer shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest.  At least 15 days before any such special record date, the Issuer (or, upon the written request of the Issuer, the Trustee in the name and at the expense of the Issuer) shall mail or cause to be mailed, first-class postage prepaid, to each Holder, with a copy to the Trustee, a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.
 
Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
 
SECTION 2.13.   CUSIP/ISIN Numbers .  The Issuer in issuing the Notes may use CUSIP and ISIN numbers (in each case, if then generally in use) and, if so, the Trustee shall use CUSIP and ISIN numbers in notices of redemption as a convenience to Holders; provided , that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Issuer will as promptly as practicable notify the Trustee in writing of any change in the CUSIP and ISIN numbers.
 
SECTION 2.14.   Calculation of Principal Amount of Securities .  The aggregate principal amount of the Notes, at any date of determination, shall be the principal amount of the Notes, including any PIK Notes issued in respect thereof, and any increase in the principal amount thereof, as a result of a PIK Payment at such date of determination.  With respect to any matter requiring consent, waiver, approval or other action of the Holders of a specified percentage of the principal amount of all the Notes, such percentage shall be calculated, on the relevant date of determination, by dividing (a) the principal amount, as of such date of determination, of Notes, the Holders of which have so consented by (b) the aggregate principal amount, as of such date of determination, of the Notes then outstanding, in each case, as determined in accordance with the preceding sentence, Section 2.08 and Section 2.09 of this Indenture.  Any such calculation made pursuant to this Section 2.14 shall be made by the Issuer and delivered to the Trustee pursuant to an Officer’s Certificate.
 
SECTION 2.15.   No Gross Up; Withholding . The Issuer shall not be obligated to pay additional amounts to the Holders or beneficial owners of the Notes as a result of any withholding or deduction for, or an account of, any present or future taxes, duties, assessments, withholding or governmental change with respect to the Notes. Because the status of the Notes is unclear, it is anticipated that distributions on the Notes are subject to U.S. federal income withholding tax.
 

 
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ARTICLE III

 
REDEMPTION
 
SECTION 3.01.   Notices to Trustee .  If the Issuer elects to redeem the Notes pursuant to Section 3.07 hereof, it shall furnish to the Trustee, at least five (5) Business Days (or such shorter period as allowed by the Trustee) before notice of redemption is required to be mailed or caused to be mailed to Holders pursuant to Section 3.03 hereof but not more than 60 days before a Redemption Date, an Officer’s Certificate of the Issuer setting forth (i) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of the Notes, to be redeemed and (iv) the redemption price.
 
SECTION 3.02.   Selection of Notes to Be Redeemed .  If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes of such series to be redeemed (a) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed or (b) on a pro rata basis to the extent practicable, or, if the pro rata basis is not practicable for any reason, by lot or by such other method the Trustee shall deem fair and appropriate.  In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the Redemption Date by the Trustee from the outstanding Notes not previously called for redemption.
 
The Trustee shall promptly notify the Issuer in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed.  Notes and portions of Notes selected shall be in whole dollar ($1.00) amounts or whole dollar multiples in excess thereof.  Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
 
SECTION 3.03.   Notice of Redemption .  The Issuer shall request and the Trustee shall be authorized to provide a list of record holders, as of a date determined by the Issuer. The Issuer shall mail or cause to be mailed by first-class mail notices of redemption at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder’s registered address appearing in the Note Register or otherwise in accordance with Applicable Procedures.  Notices of redemption may not be conditional.
 
The notice shall identify the Notes to be redeemed and shall state:
 
(a)   the Redemption Date;
 
(b)   if any Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder of the Notes upon cancellation of the original Note;
 
(c)   the name and address of the Paying Agent;
 
(d)   that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
 
(e)   that, unless the Issuer defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;
 

 
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(f)   the paragraph or subparagraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
 
(g)   the CUSIP and ISIN number, if any, printed on the Notes being redeemed and that no representation is made as to the correctness or accuracy of any such CUSIP and ISIN number that is listed in such notice or printed on the Notes.
 
At the Issuer’s request, the Trustee shall give the notice of redemption in the Issuer’s name and at its expense; provided that the Issuer shall have delivered to the Trustee, at least five (5) Business Days before notice of redemption is required to be mailed or caused to be mailed to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate of the Issuer requesting that the Trustee give such notice (in which case the Issuer shall provide to the Trustee the complete form of such notice in the name and at the expense of the Issuer) and setting forth the information to be stated in such notice as provided in the preceding paragraph.
 
The Issuer may provide in the notice of redemption that payment of the redemption price and performance of the Issuer’s obligations with respect to such redemption or purchase may be performed by another Person.
 
SECTION 3.04.   Effect of Notice of Redemption .  Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price.  The notice, if mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice.  In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note.  Subject to Section 3.05 hereof, on and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption.
 
SECTION 3.05.   Deposit of Redemption Price .
 
(a)   Prior to 11:00 a.m. (New York City time) on the Redemption Date, the Issuer shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Notes to be redeemed on that Redemption Date.  The Trustee or the Paying Agent shall promptly, and in any event within two (2) Business Days after the Redemption Date, return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed.
 
(b)   If the Issuer complies with the provisions of the preceding paragraph (a), on and after the Redemption Date, interest shall cease to accrue on the applicable series of Notes or the portions of Notes called for redemption, whether or not such Notes are presented for payment.  If a Note is redeemed on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the Redemption Date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date.  If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the Redemption Date until such principal is paid, and to the extent lawful on any interest accrued to the Redemption Date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 5.01 hereof.
 
SECTION 3.06.   Notes Redeemed in Part .  Upon surrender of a Note that is redeemed in part, the Issuer shall issue and the Trustee shall authenticate for the Holder at the expense of the Issuer
 

 
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a new Note equal in principal amount to the unredeemed portion of the Note surrendered representing the same indebtedness to the extent not redeemed; provided that each new Note will be in a whole dollar ($1.00) principal amount.  It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate of the Issuer is required for the Trustee to authenticate such new Note.
 
SECTION 3.07.   Optional Redemption .  At any time the Notes may be redeemed or purchased (by the Issuer or any other Person designated by the Issuer), in whole or in part, at a redemption price equal to 100% of the principal amount of Notes redeemed (the “ Redemption Date ”) and, without duplication, accrued and unpaid interest to the Redemption Date, subject to the rights of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date.  Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
 
SECTION 3.08.   Mandatory Redemption .  The Issuer shall not be required to make any mandatory redemption or sinking fund payments with respect to the Notes (other than pursuant to Section 4.02).
 
ARTICLE IV                                
 

 
ESTABLISHMENT OF FUNDS AND APPLICATION AND INVESTMENT OF MONIES THEREIN
 
SECTION 4.01.   Maintenance of Collateral Account .  The Issuer shall maintain the Collateral Account at all times.
 
SECTION 4.02.   Deposit of Runoff Proceeds and Application Thereof .
 
(a)   Issuer shall, and shall cause the Owner to, deposit all distributions, dividends or other receipts in respect of Runoff Proceeds on the date paid to the Issuer (“ Runoff Proceeds Distributions ”) directly into the Collateral Account; provided that the foregoing shall not apply to any Runoff Proceeds Distributions made prior to the execution and delivery of this Indenture for the purpose of deposit into the Trustees Fees Account pursuant to the First Lien Indenture. If Issuer shall nevertheless receive any Runoff Proceeds Distributions other than by deposit directly into the Collateral Account, it shall cause all such Runoff Proceeds Distributions to be deposited into the Collateral Account on the same Business Day on which they are received. Runoff Proceeds Distributions shall not be deposited in any deposit or securities account other than the Collateral Account, and all such Runoff Proceeds Distributions, while not held in the Collateral Account shall be held by the Issuer in trust for the Collateral Agent and shall not be commingled with any other assets of the Issuer; provided that the foregoing shall not apply to any Runoff Proceeds Distributions made prior to the execution and delivery of this Indenture for the purpose of deposit into the Trustees Fees Account pursuant to the First Lien Indenture.
 
(b)   Subject to Section 7.14, on each Interest Payment Date, the Issuer shall direct the Collateral Agent to apply all amounts on deposit in the Collateral Account and any other Runoff Proceeds Distributions, to the extent any such amounts and Runoff Proceeds Distributions remain following application thereof pursuant to Section 4.02(b) of the First Lien Indenture (other than any such Runoff Proceeds Distributions made prior to the execution and delivery of this Indenture for the purpose of deposit into the Trustees Fees Account pursuant to the First Lien Indenture), in the following order (each such date of application, a “ Runoff Payment Date ”):
 
(i)   FIRST:  To the extent not paid pursuant to Section 4.04 or otherwise, to the pro rata payment of any compensation, fees and expenses, if any, due to the Trustee and the Collat-
 

 
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eral Agent on such Runoff Payment Date for any services rendered under the Indenture or the Security Documents.
 
(ii)   SECOND:  To the payment to the Issuer of an amount equal to the Issuer Incremental Amount accrued, if any, since the immediately preceding Interest Payment Date on the Issuer Secondary Amount.
 
(iii)   THIRD:  To the payment to the Issuer of an amount equal to any unpaid Issuer Secondary Amount.
 
(iv)   FOURTH:  To the Paying Agent for payment to the Holders of any accrued and unpaid interest, if any, with respect to the Notes; provided, however, that if on any Runoff Payment Date the Runoff Proceeds Distributions are not sufficient for such purposes, then any accrued and unpaid interest, if any, shall be paid as PIK Interest or as additional principal in accordance with the terms of the Notes.
 
(v)   FIFTH:  To the Paying Agent for payment to the Holders of any unpaid principal and other Notes Obligations, if any, with respect to the Notes.
 
After the payments required by paragraphs FIRST, SECOND, THIRD, FOURTH and FIFTH above have been made, the balance on deposit in the Collateral Account shall be paid as provided in Section 2.4(a) of the Intercreditor Agreement.
 
(c)   Any Issuer Incremental Amount not paid with respect to the Issuer Priority Amount or the Issuer Secondary Amount on any Interest Payment Date, shall be added to the then outstanding Issuer Priority Amount or Issuer Secondary Amount, as applicable.
 
SECTION 4.03.   Investment of Funds .  All moneys in the Collateral Account shall be invested at the written direction of an Officer of the Issuer in cash and Cash Equivalents. On each Interest Payment Date on which any Cash Equivalents are held in or credited to the Collateral Account, the Collateral Agent shall sell or otherwise convert such Cash Equivalents to cash in order to make the payments provided above.
 
SECTION 4.04.   Trustees Fees Account
 
(a)   The Issuer shall pay any compensation, fees and expenses due to the Trustee, the First Lien Trustee and the Collateral Agent pursuant to this Indenture, the First Lien Indenture or the Security Documents, first from the Trustees Fees Account and then from the application of monies pursuant to Section 4.02(b).
 
(b)   On March 19, 2014, the Issuer shall deposit any funds remaining in the Trustees Fees Account directly into the Collateral Account.
 
ARTICLE V
COVENANTS
 
SECTION 5.01.   Payment of Notes .  The Issuer shall pay or cause to be paid the principal of and interest on the Notes on the dates and in the manner provided in the Notes (in the case of the payment of principal and interest in cash, only to the extent funds are available therefor) as provided for in paragraphs FOURTH and FIFTH of Section 4.02(b) herein.  Principal and interest shall be considered
 

 
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paid on the date due if the Paying Agent holds as of 11:00 a.m. Eastern Time on the due date money deposited by the Issuer or transferred from the Collateral Account in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. PIK Interest shall be considered paid on the date due if the Trustee is directed on or prior to such date to issue PIK Notes or increase the principal amount of the applicable Notes, in each case in an amount equal to the amount of the applicable PIK Interest.
 
The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law whether or not allowed) on, (i) overdue principal at the rate that is 2% higher than the then applicable interest rate on the Notes to the extent lawful, and (ii) overdue installments of interest (without regard to any applicable grace period) at the rate then applicable to the Notes to the extent lawful, provided, however that with respect to clauses (i) and (ii) above, payments of interest shall only be made in cash to the extent moneys are in or should have been deposited in the Collateral Account in accordance with Article IV or are available to be applied in accordance with Section 7.14 herein, and such payment of interest shall otherwise be paid in PIK Interest.
 
SECTION 5.02.   Deposit of Runoff Proceeds Distributions . (a) So long as the Owner shall have accumulated Runoff Proceeds at such time, the Issuer shall cause the Owner to use commercially reasonable efforts to obtain the appropriate regulatory approval on or before the ninetieth (90th) day following the end of each fiscal year (or more frequently as the Issuer may in good faith determine to be commercially reasonable), of a dividend or distribution of the maximum amount of undistributed Runoff Proceeds that could reasonably be expected to be approved after consulting with the Owner’s Hawaiian regulatory advisers and counsel, and within three (3) Business Days of the receipt of such approval, to pay to the Issuer such dividend or distribution and deposit such dividend or distribution on the date paid directly into the Collateral Account.
 
(b) On the Issue Date, the Issuer will irrevocably instruct and authorize WMMRC in writing (which instruction shall be applicable to the protected cell following an Insurance Book Closing) to deposit all Runoff Proceeds Distributions into the Collateral Account.
 
SECTION 5.03.   Liens .  (a) The Issuer will not, and will cause the Owner not to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind (except Permitted Liens) on the Collateral, the equity interests issued by the Owner, any interests of the Owner in any of the Trusts or assets thereof, Runoff Proceeds Distributions or any Runoff Proceeds, or any proceeds of any of the foregoing.
 
(b) The Issuer will, and will cause WMMRC to, use commercially reasonable efforts to obtain approval from the applicable regulatory authorities to: (i) effect, as soon as reasonably practicable, the Insurance Book Closing and (ii) grant a second priority perfected security interest (subject to whatever limitations or conditions any such authority may impose) under the Security Documents in the equity issued by the Owner (including, upon the Insurance Book Closing, the protected cell to which the Trusts and their assets are transferred) and, after the Insurance Book Closing, the excess assets of the Owner and the Trusts.  As soon as reasonably practicable following receipt of the necessary regulatory approvals, the Issuer will, and will cause WMMRC, the Owner and the Trusts, as applicable, to, consummate the Insurance Book Closing and grant such security interests, pursuant to the Security Agreement or a separate Security Document, which shall be in a form and with terms substantially  similar to the Security Agreement, which for clarification purposes, may occur at different times depending on the timing of the receipt of such necessary regulatory approvals.
 
SECTION 5.04.   Maintenance of Office or Agency .  The Issuer shall maintain the offices or agencies (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-
 

 
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registrar) in the Borough of Manhattan, The City of New York, as required under Section 2.03 where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
 
The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Issuer of its obligation to maintain such offices or agencies as required by Section 2.03 for such purposes.  The Issuer shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
 
The Issuer hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Issuer in accordance with Section 2.03 hereof.
 
SECTION 5.05.   Reports and Other Information . The Issuer shall, and shall cause the Owner to, provide to the Holders and to the Trustee (a) an annual audited balance sheet and income statement of the Issuer and the Owner within 90 days following the end of each fiscal year, commencing with the fiscal year ending December 31, 2012, and (b) monthly unaudited balance sheets and income statements of the Owner and each of the Trusts and the account statement of each segregated account into which any Runoff Proceeds are deposited within 45 days following the end of each month.  The Issuer shall, and shall cause the Owner to, provide to the Holders and to the Trustee a monthly statement of the Collateral Account, including the amount and nature of any of its investments and any gain or loss associated therewith, within 30 days following the end of each month.
 
SECTION 5.06.   Compliance Certificate . So long as any of the Notes are outstanding, the Issuer will deliver to the Trustee, within 5 Business Days after any Officer becomes aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Issuer is taking or propose to take with respect thereto. The Issuer shall furnish to the Trustee not less than annually, an Officers’ Certificate as to his or her knowledge of the Issuer’s compliance with all conditions and covenants under the Indenture.
 
SECTION 5.07.   Limitation on Business Activities .  The Issuer shall cause the Owner (i) to engage in no activities, other than administering the Trusts, collecting premiums and depositing the Runoff Proceeds Distributions into the Collateral Account and activities incidental thereto, (ii) to not originate any new insurance policies, and (iii) to not create, incur, issue, assume, guarantee or suffer to exist any indebtedness. The Issuer shall not permit the Owner to invest, or allow to be invested, any of the assets of the Trusts except in accordance with the applicable trust documents and substantially in accordance with past practices.
 

 
SECTION 5.08.   Prohibition on Commingling . The Issuer shall cause the Owner to deposit all Runoff Proceeds released to it from the Trusts into a segregated account, which account shall consist solely of such Runoff Proceeds and proceeds thereof or interest thereon, and to hold such amounts in the segregated account until such time as they are distributed as Runoff Proceeds Distributions as provided for in Article IV hereof and will invest the same only in cash and Cash Equivalents. The Issuer shall cause the Owner to not deposit such Runoff Proceeds and other amounts in any deposit or securities account other than the segregated account referred to in the preceding sentence, and all such amounts shall
 

 
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be held by the Owner in trust for distribution as provided for in Article IV hereof and shall not be commingled with any other assets of the Owner or the Issuer. To the extent applicable, this Section 5.08 shall not prohibit the deposit of any funds to the Trustees Fees Account pursuant to Section 4.04.
 

 
SECTION 5.09.   Stay, Extension and Usury Laws .  The Issuer covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenant that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
 
SECTION 5.10.   Corporate Existence .  Except as permitted by Article VI or required by 5.03(b), the Issuer shall do or cause to be done all things necessary (i) to preserve and keep in full force and effect its corporate existence, and the corporate, partnership or other existence of the Owner in accordance with the respective organizational documents of the Issuer or the Owner (which, in the case of the Owner, will not be amended except as necessary to comply with regulatory requirements, effect the Insurance Book Closing and to maintain the ability to pay dividends), (ii) to maintain its direct ownership and voting control over 100% of the equity issued by the Owner (iii) to preserve and keep in full force and effect the rights (charter and statutory), licenses and franchises of the Issuer and the Owner;  provided  that the Issuer shall not be required to preserve any such right, license or franchise described in this clause (iii) if the preservation thereof is no longer necessary for the administration of the Trusts or collection of the Runoff Proceeds and that the loss thereof is not adverse in any material respect to the Holders of the Notes, taken as a whole, and (iv) to not consolidate or merge the Owner with or into another Person.
 
SECTION 5.11.   Security Documents .  The Issuer will and will cause the Owner to comply with the terms of each Security Document to which it is a party.
 
SECTION 5.12.   Reporting of Debt for Tax Purposes . The Issuer shall treat the Runoff Notes as debt for federal income tax purposes, and shall use commercially reasonable efforts to defend such treatment in connections with any examination or subsequent proceedings.
 
SECTION 5.13.   Prohibition on Sale of Interests in Trusts .  Except pursuant to an Insurance Book Closing and required by this Indenture, the Issuer will cause the Owner not to, directly or indirectly, (a) sell, lease, transfer or otherwise dispose of any of its interest in any of the Trusts, (b) permit any Trust to sell, lease, transfer or otherwise dispose of any of its assets other than in the ordinary course of administering and managing the assets of the Trust in accordance with the trust documents and investment policies of the Owner or (c) enter into any contract, agreement or understanding to effectuate (a) or (b) above.
 


ARTICLE VI

 
SUCCESSORS
 
SECTION 6.01.   Merger, Consolidation or Sale of All or Substantially All Assets .
 
The Issuer shall not, directly or indirectly, consolidate or merge with or into or wind up into (whether or not the Issuer is the surviving corporation), and shall not sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer, in one or more related transactions, to any Person unless:
 
 
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(1)           the Issuer is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or the Person to whom such sale, assignment, transfer, lease, conveyance or other disposition will have been made, is a Person organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia (such Person, as the case may be, being herein called the “ Successor Company ”); provided that in the case where the Successor Company is not a corporation, a co-obligor of the Notes is a corporation, organized or existing under any such laws;
 
(2)           the Successor Company, if other than the Issuer, expressly assumes all the Notes Obligations pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee (subject to the non-recourse provisions contained herein);
 
(3)           at the time of such transaction, no Default exists and after giving effect to such transaction, no Default would exist;
 
(4)           immediately after such transaction, WMMRC continues to be a direct or indirect wholly-owned subsidiary of the Successor Company; and
 
(5)           the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures, if any, comply with this Indenture, the Notes and the Security Documents.
 
SECTION 6.02.   Successor Corporation Substituted .  Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer in accordance with Section 6.01(a) hereof, the successor corporation formed by such consolidation or into or with which the Issuer is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture and the Security Documents referring to the Issuer shall refer instead to the successor corporation and not to the Issuer), and may exercise every right and power of the Issuer under this Indenture and the Security Documents with the same effect as if such successor Person had been named as the Issuer herein and therein; provided that the predecessor Issuer shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale, assignment, transfer, conveyance or other disposition of all of the Issuer’s assets that meets the requirements of Section 6.01 hereof.
 


ARTICLE VII
 

 
DEFAULTS AND REMEDIES
 
SECTION 7.01.   Events of Default .  An “ Event of Default ” wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
 
(1)           default in payment when due and payable, at maturity, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes;
 
(2)           default for five Business Days or more in the payment when due of interest on or with respect to the Notes;
 
 
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(3)           the failure by the Issuer to perform, observe or comply with Sections 4.02, 5.02, 5.03, 5.06, 5.07, 5.08, 5.10 and 5.13 of this Indenture;
 
(4)           failure by the Issuer for 30-days after receipt of written notice given by the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes to perform, observe or comply with any other covenant or agreement on its part under Article V of this Indenture (other than Sections 5.02, 5.03, 5.06, 5.07, 5.08, 5.10 and 5.13), provided that, it shall not constitute an Event of Default if, within 30-days after receipt of such written notice, corrective action is instituted and thereafter diligently pursued until the Default is cured;
 
(5)           the Owner or the Issuer, pursuant to or within the meaning of any Bankruptcy Law:
 
(A)           commences proceedings to be adjudicated bankrupt or insolvent;
 
(B)           consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under applicable Bankruptcy law;
 
(C)           consents to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or a substantial part of its property; or
 
(D)           makes a general assignment for the benefit of its creditors;
 
(6)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
 
(A)           is for relief against the Owner or the Issuer, in a proceeding in which the Owner or the Issuer, is to be adjudicated bankrupt or insolvent;
 
(B)           appoints a receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Owner or the Issuer, or for all or a substantial part of the property of the Issuer or the Owner; or
 
(C)           orders the liquidation of the Owner or the Issuer;
 
and the order or decree remains unstayed and in effect for 60 consecutive days;
 
(7)           the Insurance Division of the Hawaii Department of Commerce and Consumer Affairs commences a dissolution, liquidation, insolvency or other similar proceeding against the Owner or the Issuer, or petitions a court of competent jurisdiction for an order of rehabilitation in accordance with applicable law.
 
SECTION 7.02.   Acceleration .
 
(a)   If any Event of Default (other than an Event of Default specified in clause (5), (6) or (7) of Section 7.01 hereof) occurs and is continuing under this Indenture, the Trustee by notice to the Issuer or the Holders of at least 25% in aggregate principal amount of the then total outstanding Notes by notice to the Issuer and the Trustee, in either case specifying in such notice the respective Event of Default and that such notice is a “notice of acceleration,” may declare the principal, interest and premium, if any, on all the then outstanding Notes to be due and payable.  Upon the effectiveness of such declaration,
 

 
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such principal and interest shall be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default arising under clause (5), (6) or (7) of Section 7.01 hereof, all outstanding Notes shall be due and payable without further action or notice.
 
(b)   The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of the Holders of all of the Notes rescind any acceleration with respect to the Notes and its consequences if such rescission would not conflict with any judgment or decree of a court of competent jurisdiction and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.
 
SECTION 7.03.   Other Remedies .  If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture or the Security Documents, subject to Section 7.16 herein.
 
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent permitted by law.
 
SECTION 7.04.   Specific Performance . The Issuer agrees that irreparable damage would occur and that the Trustee, the Collateral Agent and the Holders would not have any adequate remedy at law in the event that any of the provisions of this Indenture were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the Trustee, Collateral Agent and the Holders shall be entitled to an injunction or injunctions to prevent breaches of this Indenture and to enforce specifically the terms and provisions of this Indenture, including but not limited to Sections 4.02, 5.01, 5.02, 5.03, 5.07, 5.08, 5.11 and 5.13, in any court of competent jurisdiction, without proof of actual damages (and each party hereby waives any requirement for the securing or posting of any bond or other security in connection therewith); specific performance being in addition to any other remedy to which the parties are entitled at law or in equity.
 
SECTION 7.05.   Waiver of Past Defaults .  Holders of not less than a majority in aggregate principal amount of the then outstanding Notes (unless a higher percentage would be required under Section 10.02 to consent to an amendment of the relevant provision, in which case such higher per-
 
centage shall apply) by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default (other than a Default under Section 5.01). Holders of not less than all affected then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default under Section 5.01 and its respective consequences hereunder. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. This Section 7.05 is subject to Section 7.02 hereof.
 
SECTION 7.06.   Control by Majority .  Holders of a majority in principal amount of the then total outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.  The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder of a Note or that would involve the Trustee in personal liability.
 

 
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SECTION 7.07.   Limitation on Suits .  Subject to Sections 7.04 and 7.08 hereof, no Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless:
 
(a)   such Holder has previously given the Trustee notice that an Event of Default has occurred and is continuing;
 
(b)   Holders of at least 25% in aggregate principal amount of the total outstanding Notes have requested the Trustee to pursue the remedy;
 
(c)   Holders of the Notes have offered the Trustee satisfactory security or indemnity against any loss, liability or expense;
 
(d)   the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and
 
(e)   Holders of a majority in principal amount of the total outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.
 
A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.
 
SECTION 7.08.   Rights of Holders of Notes to Receive Payment .  Notwithstanding any other provision of this Indenture and subject to Section 7.16, the right of any Holder of a Note to receive payment of principal of, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
 
SECTION 7.09.   Collection Suit by Trustee .  If an Event of Default specified in Section 7.01(1) or (2) hereof occurs and is continuing, the Trustee is authorized to recover judgment, subject to the limitation in Section 7.16 hereof, in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
 
SECTION 7.10.   Restoration of Rights and Remedies .  If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Issuer, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
 
SECTION 7.11.   Rights and Remedies Cumulative .  Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, and subject to Section 7.16 hereof, no right or remedy herein or in the Security Documents conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder or in the Security Documents, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
 

 
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SECTION 7.12.   Delay or Omission Not Waiver .  No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
 
SECTION 7.13.   Trustee May File Proofs of Claim .  The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Notes), its creditors or its property and to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07 hereof.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
 
SECTION 7.14.   Priorities .  If the Trustee or any Agent collects any money or property pursuant to the enforcement of this Article VII, it shall pay out the money in the order set forth in Section 2.4(b) of the Intercreditor Agreement, provided that, in the case of a Recourse Action, other than in an Insolvency Proceeding, each as defined in the Intercreditor Agreement, such money or property shall be paid out in the order set forth in Section 2.4(e) of the Intercreditor Agreement.
 
The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 7.14.
 
SECTION 7.15.   Undertaking for Costs .  In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 7.15 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 7.08 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.
 
SECTION 7.16.   Limitation on the Issuer’s Obligations . Notwithstanding any other provision of the Indenture, the Notes, the Intercreditor Agreement and the other Security Documents to the contrary, the Trustee, on behalf of itself and the Holders, agrees that it and the Holders shall not have or take recourse (other than actions for specific performance under Section 7.04) with respect to the Notes
 

 
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Documentation against the Issuer or its assets and property or against WMMRC or the Owner or their respective assets and property (other than assets that were required to be transferred to the protected cell pursuant to the Insurance Book Closing), except (i) to the Collateral Account, (ii) if the Issuer fails to comply with its obligations pursuant to Sections 4.02(a), 4.02(b), 5.02 or 5.08, to the assets of the Issuer in an amount equal to the aggregate amount of any Runoff Proceeds or Runoff Proceeds Distributions that were not deposited into the Collateral Account, (iii) to the equity interests in and the excess assets of the Owner and the Trusts to the extent a Lien has been granted therein pursuant to Section 5.03(b) herein in favor of the Collateral Agent and (iv) to the Owner or the Issuer for costs and expenses, including reasonable attorney’s fees, related to the enforcement of Sections 4.01, 4.02, 4.03, 5.02, 5.03, 5.07, 5.08, 5.10 and 5.13 herein, if the Holders or the Trustee, as applicable, are the prevailing party in such enforcement action.
 
ARTICLE VIII

 
TRUSTEE
 
SECTION 8.01.   Duties of Trustee .
 
(a)   If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by the Notes Documentation, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
 
(b)   Except during the continuance of an Event of Default:
 
(i)   the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
 
(ii)   in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the form required in this Indenture.  However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
 
(c)   The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
 
(i)   this paragraph does not limit the effect of paragraph (b) of this Section 8.01;
 
(ii)   the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and
 
(iii)   the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.02, 8.04 or 8.05 hereof.
 

 
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(d)   Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 8.01.
 
(e)   The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders of the Notes unless the Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense.
 
(f)   The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
 
SECTION 8.02.   Rights of Trustee .
 
(a)   The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer and its Subsidiaries, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
 
(b)   Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate of the Issuer or an Opinion of Counsel or both.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.  The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
 
(c)   The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.
 
(d)   The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
 
(e)   Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer shall be sufficient if signed by an Officer of the Issuer.
 
(f)   None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.
 
(g)   The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.
 
(h)   The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the
 

 
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Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
 
(i)   In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
 
SECTION 8.03.   Individual Rights of Trustee .  The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee.  However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign.  Any Agent may do the same with like rights and duties.  The Trustee is also subject to Sections 8.10 and 8.11 hereof.
 
SECTION 8.04.   Trustee’s Disclaimer .  The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuer’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.  The recitals and statements contained herein and in the Notes, except those contained in any Trustee’s certificate of authentication, shall be taken as the recitals and statements of the Issuer, and the Trustee or any authenticating agent assumes no responsibility for their correctness.
 
SECTION 8.05.   Notice of Defaults .  If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default within 90 days after it occurs.  Except in the case of a Default relating to the payment of principal, premium, if any, or
 
interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers, in each case, of the Trustee in good faith determines that withholding the notice is in the interests of the Holders of the Notes.  The Trustee shall not be deemed to know of any Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is such a Default is received by the Trustee in accordance with Section 13.02 hereof at the Corporate Trust Office of the Trustee and such notice references the Notes and this Indenture. During any period in which an Event of Default has occurred and is continuing, the Trustee shall be entitled to have all Agents and Collateral Agents act at its direction.
 
SECTION 8.06.   Reports by Trustee to Holders of the Notes .  Within 60 days after each April 15, beginning with the April 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with Trust Indenture Act Section 313(a) (but if no event described in Trust Indenture Act Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with Trust Indenture Act Section 313(b)(1) and Section 313(b)(2) (to the extent applicable).  The Trustee shall also transmit by mail all reports as required by Trust Indenture Act Section 313(c).
 
A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Issuer and filed with each stock exchange on which the Notes are listed and the SEC in accordance
 

 
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with Trust Indenture Act Section 313(d).  The Issuer shall promptly notify the Trustee when the Notes are listed on any stock exchange.
 
SECTION 8.07.   Compensation and Indemnity .  The Issuer shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree in writing from time to time.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Issuer shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services.  Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
 
The Issuer shall indemnify the Trustee and its officers, directors, employees, agents and any predecessor trustee (in its capacity as trustee) and its officers, directors, employees and agents for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including reasonable attorneys’ fees) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the costs and expenses of enforcing this Indenture against the Issuer (including this Section 8.07) or defending itself against any claim whether asserted by any Holder or the Issuer, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder).  The Trustee shall notify the Issuer promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder except to the extent the Issuer has been materially prejudiced thereby.  The Issuer shall defend the claim and the Trustee may have separate counsel and the Issuer shall pay the fees and expenses of such counsel.  The Issuer need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.  The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct or negligence.
 
The obligations of the Issuer under this Section 8.07 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.
 
To secure the payment obligations of the Issuer in this Section 8.07, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee. Such Lien shall survive the satisfaction and discharge of this Indenture.
 
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 7.01(5), (6) or (7) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
 
SECTION 8.08.   Replacement of Trustee .  A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 8.08.  The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuer.  The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuer in writing.  The Issuer may remove the Trustee if:
 
(a)   the Trustee fails to comply with Section 8.10 hereof or Section 310 of the Trust Indenture Act;
 
(b)   the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
 

 
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(c)   a custodian or public officer takes charge of the Trustee or its property; or
 
(d)   the Trustee becomes incapable of acting.
 
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall promptly appoint a successor Trustee.  Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.
 
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Issuer’s expense), the Issuer or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
 
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 8.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
 
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer.  Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Holders.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 8.07 hereof.  Notwithstanding replacement of the Trustee pursuant to this Section 8.08, the Issuer’s obligations under Section 8.07 hereof shall continue for the benefit of the retiring Trustee.
 
SECTION 8.09.   Successor Trustee by Merger, etc .
 
  If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
 
SECTION 8.10.   Eligibility; Disqualification .  There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has, together with its parent, a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.
 
This Indenture shall always have a Trustee who satisfies the requirements of Trust Indenture Act Sections 310(a)(1), (2) and (5).  The Trustee is subject to Trust Indenture Act Section 310(b).
 
SECTION 8.11.   Preferential Collection of Claims Against Issuer .  The Trustee is subject to Trust Indenture Act Section 311(a), excluding any creditor relationship listed in Trust Indenture Act Section 311(b).  A Trustee who has resigned or been removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated therein.
 

 
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ARTICLE IX

 
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
 
SECTION 9.01.   Option to Effect Legal Defeasance or Covenant Defeasance .  The Issuer may, at its option and at any time, elect to have either Section 9.02 or 9.03 hereof applied to all outstanding Notes upon compliance with the conditions set forth below in this Article IX.
 
SECTION 9.02.   Legal Defeasance and Discharge .  Upon the Issuer’s exercise under Section 9.01 hereof of the option applicable to this Section 9.02, the Issuer shall, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, be deemed to have been discharged from their Obligations with respect to all outstanding Notes (including their Obligations under the Security Documents with respect to the Notes Obligations) on the date the conditions set forth below are satisfied (“ Legal Defeasance ”).  For this purpose, Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 9.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other Obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:
 
(a)   the rights of Holders of Notes to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due solely out of the trust created pursuant to this Indenture referred to in Section 9.04 hereof;
 
(b)   the Issuer’s obligations with respect to Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;
 
(c)   the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s obligations in connection therewith; and
 
(d)   this Section 9.02.
 
If the Issuer exercises under Section 9.01 the option applicable to this Section 9.02, subject to satisfaction of the conditions set forth in Section 9.04 hereof, payment of the Notes may not be accelerated because of an Event of Default under clauses (3), (4), (5), (6) and (7) of Section 7.01.  Subject to compliance with this Article IX, the Issuer may exercise its option under this Section 9.02 notwithstanding the prior exercise of its option under Section 9.03 hereof.
 
SECTION 9.03.   Covenant Defeasance .  Upon the Issuer’s exercise under Section 9.01 hereof of the option applicable to this Section 9.03, the Issuer shall, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, be released from their obligations under the covenants contained in Sections 5.03, 5.05, 5.06, 5.07, 5.09, 5.10 and 5.13 and from the applicability of clauses (3) and (4) of Section 6.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 9.04 hereof are satisfied (“ Covenant Defeasance ”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes).  For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Issuer may omit to comply with and shall have no liability in respect of any term,
 

 
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condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 7.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby.  In addition, upon the Issuer’s exercise under Section 9.01 hereof of the option applicable to this Section 9.03 hereof, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, Sections 7.01(3) (solely with respect to the covenants that are released upon a Covenant Defeasance), 7.01(5), 7.01(6) and 7.01(7) hereof shall not constitute Events of Default.
 
SECTION 9.04.   Conditions to Legal or Covenant Defeasance .  The following shall be the conditions to the application of either Section 9.02 or 9.03 hereof to the outstanding Notes:
 
In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:
 
(a)   the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal amount of, premium, if any, and interest due on the Notes on the stated maturity date or on the Redemption Date, as the case may be, of such principal amount, premium, if any, or interest on such Notes and the Issuer must specify whether such Notes are being defeased to maturity or to a particular Redemption Date.
 
(b)   in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions,
 
(i)   the Issuer has received from, or there has been published by, the United States Internal Revenue Service a ruling, or
 
(ii)   since the issuance of the Notes, there has been a change in the applicable U.S. federal income tax law,
 
in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
 
(c)   in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
 
(d)   no Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other indebtedness, and in each case, the
 

 
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granting of Liens in connection therewith) shall have occurred and be continuing on the date of such deposit;
 
(e)   the Issuer shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer; and
 
(f)   the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.
 
SECTION 9.05.   Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions .  Subject to Section 9.06 hereof, all money and Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 9.05, the “ Trustee ”) pursuant to Section 9.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.
 
The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or Government Securities deposited pursuant to Section 9.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.  Anything in this Article IX to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from time to time upon the request of the Issuer any money or Government Securities held by it as provided in Section 9.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 9.04(a) hereof),
 
are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
 
SECTION 9.06.   Repayment to Issuer .  Subject to any applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Issuer on its request or (if then held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease.
 
SECTION 9.07.   Reinstatement .  If the Trustee or Paying Agent is unable to apply any United States dollars or Government Securities in accordance with Section 9.02 or 9.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuer’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 9.02 or 9.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 9.02 or 9.03 hereof, as the case may be; provided that, if the Issuer makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obliga-
 

 
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tions, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.
 
ARTICLE X

 
AMENDMENT, SUPPLEMENT AND WAIVER
 
SECTION 10.01.   Without Consent of Holders of Notes .  Notwithstanding Section 10.02 hereof, the Issuer and the Trustee (or the Collateral Agent, as applicable) may amend or supplement this Indenture, the Notes, any Security Document or the Intercreditor Agreement without the consent of any Holder:
 
(a)   to cure any ambiguity, omission, mistake, defect or inconsistency;
 
(b)   to provide for uncertificated Notes of such series in addition to or in place of Definitive Notes;
 
(c)   to comply with Section 6.01 hereof;
 
(d)   to provide for the assumption of the Issuer’s obligations to the Holders;
 
(e)   to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Indenture, the Notes, the Security Documents or the Intercreditor Agreement of any such Holder;
 
(f)   to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuer;
 
(g)   to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act;
 
(h)   to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee hereunder pursuant to the requirements hereof;
 
(i)   to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, without limitation to facilitate the issuance and administration of the Notes; provided , however , that (i) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Notes;
 
(j)   to add or release Collateral from, or subordinate, the Lien of the Security Documents only as expressly set forth in this Indenture, the Security Documents or the Intercreditor Agreement; and
 
(k)   to mortgage, pledge, hypothecate or grant any other Lien in favor of the Trustee or the Collateral Agent for the benefit of the Holders of the Notes, as additional security for the payment and performance of all or any portion of the Notes Obligations, on any property or assets, including any which are required to be mortgaged, pledged or hypothecated, or on which a Lien is required to be granted to or for the benefit of the Trustee or the Collateral Agent pursuant to this Indenture, any of the Security Documents or otherwise.
 

 
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Upon the request of the Issuer accompanied by a resolution of its board of directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 8.02 hereof, the Trustee shall join with the Issuer in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall have the right, but not be obligated to, enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.
 
SECTION 10.02.   With Consent of Holders of Notes .  Except as provided below in this Section 10.02, the Issuer and the Trustee (or the Collateral Agent, as applicable) may amend or supplement this Indenture, the Notes, the Intercreditor Agreement or any Security Documents with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Subject to Sections 7.04 and 7.08 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes, the Intercreditor Agreement or any Security Documents may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes).  Section 2.08 hereof, Section 2.09 hereof and Section 2.14 hereof shall determine which Notes are considered to be “outstanding” for the purposes of this Section 10.02.
 
Upon the request of the Issuer accompanied by a resolution of its board of directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 8.02 hereof, the Trustee shall join with the Issuer in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or
 
otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture.
 
It shall not be necessary for the consent of the Holders of Notes under this Section 10.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.
 
After an amendment, supplement or waiver under this Section 10.02 becomes effective, the Issuer shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.
 
Without the consent of each affected Holder of Notes, an amendment or waiver under this Section 10.02 may not, with respect to any Notes held by a non-consenting Holder:
 
(a)           reduce the principal amount of such Notes whose Holders must consent to an amendment, supplement or waiver;
 
(b)           reduce the principal amount of or change the fixed final maturity of any such Note or alter or waive the provisions with respect to the redemption of such Note;
 
(c)           reduce the rate of or change the time for payment of interest on any Note;
 

 
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(d)           waive a Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration) or in respect of a covenant or provision contained in this Indenture which cannot be amended or modified without the consent of each Holder affected thereby;
 
(e)           make any Note payable in money or a currency other than that stated therein;
 
(f)           make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes;
 
(g)           make any change in these amendment and waiver provisions;
 
(h)           impair the right of any Holder to receive payment of principal of, or interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;
 
(i)           amend, supplement, waive or modify the provisions of this Indenture dealing with the Security Documents or application of Runoff Proceeds in any manner, in each case that would subordinate the Lien of the Collateral Agent to the Liens securing any other Obligations (other than as contemplated under clause (j) of Section 10.01) or otherwise release any material portion of the Collateral, in each case other than in accordance with this Indenture, the Security Documents and the Intercreditor Agreement; or
 
(j)           to amend the definition of Runoff Proceeds, Runoff Proceeds Distribution and Section 4.02.
 
In addition, without the consent of the Holders of at least two-thirds in aggregate principal amount of Notes then outstanding, no amendment, supplement or waiver may modify Sections 5.02, 5.03, 5.07, 5.08, 5.10 and 5.13 of this Indenture.
 
SECTION 10.03.   Compliance with Trust Indenture Act .  Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended or supplemental indenture that complies in all material respects with the Trust Indenture Act as then in effect.
 
SECTION 10.04.   Revocation and Effect of Consents .  Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
 
The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement, or waiver.  If a record date is fixed, then, notwithstanding the preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled to consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether or not such Persons continue to
 

 
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be Holders after such record date.  No such consent shall be valid or effective for more than 120 days after such record date unless the consent of the requisite number of Holders has been obtained.
 
SECTION 10.05.   Notation on or Exchange of Notes .  The Trustee may but shall not be obligated to place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated.  The Issuer in exchange for all Notes may but shall not be obligated to issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
 
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
 
SECTION 10.06.   Trustee to Sign Amendments, etc .
 
  The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article X if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  The Issuer may not sign an amendment, supplement or waiver until the board of directors (or similar governing body) approves it.  In executing any amendment, supplement or waiver, the Trustee shall be entitled to receive, and (subject to Section 8.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 13.04 hereof, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Issuer, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 10.03).
 
ARTICLE XI

 
SATISFACTION AND DISCHARGE
 
SECTION 11.01.   Satisfaction and Discharge .  This Indenture shall be discharged and shall cease to be of further effect as to all Notes, when either:
 
(a)   all Notes heretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has heretofore been deposited in trust, have been delivered to the Trustee for cancellation; or
 
(b)   (A)  all Notes not heretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption and redeemed within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer, and the Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders of the Notes, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on the Notes not heretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;
 
(B)           no Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness to the extent such Indebtedness is simultaneously being discharged or repaid and the granting of Liens in connection therewith) with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not
 

 
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result in a breach or violation of, or constitute a default under any other material agreement or instrument to which the Issuer is a party or by which the Issuer is bound;
 
(C)           the Issuer has paid or caused to be paid all sums payable by it under this Indenture; and
 
(D)           the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.
 
In addition, the Issuer shall deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
 
Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to subclause (A) of clause (b) of this Section 11.01, the provisions of Section 11.02 and Section 9.07 hereof shall survive.
 
SECTION 11.02.   Application of Trust Money .  Subject to the provisions of Section 9.07 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
 
If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Issuer has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.
 
ARTICLE XII
 
SECURITY
 
SECTION 12.01.   Security Documents
 
(a)   .  The payment of the principal of and interest (including without limitation, any PIK Interest) and premium, if any, on the Notes when due, whether at maturity, by acceleration, repurchase, redemption or otherwise and whether by the Issuer pursuant to the Notes, the payment of all other Notes Obligations and the performance of all other Notes Obligations are secured as provided in the Security Documents which the Issuer has entered into and will be secured by Security Documents hereafter delivered as required or permitted by this Indenture.  The Issuer shall comply with all provisions and covenants, make all filings (including filings of continuation statements and amendments to Uniform Commercial Code financing statements that may be necessary to continue the effectiveness of such Uniform Commercial Code financing statements) and take all other actions as are required by the Security Documents or necessary to maintain (at the sole cost and expense of the Issuer) the security interest created by the Security Documents in the Collateral (other than with respect to any Collateral the security interest in which is not required to be perfected or maintained under the Security Documents) as a perfected security interest.  The Issuer shall deliver an Opinion of Counsel to the Trustee
 

 
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within 30 calendar days following the end of each annual period beginning with the annual period beginning on January 1, 2013, to the effect that all actions required to maintain the Lien of the Security Documents with respect to items of Collateral that may be perfected solely by the filing of financing statements under the Uniform Commercial Code have been taken.
 
SECTION 12.02.   Collateral Agent .
 
(a)   The Collateral Agent shall have all the rights and protections provided in the Security Documents and the Intercreditor Agreement and shall have no responsibility to exercise any discretionary power or right provided in any Security Document except as expressly required pursuant to the Security Documents or the Intercreditor Agreement or to ensure the existence, genuineness, value or protection of any Collateral or to ensure the legality, enforceability, effectiveness or sufficiency of the Security Documents or the creation, perfection, priority, sufficiency or protection of any Lien or any defect or deficiency as to any such matters.
 
(b)   The Trustee is authorized and directed to (i) enter into the Intercreditor Agreement, (ii) acknowledge the Collateral Agent as the Collateral Agent and to authorize the Collateral Agent  (and the Holders hereby authorize the Collateral Agent) to enter into the Security Documents for the benefit of the Holders, (iii) bind the Holders on the terms as set forth in the Security Documents and the Intercreditor Agreement and (iv) perform and observe its obligations and exercise its rights (and the Holders hereby authorize the Collateral Agent to perform and observe its obligations and exercise its rights) under the Intercreditor Agreement and the Security Documents.
 
(c)   Subject to Section 8.01, neither the Trustee nor the Collateral Agent nor any of their officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral, for the legality, enforceability, effectiveness or sufficiency of the Security Documents, for the creation, perfection, priority, sufficiency or protection of any Lien or any defect or deficiency as to any such matters.
 
SECTION 12.03.   Authorization of Actions to Be Taken .
 
(a)   Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of each Security Document and the Intercreditor Agreement, as originally in effect and as amended, restated, amended and restated, renewed, modified, supplemented or replaced from time to time in accordance with its terms or the terms of this Indenture, authorizes and directs the Trustee to authorize the Collateral Agent to enter into the Security Documents for the benefit of the Holders, authorizes and empowers the Trustee and the Collateral Agent to enter into each of the Security Agreements and the Intercreditor Agreement and authorizes and empowers the Trustee and the Collateral Agent to bind the Holders of Notes pursuant to the terms of the Intercreditor Agreement and to perform their respective obligations and exercise their respective rights and powers thereunder.
 
(b)   The Trustee is authorized and empowered to receive for the benefit of the Holders of Notes any funds collected or distributed under the Security Documents to which the Trustee is entitled pursuant to the terms of the Intercreditor Agreement and to make further distributions of such funds to the Holders of Notes according to the provisions of this Indenture and the Intercreditor Agreement.
 
(c)   Subject to the Intercreditor Agreement, the Trustee is authorized and empowered to institute and maintain, or direct the Collateral Agent to institute and maintain, such suits and proceedings as it may deem expedient to protect or enforce the Liens of the Security Documents or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Security Documents.
 

 
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SECTION 12.04.   Release of Collateral ; Substitution .
 
(a)   Liens granted pursuant to the Security Documents securing the Notes Obligations shall automatically terminate and/or be released in full all without delivery of any instrument or performance of any act by any party as of the date upon which (i) all the Notes Obligations and this Indenture (other than contingent or unliquidated obligations or liabilities not then due) have been paid in full in cash or immediately available funds or (ii) a Legal Defeasance or Covenant Defeasance under Article VIX or a discharge in accordance with Article XI has occurred.
 
Upon the receipt of an Officer’s Certificate from the Issuer, as described in Section 12.04(b) below and any necessary or proper instruments of termination, satisfaction or release prepared by the Issuer, the Collateral Agent shall execute, deliver or acknowledge such instruments or releases to evidence the release of any Collateral permitted to be released pursuant to this Indenture or the Security Documents or the Intercreditor Agreement.
 
(b)   Notwithstanding anything herein to the contrary, in connection with (x) any release of Collateral pursuant to Section 12.04(a) above, such Collateral may not be released from the Lien and security interest created by the Security Documents and (y) any release of Collateral pursuant to Section 12.04(a), the Collateral Agent shall not be required to execute, deliver or acknowledge any instruments of termination, satisfaction or release unless, in each case, an Officer’s Certificate and Opinion of Counsel certifying that all conditions precedent, including, without limitation, this Section 12.04, have been met and stating under which of the circumstances set forth in Section 12.04(a) above the Collateral is being released have been delivered to the Collateral Agent on or prior to the date of such release or, in
 
the case of clause (y) above, the date on which the Collateral Agent executes any such instrument.  The Trustee shall be entitled to receive and rely on Officer’s Certificates and Opinions of Counsel delivered to the Collateral Agent under this Section 12.04(b).
 
(c)   Notwithstanding anything to the contrary contained in the Notes Documentation or any Security Document upon the Insurance Book Closing, any Lien in the equity of WMMRC held by the Collateral Agent shall be deemed automatically released.
 
SECTION 12.05.   Powers Exercisable by Receiver or Trustee .  In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article XII upon the Issuer with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Issuer or of any officer or officers thereof required by the provisions of this Article XII; and if the Trustee or the Collateral Agent shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Trustee or the Collateral Agent, as the case may be.
 
SECTION 12.06.   No Fiduciary Duties; Collateral . The Trustee shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and the Trustee shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral. The Trustee shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Trustee in good faith.
 

 
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SECTION 12.07.   Intercreditor Agreement Controls .  Upon the Trustee’s entry into the Intercreditor Agreement, the Holders of the Notes and the Trustee will be subject to and bound by the provisions of the Intercreditor Agreement.  Notwithstanding anything herein to the contrary, (i) the liens and security interests granted to the Collateral Agent pursuant to the Security Documents and all rights and obligations of the Trustee hereunder are expressly subject to the Intercreditor Agreement and (ii) the exercise of any right or remedy by the Trustee hereunder is subject to the limitations and provisions of the Intercreditor Agreement.  Subject to Section 7.16 and except for Article VIII, in the event of any conflict or inconsistency between the terms of the Intercreditor Agreement and the terms of this Indenture, the terms of the Intercreditor Agreement shall govern.
 
ARTICLE XIII

 
MISCELLANEOUS
 
SECTION 13.01.   Trust Indenture Act Controls .  If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Trust Indenture Act Section 318(c), the imposed duties shall control.
 
SECTION 13.02.   Notices .  Any notice or communication by the Issuer or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), fax or overnight air courier guaranteeing next day delivery, to the others’ address:
 
If to the Issuer:
 

 
WMI Holdings Corp.
1201 Third Avenue, Suite 3000
Seattle, Washington  98101
Attention:  General Counsel
 
Telephone No.: (206) 432-8731
Facsimile No:  (206) 432-8879
Email: chad.smith@wamuinc.net
 
with a copy to:
 
Weil Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention:  Todd R. Chandler
 
Telephone No.: (212) 310-8000
Facsimile No:  (212) 310-8007
Email: todd.chandler@weil.com
 
If to the Trustee:

Law Debenture Trust Company of New York
400 Madison Avenue, 4th Floor
New York, NY 10017
Attention: Managing Director
 

 
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Telephone No.: (212) 750-6474
Facsimile No:  (212) 750-1361
Email: newyork@lawdeb.com
 
The Issuer or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
 
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.
 
Any notice or communication to a Holder shall be mailed by first-class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the Note Register kept by the Registrar.  Any notice or communication shall also be so mailed to any Person described in Trust Indenture Act Section 313(c), to the extent required by the Trust Indenture Act.  Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
 
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
 
If the Issuer mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.
 
SECTION 13.03.   Communication by Holders of Notes with Other Holders of Notes .  Holders may communicate pursuant to Trust Indenture Act Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes.  The Issuer, the Trustee, the Registrar and anyone else shall have the protection of Trust Indenture Act Section 312(c).
 
SECTION 13.04.   Certificate and Opinion as to Conditions Precedent .
 
(a)   Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee an Officer’s Certificate of the Issuer in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 13.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
 
(b)   an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 13.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
 
SECTION 13.05.   Statements Required in Certificate or Opinion .  Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 5.06 hereof or Trust Indenture Act Section 314(a)(4)) shall comply with the provisions of Trust Indenture Act Section 314(e) and shall include:
 
(a)   a statement that the Person making such certificate or opinion has read such covenant or condition;
 

 
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(b)   a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
 
(c)   a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with (and, in the case of an Opinion of Counsel, may be limited to reliance on an Officer’s Certificate, certificates of public officials or reports or opinions of experts as to matters of fact); and
 
(d)   a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
 
SECTION 13.06.   Rules by Trustee and Agents .  The Trustee may make reasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
 
SECTION 13.07.   No Personal Liability of Directors, Officers, Employees and Stockholders .  No past, present or future director, officer, employee, incorporator or stockholder of the Issuer or any of their parent companies shall have any liability for any obligations of the Issuer under the Notes or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation.
 
Each Holder by accepting Notes waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.
 
SECTION 13.08.   Governing Law .  THIS INDENTURE AND THE NOTES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 13.09.   Waiver of Jury Trial .  THE ISSUER AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
SECTION 13.10.   Force Majeure .  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.
 
SECTION 13.11.   No Adverse Interpretation of Other Agreements .  This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Subsidiaries or of any other Person.  Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
 
SECTION 13.12.   Successors .  All agreements of the Issuer in this Indenture and the Notes shall bind its successors.  All agreements of the Trustee in this Indenture shall bind its successors.
 
SECTION 13.13.   Severability .  In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
 

 
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SECTION 13.14.   Counterpart Originals .  The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.
 
SECTION 13.15.   Table of Contents, Headings, etc .
 
  The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
 
ARTICLE XIV
 
OTHER TRANSFER RESTRICTIONS
 
SECTION 14.01.   Definitions . As used in this Article XIV, the following capitalized terms shall have the following respective meanings (and any references to any portions of Treasury Regulation section 1.382-2T shall include any successor provisions):
 
(a)   “ Acquire ” means the acquisition, directly or indirectly, of ownership of Notes by any means, including, without limitation, (i) the exercise of any rights under any option, warrant, convertible security, pledge or other security interest or similar right to acquire Notes, (ii) the entering into of
 
any swap, hedge or other arrangement that results in the acquisition of any of the economic consequences of ownership of Notes or (iii) any other acquisition or transaction treated under the applicable rules under Section 382 of the Code as a direct or indirect acquisition (including the acquisition of an ownership interest in a Substantial Holder), but shall not include the acquisition of any such rights unless, as a result, the acquirer would be considered an owner within the meaning of the tax laws.  The terms “Acquires” and “Acquisition” shall have the same meaning.
 
(b)   “ Beneficial Interest ” shall be determined in accordance with applicable rules under section 382 of the Code treating the Notes as stock (without regard to the rule that treats stock of an entity as to which the constructive ownership rules apply as no longer owned by that entity) and, thus, to the extent provided in those rules, from time to time shall include, without limitation, (A) direct and indirect ownership (e.g., a holding company would be considered to beneficially own all Notes owned or acquired by its subsidiaries), (B) ownership by a Holder’s family members, (C) any group of persons acting pursuant to a formal or informal understanding to make a coordinated acquisition of the Notes, and (D) to the extent set forth in Treasury Regulation section 1.382-4, the ownership of an option or right to acquire the Notes.
 
(c)   “ Board ” means the Board of Directors of the Issuer.
 
(d)   “ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
 
(e)   “ Person ” means an individual, corporation, estate, trust, association, limited liability company, partnership, joint venture or similar organization or “entity” within the meaning of Treasury Regulation section 1.382-3 (including, without limitation, any group of Persons treated as a single entity under such regulation).
 
(f)   “ Plan ” means the Seventh Amended Joint Plan of Washington Mutual, Inc. and WMI Investment Corp., pursuant to Chapter 11 of the Bankruptcy Code.
 

 
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(g)   “ Prohibited Acquisition ” means any purported Acquisition of Notes to the extent that such Acquisition is prohibited and/or void or is treated as such under Sections 14.02 or 14.03 hereof.
 
(h)   “ Restriction Release Date ” means the date as of which the restrictions under Article VI of the Issuer’s Amended and Restated Articles of Incorporation no longer apply with respect to the common stock of the Issuer.
 
(i)   “ Substantial Holder ” means a Person (including, without limitation, any group of Persons treated as a single “entity” within the meaning of Treasury Regulation Section 1.382-3) (i) holding Notes, whether after giving effect to the Plan or thereafter, having a Beneficial Interest of at least 4.75% of the then outstanding principal amount of the Notes or (ii) that is a "Substantial Holder" with respect to the Issuer's “Corporation Securities” each within the meaning of Article VI of the Issuer's Amended and Restated Articles of Incorporation.
 
(j)   “ Treasury Regulation ” means a Treasury regulation promulgated under the Code.
 
SECTION 14.02.   Restriction on Transfer . To the fullest extent permitted by law, prior to the Restriction Release Date, no Person shall be permitted to make an Acquisition, whether in a single transaction or series of related transactions, and any such purported Acquisition will be void ab initio and the Notes, will not be registered in the name of the purported transferee, to the extent that after giving effect to such purported Acquisition (if known by the Issuer or the Trustee) (i) the purported transferee or
 
any other Person by reason of the purported transferee’s Acquisition would become a Substantial Holder or (ii) the Beneficial Interest of a Person that, prior to giving effect to the purported Acquisition, is a Substantial Holder would be increased. The preceding sentence is not intended to prevent the Notes from being DTC-eligible and shall not preclude any settlement of any transactions in the Notes entered into through a national securities exchange or an inter-dealer quotation system or delivered through DTC, but such transaction, if prohibited by the prior sentence, shall nonetheless be a Prohibited Acquisition.
 
SECTION 14.03.   Deemed Representation . By Acquiring a Beneficial Interest in the Notes, any transferee of the Notes shall be deemed to have represented that (i) immediately before the Acquisition, it is not and by reason of its Acquisition it and any other person would not become a Substantial Holder and (ii) such transferee will comply with the provisions of this Article XIV, as applicable.
 
SECTION 14.04.   Transfer Restriction Legend . Each Note (other than any Global Note) shall bear an additional legend in substantially the following form:
 
“THE ACQUISITION OF INTERESTS IN THIS SECURITY ARE SUBJECT TO OWNERSHIP RESTRICTIONS PURSUANT TO ARTICLE XIV OF THE INDENTURE. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, (1) ONLY TO A PERSON WHO DOES NOT OWN AND WILL NOT OWN FOLLOWING SUCH TRANSFER 4.75% OR MORE OF THE CURRENT OUTSTANDING PRINCIPAL AMOUNT OF THE NOTES AND (2) ONLY IN COMPLIANCE WITH ARTICLE XIV OF THE INDENTURE.”
 
SECTION 14.05.   Disgorgement .
 
(a)   If an Acquisition is made in violation of Sections 14.02 or 14.03 above or is otherwise a Prohibited Acquisition, until the Notes which are the subject of such Prohibited Acquisition (the “ Excess Securities ”) are Acquired by another Person in an Acquisition that is not a Prohibited Acquisition, the purported transferee shall not be entitled with respect to such Excess Securities to any rights of
 

 
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ownership.  Once the Excess Securities have been acquired in an Acquisition that is in accordance with Sections 14.02 and 14.03 and is not a Prohibited Acquisition, such Notes shall cease to be Excess Securities. The Issuer will deliver to the Trustee, promptly after any Officer becomes aware of any Excess Securities, notice of such Excess Securities.  The Trustee will deliver to the Issuer, promptly after it becomes aware of any Excess Securities, notice of such Excess Securities.
 
(b)   In the event that a Prohibited Acquisition has occurred, such Prohibited Acquisition and, if applicable, the recording of such Prohibited Acquisition, shall (except as limited by the last sentence of Section 14.02), to the fullest extent permitted by law, be void ab initio and have no legal effect. In the event that a Prohibited Acquisition has occurred, upon written demand by the Issuer, the purported transferee shall turn over or transfer or cause to be turned over or transferred any ownership interest in the Excess Securities, including any certificate or other evidence of ownership or beneficial interest (including any interest held thorough DTC) of the Excess Securities within the purported transferee's possession or control, together with any payments that were received by the purported transferee from the Issuer with respect to the Excess Securities (the “Prohibited Distributions”), to an agent designated by the Board (the “Agent”).
 
(c)   In the case of a Prohibited Acquisition described in this Article XIV, the Agent shall thereupon sell to a buyer or buyers, the Excess Securities transferred to it in one or more arm's-length transactions (including over a national securities exchange on which the Notes may be traded, if
 
possible); provided , however , that the Agent, in its sole discretion, shall effect such sale or sales in an orderly fashion and shall not be required to effect any such sale within any specific time frame if, in the Agent's discretion, such sale or sales would disrupt the market for the Notes or otherwise would adversely affect the value of the Notes.  If the purported transferee has resold the Excess Securities before receiving the Issuer's demand to surrender the Excess Securities to the Agent, the purported transferee shall be deemed to have sold the Excess Securities for the Agent, and shall be required, to the fullest extent permitted by law, to transfer to the Agent any Prohibited Distributions and proceeds of such sale, except to the extent that the Issuer grants written permission to the purported transferee to retain a portion of such sales proceeds not exceeding the amount that the purported transferee would have received from the Agent pursuant to Section 14.05(d) if the Agent, rather than the purported transferee, had resold the Excess Securities.
 
(d)   The Agent shall apply any proceeds or any other amounts received by it in accordance with this Section 14.05 as follows:
 
(i)   FIRST, such amounts shall be paid to the Agent to the extent necessary to cover its costs and expenses incurred in connection with its duties hereunder;
 
(ii)   SECOND any remaining amounts shall be paid to the purported transferee, up to the amount paid by the purported transferee for the Excess Securities (or in the case of any Prohibited Acquisition by gift, devise or inheritance or any other Prohibited Acquisition without consideration, the fair market value as determined in good faith by the Board, which amount (or fair market value) shall be determined at the discretion of the Board); and
 
(iii)   THIRD, any remaining amounts, subject to the limitations imposed by the following proviso, shall be paid to one or more organizations qualifying under section 501(c)(3) of the Code (or any comparable successor provision) (“Section 501(c)(3)”) selected by the Board, provided , however , that if the Excess Securities (including any Excess Securities arising from a previous Prohibited Acquisition not sold by the Agent in a prior sale or sales) represent a 4.75% or greater Beneficial Interest of the then aggregate outstanding principal amount of Notes, then
 

 
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such remaining amounts shall be paid to two or more organizations qualifying under Section 501(c)(3) selected by the Board such that no organization qualifying under Section 501(c)(3) shall possess Notes 4.75% or greater of the then outstanding aggregate principal amount of the Notes.
 
The recourse of any purported transferee in respect of any Prohibited Acquisition shall be limited to the amount payable to the purported transferee pursuant to clause (ii) above. Except as may be required by law, in no event shall the proceeds of any sale of Excess Securities pursuant to this Section 14.05 inure to the benefit of the Issuer.
 
(e)   If the purported transferee fails to surrender the Excess Securities (as applicable) or the proceeds of a sale thereof to the Agent within thirty (30) days from the date on which the Issuer makes a demand pursuant to this Section 14.05, then the Issuer shall use its commercially reasonable efforts to enforce the provisions hereof, including the institution of legal proceedings to compel the surrender.
 
SECTION 14.06.   Information Request . At the request of the Issuer, any holder which is a beneficial, legal or record holder of Notes, and any proposed transferor or transferee and any Person controlling, controlled by or under common control with the proposed transferor or transferee, shall provide such information as the Issuer may reasonably request as may be necessary from time to time in or-
 
der to determine compliance with this Article XIV.  Any such information shall be kept confidential by the Issuer and may be disclosed only (i) as necessary for purposes of this Article XIV by the Issuer to its officers, employees and advisors, provided such personnel also agree to treat such information as confidential, (ii) if the Issuer is required to disclose such information under any applicable law, regulation, subpoena, court order or legal, regulatory or judicial process or the rules of any applicable regulatory agency or stock exchange, (iii) if such information was already in the Issuer's possession and did not come from a source that is reasonably known by the Issuer to be bound by a confidentiality obligation, (iv) if such information is publicly available or becomes available other than as a result of a disclosure by the Issuer in violation of the terms hereof, or (v) if such information is or becomes available to the Issuer on a non-confidential basis from another source that is not known by the Issuer to be bound by an obligation of confidentiality.
 
The Issuer shall have the power to make appropriate notations upon its Register and instruct any transfer agent, registrar, securities intermediary or depository with respect to the requirements of this Article XIV for any uncertificated Notes or Notes held in an indirect holding system, and the Issuer shall provide notice of the restrictions on transfer and ownership to holders of uncertificated  Notes in accordance with applicable law.
 
The Board shall have the power to determine all matters necessary for determining compliance with this Article XIV, including, without limitation, determining (A) the identification of Substantial Holders, (B) whether an Acquisition is a Prohibited Acquisition, (C) the Beneficial Interest of any Substantial Holder or other Person, (D) the amount (or fair market value) due to a purported transferee pursuant to Section 14.05(d)(ii) of this Indenture, and (E) any other matters that the Board determines to be relevant.  The good faith determination of the Board on such matters shall be conclusive and binding for the purposes of this Article XIV.
 
SECTION 14.07.   Board Consent to Transfer . The restrictions set forth in Sections 14.02 and 14.03 shall not apply to a proposed Acquisition if the transferor or the transferee, upon providing at least fifteen (15) days prior written notice of such proposed Acquisition to the Board, obtains the written consent to the proposed Acquisition from a majority of the Board. The Board shall endeavor to inform the
 

 
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requesting party of its determination within ten (10) days after receiving such written notice; provided, however, that the failure of the Board to respond during such ten (10) day period shall not be deemed to be a consent to the Acquisition.  As a condition to granting its consent, the Board may, in its discretion, require and/or obtain (at the expense of the transferor and/or transferee) such representations and/or agreements from the transferor and/or transferee, such opinions of counsel to be rendered by counsel approved by the Board, and such other advice, in each case as to such matters as the Board determines is appropriate.  The Board may waive the restrictions imposed in this Article XIV, in whole or in part, in circumstances where it believes doing so would be beneficial the Issuer.
 
SECTION 14.08.   No Liability . The Trustee and the Registrar shall have no liability for and shall have no duty to monitor compliance by Holders of Notes with this Article XIV.   In the event, the Issuer notifies the Trustee that a Prohibited Acquisition has occurred, the Trustee and the Registrar will cooperate with the Issuer to facilitate the implementation of Section 14.05 hereof. In addition, to the extent that a Holder is in possession of Excess Securities, the Trustee and Registrar shall have no liability for continuing to extend the benefits of Holder to the Holders of Excess Securities.
 

 
[Signatures on following page]


 
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WMI HOLDINGS CORP.
 
       
 
By:
/s/   
    Name   
    Title   
       

 


 
[Signature Page to Senior Second Lien Notes Indenture]
 

 
 
 

 
Law Debenture Trust Company of New York
 
as Trustee
 
       
 
By:
/s/   
    Name   
    Title   
       
 
















 
[Signature Page to Senior Second Lien Notes Indenture]
 

 
 
 

EXHIBIT A
 
[Face of Note]
 
[Insert the Global Note Legend, if applicable]
 
[Insert the Transfer Restriction Legend, if applicable]
 

 


 
A-1
 
 
 

CUSIP [ ]
 
13% Senior Second Lien Note due 2030
 
No. ___
[$______________]

WMI HOLDINGS CORP.
 
promises to pay, subject to the terms of the Indenture, to __________ or registered assigns, the principal sum [set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto] [of ________________________ Dollars] ($_________________) on March 19, 2030.
 
Interest Payment Dates:  March 1, June 1, September 1 and December 1, commencing June 1, 2012
 
Record Dates:  February 15, May 15, August 15 or November 15
 


 
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IN WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.
 
Dated:  [ ]
 
WMI HOLDINGS CORP.
 
       
 
By:
/s/   
    Name   
    Title   
       

 


 
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This is one of the Notes referred to in the within-mentioned Indenture:
 
Dated:  _______________
 
Law Debenture Trust Company of New York
 
as Trustee
 
       
 
By:
/s/   
   
Authorized Signatory
 
       
       
 


 
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[Back of Note]
 
13% Senior Second Lien Note due 2030
 
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
 
1.            Interest .  WMI Holdings Corp., a Washington corporation (the “ Issuer ”), promises to pay, subject to the terms of the Indenture, interest on the principal amount of this Note at a rate per annum set forth below from the Issue Date until paid in full.  The Issuer will pay interest on this Note quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on June 1, 2012, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “ Interest Payment Date ”), and no interest shall accrue on such payment for the intervening period.  The Issuer will make each interest payment to the Holder of record of this Note on the immediately preceding February 15, May 15, August 15 and November 15 (each, a “ Record Date ”).  Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date.  The Notes will mature on March 19, 2030. The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law whether or not allowed) on overdue principal at the rate that is 2% higher than the rate then applicable to this Note; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) at the rate then applicable to this Note to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
 
To the extent there are sufficient Runoff Proceeds Distributions on any Interest Payment Date to pay interest on the Notes in accordance with Section 4.02 of the Indenture, interest on this Note shall be paid entirely in cash (“Cash Interest”); provided to the extent there are insufficient Runoff Proceeds Distributions to pay interest on the Notes in accordance with Section 4.02 of the Indenture, interest shall be payable on such Interest Payment Date in cash to the extent of funds available for payment of cash payments and any excess interest payable shall be paid by increasing the principal amount of this Note or by issuing PIK Notes in an amount equal to such excess. The Issuer must notify the Trustee at least five (5) Business Days prior to any Interest Payment Date whether Cash Interest and/or a PIK Payment will be paid on such Interest Payment Date to the Holders of the Notes. The Trustee shall promptly deliver a corresponding notice to the Holder of this Note. The Trustee will, at the request of the Issuer, authenticate and deliver such PIK Notes for original issuance to such Holder of this Note on the relevant record date, as shown by the records of the Note Register. Following an increase in the principal amount of this Note as a result of a PIK Payment, this Note will bear interest on such increased principal amount from and after the date of such PIK Payment. Any PIK Notes will be dated as of the applicable Interest Payment Date and will bear interest from and after such date. All PIK Notes issued pursuant to a PIK Payment will mature on March 19, 2030 and will be governed by, and subject to the terms, provisions and conditions of, the Indenture and shall have the same rights and benefits as the Notes issued on the Issue Date. Any PIK Notes will be issued with the description “PIK” on the face of such PIK Note.
 
Interest on this Note and any PIK Notes will accrue at the rate of 13% per annum.
 
2.            Method of Payment .  The Issuer or the Trustee will pay interest on this Note to the Person who is the registered Holder of this Note at the close of business on the Record Date (whether or not a Business Day) next preceding the Interest Payment Date, even if this Note is canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest.  Cash payment of interest may be made by check mailed to the Holders at their addresses set forth in the Register, provided that all cash payments of principal, premium,
 


 
A-5
 
 
 

if any, and interest on, this Note will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).  Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
 
3.            Paying Agent and Registrar .  Initially, Law Debenture Trust Company of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Issuer may change any Paying Agent or Registrar without notice to the Holders.
 
4.            Indenture .  The Issuer issued the Notes under a Senior Second Lien Notes Indenture, dated as of March 19, 2012 (the “ Indenture ”), among WMI Holdings Corp. and the Trustee.  This Note is one of a duly authorized issue of notes of the Issuer designated as its 13% Senior Second Lien Notes due 2030.  The Notes and any PIK Notes issued under the Indenture shall be treated as a single class of securities under the Indenture.  The terms of the Notes include those stated in the Indenture and those incorporated by reference into the Indenture from the Trust Indenture Act of 1939, as amended (the “ Trust Indenture Act ”).  The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. Upon the Trustee’s entry into the Indenture, the Holders of the Notes and the Trustee will be bound by the terms of the Indenture.
 
5.            Optional Redemption .  At any time the Notes may be redeemed or purchased (by the Issuer or any other Person), in whole or in part, at a redemption price equal to 100% of the principal amount of Notes redeemed and, without duplication, accrued and unpaid interest, if any, to the date of redemption (the “ Redemption Date ”), subject to the rights of Holders of Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date.  Any redemption pursuant to this paragraph 5 shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.
 
6.            Notice of Redemption .  Subject to Section 3.03 of the Indenture, notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed at its registered address.  Notes and portions of the Notes in whole dollar ($1.00) denominations may be redeemed.  On and after the Redemption Date, interest ceases to accrue on this Note or portions thereof called for redemption.
 
8.            Collateral and Intercreditor Agreement .  These Notes are secured by a security interest in the Collateral pursuant to certain security documents.  The Liens securing the Notes are subject to the terms of the Intercreditor Agreement.
 
9.            Limitation on the Issuer’s Obligations . Notwithstanding any other provision of the Indenture, the Intercreditor Agreement, the Notes and the Security Documents to the contrary, the Holder of this Note agrees that it shall not have or take recourse (other than actions for specific performance under Section 7.04 of the Indenture) with respect to the Notes Documentation against the Issuer or its assets and property, or against WMMRC or the Owner or their respective assets and property (other than assets that were required to be transferred to the protected cell pursuant to the Insurance Book Closing), except (i) to the Collateral Account, (ii) if the Issuer fails to comply with its obligations pursuant to Sections 4.02(a), 4.02(b), 5.02 or 5.08, to the assets of the Issuer in an amount equal to the aggregate amount of any Runoff Proceeds or Runoff Proceeds Distributions that were not deposited into the Collateral Account, (iii) to the equity interests in and the excess assets of the Owner and the Trusts to the extent
 


 
A-6
 
 
 

a Lien has been granted therein pursuant to Section 5.03(b) of the Indenture in favor of the Collateral Agent and (iv) to the Owner or the Issuer for costs and expenses, including reasonable attorney’s fees, related to the enforcement of Sections 4.01, 4.02, 4.03, 5.02, 5.03, 5.07, 5.08, 5.10 and 5.13 of the Indenture, if the Holders or the Trustee, as applicable, are the prevailing party in such enforcement action.
 
10.            Denominations, Transfer, Exchange .  The Notes are in registered form without coupons in whole dollar ($1.00) denominations and integral multiples of $1.00 rounded up to the nearest whole dollar.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Issuer need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part.  Also, the Issuer need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed.
 
11.            Persons Deemed Owners .  The registered Holder of a Note may be treated as its owner for all purposes.
 
12.            Amendment, Supplement and Waiver .  The Indenture, the Notes, the Security Documents and the Intercreditor Agreement may be amended or supplemented as provided in the Indenture.
 
13.            Defaults and Remedies .  The Events of Default relating to the Notes are defined in Section 7.01 of the Indenture.  If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the Notes notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest.  The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder.  The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required within five (5) Business Days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Issuer is taking or proposes to take with respect thereto.
 
14.            Authentication .  This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
 
15.            GOVERNING LAW .  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
 
16.            CUSIP and ISIN Numbers .  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP and ISIN numbers to be printed on the Notes and the Trustee may use CUSIP and ISIN numbers in notices of redemp-
 


 
A-7
 
 
 

tion as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
 
[Insert the following transfer restrictions for any Note other than any Global Note.
 
17.            Restriction on Transfer . To the fullest extent permitted by law, prior to the Restriction Release Date, no Person shall be permitted to make an Acquisition, whether in a single transaction or series of related transactions, and any such purported Acquisition will be void ab initio and the Notes, will not be registered in the name of the purported transferee, to the extent that after giving effect to such purported Acquisition (if known by the Issuer or the Trustee) (i) the purported transferee or any other Person by reason of the purported transferee’s Acquisition would become a Substantial Holder or (ii) the Beneficial Interest of a Person that, prior to giving effect to the purported Acquisition, is a Substantial Holder would be increased. The preceding sentence is not intended to prevent the Notes from being DTC-eligible and shall not preclude any settlement of any transactions in the Notes entered into through a national securities exchange or an inter-dealer quotation system or delivered through DTC, but such transaction, if prohibited by the prior sentence, shall nonetheless be a Prohibited Acquisition.
 
18.            Deemed Representation . By Acquiring a Beneficial Interest in the Notes, any transferee of the Notes shall be deemed to have represented that (i) immediately before the Acquisition, it is not and by reason of its Acquisition it and any other person would not become a Substantial Holder and (ii) such transferee will comply with the provisions of Article XIV of the Indenture, as applicable.]
 
The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to the Issuer at the following address:
 
WMI Holdings Corp.
1201 Third Avenue
Seattle, Washington  98101
Attention:  General Counsel
 


 
A-8
 
 
 

ASSIGNMENT FORM
 
To assign this Note, fill in the form below:
 
(I) or (we) assign and transfer this Note to:
 
(Insert assignee’s legal name)
 
(Insert assignee’s soc. sec. or tax I.D. no.)
 
 
 
 
 
 
 
 
(Print or type assignee’s name, address and zip code)
 
and irrevocably appoint
to transfer this Note on the books of the Issuer.  The agent may substitute another to act for him.
 
Date:  _____________________
 
     
     
Your Signature:   /s/   
  (Sign exactly as your name appears  
  on the face of this Note)  
     
Signature Guarantee*:
 
*
Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).


 
A-9
 
 
 


SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
 
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, or increased for a PIK Payment, have been made:
 
Date of Exchange/Transfer
Amount of decrease in
Principal Amount
Amount of increase in Principal Amount of this Global Note
Principal Amount of this Global Note following such decrease or increase
Signature of authorized officer of Trustee or Custodian
         





_______________________
 
*
This schedule should be included only if the Note is issued in global form.


 
A-10
 
 
 

 
EXHIBIT 10.1
 

 
EXECUTION COPY


FINANCING AGREEMENT
 
Financing Agreement, dated as of March 19, 2012, by and among WMI Holdings Corp., a Washington corporation (the " Borrower "), each subsidiary of the Borrower listed as a " Guarantor " on the signature pages hereto (together with each other Person that executes a joinder agreement and becomes a "Guarantor" hereunder or otherwise guaranties all or any part of the Obligations (as hereinafter defined), each a " Guarantor " and collectively, the " Guarantors "), the lenders from time to time party hereto (each a " Lender " and collectively, the " Lenders ") and U.S. Bank National Association, a national banking association, as administrative agent for the Lenders (together with its successors and assigns, in such capacity, the " Agent ").
 
RECITALS
 
           On September 26, 2008, Washington Mutual, Inc. and its subsidiaries (collectively, the " Debtors ") filed in the United States Bankruptcy Court for the District of Delaware (the " Bankruptcy Court ") voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (as amended and any successor thereto, the " Bankruptcy Code ") and continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code.  Such reorganization cases were jointly administered under Case Numbers 08-12229 (the " Chapter 11 Cases ").
 
On December 12, 2011, the Debtors filed their Seventh Amended Joint Plan of Reorganization (the " Plan of Reorganization "), and related Disclosure Statement with the Bankruptcy Court in the Chapter 11 Cases.  In connection therewith, the Debtors filed a Plan Supplement which included documents contemplated to be executed and delivered contemporaneously with the consummation of the Plan, including the form of this Agreement. By order dated February 23, 2012, the Bankruptcy Court confirmed the Plan of Reorganization in accordance with Section 1129 of the Bankruptcy Code and authorized the consummation thereof, including the execution and delivery of this Agreement.
 
The Borrower has asked the Lenders to extend credit to the Borrower consisting of (a) a tranche A term loan and a tranche A-1 term loan in the aggregate principal amount of $25,000,000 and (b) a tranche B term loan in the aggregate principal amount of $100,000,000.  The proceeds of (a) the tranche A term loan and tranche A-1 term loan shall be used to fund working capital and to provide for general corporate purposes (as more fully set forth in Section 5.01(p) hereof) of the Borrower and its subsidiaries subject to the terms hereof, and (b) the tranche B term loan shall be used to fund permitted acquisitions and permitted originations subject to the terms hereof.  The Lenders are severally, and not jointly, willing to extend such credit to the Borrower subject to the terms and conditions hereinafter set forth.
 
In consideration of the premises and the covenants and agreements contained herein, the parties hereto agree as follows:
 

 
   

 
 
 

ARTICLE I
 

 
DEFINITIONS; CERTAIN TERMS
 
Section 1.01   Definitions   .  As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:
 
" Account Receivable " means, with respect to any Person, any and all rights of such Person to payment for goods sold and/or services rendered, including accounts, general intangibles and any and all such rights evidenced by chattel paper, instruments or documents, whether due or to become due and whether or not earned by performance, and whether now or hereafter acquired or arising in the future, and any proceeds arising therefrom or relating thereto.
 
" Action " has the meaning specified therefor in Section 10.12.
 
" Acquisition Business Plan " means a business plan approved by the board of directors of the Borrower consisting of pro forma projected GAAP Pre-Tax Income or Statutory Pre-Tax Income, in accordance with GAAP or SAP, as applicable.
 
" Additional Amount " has the meaning specified therefor in Section 2.07(a).
 
" Affiliate " means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person.  For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the Equity Interests having ordinary voting power for the election of members of the board of directors of such Person or (b) direct or cause the direction of the management and policies of such Person whether by contract or otherwise; provided that neither the Agent nor any Lender shall be deemed an Affiliate of the Borrower.
 
" Agent " has the meaning specified therefor in the preamble hereto.
 
" Agent's Account " means an account at a bank designated by the Agent from time to time as the account into which the Loan Parties shall make all payments to the Agent for the benefit of the Agent and the Lenders under this Agreement and the other Loan Documents.
 
" Agent Fee Letter " shall mean that certain Fee Letter dated March 19, 2012 between the Borrower and the Agent, as amended, restated or otherwise modified from time to time.
 
" Agreement " means this Financing Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative.
 
" Anti-Terrorism Laws " means any laws relating to terrorism or money laundering, including, without limitation, (a) the Money Laundering Control Act of 1986 ( i.e. , 18 U.S.C. §§ 1956 and 1957), (b) the Bank Secrecy Act, as amended by the USA PATRIOT Act, (c) the laws, regulations and Executive Orders administered by the United States Department of
 

 
 
 

 
- 2 -
 

the Treasury's Office of Foreign Assets Control (" OFAC "), (d) the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 and implementing regulations by the United States Department of the Treasury, (e) any law prohibiting or directed against terrorist activities or the financing of terrorist activities ( e.g. , 18 U.S.C. §§ 2339A and 2339B), or (f) any similar laws enacted in the United States or any other jurisdictions in which the parties to this agreement operate, as any of the foregoing laws may from time to time be amended, renewed, extended, or replaced and all other present and future legal requirements of any Governmental Authority governing, addressing, relating to, or attempting to eliminate, terrorist acts and acts of war and any regulations promulgated pursuant thereto.
 
" Asset Coverage Ratio " means the ratio of Consolidated Assets to Consolidated Funded Indebtedness of the Loan Parties (excluding the Run-Off Notes); provided, that for purposes of calculating the Asset Coverage Ratio, (i) the Run-Off Assets and Liabilities shall be excluded and (ii) the Insurance Holdings of any Loan Party shall be accounted for at Net Asset Value on the basis of SAP (for purposes of clarity, it being understood that (x) Consolidated Assets shall exclude assets of Insurance Subsidiaries under SAP and (y) Consolidated Funded Indebtedness shall exclude liabilities of Insurance Subsidiaries under SAP).
 
" Assignment and Acceptance " means an assignment and acceptance entered into by an assigning Lender and an assignee in accordance with Section 10.07 hereof, substantially in the form of Exhibit A attached hereto.
 
" Authorized Officer " means, with respect to any Person, the chief executive officer or chief financial officer of such Person.
 
" Bankruptcy Code " means the United States Bankruptcy Code (11 U.S.C. § 101, et seq .) as amended, and any successor statute.
 
" Bankruptcy Court " has the meaning specified therefor in the recitals hereto.
 
" Blocked Person " has the meaning specified therefor in Section 5.01(t).
 
" Board " means the Board of Governors of the Federal Reserve System of the United States.
 
" Borrower " has the meaning specified therefor in the preamble hereto.
 
" Borrower's Cash Interest Expense " means, with respect to Borrower for any period, (a) gross interest expense (excluding interest on the Run-Off Notes) of the Borrower for such period determined in accordance with GAAP incurred in connection with the Loan and any other Indebtedness (including, without limitation, interest expense paid to Affiliates), less (b) the sum of, in each case to the extent included in clause (a) above, (i) the amortized amount of debt discount and debt issuance costs, (ii) gains or losses related to adjustments to the carrying value of Borrower Funded Indebtedness pursuant to GAAP and any applicable Accounting Standards Codifications (c) interest payable in evidence of Indebtedness or by addition to the principal of the related Indebtedness and (d) other non-cash interest.
 

 
 
 

 
- 3 -
 

" Borrower Funded Indebtedness " means, with respect to the Borrower at any date, all Indebtedness of the Borrower, determined in accordance with GAAP.
 
" Business Day " means any day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required to close.
 
" Business Performance Test " means, with respect to each Fiscal Year of the Borrower and its Subsidiaries (a) the Asset Coverage Ratio of the Borrower and its Subsidiaries as of the last day of such Fiscal Year is not less than 1.20 to 1.00, and (b) the actual performance (on an aggregate basis) of the Borrower and its Subsidiaries for such Fiscal Year, as compared to the Covenant Business Plan in respect of such Fiscal Year, does not demonstrate an actual negative variance greater than 25%.
 
" Cash Equivalents " means (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case, maturing within six months from the date of acquisition thereof, (b) commercial paper, maturing not more than 270 days after the date of issue rated P-1 by Moody's or A-1 by Standard & Poor's, (c) certificates of deposit maturing not more than 270 days after the date of issue, issued by commercial banking institutions and money market or demand deposit accounts maintained at commercial banking institutions, each of which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, (d) money market accounts maintained with mutual funds having assets in excess of $2,500,000,000, and (f) marketable tax exempt securities rated A or higher by Moody's or A+ or higher by Standard & Poor's, in each case, maturing within six months from the date of acquisition thereof.
 
" Change of Control " means each occurrence of any of the following:
 
(a)           the acquisition, directly or indirectly, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) of beneficial ownership of more than 50% of the aggregate outstanding voting power of the Equity Interests of the Borrower;
 
(b)           commencing on the earlier of (x) the twelve month anniversary of the effective date of the Plan of Reorganization and (y) when the initial board of directors of the Borrower is fully constituted with members expected to serve a year or more, during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of the Borrower (together with any new directors whose election by such board of directors or whose nomination for election by the shareholders of the Borrower was approved by a vote of at least a majority the directors of the Borrower then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously approved) cease for any reason to constitute a majority of the board of directors of the Borrower;
 
(c)           except to the extent permitted by Section 6.02(c), the Borrower shall cease to directly or indirectly have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of 100% of the aggregate voting power of the Equity Interests of each other Loan Party or  Insurance Subsidiary (including, without limitation, any protected cell (other than the Protected
 

 
 
 

 
- 4 -
 

Cell)), free and clear of all Liens or in the case of entities that are Loan Parties or is an Insurance Subsidiary (including, without limitation, any protected cell (other than the Protected Cell)), as a result of a Permitted Acquisition or Permitted Origination, the Borrower shall cease to directly or indirectly have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of at least the same percentage of the aggregate voting power of the Equity Interests of such Loan Party, free and clear of all Liens as Borrower had at the time of the closing of the Permitted Acquisition or the Permitted Origination as a result of such Permitted Acquisition or Permitted Origination; or
 
(d)           a "Change of Control" (or any comparable term or provision), if any, under or with respect to any of the Run-Off Notes Documents or Subordinated Indebtedness of the Borrower or any of its Subsidiaries.
 
" Chapter 11 Cases " has the meaning specified therefor in the recitals hereto.
 
" CIP Regulations " has the meaning specified therefor in Section 8.09.
 
" Collateral " means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations.
 
" Commitment " means, with respect to each Lender, such Lender's Term Loan A Commitment, Term Loan A-1 Commitment and Term Loan B Commitment.
 
" Confirmation Order " means that certain Order Confirming Seventh Amended Joint Plan of Reorganization of the Debtors, in form and substance acceptable to the Required Lenders and the Equity Committee, entered by the Bankruptcy Court on February 24, 2012.
 
" Consolidated Funded Indebtedness " means, with respect to any Person at any date, all Indebtedness of such Person, determined on a consolidated basis in accordance with GAAP, excluding any deposits at an FDIC regulated financial institution which is a Loan Party.
 
" Consolidated Assets " means, the total consolidated assets of the Borrower and its Subsidiaries, with the valuation of such total consolidated assets to be calculated on the basis of: (a) in the case of assets owned by the Borrower and its Subsidiaries immediately prior to the time of such calculation, and reflected in the most recently delivered audited financial statements delivered pursuant to Section 6.01(a) hereof, on the basis of such audited financial statements, and (b) in the case of assets (i) to be acquired or originated by the Borrower and its Subsidiaries contemporaneously with the making of such calculation, or (ii) acquired or originated after delivery of the most recently delivered audited financial statements pursuant to Section 6.01(a) hereof, on the basis of the fair market value of such assets, as determined in accordance with (x) the Independent Valuation Process, if required hereunder, or (y) at any other time, by a majority of the Borrower's board of directors, including the Lender Board Representative, in the exercise of the board's good faith business judgment, using a customary method for determining fair market value for such assets.
 
" Consolidated Tangible Assets " means Consolidated Assets of the Loan Parties, after deducting therefrom any intangible assets.
 

 
 
 

 
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" Covenant Business Plan " means a business plan consisting of pro forma projected GAAP Pre-Tax Income and Statutory Pre-Tax Income, reflecting all Permitted Acquisitions (consistent with any Acquisition Business Plan) and Permitted Originations (consistent with any Origination Business Plan) through the date of preparation thereof, prepared by the management of the Borrower (it being understood that the Covenant Business Plan is not required to be the actual business plan prepared by the Borrower from time to time for purposes other than the Business Performance Test).
 
" Cure Amount " means an amount sufficient to reduce Indebtedness outstanding under this Agreement such that after giving effect to such reduction, the Interest Coverage Ratio set forth in Section 6.03(a) is satisfied.
 
" Cure Right " means the right to obtain a cash equity contribution of the Cure Amount from external sources (so long as such equity issued in connection therewith is common equity of the same class that exists on the Effective Date) and such Cure Amount is deposited in a separate blocked account subject to a first priority perfected Lien in favor of the Agent for the benefit of the Agent and the Lenders and held in such account for six months from the date of deposit; provided , however , that in the event that at the end of such six-month period, without giving effect to such sums so deposited, a Default or Event of Default is continuing with respect to the Interest Coverage Ratio as computed on such date based on the then most recent quarterly financial statements, the Agent shall apply such Cure Amounts to first prepay the  Term Loan A-1 until paid in full and then to prepay the Term Loan A and the Term Loan B on a pro rata basis and, provided further , such Cure Amounts may come from internal sources, so long as such amounts were not borrowed from the Lenders under Term Loan A, Term Loan A-1 or Term Loan B and do not constitute Restricted Disposition Proceeds.
 
" Debtors " has the meaning specified therefor in the recitals hereto.
 
" Default " means an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
 
" Defaulting Lender " means subject to Section 3.02, any Lender that (a) has failed to fund any portion of the Loan required to be funded by it hereunder within three (3) Business Days of the date required to be funded by it hereunder unless such Lender notifies the Agent in writing that such failure is the result of such Lender's determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (b) has otherwise failed to pay over to the Agent or any other Lender any other amount required to be paid by it hereunder within five (5) Business Days of the date when due, (c) is insolvent or becomes the subject of an Insolvency Proceeding or (d) has notified the Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender's obligation to fund a Loan hereunder and states that such position is based on such Lender's determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied); provided , however , that solely for the purpose of any responsibilities or obligations of the Agent hereunder, the Agent shall not be deemed to be aware of such public statement unless notified in writing of such
 

 
 
 

 
- 6 -
 

public statement by any party to this Agreement. Any determination by the Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 3.02) upon delivery of written notice of such determination to the Borrower and each Lender.
 
" Default PIK Interest " has the meaning specified therefor in Section 2.04.
 
" Disposition " means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers, leases, licenses (as licensor) or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person.
 
" Dividend " has the meaning specified therefor in Section 6.02(f).
 
" Dollar ," " Dollars " and the symbol " $ " each means lawful money of the United States of America.
 
" Domestic Subsidiary " means any Subsidiary organized under the laws of the United States of America, any state thereof or the District of Columbia.
 
" Effective Date " has the meaning specified therefor in Section 4.01.
 
" Employee Plan " means an employee benefit plan (other than a Multiemployer Plan) covered by Title IV of ERISA and maintained (or that was maintained at any time during the six (6) calendar years preceding the date of any borrowing hereunder) for employees of any Loan Party or any of its ERISA Affiliates.
 
" Equity Committee " means the official committee of equity security holders appointed in the jointly administered cases styled as In re Washington Mutual, Inc., et al. and being jointly administered in the Bankruptcy Court, Case no. 08-12229 (MFW), under Chapter 11 of the Bankruptcy Code.
 
" Equity Interest " means (a) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (b) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.
 
" Equity Issuance " means either the sale or issuance by any Loan Party or any of its Subsidiaries of any shares of its Equity Interests.
 
" Equity Requirement " means as to (a) a Permitted Acquisition, the requirement that not less than 20% of the Purchase Price paid in connection with any Permitted Acquisition be funded with the proceeds of Equity Issuances or Subordinated Indebtedness or with cash on hand (other than Restricted Disposition Proceeds, proceeds of Loans, or other Indebtedness) and (b) a Permitted Origination, that no less than 20% of the Origination Request shall be funded with the
 

 
 
 

 
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proceeds of Equity Issuances or Subordinated Indebtedness or with cash on hand (other than Restricted Disposition Proceeds, proceeds of Loans, or other Indebtedness).
 
" ERISA " means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, and regulations thereunder, in each case, as in effect from time to time.  References to sections of ERISA shall be construed also to refer to any successor sections.
 
" ERISA Affiliate " means, with respect to any Person, any trade or business (whether or not incorporated) which is a member of a group of which such Person is a member and which would be deemed to be a "controlled group" within the meaning of Sections 414(b), (c), (m) and (o) of the Internal Revenue Code.
 
" Event of Default " means any of the events set forth in Section 7.01.
 
" Exchange Act " means the Securities Exchange Act of 1934, as amended.
 
" Executive Order No. 13224 " means the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
 
" FATCA " means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement and any current or future regulations or official interpretations thereof.
 
" Final Maturity Date " means the earlier of (a) five years from the Effective Date, and (b) the date on which the Loans (other than the Term Loan A-1) shall become due and payable in full in accordance with the terms of this Agreement.
 
" Final Term Loan A-1 Maturity Date " means the earlier of (a) fifty-four months from the Effective Date and (b) the date on which the Loans   shall become due and payable in full in accordance with the terms of this Agreement.
 
" Fiscal Year " means the fiscal year of the Borrower and its Subsidiaries ending on December 31 of each year.
 
" Foreign Subsidiary " means any Subsidiary other than a Domestic Subsidiary.
 
" Funding Fee " means 1.5% of the Total Commitment earned in full, and nonrefundable on the date of the first advance of Term Loan A as to Term Loan A Commitment, on the date of the first advance of the Term Loan A-1 as to the Term Loan A-1 Commitment and on the date of the first advance of Term Loan B as to Term Loan B Commitment, and paid-in-kind by being added to the outstanding principal balances of the Term Loan A, Term Loan A-1 and Term Loan B, as applicable, on such dates as aforesaid.
 
" GAAP " means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis.
 

 
 
 

 
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" GAAP Net Income " means, with respect to any Person, for any period, the net income (or loss) of such Person for such period determined in accordance with GAAP; other than the net income of such Person that is, on the last day of such period, subject to any statutory restriction or limitation on the payment of dividends or the making of other distributions, to the extent of such restriction or limitation.
 
" GAAP Pre-Tax Income " means, with respect to any Person, for any period, (a)  the GAAP Net Income of such Person for such period; (b) plus the sum of, in each case to the extent included in the calculation of GAAP Pre-Tax Income and without duplication,(i) any provision for United States federal income taxes or other taxes measured by net income, (ii) any loss from extraordinary items, (iii) any depreciation, depletion and amortization expense up to $2,500,000 per annum in the aggregate, (iv) any aggregate net loss on the Disposition of property (other than Accounts Receivable and inventory) outside the ordinary course of business, (v) any other non-cash expenditure, charge or loss for such period (other than any non-cash expenditure, charge or loss relating to write-offs, write-downs or reserves with respect to Accounts Receivable, loan assets, investment securities, provisions for loss on loans and impairment of loans and investment securities under GAAP, and inventory; provided, however, without duplication of (vi) below that any such non-cash expenditure charge or loss resulting from any mark-to-market accounting for temporary impairment of investment securities as contemplated in clause (vi) below shall be added to such Person's GAAP Pre-Tax Income), including the amount of any compensation deduction as the result of any Equity Issuance to employees, officers, directors or consultants, (vi) any non-cash losses to the extent of any mark-to-market accounting for temporary impairment of investment securities of any such Person, and (vii) any fees and expenses of such Person incurred in connection with the engagement of a Qualified Valuation Firm in connection with the Independent Valuation Process, and minus (c) the sum of, in each case to the extent included in the calculation of such GAAP Pre-Tax Income and without duplication, (i) any credit for United States federal income taxes or other taxes measured by net income, (ii) any gain from extraordinary items, (iii) any aggregate net gain from the Disposition of property (other than Accounts Receivable and inventory) out of the ordinary course of business by such Person, (iv) any other non-cash gain, including any gain or reversal of a charge referred to in clause (b)(vi) above, and (v) any other cash payment in respect of expenditures, charges and losses that have been added to GAAP Pre-Tax Income of such Person pursuant to clause (b)(v) above in any prior period.
 
" Governmental Authority " means any nation or government, any Federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
 
" Guaranteed Obligations " has the meaning specified therefor in Section 9.01.
 
" Guarantor " means (a) each Subsidiary of the Borrower listed as a "Guarantor" on the signature pages hereto,  if any, and (b) each other Person which guarantees, pursuant to Section 9.01(b) or otherwise, all or any part of the Obligations or executes a joinder agreement substantially in the form of Exhibit B attached hereto.
 

 
 
 

 
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" Guaranty " means (a) the guaranty of each Guarantor party hereto contained in ARTICLE IX hereof and (b) any other guaranty, in form and substance satisfactory to the Required Lenders, made by any other Guarantor in favor of the Agent, for the benefit of the Agent and the Lenders, guaranteeing all or part of the Obligations.
 
" Holdout Lender " has the meaning specified therefor in Section 10.02(b).
 
" Indebtedness " means, with respect to any Person, without duplication, (a) all indebtedness of such Person for borrowed money (including, without limitation, with respect to the Loan Parties, the Loans); (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables or other accounts payable incurred in the ordinary course of such Person's business and not outstanding for more than 90 days after the date such payable was created); (c) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made; (d) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property; (e) all capitalized lease obligations of such Person; (f) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities; (g) all obligations and liabilities, calculated on a basis satisfactory to the Required Lenders and in accordance with accepted practice, of such Person (marked to market) under hedging agreements; (h) all monetary obligations under any receivables factoring, receivable sales or similar transactions and all monetary obligations under any synthetic lease, tax ownership/operating lease, off-balance sheet financing or similar financing; (i) all contingent obligations; and (j) obligations referred to in clauses (a) through (i) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.  The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer.
 
" Indemnified Matters " has the meaning specified therefor in Section 10.15.
 
" Indemnitees " has the meaning specified therefor in Section 10.15.
 
" Independent Valuation Process " means, in connection with a proposed Permitted Acquisition, the valuation report of a Qualified Valuation Firm containing an opinion that the consideration to be paid for the target business or assets to be acquired in connection with the proposed Permitted Acquisition is not greater than the fair market value of the target business or assets, such opinion to (a) be rendered after consideration of the Acquisition Business Plan and such other factors that the Qualified Valuation Firm deems material to such opinion and (b) set forth the basis for such opinion.
 
" Insolvency Proceeding " means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or
 

 
 
 

 
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extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
 
" Insurance Book Closing " means, after the approval of the applicable Governmental Authority, the transfer by WMMRC of all Run-Off Proceeds held on the date of such transfer, the right to receive all future Run-Off Proceeds, the Trusts and their assets along with all insurance liabilities associated therewith as of the date of transfer to the Protected Cell in conformance with all applicable Requirements of Law, which complies with the following requirements: (w) the Protected Cell shall be organized as a direct wholly owned subsidiary of the Borrower,  (x) the assets of the Protected Cell shall not be chargeable with liabilities arising out of any other business WMMRC may conduct, (y) the business plan establishing the Protected Cell shall restrict its business to the administration and management of the Trusts and the assets thereof along with the liabilities associated therewith, and the distribution of the Run-Off Proceeds; and (z) the governing documents of the Protected Cell shall provide that no dividend or distribution may be made to any Person other than the Borrower as provided for in Run-Off Notes Documents.
 
" Insurance Holdings " means investments in the equity, whether owned in whole or in part, of any Insurance Subsidiary.
 
" Insurance Subsidiary " means (a) any direct or indirect Subsidiary of the Borrower regulated by any insurance-related Governmental Authority engaged in the business of selling, issuing or underwriting insurance or reinsurance and any activities (including investment activities) reasonably related or ancillary thereto or representing a reasonable extension thereof and (b) WMMRC, at any time after the Insurance Book Closing, to the extent it is regulated by any insurance-related Governmental Authority.
 
" Intercreditor Agreement " means the Intercreditor Agreement, dated as of March 19, 2012, among the Borrower, the other grantors party thereto, Wilmington Trust, National Association, as collateral agent for the First Lien Creditors, Second Lien Creditors and Third Lien Creditors (each, as defined therein) and Agent, as Credit Agreement Agent (as defined therein) and authorized representative for Third Lien Creditors, as amended, modified and supplemented from time to time.
 
" Interest Coverage Ratio " means, with respect to Borrower for any period, (a) the sum of (i) the Statutory Pre-Tax Income of all of Borrower's Insurance Subsidiaries for such period; plus (ii) the aggregate GAAP Pre-Tax Income of the Borrower's non-insurance company Subsidiaries (i.e., all Subsidiaries other than its Insurance Subsidiaries); plus (iii) an amount equal to all interest, dividend, and other income (or loss) (which for the avoidance of doubt shall not include Borrower's Cash Interest Expense) of the Borrower for such period and not included in (i) or (ii) above; divided by (b) an amount equal to the Borrower's Cash Interest Expense during such period.
 
" Internal Revenue Code " means the Internal Revenue Code of 1986, as amended (or any successor statute thereto) and the regulations thereunder.
 

 
 
 

 
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" Investment " means, with respect to any Person, (a) any investment by such Person in any other Person in the form of loans, guarantees, advances or other extensions of credit, capital contributions or acquisitions of Indebtedness, Equity Interests, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person) or (b) any investment in any other items that are or would be classified as investments on a balance sheet of such Person prepared in accordance with GAAP or SAP, as applicable.
 
" Lender " has the meaning specified therefor in the preamble hereto.
 
" Lender Board Representative " means the Person designated by the Required Lenders from time to time as a member of the board of directors of the Borrower, as such Person may be replaced by the Required Lenders from time to time, as such designation and replacement is set forth in the Borrower's certificate of incorporation and/or bylaws and as consistent with applicable law.
 
" Lien " means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any capitalized lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.
 
" Lien Requirement " means, in connection with a Permitted Acquisition, Permitted Origination or any asset of Borrower or any of its Subsidiaries, the requirement that (a) all of the Equity Interests acquired or otherwise issued by the Person that is the target of the Permitted Acquisition, or the Person that originates pursuant to a Permitted Origination, or if such Person is an Insurance Subsidiary or owns Regulated Insurance Assets, a special purpose vehicle formed in connection with such Permitted Acquisition or Permitted Origination to hold the Equity Interests of such Person, shall be owned, in each case, 100% by the Borrower or any Guarantor Subsidiary thereof ( provided , however , that the Borrower or such Guarantor Subsidiary may own less than 100% of the Equity Interests of such Person or such special purpose vehicle so long as all assets owned by such Person or special purpose vehicle are permitted by the applicable partnership, joint venture, or other governing agreement relating to the Equity Interests of such Person or special purpose vehicle to be, and are on the date of acquisition thereof, subject to a first priority Lien granted to the Agent for the benefit of the Agent and the Lenders (subject, to the extent applicable, Permitted Liens)), (b) all of (i) the Equity Interests of such Person acquired in connection with such Permitted Acquisition, or such Person that originates pursuant to a Permitted Origination, or if such Person is an Insurance Subsidiary or owns Regulated Insurance Assets, a special purpose vehicle formed in connection with such Permitted Acquisition or Permitted Origination to hold the Equity Interests of such Person, are subject, in each case, to first priority Liens granted to the Agent for the benefit of the Agent and the Lenders by the Borrower or Guarantor Subsidiary which owns the Equity Interests of such Person, and (ii) all assets acquired in connection with such Permitted Acquisition, originated in connection with such Permitted Origination or otherwise originated or acquired by the Borrower or any of its Subsidiaries are subject to first priority Liens (subject to Permitted Liens) granted to the Agent for the benefit of the Agent and the Lenders, other than in the case of the Permitted Acquisition of an Insurance Subsidiary or a Subsidiary that owns Regulated Insurance Assets, or a Permitted
 

 
 
 

 
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Origination by an Insurance Subsidiary or in respect of Regulated Insurance Assets, in which case, the Negative Pledge Requirement shall be applicable to the Equity Interests of such Insurance Subsidiary, and any such Regulated Insurance Assets, and (c) to the extent applicable, the requirement to deliver additional guaranties and collateral set forth in Section 6.01(b) (it being understood that as to any Insurance Subsidiary and any Regulated Insurance Assets first priority perfected Liens on Equity Interests and assets as well as guaranties are required unless, and only to the extent, any insurance–related Governmental Authority prohibits the granting of such Liens or the making of guaranties).
 
" Lien Update " means a summary in reasonable detail setting forth the commercially reasonable and diligently pursued efforts of the Borrower regarding the granting of Liens in connection with an Insurance Subsidiary or Regulated Insurance Assets consistent with and pursuant to Section 6.01(a)(ix) and Section 6.01(b)(i).
 
" Loan " means the Term Loan A, Term Loan A-1 and the Term Loan B.
 
" Loan Document " means this Agreement, the Security Documents, any Guaranty, the Intercreditor Agreement , the Agent Fee Letter and any other agreement, instrument, note, certificate, report and other document executed and delivered pursuant hereto or thereto or otherwise evidencing or securing any Loan or any other Obligation.
 
" Loan Party " means the Borrower and any Guarantor.
 
" Material Adverse Effect " means a material adverse effect on any of (a) the business, assets, financial condition, operations, performance or properties of the Borrower and its Subsidiaries taken as a whole, (b) the legality, validity or enforceability of this Agreement or any other Loan Document, (c) the ability of the Borrower or any of its Subsidiaries that is a Loan Party to perform its obligations under any Loan Document to which it is a party, (d) the rights and remedies of the Agent or any Lender under any Loan Document to the extent such effect does not result from any act or omission of the Agent or the Lenders, or (e) the validity, perfection or priority of a Lien (to the extent required hereunder) in favor of the Agent for the benefit of the Agent and the Lenders on the Collateral having a fair market value in excess of $250,000.
 
" Moody's " means Moody's Investors Service, Inc. and any successor thereto.
 
" Multiemployer Plan " means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any of its ERISA Affiliates has contributed to, or has been obligated to contribute, at any time during the preceding six (6) years.
 
" Negative Pledge Requirement " means as to any Equity Interest or assets as to which the Agent or Lenders do not have a first priority Lien (other than Permitted Liens) or any Subsidiary that is not a Guarantor, the requirement that no such liens shall be granted, and no such guaranties shall be delivered in respect of such Subsidiary, in favor of any other Person.
 
" Net Asset Value " means the sum of total assets less total liabilities of a Person accounted for on the basis of GAAP or SAP, whichever is applicable.
 

 
 
 

 
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" New Lending Office " has the meaning specified therefor in Section 2.07(e).
 
" Non-U.S. Lender " has the meaning specified therefor in Section 2.07(e).
 
" Notice of Borrowing " has the meaning specified therefor in Section 2.02(a).
 
" Obligations " means all present and future indebtedness, obligations, and liabilities of each Loan Party to the Agent and the Lenders arising under or in connection with this Agreement or any other Loan Document, whether or not the right of payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 7.01.  Without limiting the generality of the foregoing, the Obligations of each Loan Party under the Loan Documents include (a) the obligation (irrespective of whether a claim therefor is allowed in an Insolvency Proceeding) to pay principal, interest (including any PIK Interest), and whether or not accruing after the commencement of any Insolvency Proceeding or otherwise, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding, charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by such Person under the Loan Documents, (b) the Funding Fee, and (c) the obligation of such Person to reimburse any amount in respect of any of the foregoing that the Agent or any Lender (in its sole discretion) may elect to pay or advance on behalf of such Person.
 
" OFAC Sanctions Programs " means the laws, regulations and Executive Orders administered by OFAC, including but not limited to, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as it has been or shall thereafter be renewed, extended, amended, or replaced, and the list of Specially Designated Nationals and Blocked Persons administered by OFAC, as such list may be amended from time to time.
 
" Origination Amount " means $10,000,000 unless the Required Lenders increase such amount in their sole and absolute discretion, such increase to become effective upon a written notice signed by such Required Lenders approving such increase.
 
" Origination Business Plan " means a business plan approved by the board of directors of the Borrower in respect of each proposed origination business, the description of such business, and projections (including revenues) with respect thereto in accordance with GAAP or SAP, as applicable, including, without limitation, the management selected to operate such business.
 
" Origination Request " means the total amount of the investment in a proposed Permitted Origination, specified by the Borrower, and consistent with the Origination Business Plan.
 
" Other Taxes " has the meaning specified therefor in Section 2.07(b).
 
" Owner " means (a) WMMRC, until the occurrence of the Insurance Book Closing, and (b) the Protected Cell, after the occurrence of the Insurance Book Closing.
 
" Participant Register " has the meaning specified therefor in Section 10.07(g).
 

 
 
 

 
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" Payment Office " means the Agent's office located at U.S. Bank Corporate Trust Services, 214 North Tryon Street, 26 th Floor, Charlotte, NC  28202, Attn.: CDO Trust Services, Facsimile: 704-335-4678, or at such other office or offices of the Agent as may be designated in writing from time to time by the Agent and the Borrower.
 
" Permitted Acquisition " means any acquisition by the Borrower or any of its direct or indirect wholly-owned Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the Equity Interests of, or a business line, unit or division of, any Person); provided , that :
 
                                (a)           immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;
 
                                (b)           all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable Requirements of Law;
 
                               (c)             the assets or Equity Interests acquired shall be consistent with the requisites of 5.01(l);
 
                               (d)             the Equity Requirement shall have been satisfied;
 
                               (e)             the Lien Requirement shall have been satisfied;
 
                               (f)             the Borrower shall provide the Lenders which such information and documentation related to the proposed acquisition as they shall reasonably request and on consummation of such acquisition a complete set of acquisition closing documents shall be delivered to the Agent.
 
" Permitted Dispositions " shall mean the conveyance, sale, lease or sublease, transfer or other disposal for cash, whether in one transaction or a series of related transactions, all or any part of a business, property or assets, whether now owned or hereafter acquired (or the entry into an agreement to do any of the foregoing), provided that (a) if such disposition is of assets or Equity Interests acquired in connection with a Permitted Acquisition or originated in connection with a Permitted Origination with the proceeds of a Term Loan B, then the amount for which such asset is sold shall not be less than the amount advanced under the Term Loan B in connection with such Permitted Acquisition or Permitted Origination, as the case may be; (b) no Restricted Disposition Proceeds shall be permitted to be used for a Permitted Origination except with the consent of the Required Lenders, and (c) the Restricted Disposition Proceeds received in connection with such disposition shall be held in a deposit account of a Loan Party subject to the dominion and control of the Agent for the benefit of the Agent and the Lenders, and such Restricted Disposition Proceeds shall be (x) used to fund Permitted Acquisitions or Permitted Originations (subject to clause (b)), or (y) applied to the Obligations at the Borrower's discretion.
 
" Permitted Indebtedness " means:
 
                      (a)           any Indebtedness owing to the Agent or any Lender under this Agreement and the other Loan Documents;
 

 
 
 

 
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                      (b)           Indebtedness evidenced by capitalized lease obligations entered into in order to finance capital expenditures made by the Loan Parties, which Indebtedness, when aggregated with the principal amount of all Indebtedness incurred under this clause (b) and clause (c) of this definition, does not exceed $1,000,000 at any time outstanding;
 
                      (c)           Indebtedness permitted by clause (e) of the definition of "Permitted Lien";
 
                      (d)           Indebtedness incurred in the ordinary course of business under performance, surety, statutory, and appeal bonds;
 
                      (e)           Indebtedness owed to any Person providing property, casualty, liability, or other insurance to the Loan Parties, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such year;
 
                      (f)           with respect to the Borrower only, contingent liabilities including in respect of earn-outs or similar payments, indemnification obligations, adjustment of purchase price, non-compete, or similar obligations of the Borrower  incurred in connection with the consummation of one or more Permitted Acquisitions and in an aggregate maximum amount for each Permitted Acquisition as to adjustment of purchase price or any payments pursuant to any indemnification obligations not to exceed 15% of the Purchase Price for such Permitted Acquisition (it being understood that no Restricted Disposition Proceeds can be applied to the payment thereof).
 
(g)           Subordinated Indebtedness in an original principal amount not to exceed, at the time of incurrence in the aggregate (together with the principal of all other Subordinated Debt previously incurred), the greater of (i) $25,000,000 and (ii) 25% of Consolidated Tangible Assets, so long as no Default or Event of Default has occurred or shall be continuing after giving effect to the incurrence of such Subordinated Indebtedness;
 
(h)           Indebtedness outstanding on the Effective Date under the Run Off Notes Documents, together with any capitalized interest thereon, if any; and
 
(i)           the extension of maturity, refinancing or modification of the terms of any of the foregoing; provided , however , that (i) such extension, refinancing or modification is pursuant to terms, individually or in the aggregate, that are not less favorable to the Loan Parties and the Lenders than the terms of the Indebtedness being extended, refinanced or modified (including interest rates amortization, maturity, source of repayment, terms of subordination and/or limitations on recourse, if any), and (ii) after giving effect to such extension, refinancing or modification, the amount of such Indebtedness is not greater than the amount of Indebtedness outstanding immediately prior to such extension, refinancing or modification (other than by the amount of premiums paid thereon and the fees and expenses incurred in connection therewith and by the amount of unfunded commitments with respect thereto); provided that Borrower shall be permitted to refinance the Run-Off Notes in an amount greater than the Indebtedness outstanding immediately prior to such refinancing transaction (subject to all of the other limitations set forth in this paragraph (i)); provided further that net proceeds of such refinancing
 

 
 
 

 
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transaction in excess of the amount needed to satisfy the Run-Off Notes in full shall be applied as follows:  (a) 50% of such excess proceeds shall be immediately applied to the Obligations in accordance with Section 2.05(d) of this Agreement and (b) 50% of such proceeds shall be held in a deposit account of a Loan Party subject to the dominion and control of the Agent for the benefit of the Agent and the Lenders and treated as though they were Restricted Disposition Proceeds under this Agreement; and (iii) any such refinancing or modification shall not add new obligors or be secured by assets which did not secure the debt being so refinanced.
 
" Permitted Investments " shall mean each of the following:
 
(a)           investments in cash and Cash Equivalents;
 
(b)           investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business;
 
(c)           advances made in connection with purchases of goods or services in the ordinary course of business;
 
(d)           [Intentionally Omitted];
 
(e)           stock or obligations issued to Borrower and its Subsidiaries by any Person (or the representative of such Person) in respect of Indebtedness or other liabilities of such Person owing to Borrower and its Subsidiaries in connection with the insolvency, bankruptcy, receivership or reorganization of such Person or a composition or readjustment of the debts of such Person;
 
(f)           Permitted Acquisitions;
 
(g)           Permitted Originations;
 
(h)            the deferred portion of any Purchase Price; and
 
(i)           any acquisition, origination or other investment by a Loan Party not funded by (x) Term Loan B or (y) Restricted Disposition Proceeds, so long as, in each case, the Lien Requirement is met with respect thereto.
 
" Permitted Liens " means:
 
(a)           Liens securing the Obligations, including, without limitation, any Lien granted to the Agent for the benefit of the Agent and the Lenders on the Run-Off Proceeds;
 
(b)           Liens for taxes, assessments and governmental charges the payment of which is not required under Section 6.01(c);
 
(c)           Liens imposed by law, such as carriers', warehousemen's, mechanics', materialmen's and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money) that are not overdue by more than 30 days or are being contested in good faith and by appropriate proceedings promptly initiated and
 

 
 
 

 
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diligently conducted, and a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor;
 
(d)           [Intentionally Omitted];
 
(e)           (i)           purchase money Liens on equipment acquired or held by any Loan Party or any of its Subsidiaries in the ordinary course of its business to secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition of such equipment or (ii) Liens existing on such equipment at the time of its acquisition; provided , however , that (A) no such Lien shall extend to or cover any other property of any Loan Party or any of its Subsidiaries and (B) the aggregate principal amount of Indebtedness secured by any or all such Liens shall not exceed at any one time outstanding $1,000,000;
 
(f)           deposits and pledges of cash securing (i) obligations incurred in respect of workers' compensation, unemployment insurance or other forms of governmental insurance or benefits, (ii) the performance of bids, tenders, leases, contracts (other than for the payment of money) and statutory obligations or (iii) obligations on surety or appeal bonds, but only to the extent such deposits or pledges are made or otherwise arise in the ordinary course of business and secure obligations not past due;
 
(g)           easements, zoning restrictions and similar encumbrances on real property and minor irregularities in the title thereto that do not (i) secure obligations for the payment of money or (ii) materially impair the value of such property or its use by any Loan Party or any of its Subsidiaries in the normal conduct of such Person's business;
 
(h)           Liens of landlords and mortgagees of landlords (i) arising by statute or under any lease or related contractual obligation entered into in the ordinary course of business, (ii) on fixtures and movable tangible property located on the real property leased or subleased from such landlord, (iii) for amounts not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and (iv) for which adequate reserves or other appropriate provisions are maintained on the books of such Person in accordance with GAAP;
 
(i)           Liens on real property or equipment securing Indebtedness permitted by subsection (b) of the definition of Permitted Indebtedness;
 
(j)           the title and interest of a lessor or sublessor in and to personal property leased or subleased (other than through a capital lease), in each case extending only to such personal property;
 
(k)           non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business;
 
(l)           judgment liens (other than for the payment of taxes, assessments or other governmental charges) securing judgments and other proceedings not constituting an Event of Default under Section 7.01(h);
 

 
 
 

 
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(m)           rights of setoff or bankers' liens upon deposits of cash in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business;
 
(n)           Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under the definition of Permitted Indebtedness;
 
(o)           Liens solely on any cash earnest money deposits made by any Loan Party in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition; and
 
(p)           Liens on (i) the Collateral Account (as defined in the Run-Off Notes Indenture) and all funds and assets held therein or credited thereto, (ii) the Trustee Fee Account (as defined in the Run-Off Notes Indenture) and all funds and assets held therein and credited thereto, (iii) all Run-Off Proceeds held by the Trusts, (iv) all Run-Off Proceeds held by WMMRC (to the extent permitted by the applicable Governmental Authority), (v) all Run-Off Proceeds held by the Protected Cell (to the extent permitted by the applicable Governmental Authority), (vi) all Run-Off Proceeds received by the Borrower, (vii) all rights of the Borrower to receive dividends or distributions in respect of the Run-Off Proceeds, (viii) the Equity Interests of WMMRC owned or held by the Borrower (to the extent permitted by the applicable Governmental Authority), (ix) the Equity Interests in the Protected Cell owned or held by the Borrower (to the extent permitted by the applicable Governmental Authority), (x) the excess assets of the Protected Cell (to the extent permitted by the applicable Governmental Authority), and (xi) all proceeds of the foregoing, in each case, granted in favor of the Run-Off Notes Collateral Agent to secure Indebtedness permitted under clause (h) of the definition of Permitted Indebtedness.
 
" Permitted Origination " means the origination of a loan asset or insurance policy which (a) is subject to the Origination Business Plan, (b) satisfies the corresponding conditions set forth in clauses (a), (b) and (d) of the definition of "Permitted Acquisition", (c) satisfies the Lien Requirement in respect of any such loan assets and insurance policies and (d) shall be, as to Permitted Originations funded with the proceeds of Term Loan B advances, in an amount less than or equal to the Origination Amount in the aggregate unless the Required Lenders agree, in their sole and absolute discretion, to increase the Origination Amount.
 
" Person " means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.
 
" PIK Interest " has the meaning specified therefor in Section 2.04.
 
" PIK Rate " means a rate per annum equal to 1.0%.
 
" Plan " means any Employee Plan or Multiemployer Plan.
 
" Plan of Reorganization " has the meaning specified therefor in the recitals hereto.
 

 
 
 

 
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" Post-Default Rate " means a rate of interest per annum equal to the rate of interest otherwise in effect from time to time pursuant to the terms of this Agreement plus 2.0%, or, if a rate of interest is not otherwise in effect, interest at the highest rate specified herein for any Loan then outstanding prior to an Event of Default plus 2.0%.
 
" Private Side Information " has the meaning specified therefor in Section 10.18.
 
" Private Sider " has the meaning specified therefor in Section 10.18.
 
" Pro Rata Share " means:
 
(a) (i)           with respect to a Lender's obligation to make the Term Loan A and receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (i) such Lender's Term Loan A Commitment, by (ii) the Total Term Loan A Commitment, provided that if the Total Term Loan A Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender's portion of the Term Loan A and the denominator shall be the aggregate unpaid principal amount of the Term Loan A, and
 
(a) (ii) with respect to a Lender's obligation to make the Term Loan A-1 and receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (i) such Lender's Term Loan A-1 Commitment, by (ii) the Total Term Loan A-1 Commitment, provided that if the Total Term Loan A-1 Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender's portion of the Term Loan A-1 and the denominator shall be the aggregate unpaid principal amount of the Term Loan A-1, and
 
(b)           with respect to a Lender's obligation to make the Term Loan B and receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (i) such Lender's Term Loan B Commitment, by (ii) the Total Term Loan B Commitment, provided that if the Total Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender's portion of the Term Loan B and the denominator shall be the aggregate unpaid principal amount of the Term Loan B, and
 
(c)           with respect to all other matters (including, without limitation, the indemnification obligations arising under Section 8.05), the percentage obtained by dividing (i) the sum of such Lender's portion of the undrawn Total Commitment plus the unpaid principal amount of such Lender's portion of the Loans, by (ii) the sum of the undrawn Total Commitment plus the aggregate unpaid principal amount of the Loans.
 
" Protected Cell " means a protected cell established by the Borrower in connection with the Insurance Book Closing upon the receipt of approval of the applicable Governmental Authority and maintained pursuant to § 431:19-303 of Title 24 of the Hawaii Insurance Code, in conformance with all applicable Requirements of Law.
 
" Purchase Price " means, with respect to any Permitted Acquisition, the cash purchase price paid in connection with such Permitted Acquisition, it being understood that a portion of such purchase price may be paid in cash on a deferred basis, so long as the Equity
 

 
 
 

 
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Requirement is satisfied with respect to such deferred amount and such a deferred payment does not represent any "earn-outs" or similar payments.
 
" Qualified Valuation Firm " means, the following firms: Perella Weinberg Partners LP, Evercore Partners, Houlihan Lokey, FBR & Co., Zolfo Cooper, LLC, Duff & Phelps Corp., Sandler O'Neill + Partners, L.P., Goldin Associates, L.L.C., AlixPartners, and Kinetic Partners, or any other firms mutually agreed to by Borrower and Required Lenders, in each case having expertise in the relevant insurance or financial sector related to the proposed Acquisition.
 
" Register " has the meaning specified therefor in Section 10.07(d).
 
" Registered Loans " has the meaning specified therefor in Section 10.07(d).
 
" Regulated Insurance Assets " means assets of any Insurance Subsidiary.
 
" Regulation T ", " Regulation U " and " Regulation X " mean, respectively, Regulations T, U and X of the Board or any successor, as the same may be amended or supplemented from time to time.
 
" Related Fund " means, with respect to any Person, an Affiliate of such Person, or a fund or account managed by such Person or an Affiliate of such Person.
 
" Replacement Lender " has the meaning specified therefor in Section 3.02.
 
" Required Lenders " means Lenders whose Pro Rata Shares (calculated in accordance with clause (c) of the definition thereof) aggregate at least 66 2/3 %.  The Pro Rata Share of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
 
" Requirements of Law " means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of, any Governmental Authority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
 
" Report " has the meaning specified therefor in Section 8.12.
 
" Restricted Disposition Proceeds " means, with respect to a Permitted Disposition of assets or Equity Interests acquired in connection with a Permitted Acquisition or originated in connection with a Permitted Origination, a portion of the proceeds of such Permitted Disposition equal to the sum of (a) the amount advanced under Term Loan B to fund the underlying Permitted Acquisition or Permitted Origination, and (b) the amount provided by Borrower to satisfy the Equity Requirement in connection with such Permitted Acquisition or Permitted Origination.
 

 
 
 

 
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" Run-Off Assets and Liabilities " means the assets and liabilities of WMMRC related to the policies in place at the Effective Date, accounted for on the basis of SAP.
 
" Run-Off Assets Pledge and Security Agreement " means the Pledge and Security Agreement, dated as of March 19, 2012, by and among the Washington Mutual, Inc., as Issuer (as defined therein), Wilmington Trust, National Association, as the First Lien Trustee and Collateral Agent (each, as defined therein), Law Debenture Trust Company of New York, as the Second Lien Trustee (as defined therein) and the Agent, as Credit Agreement Agent (as defined therein), and any other security agreement providing for Liens on the Collateral entered into in connection with any refinancing of the First Lien Obligations, the Second Lien Obligations or the Third Lien Obligations (each, as defined therein), in each case as the same may be amended, restated, amended and restated, renewed, replaced, supplemented or otherwise modified from time to time.
 
" Run-Off Notes " means, collectively, the Notes and the Second Lien Notes, each as defined in the Run-Off Notes Indenture.
 
" Run-Off Notes Collateral Agent " means Wilmington Trust National Association.
 
" Run-Off Notes Documents " means the Notes Documentation and the Second Lien Documentation, each as defined in the Run-Off Notes Indenture.
 
" Run-Off Notes Indenture " means the Senior First Lien Notes Indenture, dated as of March 19, 2012, by and between the Borrower, as Issuer, and Wilmington Trust National Association, as Trustee in respect of the Borrower's 13% Senior First Lien Notes Due 2030.
 
" Run-Off Proceeds " means (a)(i) all net premiums, reinsurance recoverables, net revenue resulting from commutation of insurance contracts, net interest income, reserve releases and other revenues derived from the reinsurance contracts, investments and other assets of the Trusts, without duplication, less (ii)(A) the reasonable and necessary costs and expenses of the Trusts or the Owner (including, but not limited to, general and administrative expenses, audit fees, required regulatory capital contributions (which capital contributions will be added back to the Run-Off Proceeds if applicable regulations permit such distributions thereof), expenses of regulatory compliance, including all costs associated with the Insurance Book Closing, expenses of administering the Run-Off Notes Documents and taxes) attributable to the administration of the Trusts or the assets thereof and the collection of premiums and/or management of investments in connection therewith (which expenses shall include reasonable and customary expenses attributable to the foregoing paid under any administrative services agreement, investment management agreement or similar agreement), and (B) claims paid for covered losses and (b) the proceeds from the foregoing received by the Owner or the Borrower in cash, securities and/or other property from any sale, liquidation, merger or other disposition in respect of the Owner or its interests in the Trusts or the assets thereof. The inclusion of clause (b) of this definition shall not be construed as a consent to any sale, liquidation, merger or other disposition or waiver of compliance with any covenant related thereto.  For the avoidance of doubt, to the extent that the Borrower or WMMRC pays any such cost, capital contribution or expense described in clause (ii)(A), payment by Borrower or WMMRC will be deemed a cost or expense of the Trusts.
 

 
 
 

 
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" SAP " means (a) statutory accounting principles and regulations prescribed by the National Association of Insurance Commissioners for the preparation of financial statements for an insurance business applied on a consistent basis or (b) to the extent an Insurance Subsidiary is permitted by a Governmental Authority to report on an alternative basis to the basis under (a) above, such adjustments to such alternative basis reasonably acceptable to the Borrower and Agent at the direction of the Required Lenders that will make pretax income under such alternative basis reasonably equivalent to pretax income as if calculated under (a) above.  The adjustments to be made pursuant to clause (b) above will be made as soon as is reasonably practicable from an accounting perspective, but in no event later than the end of the first full quarterly period following the acquisition of such Insurance Subsidiary.
 
" Scheduled PIK Interest " has the meaning specified therefor in Section 2.04.
 
" SEC " means the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act.
 
" Securities Act " means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.
 
" Securitization " has the meaning specified therefor in Section 10.07.
 
" Security Agreement " means a Pledge and Security Agreement made by a Loan Party in favor of the Agent for the benefit of the Agent and the Lenders securing the Obligations with a first priority perfected security interest in all assets of the Loan Parties, subject only to Permitted Liens, and delivered to the Agent in form and substance reasonably satisfactory to the Required Lenders.
 
" Security Documents " means any Security Agreement, the Run-Off Assets Pledge and Security Agreement, any UCC filing authorization letter, all deposit account and securities account control agreements, and any other agreements pursuant to which a Lien is granted to the Lenders or the Agent on behalf of the Lenders.
 
" Solvent " means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is not less than the total amount of the liabilities of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its existing debts as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital.
 
" Standard & Poor's " means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.
 

 
 
 

 
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" Statutory Pre-Tax Income " means for any Insurance Subsidiary, or any insurance assets required for regulatory purposes to be accounted for in accordance with SAP, pre-tax income (or loss) in accordance with SAP.
 
" Subordinated Indebtedness " means unsecured Indebtedness of the Borrower which has been expressly subordinated in right of payment to all Indebtedness of such Loan Party under the Loan Documents by the execution and delivery of a subordination agreement, in form and substance satisfactory to the Required Lenders, that provides, among other things, (a) that such Subordinated Indebtedness is subordinated to the payment of interest on the Loan that accrues after the commencement of any Insolvency Proceeding of the Borrower, whether or not a claim for post-petition interest is allowed or allowable as a claim in any such proceeding, (b) that no amortization or other principal payments may be made with respect to such Subordinated Indebtedness prior to the payment in full in cash of all of the Obligations and (c) that no cash interest may be paid with respect to such Subordinated Indebtedness provided that cash interest may be paid by the Borrower if (i) no Default or Event of Default has occurred and is continuing or would result therefrom at the time of such payment and (ii) at the time of such cash payment the Borrower is paying current cash interest on the Loans hereunder at 7% per annum (without exercising any option to pay PIK interest under this Agreement); provided that in no event shall such cash interest in respect of such Subordinated Indebtedness exceed a rate per annum of 12% (it being understood that there is no cap on PIK interest).
 
" Subsidiary " means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (a) the accounts of which would be consolidated with those of such Person in such Person's consolidated financial statements if such financial statements were prepared in accordance with GAAP or (b) of which more than 50% of (i) the outstanding Equity Interests having (in the absence of contingencies) ordinary voting power to elect a majority of the Board of Directors of such Person, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person; provided, however, that WMMRC and the Protected Cell shall not be considered a "Subsidiary" of the Borrower or any Loan Party for the purposes of any Loan Document (including, without limitation, for purposes of calculating the Asset Coverage Ratio for purposes of Article IV hereof and the financial covenants set forth in Section 6.03 hereof), other than (i) as expressly set forth in such Loan Document and (ii) with respect to WMMRC only, at any time after the Insurance Book Closing.  Further, any conditions existing at the Protected Cell will not directly or indirectly impact or affect compliance with any of the representations, warranties, covenants, conditions and obligations of the Loan Parties and any of their Subsidiaries hereunder.
 
" Taxes " has the meaning specified therefor in Section 2.07(a).
 
" Term Loan A " means the term loans made by the Lenders to the Borrower pursuant to Section 2.01(a)(i).
 

 
 
 

 
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" Term Loan A Commitment " means, with respect to each Lender, the commitment of such Lender to make the Term Loan A to the Borrower in the amount set forth in Schedule 1.01(A) hereto, as the same may be terminated or reduced from time to time in accordance with the terms of this Agreement.
 
" Term Loan A Commitment Termination Date " means the earliest to occur of (i) the date the Term Loan A Commitments are permanently reduced to zero pursuant to Section 2.01(a), (ii) the date of the termination of the Term Loan A Commitments pursuant to Section 7.01, and (iii) three years from the Effective Date.
 
" Term Loan A-1 " means the term loans made by the Term A-1 Lenders pursuant to Section 2.01 (a)(ii).
 
" Term Loan A-1 Commitment " means with respect to each Term A-1 Lender, the commitment of such Lender to make the Term Loan A-1 to the Borrower in an amount set forth in Schedule 1.01 (A) hereto, as the same may be terminated or reduced from time to time in accordance with the terms of this Agreement.
 
" Term Loan A-1 Commitment Termination Date " means the earliest to occur of (i) the date the Term Loan A-1 Commitments are permanently reduced to zero pursuant to Section 2.01(a), (ii) the date of the termination of the Term Loan A-1 Commitments pursuant to Section 7.01, and (iii) three years from the Effective Date.
 
" Term Loan B " means the term loans made by the Lenders to the Borrower pursuant to Section 2.01(b).
 
" Term Loan B Commitment " means, with respect to each Lender, the commitment of such Lender to make the Term Loan B to the Borrower in the amount set forth in Schedule 1.01(A) hereto, as the same may be terminated or reduced from time to time in accordance with the terms of this Agreement.
 
" Term Loan B Commitment Termination Date " means the earliest to occur of (i) the date the Term Loan B Commitments are permanently reduced to zero pursuant to Section 2.01(b), (ii) the date of the termination of the Term Loan B Commitments pursuant to Section 7.01, and (iii) three years from the Effective Date.
 
" Total Commitment " means the sum of the Total Term Loan A Commitments, the Total of the Term Loan A-1 Commitments and the Total Term Loan B Commitments.
 
" Total Term Loan A Commitment " means the sum of the Term Loan A Commitments.
 
" Total Term Loan A-1 Commitment " means the sum of the Term Loan A-1 Commitments.
 
" Total Term Loan B Commitment " means the sum of the Term Loan B Commitments.
 

 
 
 

 
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" Transferee " has the meaning specified therefor in Section 2.07(a).
 
" Trusts " means (a) Home Loan Reinsurance Co. United Guaranty Residential Insurance Company Reinsurance Agreement (Acct. No. x6401); (b) Home Loan Reinsurance Co. Genworth Reinsurance Co. Trust Agreement (Acct. No. x6403); (c) Mortgage Guaranty Insurance Corporation/WM MTG Reinsurance Co. Trust; (Acct. No. x2400); (d) Reinsurance Escrow Agreement among WM Mortgage Reinsurance Co. PMI Mortgage Insurance Company and US Bank (Acct. No. x6404); (e) Radian Guaranty Inc. and WM Mortgage Reinsurance Company Agreement, dated March 27, 2001 (Acct. No. x5700); (f) Home Loan Reinsurance Co. Republic Mortgage Co. Reinsurance Agreement, dated December 14, 1998 (Acct. No. x6402); (g) Washington Mutual Custody Account (Acct. No. x6406); and (h) WM Mortgage Reinsurance Company Inc. (Acct. No. x4202).
 
" Uniform Commercial Code " has the meaning specified therefor in Section 1.04.
 
" USA PATRIOT Act " means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (PATRIOT) Act of 2001 (Title III of Pub. L. 107-56, Oct. 26, 2001).
 
" WMMRC " means WM Mortgage Reinsurance Company, Inc., a Hawaii corporation and directly wholly-owned subsidiary of the Borrower.
 
" WMMRC New Business " means any business activities conducted by WMMRC after the Insurance Book Closing, other than any activities conducted in connection with the Run-Off Assets and Liabilities and administration of the Run-Off Notes and Run-Off Notes Documents.
 
Section 1.02   Terms Generally   .  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation".  The word "will" shall be construed to have the same meaning and effect as the word "shall".  Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any right or interest in or to assets and properties of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
 
Section 1.03   Certain Matters of Construction   .  References in this Agreement to "determination" by the Agent or Lender includes good faith estimates by the Agent (in the case
 

 
 
 

 
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of quantitative determinations) and good faith beliefs by the Agent or Lender (in the case of qualitative determinations).  A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall "continue" or be "continuing" until such Event of Default has been waived in writing by the Required Lenders.  Any Lien referred to in this Agreement or any other Loan Document as having been created in favor of the Agent, any agreement entered into by the Agent pursuant to this Agreement or any other Loan Document, any payment made by or to or funds received by the Agent pursuant to or as contemplated by this Agreement or any other Loan Document, or any act taken or omitted to be taken by the Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of the Agent and the Lenders. Wherever the phrase "to the knowledge of any Loan Party" or words of similar import relating to the knowledge or the awareness of any Loan Party are used in this Agreement or any other Loan Document, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of any Loan Party or (ii) the knowledge that a senior officer would have obtained if such officer had engaged in good faith and diligent performance of such officer's duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of such Loan Party and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists.  In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.
 
Section 1.04   Accounting and Other Terms   .
 
(a)   Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP.  Notwithstanding the foregoing, all financial statements delivered hereunder shall be prepared without giving effect to an election under Statement of Financial Accounting Standards 159 (or any similar accounting principal) permitting a Person to value its financial liabilities at the fair market value thereof.
 
(b)   All terms used in this Agreement which are defined in Article 8 or Article 9 of the Uniform Commercial Code as in effect from time to time in the State of New York (the " Uniform Commercial Code ") and which are not otherwise defined herein shall have the same meanings herein as set forth therein, provided that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Agent at the direction of the Required Lenders may otherwise determine.
 

 
 
 

 
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Section 1.05   Time References   .  Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern daylight saving time, as in effect in New York City on such day.  For purposes of the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding"; provided , however , that with respect to a computation of fees or interest payable to the Agent or any Lender, such period shall in any event consist of at least one full day.
 
ARTICLE II
 

 
THE LOANS
 
Section 2.01   Commitments   .  (a)(i) Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender with a Term Loan A Commitment severally agrees to make the Term Loan A, on one or more borrowing dates, to the Borrower prior to the Term Loan A Commitment Termination Date, in an aggregate principal amount not to exceed the amount of such Lender's Term Loan A Commitment.  The aggregate principal amount of the Term Loan A made on any borrowing date shall not exceed the undrawn Total Term Loan A Commitment (excluding, for the purposes of this Section 2.01(a)(i), the Funding Fee and any PIK Interest added to the outstanding principal balance of the Term Loan A).  Any principal amount of the Term Loan A which is repaid or prepaid may not be reborrowed.  The Total Term Loan A Commitment and the Total Commitment shall be permanently reduced immediately and without further action on the date of each borrowing of the Term Loan A in an amount equal to the amount of such Term Loan A funded, and each Lender's Term Loan A Commitment, if any, shall be permanently reduced immediately and without further action on the date of each borrowing of the Term Loan A in an amount equal to such Lender's Pro Rata Share of the amount of such Term Loan A funded.
 
(ii) Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender with a Term Loan A-1 Commitment severally agrees to make the Term Loan A-1, on one or more borrowing dates, to the Borrower prior to the Term Loan A-1 Commitment Termination Date, in an aggregate principal amount not to exceed the amount of such Lender's Term Loan A-1 Commitment.  The aggregate principal amount of the Term Loan A-1 made on any borrowing date shall not exceed the undrawn Total Term Loan A-1 Commitment (excluding, for the purposes of this Section 2.01(a)(ii), the Funding Fee and any PIK Interest added to the outstanding principal balance of the Term Loan A-1).  Any principal amount of the Term Loan A-1 which is repaid or prepaid may not be reborrowed.  The Total Term Loan A-1 Commitment and the Total Commitment shall be permanently reduced immediately and without further action on the date of each borrowing of the Term Loan A-1 in an amount equal to the amount of such Term Loan A-1 funded, and each Lender's Term Loan A-1 Commitment, if any, shall be permanently reduced immediately and without further action on the date of each borrowing of the Term Loan A-1 in an amount equal to such Lender's Pro Rata Share of the amount of such Term Loan A-1 funded.
 
(iii) all borrowings under this clause (a) shall be allocated on a pro rata basis between the Term Loan A and the Term Loan A-1 based on the respective amounts of
 

 
 
 

 
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the unfunded Total Term Loan A Commitment and the unfunded Total Term Loan A-1 Commitment at the time of such borrowing.
 
(b)   Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender with a Term Loan B Commitment severally agrees to make the Term Loan B, on one or more borrowing dates, to the Borrower prior to the Term Loan B Commitment Termination Date, in an aggregate principal amount not to exceed the amount of such Lender's Term Loan B Commitment.  The aggregate principal amount of the Term Loan B made on any borrowing date shall not exceed the undrawn Total Term Loan B Commitment (excluding, for the purposes of this Section 2.01(b), the Funding Fee and any PIK Interest added to the outstanding principal balance of the Term Loan B).  Any principal amount of the Term Loan B which is repaid or prepaid may not be reborrowed. The Total Term Loan B Commitment and the Total Commitment shall be permanently reduced immediately and without further action on the date of each borrowing of the Term Loan B in an amount equal to the amount of such Term Loan B funded, and each Lender's Term Loan B Commitment, if any, shall be permanently reduced immediately and without further action on the date of each borrowing of the Term Loan B in an amount equal to such Lender's Pro Rata Share of the amount of such Term Loan B funded.
 
Section 2.02   Making the Loans   .  (a)  The Borrower shall give the Agent a written notice of borrowing substantially in the form of Exhibit C (a " Notice of Borrowing "), not later than 12:00 noon (New York City time) on the date which is five (5) Business Days prior to the date of the proposed Loan.  Such Notice of Borrowing shall specify (i) the principal amount of the proposed Loan (which shall be not less than $2,500,000), (ii) whether the Loan is a Term Loan A and a Term Loan A-1 or a Term Loan B and (iii) the proposed borrowing date, which shall be a Business Day, and which shall not occur more than once each month.  Upon receipt of a Notice of Borrowing, the Agent will promptly notify each Lender thereof and of the amount of such Lender's Pro Rata Share of such borrowing.  The Agent and the Lenders may act without liability upon the basis of written or telecopied notice believed by the Agent in good faith to be from the Borrower (or from any Authorized Officer thereof designated in writing purportedly from the Borrower to the Agent).  The Agent and each Lender shall be entitled to rely conclusively on any Authorized Officer's authority to request a Loan on behalf of the Borrower.  The Agent and the Lenders shall have no duty to verify the authenticity of the signature appearing on any written Notice of Borrowing.
 
(b)   Each Notice of Borrowing pursuant to this Section 2.02 shall be irrevocable and the Borrower shall be bound to make a borrowing in accordance therewith.
 
(c)   The Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares of the Total Term Loan A Commitment, Total Term Loan A-1 Commitment or Total Term Loan B Commitment, as applicable, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender's obligations to make the Loan requested hereunder, nor shall the Term Loan A Commitment, the Term Loan A-1 Commitment or the Term Loan B Commitment of any Lender be increased or decreased as a result of the default by any other Lender in that other Lender's obligation to make the Loan requested hereunder, and each
 

 
 
 

 
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Lender shall be obligated to make the Loan required to be made by it by the terms of this Agreement regardless of the failure by any other Lender.
 
Section 2.03   Repayment of Loans; Evidence of Debt   .  The outstanding unpaid principal of the Term Loan A-1 (including the Funding Fee and any PIK Interest) shall be due and payable on the Final Term Loan A-1 Maturity Date.  The outstanding unpaid principal of the Term Loan A and Term Loan B (including the Funding Fee and any PIK Interest) shall be due and payable in full on the Final Maturity Date.  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower owing to such Lender. The Agent shall maintain accounts and sub-accounts in which it shall record (i) the amount of the Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder , (iii) the amount of the Funding Fee and any PIK Interest added to principal from time to time as specified herein, and (iv) the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender's share thereof.  The entries made in the accounts maintained pursuant to this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.  Any Lender may request that Loans made by it be evidenced by a promissory note.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.07) be represented by one or more promissory notes in such form payable to the payee named therein and its registered assigns.
 
Section 2.04   Interest and Funding Fee   .
 
(a)   Loans .  Each portion of the Term Loan A shall bear interest on the principal amount thereof from time to time outstanding, from the date of the making of such portion of the Term Loan A until repaid, at a rate per annum equal to 7.0% (of which at least 6.0% shall be payable in cash and up to 1.0% of which may be paid-in-kind as set forth in clause (d) below).  Each portion of the Term A-1 shall bear interest on the principal amount thereof from time to time outstanding, from the date of the making of such portion of the Term Loan A-1 until repaid, at a rate per annum equal to 7.0% (of which at least 6.0% shall be payable in cash and up to 1.0% of which may be paid-in-kind as set forth in clause (d) below).  Each portion of the Term Loan B shall bear interest on the principal amount thereof from time to time outstanding, from the date of the making of such portion of the Term Loan B until repaid, at a rate per annum equal to 7.0% (of which at least 6.0% shall be payable in cash and up to 1.0% of which may be paid-in-kind as set forth in clause (d) below).
 
(b)   Funding Fee .  Each Loan shall be subject to the Funding Fee.  
 
(c)   Default Interest .  To the extent permitted by law and notwithstanding anything to the contrary in this Section, upon the occurrence and during the continuance of an Event of Default, the principal of, and all accrued and unpaid interest on, all Loans, fees, indemnities or any other Obligations of the Loan Parties under this Agreement and the other Loan Documents, shall bear interest, from the date such Event of Default occurred
 

 
 
 

 
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until the date such Event of Default is cured or waived in writing in accordance herewith, at a rate per annum equal at all times to the Post-Default Rate.
 
(d)   Interest Payment .  Interest on each Loan shall be payable quarterly, in arrears, on the first day of each fiscal quarter, commencing on the first day of the fiscal quarter following the fiscal quarter in which such Loan is made and at maturity (whether upon demand, by acceleration or otherwise).  Notwithstanding the foregoing, (i) interest payable at the Post-Default Rate pursuant to the foregoing clause (c) shall be paid-in-kind by being added to the outstanding principal balance of the Term Loan A, Term Loan A-1 and the Term Loan B, on a pro rata basis (" Default PIK Interest "), and (ii) the Borrower shall have the option, upon not less than three (3) Business Days' prior written notice to the Agent, to elect that a portion of the regularly scheduled interest payment due on the Term Loan A, and the Term Loan A-1 in an amount not to exceed the PIK Rate and that a portion of the regularly scheduled interest payment due on the Term Loan B, in an amount not to exceed the PIK Rate shall be paid-in-kind by being added to the outstanding principal balance of the Term Loan A, Term Loan A-1 or the Term Loan B, as applicable (" Scheduled PIK Interest ", and together with Default PIK Interest, " PIK Interest "), provided, however , that if an Event of Default shall have occurred and be continuing on the applicable interest payment date, the interest payment due on such interest payment date (other than Default PIK Interest) may not be added to the principal outstanding under the applicable Loan and shall be payable in cash on such interest payment date and, provided further , however , that if the applicable interest payment date is the Final Maturity Date or the Final Term Loan A-1 Maturity Date, as the case may be, then any interest payment due on such date (including at the PIK Rate or the Post-Default Rate) shall be payable in cash on the Final Maturity Date or the Final Term Loan A-1 Maturity Date, as the case may be.  Any interest to be capitalized shall be capitalized (i) in the case of Default PIK Interest, on each day that the corresponding Event of Default has occurred and continues, and (ii) in the case of Scheduled PIK Interest, on the first day of each fiscal quarter, commencing on the first day of the fiscal quarter following the fiscal quarter in which such Term Loan A, Term Loan A-1 or such Term Loan B, as applicable, is made, and added to the then outstanding principal amount of the Term Loan A, Term Loan A-1, or the Term Loan B, as applicable, and, thereafter, in the case of both Default PIK Interest and Scheduled PIK Interest, shall bear interest as provided hereunder as if it had originally been part of the outstanding principal of the Term Loan A, Term Loan A-1 or the Term Loan B, as applicable.
 
(e)   General .  All interest shall be computed on the basis of a year of 360 days for the actual number of days, including the first day but excluding the last day, elapsed.
 
Section 2.05   Reduction of Commitment; Prepayment of Loans   .
 
(a)   Reduction of Commitments.  The Total Term Loan A Commitment shall terminate at 5:00 p.m. (New York City time) on the Term Loan A Commitment Termination Date.  The Total Term Loan A-1 Commitment shall terminate at 5:00 p.m. (New York City time) on the Term Loan A-1 Commitment Termination Date .   The Total Term Loan B Commitment shall terminate at 5:00 p.m. (New York City time) on the Term Loan B Commitment Termination Date.  The Borrower may reduce the undrawn Total Term A Loan Commitment , the undrawn Total Term Loan A-1 Commitment and/or the
 

 
 
 

 
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undrawn Total Term Loan B Commitment to an amount (which may be zero) not less than the aggregate principal amount of any Term Loan A , Term Loan A-1 and/or Term Loan B, as applicable, not yet made as to which a Notice of Borrowing has been given by the Borrower under Section 2.02.  Each such reduction (x) shall be in an amount which is an integral multiple of $1,000,000 (or by the full amount of the Total Term Loan A Commitment , the Total Term Loan A-1 Commitment and/or Term Loan B Commitment, as applicable, in effect immediately prior to such reduction if such applicable amount at that time is less than $1,000,000), (y) shall be made by providing not less than 5 Business Days' prior written notice to the Agent, and (z) shall be irrevocable.  Once reduced, the Total Term Loan A Commitment , Total Term Loan A-1 Commitment and Total Term Loan B Commitment may not be increased.  Each such reduction of the Total Term Loan A Commitment , Total Term Loan A-1 Commitment and/or Total Term Loan B Commitment shall reduce the Term Loan A Commitment , Total Term Loan A-2 Commitment and/or Term Loan B Commitment, as applicable, of each Lender proportionately in accordance with its   Pro Rata Share thereof.  Any reduction of the Total Term Loan A Commitment or the Total Term Loan A-1 Commitment shall be allocated on a pro rata basis to the Total Term Loan A Commitment and the Total Term Loan A-1 Commitment.
 
(b)   Optional Prepayment .  The Borrower may, at any time and from time to time, upon at least 5 Business Days' prior written notice to the Agent, prepay without penalty or premium the principal of the Loans   in accordance with clause (d) below in whole or in part.  Each prepayment made pursuant to this clause (b) shall be accompanied by the cash payment of accrued interest to the date of such payment on the amount prepaid.
 
(c)   Mandatory Prepayment .
 
(i)   Upon the issuance or incurrence by any Loan Party or any of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness, except to the extent provided in clause (i) of the definition thereof), the Borrower shall promptly prepay the outstanding amount of the Loans in accordance with clause (d) below in an amount equal to 100% of the net cash proceeds received by such Person in connection therewith.  The provisions of this Section 2.05(c) shall not be deemed to be implied consent to any such issuance, incurrence or sale otherwise prohibited by the terms and conditions of this Agreement.
 
(ii)   To the extent required in connection with the exercise of the Cure Right under Section 6.03(c) and without limiting the right of the Agent thereunder, the Borrower shall promptly prepay the outstanding amount of the Loans in accordance with clause (d) below in an amount equal to 100% of the Cure Amount.
 
(d)   Application of Payments .  Each prepayment pursuant to subsection (b) and(c) above, as well as any prepayment described in subparagraph (i) of the definition of "Permitted Indebtedness," shall be applied first to the Term Loan A-1 until paid in full and then on a pro rata basis to the Term Loan A and the Term Loan B until paid in full.  Notwithstanding the foregoing, after the occurrence and during the continuance of an Event of Default, if the Agent has elected, or has been directed by the Required Lenders, to apply payments and other proceeds of Collateral in accordance with Section 3.03(b), prepayments required under Section 2.05(c) shall be applied in the manner set forth in Section 3.03(b).
 

 
 
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(e)   Interest and Fees .  Any prepayment made pursuant to this Section 2.05 shall be accompanied by (i) accrued interest on the principal amount being prepaid to the date of prepayment, and (ii) any fees and expenses then due and owing to the Agent .
 
(f)   Cumulative Prepayments .  Except as otherwise expressly provided in this Section 2.05, payments with respect to any subsection of this Section 2.05 are in addition to payments made or required to be made under any other subsection of this Section 2.05.
 
Section 2.06   Agent's Fee   .  The Borrower agrees to pay to the Agent, for the account of the Agent, the agency fees and expenses set forth in the Agent Fee Letter, at the times and in the amount specified therein. All such agency fees and expenses shall be paid as provided in the Agent Fee Letter, in immediately available funds, to the Agent.  Once paid, none of the agency fees shall be refundable under any circumstances.
 
Section 2.07   Taxes   .  (a)  Any and all payments by any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding (i) taxes imposed on the net income (or franchise taxes imposed in lieu of such income taxes) of the Agent or any Lender (or any transferee or assignee thereof, including a participation holder (any such entity, a " Transferee ")) by (A) the jurisdiction in which any Agent or any Lender is located or (B) as the result of any other present or former connection between such Agent or Lender and the jurisdiction imposing such tax (other than connections arising from such Agent or Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned any interest in any Loan or Loan Document), (ii) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which any Agent or any Lender is located, and (iii) taxes imposed under FATCA (or any amended or successor version of FATCA that is substantively comparable and not more onerous to comply with) (all such nonexcluded taxes, levies, imposts, deductions, charges withholdings and liabilities, collectively or individually " Taxes ").  If any Loan Party shall be required to deduct any Taxes from or in respect of any sum payable hereunder to any Agent or any Lender (or any Transferee), (i) the sum payable shall be increased by the amount (an " Additional Amount ") necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.07) the Agent or such Lender (or such Transferee) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make such deductions and (iii) such Loan Party shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.
 
(b)   In addition, each Loan Party agrees to pay to the relevant Governmental Authority, without duplication of any amounts payable pursuant to Section 10.04, in accordance with applicable law any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this
 

 
 
 

 
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Agreement or any other Loan Document (" Other Taxes ").  Each Loan Party shall deliver to the Agent and each Lender official receipts in respect of any Taxes or Other Taxes payable hereunder promptly after payment of such Taxes or Other Taxes.
 
(c)   If a payment made to any Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this paragraph (e), "FATCA" shall include any amendments made to FATCA after the date of this Agreement.
 
(d)   The Loan Parties hereby jointly and severally indemnify and agree to hold the Agent and each Lender harmless from and against Taxes and Other Taxes (including, without limitation, Taxes and Other Taxes imposed on any amounts payable under this Section 2.07) paid by such Person, whether or not such Taxes or Other Taxes were correctly or legally asserted.  Such indemnification shall be paid within 10 days from the date on which any such Person makes written demand therefore specifying in reasonable detail the nature and amount of such Taxes or Other Taxes.
 
(e)   Each Lender (or Transferee) that is organized under the laws of a jurisdiction outside the United States (a " Non-U.S. Lender ") that is entitled to an exemption from or reduction of U.S. federal withholding tax with respect to payments made under the Loan Documents, agrees that it shall, no later than the Effective Date (or, in the case of a Lender which becomes a party hereto pursuant to Section 10.07 hereof after the Effective Date, promptly after the date upon which such Lender becomes a party hereto) deliver to the Borrower and the Agent one properly completed and duly executed copy of either U.S. Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY or any subsequent versions thereof or successors thereto, in each case claiming complete exemption from, or reduced rate of, U.S. Federal withholding tax and payments of interest hereunder.  In addition, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code, such Non-U.S. Lender hereby represents to the Agent and the Borrower that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code), and such Non-U.S. Lender agrees that it shall promptly notify the Agent in the event any such representation is no longer accurate.  Each other Lender or Transferee (other than any such Lender or Transferee which is taxed as a corporation for U.S. Federal income tax purposes) and the Agent, if applicable, shall provide two properly completed and duly executed copies of IRS Form W-9 (or any successor or other applicable
 

 
 
 

 
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form) to Borrower and to the Agent, as applicable, certifying that such Lender, Transferee or the Agent, as applicable, is exempt from U.S. backup withholding tax.  Such forms shall be delivered by each Non-U.S. Lender, other Lender, Transferee or Agent, as applicable, on or before the date it becomes a party to this Agreement (or, in the case of a Transferee that is a participation holder, on or before the date such participation holder becomes a Transferee hereunder) and on or before the date, if any, such Non-U.S. Lender, other Lender, or Transferee or, if applicable, Agent changes its applicable lending office by designating a different lending office (a " New Lending Office ").  In addition, such Non-U.S. Lender, other Lender, Transferee or Agent, as applicable, shall deliver such forms within 20 days after receipt of a written request therefor from the Borrower, the Agent, the assigning Lender or the Lender granting a participation, as applicable.  Notwithstanding any other provision of this Section 2.07, a Non-U.S. Lender, other Lender, Transferee or Agent, as applicable, shall not be required to deliver any form pursuant to this Section 2.07(e) that such Non-U.S. Lender, other Lender, Transferee or Agent is not legally able to deliver.
 
(f)   The Loan Parties shall not be required to indemnify any Non-U.S. Lender, other Lender, Transferee or Agent or pay any Additional Amounts to any Non-U.S. Lender, other Lender, Transferee or Agent in respect of United States federal withholding tax pursuant to this Section 2.07 to the extent that (i) the obligation to withhold amounts with respect to United States federal withholding tax existed on the date such Non-U.S. Lender, other Lender, Transferee or Agent became a party to this Agreement (or, in the case of a Transferee that is a participation holder, on the date such participation holder became a Transferee hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S. Lender, other Lender, Transferee or Agent, as applicable, designated such New Lending Office with respect to a Loan; provided , however , that this clause (i) shall not apply to the extent the indemnity payment or Additional Amounts any Transferee, or Lender (or Transferee) through a New Lending Office, would be entitled to receive (without regard to this clause (i)) do not exceed the indemnity payment or Additional Amounts that the Person making the assignment, participation or transfer to such Transferee, or Lender (or Transferee) making the designation of such New Lending Office, would have been entitled to receive in the absence of such assignment, participation, transfer or designation, or (ii) the obligation to pay such Additional Amounts would not have arisen but for a failure by such Non-U.S. Lender, other Lender, Transferee or Agent, as applicable, to comply with the provisions of clause (e) above.
 
(g)   The Agent or any Lender (or Transferee) claiming any indemnity payment or additional payment amounts payable pursuant to this Section 2.07 shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document reasonably requested in writing by the Borrower or to change the jurisdiction of its applicable lending office if the making of such a filing or change would avoid the need for or reduce the amount of any such indemnity payment or additional amount that may thereafter accrue, would not require the Agent or such Lender (or Transferee) to disclose any information the Agent or such Lender (or Transferee) deems confidential and would not, in the sole determination of the Agent or such Lender (or Transferee), be otherwise disadvantageous to the Agent or such Lender (or Transferee).
 

 
 
 

 
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(h)   If the Agent or any Lender (or a Transferee) shall become aware that it is entitled to claim a refund from a Governmental Authority in respect of Taxes or Other Taxes with respect to which any Loan Party has paid additional amounts, pursuant to this Section 2.07, it shall promptly notify the Borrower of the availability of such refund claim and shall, within 30 days after receipt of a request by the Borrower, make a claim to such Governmental Authority for such refund at the Loan Parties' expense.  If any Lender or the Agent (or a Transferee) receives a refund (including pursuant to a claim for refund made pursuant to the preceding sentence) in respect of any Taxes or Other Taxes with respect to which any Loan Party has paid additional amounts pursuant to this Section 2.07, it shall within 30 days from the date of such receipt pay over such refund to the Borrower, net of all out-of-pocket expenses of the Agent or such Lender (or Transferee).
 
(i)   The obligations of the parties under this Section 2.07 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
 
ARTICLE III
 

 
FEES, PAYMENTS AND OTHER COMPENSATION
 
Section 3.01   Payments; Computations and Statements   .  (a) The Borrower will make each payment under this Agreement not later than 12:00 noon (New York City time) on the day when due, in lawful money of the United States of America and in immediately available funds, to the Agent's Account.  All payments received by the Agent after 12:00 noon (New York City time) on any Business Day will be credited to the loan account on the next succeeding Business Day.  All payments shall be made by the Borrower without set-off, counterclaim, recoupment, deduction or other defense to the Agent and the Lenders.  Except as provided in Section 2.02, after receipt, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal ratably to the Lenders in accordance with their Pro Rata Shares and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement, provided that the Agent will cause to be distributed all interest and fees received from or for the account of the Borrower not less than once each month and in any event promptly after receipt thereof.  Whenever any payment to be made under any such Loan Document shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation of interest or fees, as the case may be.  All computations of fees shall be made by the Agent on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such fees are payable.  Each determination by the Agent of an interest rate or fees hereunder shall be conclusive and binding for all purposes in the absence of manifest error.
 
(b)   The Agent shall provide the Borrower, promptly after the end of each calendar month, a summary statement (in the form from time to time used by the Agent) of the opening and closing daily balances in the loan account of the Borrower during such month, the amounts of the Loans made to the Borrower, the amounts and dates of all payments on account of the Loans to the Borrower during such month and the Loans to which
 

 
 
 

 
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such payments were applied, the amount of interest accrued on the Loans to the Borrower during such month, and the amount and nature of any charges to the loan account made during such month on account of fees, commissions, expenses and other Obligations.  All entries on any such statement shall be presumed to be correct and, thirty (30) days after the same is sent, shall be final and conclusive absent manifest error.
 
Section 3.02   Sharing of Payments, Defaulting Lenders, Etc  
 
(a)   The Agent shall not be obligated to transfer to a Defaulting Lender any payments made by the Borrower to the Agent for the Defaulting Lender's benefit, and, in the absence of such transfer to the Defaulting Lender, the Agent shall transfer any such payments to each other non-Defaulting Lender ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender's Loan was funded by the other Lenders).  This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, the Agent, and the Borrower shall have waived such Defaulting Lender's default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable defaulted Loan and pays to the Agent all amounts owing by such Defaulting Lender in respect thereof.  The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by the Borrower of its duties and obligations hereunder to the Agent or to the Lenders other than such Defaulting Lender.  Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement (in which event Borrower shall preserve all of its rights and remedies (in law and in equity) against such Defaulting Lender in respect of such breach, subject to Section 10.15 hereof) and shall entitle the Borrower at its option, upon written notice from the Borrower to the Agent, to permanently replace the Defaulting Lender with one or more substitute Lenders (each, a " Replacement Lender "), and the Defaulting Lender shall have no right to refuse to be replaced hereunder.  Such notice to replace the Defaulting Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.  Prior to the effective date of such replacement, the Defaulting Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Defaulting Lender being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever.  If the Defaulting Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Defaulting Lender shall be deemed to have executed and delivered such Assignment and Acceptance.  The replacement of any Defaulting Lender shall be made in accordance with the terms of Section 10.07(b).  Any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lenders' or the Borrower's rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.
 
(b)   Except as provided in Section 2.02 hereof, if any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of any Obligation in excess of its ratable share of payments on account of similar obligations obtained by all the Lenders, such Lender shall forthwith
 

 
 
 

 
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purchase from the other Lenders such participations in such similar obligations held by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided , however , that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender of any interest or other amount paid by the purchasing Lender in respect of the total amount so recovered).  The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 3.02(b) may, to the fullest extent permitted by law, exercise all of its rights (including the Lender's right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.
 
Section 3.03   Apportionment of Payments   .  Subject to any written agreement among the Agent and/or the Lenders:
 
(a)   all payments of principal and interest in respect of outstanding Loans, all payments of fees (other than the fees set forth in Section 2.06 hereof) and all other payments in respect of any other Obligations, shall be allocated by the Agent among such of the Lenders as are entitled thereto, in proportion to their respective Pro Rata Shares or otherwise as provided herein or, in respect of payments not made on account of Loans, as designated by the Person making payment when the payment is made.
 
(b)   After the occurrence and during the continuance of an Event of Default, the Agent may, and upon the direction of the Required Lenders, shall, apply all payments received by the Agent in respect of the Obligations and all proceeds of the Collateral, subject to the provisions of this Agreement:  (i) first , to pay the Obligations in respect of any fees, expense reimbursements, indemnities and other amounts then due and payable to the Agent until paid in full; (ii) second , ratably to pay the Obligations in respect of any fees and indemnities then due and payable to the Lenders until paid in full; (iii) third , ratably to pay interest then due and payable in respect of the Term Loan A-1, Term Loan A and the Term Loan B until paid in full; (iv) fourth , ratably to pay principal of the Term Loan A-1, Term Loan A and Term Loan B (including the Funding Fee and any PIK Interest added to the outstanding principal balance of the Term Loan A-1, Term Loan A and Term Loan B) until paid in full; and (v) fifth , to the ratable payment of all other Obligations then due and payable.
 
(c)   In each instance, so long as no Event of Default has occurred and is continuing, Section 3.03(b) shall not be deemed to apply to any payment by the Borrower specified by the Borrower to the Agent to be for the payment of Obligations then due and payable under any provision of this Agreement or the prepayment of all or part of the principal of the Loan in accordance with the terms and conditions of Section 2.05.
 
(d)   For purposes of Section 3.03(b) (other than clause (v )), "paid in full" means payment in cash of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically
 

 
 
 

 
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including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding, except to the extent that default or overdue interest (but not any other interest) and loan fees, each arising from or related to a default, are disallowed in any Insolvency Proceeding; provided , however , that for the purposes of clause (v) , "paid in full" means payment in cash of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.
 
(e)   In the event of a direct conflict between the priority provisions of this Section 3.03 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that both such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 3.03 shall control and govern.
 
ARTICLE IV

 
CONDITIONS TO LOANS
 
Section 4.01   Conditions Precedent to Effectiveness   .  This Agreement shall become effective as of the Business Day (the " Effective Date ") when each of the following conditions precedent shall have been satisfied in a manner satisfactory to the Lenders:
 
(a)   Payment of Fees, Etc.   The Borrower shall have paid on or before the date of this Agreement all costs and expenses then payable pursuant to Section 2.06 and the Agent shall have received payment from the Lenders for all of its attorneys fees and expenses accrued to the Effective Date as agreed in writing with the Lenders.
 
(b)   Representations and Warranties; No Event of Default .  The representations and warranties contained in Article V and in each other Loan Document delivered to the Agent or any Lender on or prior to the Effective Date are true and correct on and as of the Effective Date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date).  No Default or Event of Default shall have occurred and be continuing on the Effective Date or would result from this Agreement or the other Loan Documents becoming effective in accordance with their respective terms.
 
(c)   Legality .  The making of the Loans shall not contravene any law, rule or regulation applicable to the Agent or any Lender.
 
(d)   Delivery of Documents .  The Agent on behalf of the Lenders shall have received on or before the Effective Date the following, each in form and substance satisfactory to the Lenders and, unless indicated otherwise, dated the Effective Date:
 

 
 
 

 
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(i)   this Agreement, the Security Documents, and other collateral documentation, if any, each duly executed by the parties thereto, together with (x) the original stock certificates representing all of the common stock of each Loan Party's Subsidiaries and all intercompany promissory notes of each Loan Party, accompanied by undated stock powers executed in blank and other proper instruments of transfer, and (y) appropriate financing statements on Form UCC-1 duly filed in such office or offices as may be necessary or, in the opinion of the Lenders, desirable to perfect the security interests purported to be created by each Security Agreement and evidence satisfactory to the Lenders of the filing of such UCC-1 financing statements;
 
(ii)   a certificate of the Secretary of each Loan Party, certifying as to (w) certified copies of the governing documents of such Loan Party (including in the case of the Borrower's governing documents, without limitation, satisfactory provisions related to the Lender Board Representative), (x) the resolutions of such Loan Party, authorizing the borrowings hereunder, the transactions contemplated by the Loan Documents to which such Loan Party is or will be a party, and the execution, delivery and performance of such Loan Documents, (y) the names and true signatures of the representatives of such Loan Party authorized to sign each Loan Document to which such Loan Party is or will be party to, and (z) certificates of the appropriate official(s) of the jurisdiction of organization and each jurisdiction of foreign qualification of each Loan Party customary for transactions of this nature;
 
(iii)   a certificate of an Authorized Officer of the Borrower, certifying (a) the names and true signatures of the persons that are authorized to provide the Notice of Borrowing and all other notices under this Agreement and the other Loan Documents and (b) that on the Effective Date no Default or Event of Default has occurred and is continuing or would result from this Agreement or any other Loan Document becoming effective in accordance with its or their respective terms;
 
(iv)   other certificates, if any, to be determined;
 
(v)   opinions of (i) Perkins Coie LLP, counsel to the Loan Parties, as to such matters as the Lenders may reasonably request and (ii) such other counsel to the Loan Parties reasonably acceptable to the Lenders as to New York law matters as the Lenders may reasonably request; and
 
(vi)   a duly executed Notice of Borrowing, if any, pursuant to Section 2.02 hereof.
 
(e)   Insurance .  The Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 6.01(h) and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable and shall name the Agent, on behalf of the Agent and Lenders, as additional insured, in form and substance satisfactory to the Lenders.
 
(f)   Approvals .  All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority
 

 
 
 

 
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or other Person required in connection with the making of the Loans or the conduct of the Loan Parties' business shall have been obtained and shall be in full force and effect.
 
(g)   Confirmation Order and Approval of the Plan of Reorganization .  The Plan of Reorganization shall have been confirmed by the Bankruptcy Court pursuant to the Confirmation Order, and all other conditions to the effectiveness of the Plan of Reorganization shall have been satisfied or waived, and the Confirmation Order shall have been entered by the Bankruptcy Court.  There shall have been no determination that any of the Debtors did not solicit approvals of the Plan of Reorganization in good faith pursuant to section 1125(e) of the Bankruptcy Code.  The Confirmation Order shall be in full force and effect, shall not have been stayed pending any appeal, and at least fourteen (14) days shall have elapsed since the entry of the Confirmation Order, unless such fourteen (14) day period is waived by the Bankruptcy Court or by the agreement of the Lenders.  The Plan of Reorganization shall have become effective in accordance with the terms of the Confirmation Order.
 
The Agent shall not be responsible in any way for the form, substance and completeness of such conditions precedent and shall not be responsible for ascertaining the adequacy or effectiveness of such deliverables or whether any or all of such deliverables have been delivered.
 
Section 4.02   Conditions Precedent to All Loans   .  The obligation of any Lender to make any Loan after the Effective Date is subject to the fulfillment of each of the following conditions precedent:
 
(a)   Payment of Fees .  The Borrowers shall have paid all fees, costs and expenses then payable by the Borrowers pursuant to this Agreement and the other Loan Documents, including, without limitation, Section 2.06 and Section 10.04 hereof.
 
(b)   Representations and Warranties; No Event of Default.   The following statements shall be true and correct on the date of such Loan, and the Borrower's acceptance of the proceeds of such Loan shall be deemed to be a representation and warranty by each Loan Party on the date of such Loan that:  (i) the representations and warranties contained in Article V and in each other Loan Document, on or prior to the date of such Loan are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to "materiality" or "Material Adverse Effect" in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date), (ii) at the time of and after giving effect to the making of such Loan and the application of the proceeds thereof, no Default or Event of Default has occurred and is continuing or would result from the making of the Loan to be made, and (iii) the conditions set forth in this Section 4.02 have been satisfied as of the date of such request.
 

 
 
 

 
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(c)   Legality .  The making of such Loan shall not contravene any law, rule or regulation applicable to the Agent or any Lender.
 
(d)   Notices .  The Agent shall have received a Notice of Borrowing pursuant to Section 2.02 hereof.
 
(e)   Asset Coverage Ratio .  The Asset Coverage Ratio on the date of the proposed borrowing, and after giving effect to such borrowing, shall be not less than 1.25 to 1.00.
 
(f)   Special Conditions Precedent for Term Loan B Borrowings in Respect of Permitted Acquisitions .  In connection with a Term Loan B borrowing in connection with a Permitted Acquisition, the following special conditions precedent shall be satisfied:
 
(i)   either:
 
(x) a majority of the board of directors of the Borrower, including the Lender Board Representative, approve the subject transaction, or
 
(y) (A) a majority of the board of directors of the Borrower, excluding the Lender Board Representative, approve the subject transaction, and (B) the subject transaction is approved pursuant to the Independent Valuation Process;
 
(ii)    the amount of such Term Loan B borrowing does not represent more than 80% of the Purchase Price paid in connection with such Permitted Acquisition; and
 
(iii)   the Borrower shall have delivered to the Agent a certificate of an Authorized Officer of the Borrower, which may be conclusively relied upon by the Agent, certifying (i) that the equity contribution in connection with the Permitted Acquisition complies with the Equity Requirement and (ii) that the use of proceeds of the Term Loan B in connection with such borrowing is consistent with the requirements set forth in the definition of "Permitted Acquisition", as applicable, setting forth, to the extent the foregoing clause (f)(i)(x) is applicable, valuation determined by the board of directors.
 
(g)   Special Conditions Precedent for Term Loan B Borrowings in Respect of Permitted Originations .  In connection with a Term Loan B borrowing in connection with a Permitted Origination, the following special conditions precedent shall be satisfied:
 
(i)   the amount of such Term Loan B borrowing does not represent more than 80% of the Origination Request in connection with such Permitted Origination;
 
(ii)   the Borrower shall have delivered an Origination Business Plan; and
 

 
 
 

 
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(iii)   the Borrower shall have delivered to the Agent a certificate of an Authorized Officer of the Borrower, which may be conclusively relied upon by the Agent, certifying that the use of proceeds of the Term Loan B in connection with such borrowing is consistent with the requirements set forth in the definition of "Permitted Origination" and that the equity contribution in connection therewith complies with the Equity Requirement.
 
ARTICLE V

 
REPRESENTATIONS AND WARRANTIES
 
Section 5.01   Representations and Warranties   .  Each Loan Party hereby represents and warrants to the Agent and the Lenders as follows:
 
(a)   Organization, Good Standing, Etc.   Each Loan Party (i) is duly organized, validly existing and (to the extent the concept of good standing is applicable to a Loan Party under the laws of the relevant state or jurisdiction) in good standing under the laws of the state or jurisdiction of its organization, (ii) has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrower, to make the borrowings hereunder, and to execute and deliver each Loan Document to which it is a party, and to consummate the transactions contemplated thereby, and (iii) is duly qualified to do business and is in good standing in each jurisdiction (to the extent the concept of good standing is applicable to the Borrower or such Guarantor under the laws of the relevant state or jurisdiction) in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect .
 
(b)   Authorization, Etc.   The execution, delivery and performance by each Loan Party of each Loan Document to which it is or will be a party, (i) have been duly authorized by all necessary action, (ii) do not and will not contravene any of its governing documents in any respect or any applicable Requirement of Law in any material respect or any material contractual obligation binding on or otherwise affecting it or any of its material properties, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Loan Document) upon or with respect to any of its properties, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to its operations or any of its properties, except where such default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal could not reasonably be expected to have a Material Adverse Effect.
 
(c)   Governmental Approvals .  No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required in connection with the due execution, delivery and performance by any Loan Party of any Loan Document to which it is or will be a party, except with respect to recordings with respect to Collateral, or any authorization, approval or action, the absence of which could not reasonably be expect to have a Material Adverse Effect.
 

 
 
 

 
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(d)   Enforceability of Loan Documents .  This Agreement is, and each other Loan Document to which any Loan Party is or will be a party, when delivered hereunder, will be, a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally.
 
(e)   Subsidiaries .  Schedule 5.01(e) is a complete and correct description of the name, jurisdiction of incorporation and ownership of the outstanding Equity Interests of such Subsidiaries of the Borrower in existence as of the Effective Date.
 
(f)   Litigation .  There is no pending or, to the knowledge of any Loan Party, threatened action, suit or proceeding affecting any Loan Party, any Insurance Subsidiary or any of its properties before any court or other Governmental Authority or any arbitrator that (i) could reasonably be expected to have a Material Adverse Effect or (ii) relates to this Agreement or any other Loan Document or any transaction contemplated hereby or thereby.
 
(g)   Financial Condition .  Since the Effective Date no event or development has occurred that has caused any material adverse change in the business, assets, financial condition, operations, performance or properties of (x) the Borrower, (y) its Insurance Subsidiaries (taken as a whole) or (z) its Subsidiaries (other than Insurance Subsidiaries) taken as a whole (it being understood that events, conditions or developments affecting financial markets generally shall not be deemed a material adverse change under this clause (g), and that non-cash losses to the extent of any mark-to-market accounting due to temporary impairment of investment securities shall not be considered in determining whether a material adverse change has occurred under this clause (g)).
 
(h)   Compliance with Law, Etc.   No Loan Party or any of its Subsidiaries is in violation of (i) any of its governing documents, or (ii) any domestic or foreign Requirement of Law, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.
 
(i)   ERISA .  No Loan Party nor any of its ERISA Affiliates contributes to, sponsors, maintains or has an obligation to contribute to or maintain any Multiemployer Plan or any defined benefit plan and has not at any time prior to the date hereof established, sponsored or maintained, been a party to and has not at any time prior to the date hereof contributed or been obligated to contribute to or maintain any Multiemployer Plan or any defined benefit plan.  Except as required by Section 4980B of the Internal Revenue Code, no Loan Party or any of its ERISA Affiliates maintains an employee welfare benefit plan (as defined in Section 3(1) of ERISA) which provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of any Loan Party or any of its ERISA Affiliates or coverage after a participant's termination of employment.
 
(j)   Taxes, Etc.   All Federal, and all material state, local and foreign tax returns and other reports required by applicable Requirements of Law to be filed
 

 
 
 

 
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by any Loan Party or any Insurance Subsidiary have been filed, or extensions have been obtained, and all material amounts of taxes, assessments and other governmental charges imposed upon any Loan Party or any Insurance Subsidiary or any property of any Loan Party or any Insurance Subsidiary and which have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof on the financial statements of such Loan Party or any Insurance Subsidiary in accordance with GAAP, or SAP, as applicable.  No Loan Party or any Insurance Subsidiary has knowledge of any proposed or pending tax assessments, deficiencies or audits that could reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect.
 
(k)   Regulations T, U and X .  No Loan Party or any Insurance Subsidiary is or will be engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation T, U or X), and no proceeds of any Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.
 
(l)   Nature of Business .  No Loan Party or any Insurance Subsidiary is engaged in any business other than financial services, insurance services, the origination of loan assets, the origination of insurance assets, or the origination of financial services.
 
(m)   Permits, Etc.   Each Loan Party and each Insurance Subsidiary has, and is in compliance with, all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Person lawfully to own, lease, manage or operate, or to acquire, each business currently owned, leased, managed or operated, or to be acquired, by such Person if the failure to have or be in compliance therewith could reasonably be expected to have a Material Adverse Effect.
 
(n)   Full Disclosure .  None of the reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Lenders and/or the Agent contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which it was made, not misleading; provided that , with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith and based on assumptions believed by each Loan Party to be reasonable at the time made.
 
(o)   Insurance .  Each Loan Party maintains the insurance and required reserves and financial assurance as required by law and as required by Section 6.01(h).  Schedule 5.01(o) sets forth a list of all insurance maintained by each Loan Party on the Effective Date.
 
(p)   Use of Proceeds .  The proceeds of (a) the Term Loan A and the Term Loan A-1 shall be used to fund working capital and provide for general corporate purposes of the Borrower and its Subsidiaries (including, without limitation, to fund acquisitions and originations (consistent with the requirements of Section 5.01(l))), and (b) the Term Loan B shall be used to fund (i) Permitted Acquisitions and (ii) Permitted Originations.
 

 
 
 

 
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(q)   Solvency; No Fraudulent Transfer .  After giving effect to the transactions contemplated by this Agreement and before and after giving effect to each Loan, (x) the Borrower, (y) its Insurance Subsidiaries (taken as a whole), and (z) its Subsidiaries (taken as a whole) are Solvent.  No transfer of property is being made by any Loan Party or any Insurance Subsidiary and no obligation is being incurred by any Loan Party or any Insurance Subsidiary in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of such Loan Party or any Insurance Subsidiary.
 
(r)   Investment Company Act .  None of the Loan Parties or any Insurance Subsidiary is (i) an "investment company" or an "affiliated person" or "promoter" of, or "principal underwriter" of or for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended, or (ii) subject to regulation under any Requirement of Law that limits in any respect its ability to incur Indebtedness or which may otherwise render all or a portion of the Obligations unenforceable.
 
(s)   Employee and Labor Matters .  Except any matter which could not reasonably be expected to have a Material Adverse Effect, the Borrower and its Subsidiaries have complied with all Requirements of Law relating to employee and labor matters.
 
(t)   Anti-Terrorism Laws .  (i) None of the Loan Parties nor any of their Subsidiaries is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the Anti-Terrorism Laws, (ii) none of the Loan Parties nor any of their Subsidiaries is any of the following (each a " Blocked Person "): (A) a Person that is prohibited pursuant to any of the OFAC Sanctions Programs, including a Person named on OFAC's list of Specially Designated Nationals and Blocked Persons; (B) a Person that is owned or controlled by, or that owns or controls, or that is acting for or on behalf of, any Person described in subclause (A), above; (C) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (D) a Person that is affiliated or associated with a Person described in subclauses (A) through (C), above, (iii) none of the Loan Parties nor any of their Subsidiaries. (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to any OFAC Sanctions Programs.
 
(u)   Reorganization Matters . Since the entry of the Confirmation Order, there have been no modifications, amendments, revisions or restatements of the Plan of Reorganization that are adverse to the interests of any Lender (in any capacity, including, without limitation, as a pre-petition creditor of Borrower), except those approved by the Lenders.  The Confirmation Order, confirming the Plan of Reorganization, has been entered by the Bankruptcy Court and has not been stayed pending any appeal.
 

 
 
 

 
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ARTICLE VI

 
COVENANTS OF THE LOAN PARTIES
 
Section 6.01   Affirmative Covenants   .  So long as any principal of or interest on any Loan or any other Obligation (whether or not due) shall remain unpaid or any Lender shall have any Term Loan A Commitment, Term Loan A-1 Commitment or Term Loan B Commitment hereunder, each Loan Party will, unless the Required Lenders shall otherwise consent in writing:
 
(a)   Reporting Requirements .  Furnish to the Agent (which shall promptly furnish or make available to the Lenders):
 
(i)   as soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of each Fiscal Year of the Borrower and its Subsidiaries commencing with the first fiscal quarter of the Borrower and its Subsidiaries ending after the Effective Date, consolidated financial statements of the Borrower and its Subsidiaries and financial statements by business unit (including in each case balance sheets, statements of operations and retained earnings and statements of cash flows of the Borrower and its Subsidiaries) as at the end of such quarter and for the period commencing at the end of the immediately preceding Fiscal Year and ending with the end of such quarter, and setting forth in each case in comparative form the figures for the corresponding date or period set forth in the financial statements for the immediately preceding Fiscal Year all in reasonable detail and certified by an Authorized Officer of the Borrower as fairly presenting, in all material respects, the financial position of the Borrower and its Subsidiaries as of the end of such quarter and the results of operations and cash flows of the Borrower and its Subsidiaries for such quarter, in accordance with GAAP (and where applicable SAP) applied in a manner consistent with that of the most recent audited financial statements of the Borrower and its Subsidiaries furnished to the Agent and the Lenders, subject to the absence of footnotes and normal year-end adjustments;
 
(ii)   as soon as available, and in any event within 90 days after the end of each Fiscal Year of Borrower and its Subsidiaries (unless the Borrower is subject to SEC filing requirements mandating a shorter period for the delivery of Form 10-K, in which case the time period for delivery hereunder shall be such shorter period) consolidated balance sheets, consolidated statements of operations and retained earnings and consolidated statements of cash flows of the Borrower and its Subsidiaries as at the end of such Fiscal Year, setting forth in each case in comparative form the figures for the corresponding date or period set forth in the financial statements for the immediately preceding Fiscal Year, all in reasonable detail and prepared in accordance with GAAP (and where applicable, SAP), and accompanied by a report and an unqualified opinion, prepared in accordance with generally accepted auditing standards, of independent certified public accountants of recognized standing selected by the Borrower and satisfactory to the Required Lenders (which opinion shall be without (A) a "going concern" or like qualification or exception, or (B) any qualification or exception as to the scope of such audit);
 
(iii)   as soon as available, and in any event within 30 days after the end of each fiscal month of the Borrower and its Subsidiaries commencing with the first
 

 
 
 

 
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fiscal month of the Borrower and its Subsidiaries ending after the Effective Date, internally prepared consolidated financial statements of the Borrower and its Subsidiaries and financial statements by business unit (including in each case balance sheets, statements of operations and retained earnings and statements of cash flows of the Borrower and its Subsidiaries) as at the end of such fiscal month, and for the period commencing at the end of the immediately preceding Fiscal Year and ending with the end of such fiscal month, and setting forth in each case in comparative form the figures for the corresponding date or period set forth in the financial statements for the immediately preceding Fiscal Year (it being understood that the requirement for such "comparative form" shall not commence until the first month following the one year anniversary of the Effective Date) all in reasonable detail and certified by an Authorized Officer of the Borrower as fairly presenting, in all material respects, the financial position of the Borrower and its Subsidiaries as at the end of such fiscal month and the results of operations, retained earnings and cash flows of the Borrower and its Subsidiaries for such fiscal month;
 
(iv)   simultaneously with the delivery of the financial statements of the Borrower and its Subsidiaries required by clauses (i), (ii) and (iii) of this Section 6.01(a), a certificate of an Authorized Officer of the Borrower (A) certifying that he has no knowledge of, the existence during such period of an Event of Default or Default or, if an Event of Default or Default existed, describing the nature and period of existence thereof and the action which the Borrower and its Subsidiaries propose to take or have taken with respect thereto and (B) in the case of deliveries pursuant to Section 6.01(a)(i), attaching a schedule showing the calculation of the financial covenant specified in Section 6.03(a), and in the case of deliveries pursuant to Section 6.01(a)(ii), attaching a schedule showing the calculation of the financial covenants specified in Sections 6.03(a) and 6.03(b);
 
(v)   promptly after the commencement thereof but in any event not later than five (5) Business Days after service of process with respect thereto on, or the obtaining of knowledge thereof by, any Loan Party or any Insurance Subsidiary, notice of each action, suit or proceeding before any court or other Governmental Authority or other regulatory body or any arbitrator which, if adversely determined, could reasonably be expected to have a Material Adverse Effect;
 
(vi)   promptly after the sending thereof, copies of all statements, reports and other information any Loan Party or any Insurance Subsidiary sends to any holders of its securities or with any insurance-related Governmental Authority (other than statements filed with the SEC or any national (domestic or foreign) securities exchange);
 
(vii)   promptly upon receipt thereof, copies of all financial reports (including, without limitation, management letters), if any, submitted to any Loan Party or any Insurance Subsidiary by its auditors in connection with any annual or interim audit of the books thereof;
 
(viii)   promptly (and, in any event, within three (3) Business Days of the occurrence thereof) written notice of (x) any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto, and (y) the filing or commencement of, or any written threat or notice of intention of any person to file or commence, any action, suit, litigation or proceeding, whether at
 

 
 
 

 
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law or in equity by or before any Governmental Authority, (A) against any Loan Party or any Insurance Subsidiary or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect or (B) with respect to any Loan Document;
 
(ix)   promptly upon any significant developments with respect thereto or promptly after the reasonable request of Agent (such request at the direction of the Required Lenders and not to exceed 4 times per Fiscal Year), a Lien Update; and
 
(x) No later than 30 days prior to the end of each Fiscal Year:  (A) projected quarterly balance sheets, income statements and statements of cash flows of the Borrower and its Subsidiaries, for the following Fiscal Year and (B) projected annual balance sheets, income statements and statements of cash flows of the Borrower and its Subsidiaries for the following Fiscal Year, which projected financial statements shall be updated from time to time.
 
It is understood by the parties hereto that comparative reporting to the extent provided above shall not require any comparisons with any periods ending prior to the Effective Date.
 
(b)   Additional Guaranties and Collateral Security .  Cause:
 
(i)   each Subsidiary of any Loan Party not in existence on the Effective Date, to execute and deliver to the Agent promptly and in any event within 3 days after the formation, acquisition or change in status thereof, (A) a joinder to this Agreement for the purposes set forth therein, including, without limitation, becoming a Guarantor hereunder, (B) a supplement to the Security Agreement, together with (x) certificates evidencing all of the Equity Interests of any Person owned by such Subsidiary, (y) undated stock powers executed in blank with signature guaranteed, and (z) such opinion of counsel as the Agent at the direction of the Required Lenders may reasonably request in respect of complying with any legend on any such certificate or any other matter relating to such shares, and (C) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by the Agent at the direction of the Required Lenders in order to create, perfect, establish the first priority of or otherwise protect any Lien purported to be covered by any such Security Agreement, or otherwise to effect the intent that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that all property and assets of such Subsidiary shall become Collateral for the Obligations (including, without limitation, a contribution agreement and an intercompany subordination agreement and any cash management or control agreements); it being understood that the foregoing requirements set forth in clauses (A), (B) and (C) shall not be applicable with respect to any Insurance Subsidiary or any Regulated Insurance Assets to the extent any insurance-related Governmental Authority does not permit any of the requirements of clauses (A), (B) and/or (C) to be satisfied, in each case, subject to the requirement that the Loan Parties shall, and shall cause its Subsidiaries to, use commercially reasonable efforts diligently pursued to obtain approval from the applicable Governmental Authority to grant the Agent the security interests and guaranties as set forth in this subsection (b) (with such commercially reasonable efforts to be reported to Agent on Lien Updates); and
 
Notwithstanding the foregoing, no Foreign Subsidiary shall be required to become a Guarantor hereunder (and, as such, shall not be required to deliver the documents required by clause (i)
 

 
 
 

 
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above); provided , however , that if the Equity Interests of such Foreign Subsidiary are owned by a Loan Party, such Loan Party shall deliver, all such documents, instruments, agreements (including, without limitation, at the reasonable request of the Agent (at the direction of the Required Lenders), a pledge agreement governed by the laws of the jurisdiction of organization of such Foreign Subsidiary), and certificates described in clause (ii) above to the Agent, and take all commercially reasonable actions reasonably requested by the Agent at the direction of the Required Lenders or otherwise necessary to grant and to perfect a first-priority Lien (subject to Permitted Liens) in favor of the Agent, for the benefit of the Agent and the Lenders, in 65% of the voting Equity Interests of such Foreign Subsidiary and 100% of all other Equity Interests of such Foreign Subsidiary owned by such Loan Party.
 
(c)   Compliance with Laws, Etc.   Comply, and cause each of its Subsidiaries to comply, with all Requirements of Law, judgments and awards (including any settlement of any claim that, if breached, could give rise to any of the foregoing) except to the extent such failure could not reasonably be expected to have a Material Adverse Effect.
 
(d)   Preservation of Existence, Etc.   Except as permitted by Section 6.02(c), maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except to the extent that the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect.
 
(e)   Keeping of Records and Books of Account .  Keep, and cause each of its Subsidiaries to keep, adequate records and books of account, with complete entries made to permit the preparation of financial statements in accordance with GAAP or SAP, as applicable.
 
(f)   Board of Directors .  Consistent with the Borrower's certificate of incorporation and/or bylaws, and as consistent with applicable law, cause (i) the Lender Board Representative to be a member of the board of directors of the Borrower at all times, and (ii) the board of directors of the Borrower to consist of no more than seven members at all times, without the prior written consent of the Required Lenders.
 
(g)   Maintenance of Properties, Etc.   Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its material properties which are necessary in the proper conduct of its business in good working order and condition, ordinary wear and tear and casualty excepted.
 
(h)   Maintenance of Insurance .  Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies (with a Best Financial Strength Rating of at least A+, unless otherwise reasonably approved by the Agent) (including, without limitation, comprehensive general liability, hazard, rent, executive liability (including directors and officers insurance) and business interruption insurance).
 

 
 
 

 
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(i)   Obtaining of Permits, Etc.   Obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, and take all necessary action to timely renew, all permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary in the proper conduct of its business, in each case, except to the extent such failure could not reasonably be expected to have a Material Adverse Effect.
 
(j)   Further Assurances .  Take such action and execute, acknowledge and deliver, and cause each of its Subsidiaries to take such action and execute, acknowledge and deliver, at its sole cost and expense, such agreements, instruments or other documents as may be reasonably required  from time to time in order (i) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (ii) to subject to valid and perfected first priority Liens any of the Collateral or any other property of any Loan Party and its Subsidiaries, and (iii) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby.
 
(k)   Fiscal Year .  Cause the Fiscal Year of the Borrower and its Subsidiaries to end on December 31 of each calendar year unless the Required Lenders consent to a change in such Fiscal Year (and appropriate related changes to this Agreement).
 
Section 6.02   Negative Covenants   .  So long as any principal of or interest on any Loan or any other Obligation (whether or not due) shall remain unpaid or any Lender shall have any Commitment hereunder, each Loan Party shall not, unless the Required Lenders shall otherwise consent in writing:
 
(a)   Liens, Etc.   Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien upon or with respect to any of its properties, whether now owned or hereafter acquired, other than Permitted Liens.
 
(b)   Indebtedness .  Create, incur, assume, guarantee or suffer to exist, or otherwise become or remain liable with respect to, or permit any of its Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise become or remain liable with respect to, any Indebtedness other than Permitted Indebtedness.
 
(c)   Fundamental Changes; Dispositions .  Wind-up, liquidate or dissolve, or merge, consolidate or amalgamate with any Person, or convey, sell, lease or sublease, transfer or otherwise dispose of, whether in one transaction or a series of related transactions, all or any part of its business, property or assets, whether now owned or hereafter acquired (or agree to do any of the foregoing), or permit any of its Subsidiaries to do any of the foregoing, other than (x) Permitted Dispositions and (y) the transfer by the Borrower to the Protected Cell of the assets transferred to it by WMMRC, if any, in connection with the Insurance Book Closing, as contemplated by the definition thereof, provided , however , that (i) any wholly-owned direct or indirect Subsidiary of any Loan Party (other than the Borrower) may be merged into such Loan Party or another wholly-owned direct or indirect Subsidiary of such Loan Party, or may consolidate with another wholly-owned direct or indirect Subsidiary of such Loan Party, so long as (A) no other provision of this Agreement would be violated thereby, (B) such Loan Party gives the Agent (for delivery to the Lenders) at least 30 days'
 

 
 
 

 
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prior written notice of such merger or consolidation, (C) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, (D) the Lenders' rights in any Collateral, including, without limitation, the existence, perfection and priority of any Lien thereon, are not adversely affected by such merger or consolidation and (E) the surviving Subsidiary, if any, if not already a Loan Party, is joined as a Loan Party as a Guarantor and is a party to a Security Agreement, and the Equity Interests of such Subsidiary is the subject of a Security Agreement, in each case, which is in full force and effect on the date of and immediately after giving effect to such merger or consolidation (it being understood that no Insurance Subsidiary shall merge with any other Subsidiary).
 
(d)   Change in Nature of Business .  Make, or permit any of its Subsidiaries to make, any change in the nature of its business as described in Section 5.01(l).
 
(e)   Loans, Advances, Investments, Etc. Make or commit or agree to make or permit any of its Subsidiaries make or commit or agree to make, any Investment in any other Person except for Permitted Investments.
 
(f)   Restricted Payments .  (i)  Declare or pay any dividend or other distribution, direct or indirect, on account of any Equity Interests of any Loan Party or any of its Subsidiaries, now or hereafter outstanding (a "Dividend"), (ii) make any repurchase, redemption, retirement, defeasance, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interests of any Loan Party or any direct or indirect parent of any Loan Party, now or hereafter outstanding, (iii) make any payment to retire, or to obtain the surrender of, any outstanding warrants, options or other rights for the purchase or acquisition of shares of any class of Equity Interests of any Loan Party, now or hereafter outstanding, (iv) return any Equity Interests to any shareholders or other equity holders of any Loan Party or any of its Subsidiaries, or make any other distribution of property, assets, shares of Equity Interests, warrants, rights, options, obligations or securities thereto as such or (v) pay any management fees or any other fees or expenses (including the reimbursement thereof by any Loan Party or any of its Subsidiaries) pursuant to any management, consulting or other services agreement to any of the shareholders or other equityholders of any Loan Party or any of its Subsidiaries or other Affiliates, or to any other Subsidiaries or Affiliates of any Loan Party other than another Loan Party; provided, however, that (w) the Loan Parties may declare or pay Dividends to any other Loan Party, (x) the Borrower may declare and pay Dividends to its equityholders in an aggregate amount not to exceed 50% of Consolidated Net Income of the Loan Parties for such Fiscal Year (commencing with the Fiscal Year ending December 31, 2012) less, to the extent that Consolidated Net Income for the period from the Effective Date through the end of the prior Fiscal Year is a negative number (deficit), an amount equal to such negative number (deficit);  and provided, further that so long as after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and the certificate required under Section 6.01(a)(iv) has been delivered (for the avoidance of doubt Restricted Disposition Proceeds and amounts deposited into a controlled account in connection with the exercise of the Cure Rights shall be excluded in calculating dividends permitted to be paid pursuant to this proviso), (y) WMMRC may pay the Dividends to the Borrower permitted by Section 6.02(o) hereof, and (z) the Protected Cell may pay the Dividends to the Borrower permitted by Section 6.02(q) hereof.
 

 
 
 

 
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(g)   Federal Reserve Regulations .  Permit any Loan or the proceeds of any Loan under this Agreement to be used for any purpose that would cause such Loan to be a margin loan under the provisions of Regulation T, U or X of the Board.
 
(h)   Transactions with Affiliates .  Enter into, renew, extend or be a party to, or permit any of its Subsidiaries to enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except (i) transactions consummated in the ordinary course of business in a manner and to an extent necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof, and that are fully disclosed in writing to the Agent (for delivery to the Lenders) prior to the consummation thereof, if they involve one or more payments by the Borrower or any of its Subsidiaries in excess of $250,000 for any single transaction or series of related transactions, (ii) transactions with another Loan Party, (iii) transactions permitted by Section 6.02(e) and Section 6.02(f), and (iii) the transfer by the Borrower to the Protected Cell of the assets transferred to it by WMMRC, if any, in connection with the Insurance Book Closing, as contemplated by the definition thereof.
 
(i)   Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries .  Create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of any Loan Party (i) to pay dividends or to make any other distribution on any shares of Equity Interests of such Subsidiary owned by any Loan Party or any of its Subsidiaries, (ii) to pay or prepay or to subordinate any Indebtedness owed to any Loan Party or any of its Subsidiaries, (iii) to make loans or advances to any Loan Party or any of its Subsidiaries or (iv) to transfer any of its property or assets to any Loan Party or any of its Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing; provided ,   however ,   that nothing in any of clauses (i) through (iv) of this Section 6.02(i) shall prohibit or restrict compliance with:
 
     (A)   this Agreement, the other Loan Documents and the Run-Off Notes Documents (as in effect on the date hereof);
 
     (B)   any applicable law, rule or regulation (including, without limitation, applicable currency control laws and applicable state corporate statutes restricting the payment of dividends in certain circumstances);
 
     (C)   in the case of clause (iv), customary restrictions on the subletting, assignment or transfer of any specified property or asset set forth in a lease, license, asset sale agreement or similar contract for the conveyance of such property or asset; or
 
     (D)   in the case of clause (iv) any agreement, instrument or other document evidencing a Permitted Lien (or the Indebtedness secured thereby) from restricting on customary terms the transfer of any property or assets subject thereto.
 

 
 
 

 
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(j)   Modifications of Indebtedness, Organizational Documents and Certain Other Agreements; Etc.
 
(i)   amend, modify or otherwise change (or permit the amendment, modification or other change in any manner of) any of the provisions of any of its or its Subsidiaries Indebtedness (other than the Run-Off Notes to the extent permitted thereby) or of any instrument or agreement (including, without limitation, any purchase agreement, indenture, loan agreement or security agreement) relating to any such Indebtedness unless such amendment, modification or change would be permitted by clause (i) of the definition of Permitted Indebtedness,
 
(ii)   except for the Obligations, make any voluntary or optional payment (including, without limitation, any payment of interest in cash that, at the option of the issuer, may be paid in cash or in kind), prepayment, redemption, defeasance, sinking fund payment or other acquisition for value of any of its or its Subsidiaries' Indebtedness (including, without limitation, by way of depositing money or securities with the trustee therefor before the date required for the purpose of paying any portion of such Indebtedness when due), or refund, refinance, replace or exchange any other Indebtedness for any such Indebtedness (except to the extent such Indebtedness is otherwise expressly permitted by the definition of "Permitted Indebtedness"), make any payment, prepayment, redemption, defeasance, sinking fund payment or repurchase of any Subordinated Indebtedness in violation of the subordination provisions thereof or any subordination agreement with respect thereto, or make any payment, prepayment, redemption, defeasance, sinking fund payment or repurchase of any Indebtedness as a result of any asset sale, change of control, issuance and sale of debt or equity securities or similar event, or give any notice with respect to any of the foregoing; or
 
(iii)   amend, modify or otherwise change any of the governing documents (including, without limitation, by the filing or modification of any certificate of designation, or any agreement or arrangement entered into by it) (A) of any Loan Party or Insurance Subsidiary, with respect to any of its Equity Interests (including any shareholders' agreement), or enter into any new agreement with respect to any of its Equity Interests, except any such amendments, modifications or changes or any such new agreements or arrangements pursuant to this clause (iii)(A) that are not materially adverse to the interests of the Agent or the Lenders, or (B) of the Borrower only, with respect to any provisions therein relating to the selection, removal and rights and obligations of the Lender Board Representative.
 
(k)   Investment Company Act of 1940 .  Engage in any business, enter into any transaction, use any securities or take any other action or permit any of its Subsidiaries to do any of the foregoing, that would cause it or any of its Subsidiaries to become subject to the registration requirements of the Investment Company Act of 1940, as amended, by virtue of being an "investment company" or a company "controlled" by an "investment company" not entitled to an exemption within the meaning of such Act.
 
(l)   ERISA .  (i) Establish, sponsor, maintain, become a party or contribute to or become obligated to sponsor, maintain or contribute to any Multiemployer Plan or any defined benefit plan (or permit any of its ERISA Affiliates to do any of the foregoing) or (ii) adopt or permit any ERISA Affiliate to adopt any employee welfare benefit
 

 
 
 

 
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plan within the meaning of Section 3(1) of ERISA which provides benefits to employees after termination of employment other than as required by Section 601 of ERISA or applicable law.
 
(m)   Limitations on Negative Pledges .  Enter into, incur or permit to exist, or permit any Subsidiary to enter into, incur or permit to exist, directly or indirectly, any agreement that prohibits or restricts the ability of any Loan Party or any Subsidiary of any Loan Party to create, incur or permit to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, except the following:  (i) this Agreement, the other Loan Documents, and the Run-Off Notes Documents, (ii) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by Section 6.02(a) of this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (iii) customary provisions in leases restricting the assignment or sublet thereof.
 
(n)   Anti-Terrorism Laws .  None of the Loan Parties, nor any of their Affiliates or agents shall: (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the OFAC Sanctions Programs or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the OFAC Sanctions Programs, the USA PATRIOT Act or any other Anti-Terrorism Law.  None of the Loan Parties shall knowingly cause or permit (i) a Blocked Person to have any direct or indirect interest in or benefit of any nature whatsoever in the Loan Parties or (ii) any of the funds or properties of the Loan Parties that are used to repay the Loans to constitute property of, or be beneficially owned directly or indirectly by, an Blocked Person. The Loan Parties shall deliver to the Lenders any certification or other evidence requested from time to time by any Lender in its reasonable discretion, confirming the Loan Parties' compliance with this Section 6.02(n).
 
(o)   WMMRC .  Permit WMMRC to engage in any business or activity other than: (i) the performance of its obligations, if any, under or pursuant to the Run-Off Notes Documents, (ii) the performance of its obligations under any contracts relating to the Run-Off Proceeds, (iii) the granting of Permitted Liens described under clause (p) of the definition thereof, if any, on the Run-Off Proceeds, (iv) (x) the transfer of assets contemplated by the definition of Insurance Book Closing in connection therewith to the Protected Cell or to the Borrower, and (y) the payment of Dividends on account of the Run-Off Proceeds to the Borrower prior to the occurrence of the Insurance Book Closing, (v) the Insurance Book Closing, (vi) at any time after the Insurance Book Closing, and in compliance (to the extent applicable) with the requisites of Section 6.01(b), WMMRC New Business, and (vii) any activity reasonably incidental to any of the foregoing.
 
(p)   Negative Pledge and Lien Requirements .  Fail to comply with the Negative Pledge Requirement or with any Lien Requirement.
 
(q)   Protected Cell .  Permit the Protected Cell to engage in any business or activity other than: (i) the performance of its obligations, if any, under or pursuant
 

 
 
 

 
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to the Run-Off Notes Documents, (ii) the performance of its obligations under any contracts relating to the Run-Off Proceeds, (iii) the granting of Permitted Liens described under clause (p) of the definition thereof, if any, on the Run-Off Proceeds, (iv) the payment of Dividends on account of the Run-Off Proceeds to the Borrower after the occurrence of the Insurance Book Closing, and (v) any activity reasonably incidental to any of the foregoing.
 
Section 6.03   Financial Covenants   .  So long as any principal of or interest on any Loan or any other Obligation (whether or not due) shall remain unpaid or any Lender shall have any Commitment hereunder, each Loan Party shall not, unless the Required Lenders shall otherwise consent in writing:
 
(a)   Interest Coverage Ratio .  Permit the Interest Coverage Ratio of the Borrower and its Subsidiaries for any period of 12 consecutive fiscal months as of the last day of any fiscal quarter of the Borrower and its Subsidiaries which ends on a date set forth below (or such shorter period as follows: (x) if the first Loan advance is made within the first forty-five (45) days of the quarter, for the period from the first date of the fiscal quarter in which the first Loan advance is made through such date or (y) if the first Loan advance is made on the forty-sixth (46th) day of the quarter or later, for the period from the first day of the next fiscal quarter and ending at the date set forth below) to be less than the amount set forth opposite such date:
 
Fiscal Quarter End
Interest Coverage Ratio
March 31, 2012 (or if the first Loan advance is later (x) but within the first forty-five (45) days of the quarter, then the quarter ending on or after the date of such first advance or (y) if on the forty-sixth (46 th ) day of the quarter or later, then the quarter ending after the quarter in which such advance is made) and as of the last day of each fiscal quarter thereafter until March 31, 2014
1.30 to 1.00
June 30, 2014 and as of the last day of each fiscal quarter thereafter
1.50 to 1.00

provided , however , that if the Borrower at any time makes borrowings under the Term Loan B in respect of Permitted Originations, on and after such time, the Interest Coverage Ratio of the Borrower and its Subsidiaries in respect of any fiscal quarter ending March 31, 2012 through March 31, 2014 shall not be less than 1.35 to 1.00 at the end of any such fiscal quarter.
 
(b)   Business Performance Test .  Permit the Borrower and its Subsidiaries as of the last day of any Fiscal Year of the Borrower and its Subsidiaries to be in violation of both clause (a) and clause (b) of the definition of "Business Performance Test", it being understood that no Loan Party shall be in violation of this covenant if the Borrower and
 

 
 
 

 
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its Subsidiaries meet the criteria set forth in at least one of the clauses of the definition of "Business Performance Test".
 
(c)   Certain Cure Rights .  Notwithstanding anything to the contrary contained in this Section 6.03, in the event that any Loan Party would otherwise be in default of any financial covenant set forth in this Section 6.03, until the 10th day subsequent to delivery of the related Certificate of Authorized Officer pursuant to Section 6.01(a)(iv), the Borrower shall have the right, but in any event no more than two times in any twelve-month period (and not more than four times before the Final Maturity Date) to exercise the Cure Right.
 
ARTICLE VII

 
EVENTS OF DEFAULT
 
Section 7.01   Events of Default   .  If any of the following Events of Default shall occur and be continuing:
 
(a)   the Borrower shall fail to pay any principal of or interest (with respect to interest only, within three (3) days after the due date thereof) on any Loan, or any fee, indemnity or other amount payable under this Agreement or any other Loan Document when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise);
 
(b)   any representation or warranty (after giving effect to any materiality qualifiers contained therein) made or deemed made in connection with or pursuant to any Loan Document shall have been incorrect or misleading in any material respect when made or deemed made.
 
(c)   any Loan Party shall fail to perform or comply with any covenant or agreement contained in Sections 6.01(a), 6.01(c), 6.01(d), 6.01(f), 6.02 or 6.03;
 
(d)   any Loan Party shall fail to perform or comply with any other term, covenant or agreement contained in any Loan Document to be performed or observed by it and, except as set forth in subsections (a), (b) and (c) of this Section 7.01, such failure, if capable of being remedied, shall remain unremedied for ten (10) Business Days after the earlier of the date a senior officer of any Loan Party becomes aware of such failure and the date written notice of such default shall have been given by the Agent or the Required Lenders to such Loan Party;
 
(e)   the Borrower or any of its Subsidiaries shall fail to pay any of its Indebtedness (excluding Indebtedness evidenced by this Agreement) in excess of $250,000, or any payment of principal, interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or any other default under any agreement or instrument relating to any such Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if
 

 
 
 

 
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the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased or an offer to prepay, redeem, purchase or defease such Indebtedness shall be required to be made, in each case, prior to the stated maturity thereof;
 
(f)   the Borrower or any of its Subsidiaries (i) shall institute any proceeding or voluntary case seeking to adjudicate it bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for any such Person or for any substantial part of its property, (ii) shall be generally not paying its debts as such debts become due or shall admit in writing its inability to pay its debts generally, (iii) shall make a general assignment for the benefit of creditors, or (iv) shall take any action to authorize or effect any of the actions set forth above in this subsection (f);
 
(g)   any proceeding shall be instituted against the Borrower or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for any such Person or for any substantial part of its property, and either such proceeding shall remain undismissed or unstayed for a period of 30 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against any such Person or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property) shall occur;
 
(h)   one or more judgments, orders or awards (or any settlement of any claim that, if breached, could result in a judgment, order or award) for the payment of money exceeding $250,000 in the aggregate shall be rendered against the Borrower or any of its Subsidiaries, unless stayed or bonded pending appeal;
 
(i)   except as expressly permitted pursuant to Section 6.02(c), unless the Required Lenders consent in writing, the Borrower or any of its Subsidiaries dissolves, or suspends or discontinues an existing business;
 
(j)   the Borrower or any of its Subsidiaries is prohibited or otherwise restrained from conducting the business theretofore conducted by it in any manner that has or could reasonably be expected to result in a Material Adverse Effect by virtue of any determination, ruling, decision, decree or order of any court or Governmental Authority of competent jurisdiction;
 
(k)   (i) the indictment of the Borrower or any of its Subsidiaries under any criminal statute, or the commencement of criminal proceedings against the Borrower or any of its Subsidiaries or (ii) an adverse finding in any civil proceeding against the Borrower or any of its Subsidiaries, pursuant to which statute or proceedings the penalties
 

 
 
 

 
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or remedies sought or available include forfeiture to any Governmental Authority of any material portion of the property of such Person; or
 
(l)   a Change of Control shall have occurred, except that a transaction where the proceeds of such transaction are used to indefeasibly pay all Obligations in full in cash upon the consummation thereof (and all remaining Term Loan Commitments are terminated contemporaneously therewith) shall not be deemed a Change of Control for purposes of this Section 7.01(l);
 
then, and in any such event, the Agent may, and shall at the request of the Required Lenders, (i) terminate or reduce all Term Loan A Commitments and/or all Term Loan B Commitments, and upon the request of the Term Loan A-1 Lenders terminate the Term Loan A-1 Commitments whereupon all such Term Loan A Commitments, such Term Loan A-1 Commitments and/or Term Loan B Commitments shall immediately be so terminated or reduced, (ii) declare all or any portion of the Loans then outstanding to be due and payable, whereupon all or such portion of the aggregate principal of all Loans, all accrued and unpaid interest thereon, all fees and all other amounts payable under this Agreement and the other Loan Documents shall become due and payable immediately, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party and (iii) exercise any and all of its other rights and remedies under applicable law, hereunder and under the other Loan Documents; provided , however , that upon the occurrence of any Event of Default described in subsection (f) or (g) of this Section 7.01 with respect to any Loan Party, without any notice to any Loan Party or any other Person or any act by the Agent or any Lender, all Term Loan A Commitments, Term Loan A-1 Commitments and Term Loan B Commitments shall automatically terminate and all Loans then outstanding, together with all accrued and unpaid interest thereon, all fees and all other amounts due under this Agreement and the other Loan Documents shall become due and payable automatically and immediately, without presentment, demand, protest or notice of any kind, all of which are expressly waived by each Loan Party.
 
Section 7.02   Agent Matters Upon Default  .  The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default (other than the payment of any principal of or interest on any Loan and any accrued and unpaid fees and expenses of the Agent) unless the Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default” or “notice of event of default”.  In the event that the Agent receives such a written notice, the Agent shall give notice thereof to all the Lenders and the Borrower.  The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders); provided that unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
 

 
 
 

 
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ARTICLE VIII

 
AGENT
 
Section 8.01   Appointment   .  Each Lender (and each subsequent maker of any Loan by its making thereof) hereby irrevocably appoints and authorizes the Agent to perform the duties of the Agent as set forth in this Agreement and the other Loan Documents including:  (i) to receive on behalf of each Lender any payment of principal of or interest on the Loans outstanding hereunder and all other amounts accrued hereunder for the account of the Lenders and paid to the Agent, and, subject to Section 2.02 of this Agreement, to distribute promptly to each Lender its Pro Rata Share of all payments so received; (ii) to distribute to each Lender copies of all material notices and agreements received by the Agent and not required to be delivered by any Loan Party to each Lender pursuant to the terms of this Agreement, provided that the Agent shall not have any liability to the Lenders for the Agent's inadvertent failure to distribute any such notices or agreements to the Lenders; (iii) to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Loans, and related matters and to maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Collateral and related matters; (iv) after the Effective Date, to arrange for the filing and continuation, of financing statements or other filing or recording documents or instruments (collectively, the " Financing Statements ") for the perfection of security interests in the Collateral; provided , that, the Agent shall not be responsible for the preparation, form, content, sufficiency or adequacy of any such Financing Statements all of which shall be provided in writing to the Agent by the Required Lenders including the jurisdictions and filing offices where the Agent is required to file such Financing Statements; (v) to perform, exercise, and enforce any and all other rights and remedies of the Lenders with respect to the Loan Parties, the Obligations, or otherwise related to any of same to the extent reasonably incidental to the exercise by the Agent of the rights and remedies specifically authorized to be exercised by the Agent by the terms of this Agreement or any other Loan Document; (vi)  subject to Section 8.03 of this Agreement, to incur and pay such fees necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to this Agreement or any other Loan Document; and (vii) subject to Section 8.03 of this Agreement, to take such action as the Agent deems appropriate on its behalf to administer the Loans and the Loan Documents and to exercise such other powers delegated to the Agent by the terms hereof or the other Loan Documents (including, without limitation, the power to give or to refuse to give notices, waivers, consents, approvals and instructions and the power to make or to refuse to make determinations and calculations) together with such powers as are reasonably incidental thereto to carry out the purposes hereof and thereof.  As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, enforcement or collection of the Loans), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions of the Required Lenders shall be binding upon all Lenders and all makers of Loans; provided , however , that the Agent shall not be required to take any action which, in the reasonable opinion of the Agent, exposes the Agent to liability or which is contrary to this Agreement or any other Loan Document or applicable law.
 

 
 
 

 
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Section 8.02   Nature of Duties   .  The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement or in the other Loan Documents.  The duties of the Agent shall be mechanical and administrative in nature.  The Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender.  Nothing in this Agreement or any other Loan Document, express or implied, is intended to or shall be construed to impose upon the Agent any obligations in respect of this Agreement or any other Loan Document except as expressly set forth herein or therein.  Each Lender shall make its own independent investigation of the financial condition and affairs of the Loan Parties in connection with the making and the continuance of the Loans hereunder and shall make its own appraisal of the creditworthiness of the Loan Parties and the value of the Collateral, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into their possession before the initial Loan hereunder or at any time or times thereafter, provided that, upon the reasonable written request of a Lender, the Agent shall provide to such Lender any documents or reports delivered to the Agent by the Loan Parties pursuant to the terms of this Agreement or any other Loan Document.  If the Agent seeks the consent or approval of the Required Lenders to the taking or refraining from taking any action hereunder, the Agent shall send notice thereof to each Lender.  The Agent shall promptly notify each Lender any time that the Required Lenders have instructed the Agent to act or refrain from acting pursuant hereto.  Without limiting the foregoing, it is understood that upon receipt by the Agent of any request, action or information for which the vote, or determination  or direction of the Lenders is required in accordance with the terms hereof, the Agent agrees to promptly make such request,  or provide such information,  to the Lenders.  The Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to rely on advice of counsel concerning all matters pertaining to such duties.  The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
 
Section 8.03   Rights, Exculpation, Etc.     The Agent and its directors, officers, agents or employees shall not be liable for any action taken or omitted to be taken by them under or in connection with this Agreement or the other Loan Documents, except for their own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.  Without limiting the generality of the foregoing, the Agent (i) may treat the payee of any Loan as the owner thereof until the Agent receives an Assignment and Acceptance, pursuant to Section 10.07 hereof, signed by such payee; (ii) may consult with legal counsel (including, without limitation, counsel to the Agent or counsel to the Loan Parties), independent public accountants, and other experts selected by any of them and shall not be liable for any action taken or omitted to be taken in good faith by any of them in accordance with the advice of such counsel or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, certificates, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Person, the existence or possible existence of any Default or Event of Default, or to inspect the Collateral or other property (including, without limitation, the books and records) of any Person; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents
 

 
 
 

 
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or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall not be deemed to have made any representation or warranty regarding the existence, value or collectibility of the Collateral, the existence, priority or perfection of the Agent's Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.  The Agent shall not be liable for any apportionment or distribution of payments made in good faith pursuant to Section 3.03, and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Lender to whom payment was due but not made, shall be to recover from other Lenders any payment in excess of the amount which they are determined to be entitled.  The Agent may at any time request instructions from the Lenders with respect to any actions or approvals which by the terms of this Agreement or of any of the other Loan Documents the Agent is permitted or required to take or to grant, and if such instructions are promptly requested, the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval under any of the Loan Documents until they shall have received such instructions from the Required Lenders.  Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Required Lenders.
 
Section 8.04   Reliance   .  The Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Loan Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.
 
Section 8.05   Indemnification   .  To the extent that the Agent is not reimbursed and indemnified by any Loan Party, the Lenders will, within five (5) Business Days of written demand by the Agent, reimburse and indemnify the Agent from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including, without limitation, client charges and expenses of counsel or any other advisor to the Agent), advances or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by the Agent under this Agreement or any of the other Loan Documents, in proportion to each Lender's Pro Rata Share; provided , however , that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements for which there has been a final non-appealable judicial determination by a court of competent jurisdiction that such liability resulted from the Agent's gross negligence or willful misconduct.  The obligations of the Lenders under this Section 8.05 shall survive the payment in full of the Loans, the termination of this Agreement and the earlier resignation or removal of the Agent.
 
Section 8.06   Agent Individually   .  With respect to its Pro Rata Share of the Total Commitment hereunder and the Loans made by it, if any, the Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender or maker of a Loan.  The terms "Lenders" or "Required Lenders" or any similar terms shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity as a Lender or one of the
 

 
 
 

 
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Required Lenders.  The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with the Borrower as if it were not acting as an Agent pursuant hereto without any duty to account to the other Lenders.
 
Section 8.07   Successor Agent   .  (a)  The Agent may resign from the performance of all its functions and duties hereunder and under the other Loan Documents at any time by giving at least thirty (30) Business Days' prior written notice to the Borrower and each Lender.  Such resignation shall take effect upon the acceptance by a successor Agent of appointment pursuant to clauses (b) and (c) below or as otherwise provided below.
 
(b)   Upon any such notice of resignation, the Required Lenders shall appoint a successor Agent.  Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents.  After the Agent's resignation hereunder as an Agent, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement and the other Loan Documents.
 
(c)   If a successor Agent shall not have been so appointed within said thirty (30) Business Day period, the retiring Agent shall then appoint a successor Agent who shall serve as an Agent until such time, if any, as the Required Lenders appoint a successor Agent as provided above.
 
Section 8.08   Agency for Perfection   .  The Agent and each Lender hereby appoints the Agent and each other Lender as agent and bailee for the purpose of perfecting the security interests in and Liens upon the Collateral in assets which, in accordance with Article 9 of the Uniform Commercial Code, can be perfected only by possession or control (or where the security interest of a secured party with possession or control has priority over the security interest of another secured party) and the Agent and each Lender hereby acknowledges that it holds possession of or otherwise controls any such Collateral for the benefit of the Agent and the Lenders as secured party.  Should any Lender obtain possession or control of any such Collateral, such Lender shall notify the Agent thereof, and, promptly upon the Agent's request therefor shall deliver such Collateral to the Agent or in accordance with the Agent's instructions.  In addition, the Agent shall also have the power and authority hereunder to appoint such other sub-agents as may be necessary or required under applicable state law or otherwise to perform its duties and enforce its rights with respect to the Collateral and under the Loan Documents and the Agent shall not be responsible for the negligence or misconduct of any sub-agents selected by it with reasonable care.  Each Loan Party, by its execution and delivery of this Agreement, hereby consents to the foregoing.
 
Section 8.09   No Reliance on the Agent's Customer Identification Program   .  Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender's, Affiliate's, participant's or assignee's customer identification program, or other requirements imposed by the USA PATRIOT Act or the regulations issued thereunder, including the regulations set forth in 31 CFR § 103.121, as hereafter amended or replaced (" CIP Regulations "), or any other Anti-
 

 
 
 

 
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Terrorism Laws, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby:  (1) any identity verification procedures, (2) any recordkeeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or other regulations issued under the USA PATRIOT Act.  Each Lender, Affiliate, participant or assignee subject to Section 326 of the USA PATRIOT Act will perform the measures necessary to satisfy its own responsibilities under the CIP Regulations.
 
Section 8.10   No Third Party Beneficiaries   .  The provisions of this Article are solely for the benefit of the Agent and the Lenders, and no Loan Party shall have rights as a third party beneficiary of any of such provisions.
 
Section 8.11   No Fiduciary Relationship   .  It is understood and agreed that the use of the term "agent" herein or in any other Loan Document (or any other similar term) with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine or any applicable law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.  In addition, it is understood and agreed that neither the Agent nor any Lender has any fiduciary or insider relationship with or duty to any Loan Party arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Agent and Lenders, on one hand, and the Loan Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor.
 
Section 8.12   Reports; Confidentiality; Disclaimers   .  By becoming a party to this Agreement, each Lender (subject to Section 10.18):
 
(a)   is deemed to have requested that the Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report with respect to the Borrower or any of its Subsidiaries by a third party selected by the Required Lenders (each, a " Report ") and the Agent shall so furnish each Lender with each such Report,
 
(b)   expressly agrees and acknowledges that the Agent (i) does not make any representation or warranty as to the accuracy of any Reports, and (ii) shall not be liable for any information contained in any Reports,
 
(c)   expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the Agent or other party performing any audit or examination will inspect only specific information regarding the Borrower and its Subsidiaries and will rely significantly upon the Borrower's and its Subsidiaries' books and records, as well as on representations of their personnel, and
 
(d)   agrees to keep all Reports and other material, non-public information regarding the Borrower and its Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner.
 
Section 8.13   Collateral Matters
 

 
 
 

 
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(a)     Each Lender (i) consents and agrees to the terms of each Security Document, as originally in effect and as amended, supplemented or replaced from time to time in accordance with its terms or the terms of this Financing Agreement, (ii) authorizes and directs the Agent to enter into the Security Documents to which it is a party, (iii) authorizes and empowers the Agent to execute and deliver the Intercreditor Agreement and (iv) authorizes and empowers the Agent to bind the Lenders as set forth in the Security Documents to which the Agent is a party and the Intercreditor Agreement and to perform its obligations and exercise its rights and powers thereunder.
 
(b)      Upon request by the Agent at any time, the Lenders will promptly confirm in writing the Agent's authority to release particular types or items of Collateral.
 
ARTICLE IX

 
GUARANTY
 
Section 9.01   Guaranty   .  Each Guarantor hereby jointly and severally and unconditionally and irrevocably guarantees the punctual payment when due and performance, whether at stated maturity, by acceleration or otherwise, of all Obligations of the Borrower now or hereafter existing under any Loan Document, whether for principal, interest (including, without limitation, all interest that accrues after the commencement of any Insolvency Proceeding of the Borrower, whether or not a claim for post-filing interest is allowed in such Insolvency Proceeding), fees, commissions, expense reimbursements, indemnifications or otherwise (such obligations, to the extent not paid by the Borrower, being the " Guaranteed Obligations "), and agrees to pay any and all expenses (including reasonable counsel fees and expenses) payable under Section 10.04 and all expenses incurred by the Agent and the Lenders in enforcing any rights under the guaranty set forth in this ARTICLE IX.  Without limiting the generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower to the Agent and the Lenders under any Loan Document but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving the Borrower.  In no event shall the obligation of any Guarantor hereunder exceed the maximum amount such Guarantor could guarantee under any bankruptcy, insolvency or other similar law.  Each of the Guarantors further agrees that the Guaranteed Obligations may be extended, increased or renewed, amended or modified, in whole or in part, without notice to, or further assent from, such Guarantor and that such Guarantor will remain bound upon its guarantee hereunder notwithstanding any such extension, increase, renewal, amendment or modification of any Guaranteed Obligation.
 
Section 9.02   Guaranty Absolute   .  Each Guarantor jointly and severally guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent and the Lenders with respect thereto.  Each Guarantor agrees that this ARTICLE IX constitutes a guaranty of payment when due and not of collection and waives any right to require that any resort be made by the Agent or any Lender to any Collateral.  The obligations of each Guarantor under this ARTICLE IX are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce such obligations, irrespective of whether any action
 

 
 
 

 
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is brought against any Loan Party or whether any Loan Party is joined in any such action or actions.  The liability of each Guarantor under this ARTICLE IX shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following:
 
(a)   any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;
 
(b)   any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or otherwise;
 
(c)   any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
 
(d)   the existence of any claim, set-off, defense or other right that any Guarantor may have at any time against any Person, including, without limitation, the Agent or any Lender;
 
(e)   any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Loan Party; or
 
(f)   any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Agent or the Lenders that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety.
 
This ARTICLE IX shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Agent, the Lenders, or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made.
 
Section 9.03   Waiver   .  Each Guarantor hereby waives (i) promptness and diligence, (ii) notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this ARTICLE IX and any requirement that the Agent or the Lenders exhaust any right or take any action against any Loan Party or any other Person or any Collateral, (iii) any right to compel or direct the Agent or any Lender to seek payment or recovery of any amounts owed under this ARTICLE IX from any one particular fund or source or to exhaust any right or take any action against any other Loan Party, any other Person or any Collateral, (iv) any requirement that the Agent or any Lender protect, secure, perfect or insure any security interest or Lien on any property subject thereto or exhaust any right to take any action against any Loan Party, any other Person or any Collateral, and (v) any other defense available to any Guarantor.  Each Guarantor agrees that the Agent and the Lenders shall have no obligation to marshal any assets in favor of any Guarantor or against, or in payment of, any or all of the Obligations.  Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing
 

 
 
 

 
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arrangements contemplated herein and that the waiver set forth in this Section 9.03 is knowingly made in contemplation of such benefits.  Each Guarantor hereby waives any right to revoke this ARTICLE IX, and acknowledges that this ARTICLE IX is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.
 
Section 9.04   Continuing Guaranty; Assignments   .  This ARTICLE IX is a continuing guaranty and shall (a) remain in full force and effect until the later of the cash payment in full of the Guaranteed Obligations (other than indemnification obligations as to which no claim has been made) and all other amounts payable under this ARTICLE IX and  as to Term Loan A-1, the Final Term Loan A-1 Maturity Date and as to Term Loan A and Term Loan B. the Final Maturity Date, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agent and the Lenders and their successors, pledgees, transferees and assigns.  Without limiting the generality of the foregoing clause (c), any Lender may pledge, assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Term Loan A Commitment, its Term Loan A-1 Commitments, its Term Loan B Commitment, its Loans owing to it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted such Lender herein or otherwise, in each case as provided in Section 10.07.
 
Section 9.05   Subrogation   .  No Guarantor will exercise any rights that it may now or hereafter acquire against any Loan Party or any other guarantor that arise from the existence, payment, performance or enforcement of such Guarantor's obligations under this ARTICLE IX, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Agent and the Lenders against any Loan Party or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Loan Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this ARTICLE IX shall have been paid in full in cash and as to Term Loan A-1, the Final Term Loan A-1 Maturity Date shall have occurred and as to Term Loan A and Term Loan B, the Final Maturity Date shall have occurred.  If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this ARTICLE IX and as to Term Loan A-1, the Final Term Loan A-1 Maturity Date and as to Term Loan A and Term Loan B, the Final Maturity Date, such amount shall be held in trust for the benefit of the Agent and the Lenders and shall forthwith be paid to the Agent and the Lenders to be credited and applied to the Guaranteed Obligations and all other amounts payable under this ARTICLE IX, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this ARTICLE IX thereafter arising.  If (i) any Guarantor shall make payment to the Agent and the Lenders of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this ARTICLE IX shall be paid in full in cash and (iii) as to Term Loan A-1, the Final Term Loan A-1 Maturity Date shall have occurred and as to Term Loan A and Term Loan B, the Final Maturity Date shall have occurred, the Agent and the Lenders will, at such Guarantor's request
 

 
 
 

 
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and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor.
 
Section 9.06   Reinstatement   .  Notwithstanding anything to contrary contained in this Agreement, each of the Guarantors agrees that (a) its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Guaranteed Obligation is rescinded or must otherwise be restored by the Agent or any  Lender upon the bankruptcy or reorganization (or any analogous proceeding in any jurisdiction) of the Borrower or any other Guarantor or otherwise and (b) the provisions of this Section 9.06 shall survive the termination of this Agreement.
 
ARTICLE X

 
MISCELLANEOUS
 
Section 10.01   Notices, Etc .   (a) All notices and other communications provided for hereunder shall be in writing and shall be mailed (certified mail, postage prepaid and return receipt requested), telecopied or delivered by hand, Federal Express or other reputable overnight courier, if to any Loan Party, at the following address:
 
WMI Holdings Corp.
1201 Third Avenue, Suite 3000
Seattle, Washington 98101
Attention:  Charles Edward Smith, Interim Chief Executive Officer
Telephone:  206-432-8731
Telecopier:  206-432-8879
 
with copies to:
 
Schwabe Williamson & Wyatt, P.C.
1211 SW Fifth Avenue, Suite 1500-1900
Portland, Oregon 97204
Attention:  A. Jeffery Bird, Esq. (jbird@schwabe.com) and
Darius Hartwell, Esq. (dhartwell@schwabe.com)
Telephone:  503-222-9981
Telecopier:  503-796-2900

if to the Agent, to it at the following address:
 
U.S. Bank Corporate Trust Services
214 North Tryon Street, 26th floor
Charlotte, NC 28202
Attention:CDO Trust Services
Telecopier:704-335-4678
 

 
 
 

 
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with copies (which shall not constitute notice to the Agent) to:
 
Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, New York 10036
Attention: Bart Pisella, Esq. (bart.pisella@pillsburylaw.com) and
Timothy Kober, Esq. (timothy.kober@pillsburylaw.com)

or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 10.01.  All such notices and other communications shall be effective, (i) if mailed (certified mail, postage prepaid and return receipt requested), when received or three (3) days after deposited in the mails, whichever occurs first, (ii) if telecopied, when transmitted and confirmation received, or (iii) if delivered by hand, Federal Express or other reputable overnight courier, upon delivery, except that notices to the Agent pursuant to ARTICLE II shall not be effective until received by the Agent.
 
(b)   Electronic Communications .
 
     (i)   The Agent and the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
 
     (ii)   Unless the Agent otherwise prescribes, (A) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), and (B) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (A), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (A) and (B) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
 
Section 10.02   Amendments, Etc.     (a) No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders or by the Agent with the written consent of the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given, provided , however , that no amendment, waiver or consent shall (i) increase the Commitment of any Lender, reduce the principal of, or interest on, the Loans payable to any Lender, reduce the amount of any fee payable for the account of any Lender, or postpone or extend any scheduled date fixed for any payment of principal of, or interest or fees on, the Loans payable to any Lender, in each case without the written consent of each Lender affected thereby, (ii) increase the Total Term Loan A Commitment, the Total Term Loan A-1 Commitment or the Total Term
 

 
 
 

 
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Loan B Commitment without the written consent of each Lender, (iii) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that is required for the Lenders or any of them to take any action hereunder without the written consent of each Lender, (iv) amend the definition of "Required Lenders" or "Pro Rata Share" without the written consent of each Lender, (v) release all or a substantial portion of the Collateral (except as otherwise provided in this Agreement and the other Loan Documents), subordinate any Lien granted in favor of the Agent for the benefit of the Agent and the Lenders, or release the Borrower or any Guarantor without the written consent of each Lender, or (vi) amend, modify or waive Section 2.05(d), Section 3.03, this Section 10.02 or Section 10.07 of this Agreement without the written consent of each Lender; provided , further , that no amendment, waiver or consent shall (x) amend, modify or waive Section 2.01(a)(ii) or Section 2.01(a)(iii), of this Agreement without the written consent of each Lender with a Term Loan A-1 Commitment or a Term A-1 Loan in addition to the written consent of the Required Lenders, or (y) amend the definition of "Final Term Loan A-1 Maturity Date", "Term Loan A-1", "Term Loan A-1 Commitment", "Term Loan A-1 Commitment Termination Date", "Total Term Loan A-1 Commitment", or Schedule 1.01(A) with respect to the Term Loan A-1 Commitments, without the written consent of each Lender with a Term Loan A-1 Commitment or a Term A-1 Loan in addition to the written consent of the Required Lenders.  Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent (but not in its capacity as a Lender) under this Agreement or the other Loan Documents.  Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, a Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be zero, except for purposes of voting or consenting on matters described in (i), (ii), (iii), (iv) or (vi) above.
 
(b)   If any action to be taken by the Lenders hereunder requires the consent, authorization, or agreement of all of the Lenders or any Lender affected thereby, and a Lender other than the Agent and its respective Affiliates and Related Funds (the " Holdout Lender ") fails to give its consent, authorization, or agreement, then the Agent at the written direction of the Required Lenders, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Replacement Lenders, and the Holdout Lender shall have no right to refuse to be replaced hereunder.  Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.  Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever.  If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance.  The replacement of any Holdout Lender shall be made in accordance with the terms of Section 10.07(b).  Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make its Pro Rata Share of Loans.
 

 
 
 

 
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(c)   With respect to any matter set forth on Schedule 10.02(c) hereto, to the extent the Agent asks for a determination or direction from any Lender, each Lender agrees that it will not unreasonably delay its response (it being understood that each Lender shall have been provided by the Borrower and/or Agent, to the extent applicable, sufficient information in the reasonable discretion of such Lender to make such determination, or to provide such direction).
 
Section 10.03   No Waiver; Remedies, Etc.     No failure on the part of the Agent or any Lender to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right.  The rights and remedies of the Agent and the Lenders provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.  The rights of the Agent and the Lenders under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Agent and the Lenders to exercise any of their rights under any other Loan Document against such party or against any other Person.
 
Section 10.04   Expenses; Taxes; Attorneys' Fees   .  The Borrower will pay on demand all costs and expenses set forth in clauses (i) through (x) below incurred by or on behalf of: (a) the Agent (including, periodic field audits, investigations, searches and filings, monitoring of assets, appraisals of Collateral, miscellaneous disbursements, examination, travel, lodging and meals, but excluding the fees, costs and expenses of any legal counsel to the Agent in connection with any work prior to the Effective Date), and (b) each Lender (limited, in the case of costs and expenses of legal counsel (A) absent an Event of Default, to the reasonable fees, costs, client charges and expenses of: one outside transactional legal counsel for the Lenders, and, to the extent reasonably required by the Lenders, one outside legal counsel to the  Lenders in each relevant local jurisdiction, and (B) at any time after the occurrence and during the continuance of an Event of Default, to the reasonable fees, costs, client charges and expenses of one outside transactional legal counsel for each Lender, one outside regulatory legal counsel for each Lender, and, to the extent reasonably required by such Lender, one outside legal counsel to each Lender in each relevant local jurisdiction), in each case, arising from or relating to: (i) the performance and administration of this Agreement and the other Loan Documents (including, without limitation, the preparation of any additional Loan Documents pursuant to Section 6.01(b) or the review of any agreements, instruments and documents), (ii) any requested amendments, waivers or consents to this Agreement or the other Loan Documents whether or not such documents become effective or are given, (iii) the preservation and protection of the Agent's or any of the Lenders' rights under this Agreement or the other Loan Documents, (iv) the defense of any claim or action asserted or brought against the Agent or any Lender by any Person that arises from or relates to this Agreement, any other Loan Document, the Agent's or the Lenders' claims against any Loan Party, or any and all matters in connection therewith, (v) the commencement or defense of, or intervention in, any court proceeding arising from or related to this Agreement or any other Loan Document, (vi) the filing of any petition, complaint, answer, motion or other pleading by the Agent or any Lender, or the taking of any action in respect of the Collateral or other security, in connection with this Agreement or any other Loan Document, (vii) the protection, collection, lease, sale, taking possession of or liquidation of, any Collateral or other security in connection with this Agreement or any other Loan Document, (viii) any attempt to
 

 
 
 

 
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enforce any Lien or security interest in any Collateral or other security in connection with this Agreement or any other Loan Document, (ix) any attempt to collect from any Loan Party, or (x) the receipt by the Agent or any Lender of any advice from professionals with respect to any of the foregoing.  Without limitation of the foregoing or any other provision of any Loan Document:  (x) the Borrower agrees to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Agent or any Lender to be payable in connection with this Agreement or any other Loan Document, and the Borrower agrees to save the Agent and each Lender harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions, and (y) if the Borrower fails to perform any covenant or agreement contained herein or in any other Loan Document, the Agent may perform or cause performance of such covenant or agreement, and the expenses of the Agent incurred in connection therewith shall be reimbursed on demand by the Borrower.  The Borrower also agrees to pay any costs and expenses incurred by a Qualified Valuation Firm selected to prepare a valuation report in connection with any Independent Valuation Process conducted pursuant to this Agreement.  For the avoidance of doubt, Borrower and Lenders agree that any and all fees and expenses (including, without limitation, fees and expenses of legal counsel) incurred by a party before the Effective Date will be the sole responsibility of the party incurring such fees and expenses, and Borrower has no obligation under this Section 10.04 to reimburse Lenders for fees and expenses incurred before the Effective Date.  The obligations of the Borrower under this Section 10.04 shall survive the repayment of the Obligations and discharge of any Liens granted under the Loan Documents.
 
Section 10.05   Right of Set-off   .  Upon the occurrence and during the continuance of any Event of Default, the Agent or any Lender may, and is hereby authorized to, at any time and from time to time, without notice to any Loan Party (any such notice being expressly waived by the Loan Parties) and to the fullest extent permitted by law, set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by the Agent or such Lender to or for the credit or the account of any Loan Party against any and all obligations of the Loan Parties either now or hereafter existing under any Loan Document, irrespective of whether or not the Agent or such Lender shall have made any demand hereunder or thereunder and although such obligations may be contingent or unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of Section 3.02 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.  The Agent and each Lender agrees to notify such Loan Party promptly after any such set-off and application made by the Agent or such Lender provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of the Agent and the Lenders under this Section 10.05 are in addition to the other rights and remedies (including other rights of set-off) which the Agent and the Lenders may have under this Agreement or any other Loan Documents of law or otherwise.
 
Section 10.06   Severability   .   Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
 

 
 
 

 
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extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
 
Section 10.07   Assignments and Participations   .
 
(a)   This Agreement and the other Loan Documents shall be binding upon and inure to the benefit of each Loan Party and the Agent and each Lender and their respective successors and assigns; provided , however , that none of the Loan Parties may assign or transfer any of its rights hereunder or under the other Loan Documents without the prior written consent of each Lender and any such assignment without the Lenders' prior written consent shall be null and void.
 
(b)   Each Lender may with the written consent of the Agent (not to be unreasonably withheld), and so long as no Default or Event of Default shall have occurred and be continuing, with the written consent of the Borrower (not to be unreasonably withheld, delayed or conditioned), assign to one or more other lenders or other entities all or a portion of its rights and obligations under this Agreement with respect to all or a portion of its Commitment and any Loan made by it; provided , however , that (i) such assignment is in an amount which is at least $1,000,000 or a multiple of $1,000,000 in excess thereof (or the remainder of such Lender's Commitment) (except such minimum amount shall not apply to an assignment by a Lender to (x) another Lender, an Affiliate of such Lender or a Related Fund of such Lender or (y) a group of new Lenders, each of whom is an Affiliate or Related Fund of each other to the extent the aggregate amount to be assigned to all such new Lenders is at least $1,000,000 or a multiple of $1,000,000 in excess thereof), (ii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance, an Assignment and Acceptance, together with any promissory note subject to such assignment and such parties shall deliver to the Agent, for the benefit of the Agent, a processing and recordation fee of $3,500 (except the payment of such fee shall not be required in connection with an assignment by a Lender to another Lender, an Affiliate of such Lender or a Related Fund of such Lender) and (iii) no written consent of the Agent or the Borrower shall be required (1) in connection with any assignment by a Lender to another Lender, an Affiliate of such Lender or a Related Fund of such Lender or (2) if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of such Lender.  Upon such execution, delivery and acceptance, from and after the effective date specified in each Assignment and Acceptance and recordation on the Register, which effective date shall be at least 3 Business Days after the delivery thereof to the Agent (or such shorter period as may be agreed to by the Agent and the parties to such assignment), (A) the assignee thereunder shall become a "Lender" hereunder and, in addition to the rights and obligations hereunder held by it immediately prior to such effective date, have the rights and obligations hereunder that have been assigned to it pursuant to such Assignment and Acceptance and (B) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto).  No assignment shall be made to (i) the Borrower or any of its Affiliates or Subsidiaries or (ii) to any Defaulting Lender or any of its Subsidiaries,
 

 
 
 

 
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or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons.  In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Agent and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Pro Rata Share. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
 
(c)   By executing and delivering an Assignment and Acceptance, the assigning Lender and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto; (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or any of its Subsidiaries or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement and the other Loan Documents, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the assigning Lender, the Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents; (v) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers as are reasonably incidental hereto and thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Loan Documents are required to be performed by it as a Lender.
 
(d)   The Agent shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain, or cause to be maintained at the Payment Office, a copy of each Assignment and Acceptance delivered to and accepted by it and a register (the " Register ") for the recordation of the names and addresses of the Lenders and the
 

 
 
 

 
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Commitments of, and the principal amount of the Loans (and stated interest thereon) (the " Registered Loans ") owing to each Lender from time to time.  The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior written notice.
 
(e)   Upon receipt by the Agent of a completed Assignment and Acceptance, and subject to any consent required from the Agent pursuant to Section 10.07(b) (which consent of the Agent must be evidenced by the Agent's execution of an acceptance to such Assignment and Acceptance), the Agent shall accept such assignment and record the information contained therein in the Register.
 
(f)   A Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide).  Any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s).  Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any, evidencing the same), the Agent shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered on the Register as the owner thereof for the purpose of receiving all payments thereon, notwithstanding notice to the contrary.
 
(g)   In the event that any Lender sells participations in a Registered Loan, such Lender shall, acting for this purpose as a non-fiduciary agent on behalf of the Borrower, maintain, or cause to be maintained, a register, on which it enters the name of all participants in the Registered Loans held by it and the principal amount (and stated interest thereon) of the portion of the Registered Loan that is the subject of the participation (the " Participant Register ").  A Registered Loan (and the registered note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide).  Any participation of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.  The Participant Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior written notice.
 
(h)   Any Non-U.S. Lender who purchases or is assigned or participates in any portion of such Registered Loan shall comply with Section 2.07(e).
 
(i)   Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the
 

 
 
 

 
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other Loan Documents (including, without limitation, all or a portion of its Term Loan A Commitment, Term Loan A-1 Commitment and/or Term Loan B Commitment and the Loans made by it); provided, that (i) such Lender's obligations under this Agreement (including without limitation, its Term Loan A Commitment, Term Loan A-1 Commitment and/or Term Loan B Commitment hereunder) and the other Loan Documents shall remain unchanged; and (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents.  The Loan Parties agree that each participant shall be entitled to the benefits of Section 2.07 of this Agreement with respect to its participation in any portion of the Commitments and the Loans as if it was a Lender; provided, that no participant may receive a greater benefit than the Lender from whom such participant acquired its interest would have received.
 
(j)   Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or loans made to such Lender pursuant to securitization or similar credit facility (a " Securitization "); provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.  The Loan Parties shall cooperate with such Lender and its Affiliates to effect the Securitization including, without limitation, by providing such information as may be reasonably requested by such Lender in connection with the rating of its Loans or the Securitization.
 
Section 10.08   Counterparts   .  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of this Agreement by telefacsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpart of this Agreement by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.  The foregoing shall apply to each other Loan Document mutatis mutandis .
 
Section 10.09   GOVERNING LAW .   THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
 
Section 10.10   CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE   .  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE
 

 
 
 

 
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UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH LOAN PARTY HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF NEW YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS FOR NOTICES AS SET FORTH IN SECTION 10.01 AND TO THE SECRETARY OF STATE OF THE STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING.  THE LOAN PARTIES AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT AND THE LENDERS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION.  EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  TO THE EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
 
Section 10.11   WAIVER OF JURY TRIAL, ETC.     EACH LOAN PARTY, THE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  EACH LOAN PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS.  EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL
 

 
 
 

 
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INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT.
 
Section 10.12   Consent by the Agent and Lenders   .  Except as otherwise expressly set forth herein to the contrary or in any other Loan Document, if the consent, approval, satisfaction, determination, judgment, acceptance or similar action (an " Action ") of the Agent or any Lender shall be permitted or required pursuant to any provision hereof or any provision of any other agreement to which any Loan Party is a party and to which the Agent or any Lender has succeeded thereto, such Action shall be required to be in writing and may be withheld or denied by the Agent or such Lender, in its sole discretion, with or without any reason, and without being subject to question or challenge on the grounds that such Action was not taken in good faith.
 
Section 10.13   No Party Deemed Drafter   .  Each of the parties hereto agrees that no party hereto shall be deemed to be the drafter of this Agreement.
 
Section 10.14   Reinstatement; Certain Payments   .  If any claim is ever made upon the Agent or any Lender for repayment or recovery of any amount or amounts received by the Agent or such Lender in payment or on account of any of the Obligations, the Agent or such Lender shall give prompt notice of such claim to each other Agent and Lender and the Borrower, and if the Agent or such Lender repays all or part of such amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Agent or such Lender or any of its property, or (ii) any good faith settlement or compromise of any such claim effected by the Agent or such Lender with any such claimant, then and in such event each Loan Party agrees that (A) any such judgment, decree, order, settlement or compromise shall be binding upon it notwithstanding the cancellation of any Indebtedness hereunder or under the other Loan Documents or the termination of this Agreement or the other Loan Documents, and (B) it shall be and remain liable to the Agent or such Lender hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Agent or such Lender.
 
Section 10.15   Indemnification; Limitation of Liability for Certain Damages   .
 
(a)   In addition to each Loan Party's other Obligations under this Agreement, each Loan Party agrees to, jointly and severally, defend, protect, indemnify and hold harmless the Agent and each Lender and all of their respective Affiliates, officers, directors, employees, attorneys, consultants and agents (collectively called the " Indemnitees ") from and against any and all losses, damages, liabilities, obligations, penalties, fees, reasonable costs and expenses (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by such Indemnitees, whether prior to or from and after the Effective Date, whether direct, indirect or consequential, as a result of or arising from or relating to or in connection with any of the following:  (i) the negotiation, preparation, execution or performance or enforcement of this Agreement, any other Loan Document or of any other document executed in connection with the transactions contemplated by this Agreement, (ii) the Agent's or any Lender's furnishing of funds to the Borrower under this Agreement or the other Loan Documents, including, without limitation, the management of any such Loans, (iii) any matter relating to the financing transactions contemplated by this Agreement or the other
 

 
 
 

 
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Loan Documents or by any document executed in connection with the transactions contemplated by this Agreement or the other Loan Documents, or (iv) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (collectively, the " Indemnified Matters "); provided , however , that the Loan Parties shall not have any obligation to any Indemnitee under this subsection (a) for any Indemnified Matter caused by the gross negligence or willful misconduct of such Indemnitee (or, in the case of an Indemnitee that is a Defaulting Lender, caused by a material breach by such Defaulting Lender of its obligations hereunder), as determined by a final non-appealable judgment of a court of competent jurisdiction.
 
(b)   The indemnification for all of the foregoing losses, damages, fees, costs and expenses of the Indemnitees set forth in this Section 10.15 are chargeable against the loan account.  To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section 10.15 may be unenforceable because it is violative of any law or public policy, each Loan Party shall, jointly and severally, contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
 
(c)   No Loan Party shall assert, and each Loan Party hereby waives, any claim against the Indemnitees, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Loan Party hereby waives, releases and agrees not to sue upon any such claim or seek any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
 
(d)   The indemnities and waivers set forth in this Section 10.15 shall survive the repayment of the Obligations and discharge of any Liens granted under the Loan Documents and the earlier resignation or removal of the Agent.
 
Section 10.16   Records   .  The unpaid principal of and interest on the Loans, the interest rate or rates applicable to such unpaid principal and interest, the duration of such applicability, the Commitments, and the accrued and unpaid fees payable pursuant to Section 2.06 hereof, including, without limitation, the Funding Fee, shall at all times be ascertained from the records of the Agent, which shall be conclusive and binding absent manifest error.
 
Section 10.17   Binding Effect   .  This Agreement shall become effective when it shall have been executed by each Loan Party, the Agent and each Lender and when the conditions precedent set forth in Section 4.01 hereof have been satisfied or waived in writing by the Agent, and thereafter shall be binding upon and inure to the benefit of each Loan Party, the Agent and each Lender, and their respective successors and assigns, except that the Loan Parties shall not have the right to assign their rights hereunder or any interest herein without the prior
 

 
 
 

 
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written consent of the Agent and each Lender, and any assignment by any Lender shall be governed by Section 10.07 hereof.
 
Section 10.18   Confidentiality   .  Borrower shall provide all information required hereunder regarding the Loan Parties and any Insurance Subsidiary and their businesses, including all information in connection with any waivers, amendments or approvals or otherwise requiring a determination by a Lender, the Lenders or the Required Lenders, directly to the Agent (such information, excluding information obtained by the Agent from publicly available sources, "Private Side Information").  Each Lender that wishes to receive Private Side Information will designate at least one individual to receive the Private Side Information and identify such designee to the Agent (each such designee, a "Private Sider").  The Lenders hereby agree that at all times there will be at least one Lender who has designated a Private Sider.  Each Loan Party hereby authorizes the Agent to distribute all Private Side Information from the Borrower to Private Siders; it being understood that employees and representatives of a Lender who have not been designated as Private Siders may be engaged in investment and other market-related activities with respect to Borrower's or its affiliates' securities.  In the event less than all of the Lenders have designated a Private Sider, then, in connection with any Required Lender determination under Section 10.02 or any action taken or not taken hereunder or otherwise subject to a Required Lender determination for which Private Side Information is material in the consideration of any such determination, those Lenders who have not designated a Private Sider and not voted shall be deemed to have voted in the same manner as those Lenders who have designated a Private Sider and whose Pro Rata Shares represents more than 50% of the Pro Rata Shares of such Lenders; provided that no such determination, action or non-action shall result in any Lender being treated differently than any other Lender.
 
Section 10.19   Public Disclosure   .  Each Loan Party agrees that neither it nor any of its Affiliates will now or in the future issue any press release or other public disclosure using the name of an Agent, any Lender or any of their respective Affiliates or referring to this Agreement or any other Loan Document without the prior written consent of the Agent or such Lender, except to the extent that such Loan Party or such Affiliate is required to do so under applicable law (in which event, such Loan Party or such Affiliate will consult with the Agent or such Lender before issuing such press release or other public disclosure); provided , that no consent shall be required for the Borrower to comply with its filing and disclosure requirements with the SEC.  Each Loan Party hereby authorizes the Agent and each Lender, after consultation with the Borrower, to advertise the closing of the transactions contemplated by this Agreement, and to make appropriate announcements of the financial arrangements entered into among the parties hereto, as the Agent or such Lender shall deem appropriate, including, without limitation, announcements commonly known as tombstones, in such trade publications, business journals, newspapers of general circulation and to such selected parties as the Agent or such Lender shall deem appropriate.
 
Section 10.20   Integration   .  This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.  As to the duties or obligations of the Agent, in the event of any conflict between this Agreement and any other Loan Document, the terms of this Agreement shall govern and control.
 

 
 
 

 
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Section 10.21   USA PATRIOT Act   . Each Lender that is subject to the requirements of the USA PATRIOT Act hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the entities composing the Loan Parties, which information includes the name and address of each such entity and other information that will allow such Lender to identify the entities composing the Loan Parties in accordance with the USA PATRIOT Act.  Each Loan Party agrees to take such action and execute, acknowledge and deliver at its sole cost and expense, such instruments and documents as any Lender may reasonably require from time to time in order to enable such Lender to comply with the USA PATRIOT Act.
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
 
  BORROWER :  
     
  WMI HOLDINGS CORP.  
       
 
By:
/s/   
         Name:    
         Title:    
       

 
 
  GUARANTOR :  
     
  WMI INVESTMENT CORP.  
       
 
By:
/s/   
         Name:    
         Title:    
       

 
   

 
 
 

 
 
  AGENT :  
     
  U.S. BANK NATIONAL ASSOCIATION, as Agent  
       
 
By:
/s/   
         Name:    
         Title:    
       

 
   

 
 
 

 
 
  LENDERS :  
     
 
OWL CREEK ASIA I, L.P.
 
By:  Owl Creek Advisors, LLC, its general partner
 
       
 
By:
/s/   
         Name:    
         Title:    
       

 
 
OWL CREEK ASIA II, L.P.
 
By:  Owl Creek Advisors, LLC, its general partner
 
       
 
By:
/s/   
         Name:    
         Title:    
       

 
 
OWL CREEK ASIA MASTER FUND, LTD.
 
       
 
By:
/s/   
       Name:    
       Title:    
       

 
 
OWL CREEK I, L.P.
 
By:  Owl Creek Advisors, LLC, its general partner
 
       
 
By:
/s/   
         Name:    
         Title:    
       

 
 
 
 
 
 
OWL CREEK II, L.P.
 
By:  Owl Creek Advisors, LLC, its general partner
 
       
 
By:
/s/   
         Name:    
         Title:    
       

 
OWL CREEK OVERSEAS MASTER FUND, LTD.
 
       
 
By:
/s/   
         Name:    
         Title:    
       
 
 
OWL CREEK SRI MASTER FUND, LTD.
 
       
 
By:
/s/   
         Name:    
         Title:    
       

 
   

 
 
 
 
 
 
APPALOOSA INVESTMENT L.P. I
 
By:  Appaloosa Management L.P., its general partner
 
By:  Appaloosa Partners Inc., its general partner
 
       
 
By:
/s/   
         Name:    
         Title:    
       

 
 
THOROUGHBRED FUND L.P.
 
By:  Appaloosa Management L.P., its general partner
 
By:  Appaloosa Partners Inc., its general partner
 
       
 
By:
/s/   
         Name:    
         Title:    
       

 
   

 
 
 
 
 
 
 
AURELIUS CAPITAL PARTNERS, LP
 
By:  Aurelius Capital GP, LLC, its General Partner
 
       
 
By:
/s/ Dan Gropper  
    Name: Dan Gropper  
    Title: Managing Director  
       

 
 
 
AURELIUS INVESTMENT, LLC
 
By:  Aurelius Capital Management, LP, solely as its manager and not in its individual capacity
 
       
 
By:
/s/ Dan Gropper  
    Name: Dan Gropper  
    Title: Managing Director  
       

 
   

 
 
 
 
 
 
 
CENTERBRIDGE SPECIAL CREDIT PARTNERS, L.P.
 
       
 
By:
/s/   
         Name:    
         Title:    
       
 
 
CENTERBRIDGE CREDIT PARTNERS, L.P.
 
       
 
By:
/s/   
         Name:    
         Title:    
       
 
 
 
 
CENTERBRIDGE CREDIT PARTNERS MASTER, L.P.
 
       
 
By:
/s/   
         Name:    
         Title:    
       
 
 
   

 
 
 



FINANCING AGREEMENT
 
Dated as of March 19, 2012
 
by and among
 
WMI HOLDINGS CORP.,
as Borrower,
 
 
 
 
CERTAIN SUBSIDIARIES OF WMI HOLDINGS CORP. FROM TIME
TO TIME A PARTY HERETO,
as Guarantors
 

 
THE LENDERS FROM TIME TO TIME PARTY HERETO,
as Lenders,
 
U.S. BANK NATIONAL ASSOCIATION,
as Agent,
 

 
 
 



TABLE OF CONTENTS
 
P age
ARTICLE I DEFINITIONS; CERTAIN TERMS
2
Section 1.01
Definitions
2
Section 1.02
Terms Generally
26
Section 1.03
Certain Matters of Construction
26
Section 1.04
Accounting and Other Terms
27
Section 1.05
Time References
28
ARTICLE II THE LOANS
28
Section 2.01
Commitments
28
Section 2.02
Making the Loans
29
Section 2.03
Repayment of Loans; Evidence of Debt
30
Section 2.04
Interest and Funding Fee
30
Section 2.05
Reduction of Commitment; Prepayment of Loans
31
Section 2.06
Agent's Fee
33
Section 2.07
Taxes
33
ARTICLE III FEES, PAYMENTS AND OTHER COMPENSATION
36
Section 3.01
Payments; Computations and Statements
36
Section 3.02
Sharing of Payments, Defaulting Lenders, Etc
37
Section 3.03
Apportionment of Payments
38
ARTICLE IV CONDITIONS TO LOANS
39
Section 4.01
Conditions Precedent to Effectiveness
39
Section 4.02
Conditions Precedent to All Loans
41
ARTICLE V REPRESENTATIONS AND WARRANTIES
43
Section 5.01
Representations and Warranties
43




 
i
 


ARTICLE VI COVENANTS OF THE LOAN PARTIES
47
Section 6.01
Affirmative Covenants
47
Section 6.02
Negative Covenants
51
Section 6.03
Financial Covenants
56
ARTICLE VII EVENTS OF DEFAULT
57
Section 7.01
Events of Default
57
Section 7.02
Agent Matters Upon Default
59
ARTICLE VIII AGENT
60
Section 8.01
Appointment
60
Section 8.02
Nature of Duties
61
Section 8.03
Rights, Exculpation, Etc
61
Section 8.04
Reliance
62
Section 8.05
Indemnification
62
Section 8.06
Agent Individually
62
Section 8.07
Successor Agent
63
Section 8.08
Agency for Perfection
63
Section 8.09
No Reliance on the Agent's Customer Identification Program
63
Section 8.10
No Third Party Beneficiaries
64
Section 8.11
No Fiduciary Relationship
64
Section 8.12
Reports; Confidentiality; Disclaimers
64
Section 8.13
Collateral Matters
64
ARTICLE IX GUARANTY
65
Section 9.01
Guaranty
65
Section 9.02
Guaranty Absolute
65
Section 9.03
Waiver
66




 
ii
 


Section 9.04
Continuing Guaranty; Assignments
67
Section 9.05
Subrogation
67
Section 9.06
Reinstatement
68
ARTICLE X MISCELLANEOUS
68
Section 10.01
Notices, Etc
68
Section 10.02
Amendments, Etc
69
Section 10.03
No Waiver; Remedies, Etc
71
Section 10.04
Expenses; Taxes; Attorneys' Fees
71
Section 10.05
Right of Set-off
72
Section 10.06
Severability
72
Section 10.07
Assignments and Participations
73
Section 10.08
Counterparts
76
Section 10.09
GOVERNING LAW
76
Section 10.10
CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE
76
Section 10.11
WAIVER OF JURY TRIAL, ETC
77
Section 10.12
Consent by the Agent and Lenders
78
Section 10.13
No Party Deemed Drafter
78
Section 10.14
Reinstatement; Certain Payments
78
Section 10.15
Indemnification; Limitation of Liability for Certain Damages
78
Section 10.16
Records
79
Section 10.17
Binding Effect
79
Section 10.18
Confidentiality
80
Section 10.19
Public Disclosure
80
Section 10.20
Integration
80
Section 10.21
USA PATRIOT Act
81


 
iii
 



Schedules and Exhibits
 


Schedule 1.01(A)
     Commitments      
Schedule 5.01(e)
     Subsidiaries
 
   
Schedule 5.01(o)
     Insurance
 
   
Schedule 10.02(c)
     Certain Agent Actions      
             
Exhibit A
Form of Assignment and Acceptance Agreement
   
Exhibit B
Form of Joinder Agreement
   
Exhibit C
Form of Notice of Borrowing
   





 
iv
 

Schedule 10.02(c)



 
Section/Provision of Financing Agreement
Action
Definition of “SAP”
Adjustments to Reporting on an alternative basis to statutory accounting principles and regulations prescribed by the National Association of Insurance Commission for the preparation of financial statements
Definition of “Security Agreement”
Form and Substance of Pledge and Security Agreement made by a Loan Party
Section 1.04
Meaning of terms used in New York Uniform Commercial Code (the “UCC”) in light of replacement or amendment of the UCC
Section 6.01(k)
Consent to change in Fiscal Year.
Section 10.02(b)
Replacement of Holdout Lenders

 
 
 


Section/Provision of Pledge and Security Agreement
Action
Section 7(a)(iii)
Execution and delivery by Agent of proxies and other instruments referred to therein

 
 
EXHIBIT 10.2
 
Execution Version


 
PLEDGE AND SECURITY AGREEMENT
 
Dated as of March 19 , 2012
 
 

 
 
among
 
 

 
 
WMI Holdings Corp.
as the Grantor
 
 

 
 
Wilmington Trust, National Association
as First Lien Trustee (as defined herein)
 

 
 
Law Debenture Trust Company of New York
as Second Lien Trustee (as defined herein)
 

 
 
U.S. Bank National Association
as Third Lien Agent (as defined herein)
 

 
 
and
 
 

 
 
Wilmington Trust, National Association
as Collateral Agent (as defined herein)
 
 

 

US_ACTIVE:\43906857\08\79831.0003
 
 
 

This pledge and Security Agreement is subject to the terms and provisions of the Intercreditor Agreement, dated as of March 19, 2012 (as such agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Intercreditor Agreement ”), by and among the First Lien Trustee (as hereinafter defined), the Second Lien Trustee (as hereinafter defined), the Third Lien Agent (as hereinafter defined) and the Collateral Agent(as hereinafter defined).
 
Pledge and Security Agreement ,   dated as of March 19 , 2012 , by and among WMI Holdings Corp., a Washington corporation (“ WMI ” or the “ Grantor ”), the First Lien Trustee, the Second Lien Trustee, the Third Lien Agent and Wilmington Trust, National Association, as agent (in such capacity and together with its permitted successors and assigns, the “ Collateral Agent ”) for the Secured Parties (as hereinafter defined).
 
W i t n e s s e t h:
 
Whereas , WMI has entered into (i) the Senior First Lien Notes Indenture, dated as of the date hereof (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ First Lien Indenture ”) with Wilmington Trust, National Association as Trustee (in such capacity and together with its permitted successors and assigns, the “ First Lien Trustee ”), (ii) the Senior Second Lien Notes Indenture, dated as of the date hereof (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Second Lien Indenture ” and together with the First Lien Indenture, the “ Indentures ”) with Law Debenture Trust Company of New York as Trustee (in such capacity and together with its permitted successors and assigns, the “ Second Lien Trustee ” and together with the First Lien Trustee, the “ Trustees ”) and (iii) the Financing Agreement, dated as of the date hereof (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Third Lien Credit Agreement ”) with U.S. Bank National Association as Agent (in such capacity and together with its permitted successors and assigns, the “ Third Lien Agent ”) pursuant to which the lenders party thereto (the “ Third Lien Lenders ”) have agreed to make loans to WMI in its capacity as borrower thereunder on terms and conditions contained therein;
 
Whereas , pursuant to the Indentures, the Grantor is entering into this Agreement in order to grant to the Collateral Agent separate and distinct security interests in the Collateral for the ratable benefit of the First Lien Secured Parties (as hereinafter defined), the Second Lien Secured Parties (as hereinafter defined) and the Third Lien Secured Parties (as hereinafter defined) to secure their respective Secured Obligations (as hereinafter defined).
 
Now, therefore, the Grantor hereby agrees with the Collateral Agent, the First Lien Trustee (on behalf of the First Lien Secured Parties), the Second Lien Trustee (on behalf of the Second Lien Secured Parties) and the Third Lien Agent (on behalf of the Third Lien Secured Parties), for the ratable benefit of the Secured Parties(as hereinafter defined), as follows:
 

US_ACTIVE:\43906857\08\79831.0003
 
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Pledge and Security Agreement
WMI Holdings Corp.

ARTICLE I  
Defined Terms
 
Section 1.1  
Definitions
 
(a)   Terms used herein without definition that are defined in the UCC have the meanings given to them in the UCC, including the following terms (which are capitalized herein):
 
“Account”
“Certificated Security”
“Control Account”
“Deposit Account”
“Instruments”
“Proceeds”
 
(b)   The following terms shall have the following meanings:
 
“ Agreement ” means this Pledge and Security Agreement.
 
“ Bankruptcy Event of Default ” means an Event of Default pursuant to Section 7.01(5), (6) or (7) of each Indenture (as in effect on the date hereof).
 
“ Cash Equivalent ” shall have the meaning ascribed to such term in the Indentures as in effect on the date hereof.
 
“ Collateral ” has the meaning specified in Section 2.1 ( Collateral ).
 
“ Collateral Account ” means a separate securities and/or deposit account established and maintained by the Grantor in which the Collateral Agent has a valid perfected security interest and over which the Collateral Agent has exclusive dominion and control.
 
“ Constituent Documents ” means, with respect to any Person, (a) the articles of incorporation, certificate of incorporation, constitution or certificate of formation (or the equivalent organizational documents) of such Person, (b) the by-laws or operating agreement (or the equivalent governing documents) of such Person and (c) any document setting forth the manner of election or duties of the directors or managing members of such Person (if any) and the designation, amount or relative rights, limitations and preferences of any class or series of such Person’s Stock.
 
“ Control Agreement ” means an agreement executed by the Grantor, the Collateral Agent, any other secured parties party thereto and the relevant financial institution or securities intermediary, and providing to the Collateral Agent “control” of the Collateral Account and the Trustee Fees Account within the meaning of Articles 8 and 9 of the UCC.
 
“ Default ” shall have the meaning ascribed to such term in the Indentures as in effect on the date hereof.
 
“ Excluded Collateral ” means (i) all equity interests in Owner and (ii) all assets of Owner and the Trusts, in each case, until such time as all required approvals to grant a lien therein have been obtained.
 

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Pledge and Security Agreement
WMI Holdings Corp.

“ Event of Default ” shall mean an “Event of Default” as defined in either Indenture as in effect on the date hereof.
 
“ First Lien Noteholder ” means each Holder (as defined in the First   Lien Indenture as in effect on the date hereof).
 
“ First Lien Secured Parties ” means the First   Lien Trustee, the First   Lien Noteholders and any other person from time to time holding First Lien Notes (as defined in the Second   Lien Indenture as in effect on the date hereof).
 
“ GAAP ” shall have the meaning ascribed to such term in the Indentures.
 
“ Governmental Authority ” shall have the meaning ascribed to such term in the Indentures.
 
“ Insurance Book Closing ” means the transfer by WMMRC of (i) all Runoff Proceeds held on the date of such transfer, (ii) the right to receive all future Runoff Proceeds and (iii) the Trusts and their assets along with all insurance liabilities associated therewith as of the date of transfer to a protected cell established and maintained pursuant to § 431:19-303 of Title 24 of the Hawaii Insurance Code in conformance with all applicable Requirements of Law, which complies with the following requirements: (w) the Protected Cell shall be organized as a direct wholly owned subsidiary of WMI; (x) the assets of the Protected Cell shall not be chargeable with liabilities arising out of any other business WMMRC may conduct; (y) the business plan establishing the Protected Cell shall restrict its business to the administration and management of the Trusts and the assets thereof along with the liabilities associated therewith, and the distribution of the Runoff Proceeds; and (z) the governing documents of the Protected Cell shall provide that no dividend or distribution may be made to any Person other than WMI as provided for in the Notes Documentation.
 
“ Interest Payment Date ” shall have the meaning ascribed to such term in the Indentures.
 
“ Issuer Incremental Amount ” means an amount accruing on the outstanding Issuer Priority Amount or the Issuer Secondary Amount, as applicable, at 13% per annum payable quarterly in arrears on each Interest Payment Date, to WMI.
 
“ Issuer Priority Amount ” means (i) a principal amount equal to $4.0 million plus (ii) any amounts added due to unpaid Issuer Incremental Amounts in respect of the Issuer Priority Amount, less (iii) any repayments of the Issuer Priority Amounts, to WMI.
 
“ Issuer Secondary Amount ” means (i) a principal amount equal to $6.0 million plus (ii) any amounts added due to unpaid Issuer Incremental Amounts in respect of the Issuer Secondary Amount, less (iii) any repayments of the Issuer Secondary Amounts to WMI.
 
“ Lien ” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent
 

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3
 
Pledge and Security Agreement
WMI Holdings Corp.

statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.
 
“ Notes ” means the First Lien Notes (as defined in the Second Lien Indenture as in effect on the date hereof) and the Second Lien Notes (as defined in the First Lien Indenture as in effect on the date hereof).
 
“ Notes Documentation ” means the Notes Documentation (as defined in the First Lien Indenture as in effect on the date hereof) and the Notes Documentation (as defined in the Second Lien Indenture as in effect on the date hereof).
 
“ Noteholders ” means the First Lien Noteholders and the Second Lien Noteholders.
 
“ Owner ” means (x) WMMRC until the occurrence of an Insurance Book Closing and (y) the Protected Cell created by such Insurance Book Closing to which the Runoff Proceeds, the Trusts and the assets thereof are transferred, thereafter, in accordance with the terms of the Notes Documentation as in effect on the date hereof.
 
“ Person ” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
 
“ Pledged Collateral ” means, collectively, the capital stock of WMMRC owned or held by the Grantor (to the extent permitted by the applicable Governmental Authority) and the capital stock in the Protected Cell owned or held by the Grantor (to the extent permitted by the applicable Governmental Authority), all chattel paper, certificates or other Instruments representing any of the foregoing.  For purposes of this Agreement, the term “ Pledged Collateral ” shall not include any Excluded Collateral.
 
“ Protected Cell ” means a protected cell established by WMI in connection with the Insurance Book Closing upon the receipt of approval of the applicable Governmental Authority and maintained pursuant to § 431:19-303 of Title 24 of the Hawaii Insurance Code, in conformance with all applicable Requirements of Law.
 
“ Requirements of Law ” shall have the meaning ascribed to such term in the Indentures as in effect on the date hereof.
 
“ Runoff Proceeds ” means (a)(i) all net premiums, reinsurance recoverables, net revenue resulting from commutation of insurance contracts, net interest income, reserve releases and other revenues derived from the reinsurance contracts, investments and other assets of the Trusts less, without duplication, (ii)(A) the reasonable and necessary costs and expenses of the Trusts and the Owner (including, but not limited to, general and administrative expenses, audit fees, required regulatory capital contributions (which capital contributions will be added back to the Runoff Proceeds if applicable regulations permit such distributions thereof), expenses of regulatory compliance, including all costs associated with the Insurance Book Closing, expenses of administering the Indentures and taxes attributable to the administration of the Trusts or the assets thereof and the collection of premiums and/or management of investments in connection therewith (which expenses shall include reasonable and customary expenses attributable to the foregoing paid under any administrative services agreement, investment management agreement
 

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Pledge and Security Agreement
WMI Holdings Corp.

or similar agreement), and (B) claims paid for covered losses and (b) the proceeds from the foregoing received by the Owner or WMI in cash, securities and/or other property from any sale, liquidation, merger or other disposition in respect of the Owner or its interests in the Trusts or the assets thereof.  The inclusion of clause (b) of this definition shall not be construed as a consent to any sale, liquidation, merger or other disposition or waiver of compliance with any covenant related thereto. For the avoidance of doubt, to the extent that WMI or WMMRC pays any such cost, capital contribution or expense described in clause (ii)(A), payment by WMI or WMMRC will be deemed a cost or expense of the Trusts.
 
“ Runoff Proceeds Distribution ” shall have the meaning ascribed to such term in the Indentures as in effect on the date hereof.
 
“ Second Lien Noteholder ” means each Holder (as defined in the Second   Lien Indenture as in effect on the date hereof).
 
“ Second Lien Secured Parties ” means the Second Lien Trustee, the Second Lien Noteholders and any other person from time to time holding Second Lien Notes (as defined in the First Lien Indenture as in effect on the date hereof).
 
“ Secured Obligations ” means the First Lien Notes Obligations (as defined in the Second Lien Indenture as in effect on the date hereof), the Second Lien Notes Obligations (as defined in the First Lien Indenture as in effect on the date hereof) and the Third Lien Obligations.
 
“ Secured Parties ” means the Collateral Agent, the First Lien Secured Parties, the Second Lien Secured Parties and the Third Lien Secured Parties.
 
“ Secured Party Representative ” means First Lien Trustee (if the First Lien Note Obligations are still outstanding) or by the Second Lien Trustee (if none of the First Lien Note Obligations are outstanding and the Second Lien Note Obligations are still outstanding) or by the Third Lien Agent (if none of the First Lien Notes Obligations and Second Lien Notes Obligations are outstanding and the Third Lien Obligations are still outstanding or any commitments to lend are still in effect under the Third Lien Credit Agreement).
 
“ Security Documents ” means, collectively, this Agreement, the Intercreditor Agreement, any Control Agreements, other security agreements and directions to pay relating to the Collateral executed and delivered and/or filed and recorded in appropriate jurisdictions to preserve and protect the Liens on the Collateral (including, without limitation, financing statements under the UCC of the relevant states) related to the security interests granted by any of the foregoing documents and any other document or instrument evidencing, creating or providing for a Lien on any real or personal tangible or intangible property as security for any or all of the Secured Obligations.
 
“ Stock ” means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or non-voting.
 
“ Third Lien Obligations ” means the Obligations (as defined in the Third   Lien Credit Agreement as in effect on the date hereof).
 

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“ Third Lien Secured Parties ” means the Third   Lien Agent and the Third   Lien Lenders.
 
“ Trustee Fees Account ” shall have the meaning ascribed to such term in the Indentures.
 
“ Trusts ” means (a) Home Loan Reinsurance Co. United Guaranty Residential Insurance Company Reinsurance Agreement (Acct. No. x6401); (b) Home Loan Reinsurance Co. Genworth Reinsurance Co. Trust Agreement (Acct. No. x6403); (c) Mortgage Guaranty Insurance Corporation/WM MTG Reinsurance Co. Trust; (Acct. No. x2400); (d) Reinsurance Escrow Agreement among WM Mortgage Reinsurance Co. PMI Mortgage Insurance Company and US Bank (Acct. No. x6404); (e) Radian Guaranty Inc. and WM Mortgage Reinsurance Company Agreement, dated March 27, 2001 (Acct. No. x5700); (f) Home Loan Reinsurance Co. Republic Mortgage Co. Reinsurance Agreement, dated December 14, 1998 (Acct. No. x6402); (g) Washington Mutual Custody Account (Acct. No. x6406); and (h) WM Mortgage Reinsurance Company Inc. (Acct. No. x4202).
 
“ UCC ” means the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of New York.
 
“ WMMRC ” means WM Mortgage Reinsurance Company, Inc., a Hawaii corporation and direct wholly-owned subsidiary of WMI.
 
Section 1.2  
Certain Other Terms
 
(a)   In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word “ from ” means “from and including” and the words “ to ” and “ until ” each mean “to but excluding” and the word “ through ” means “to and including.”
 
(b)   The terms “ herein ,” “ hereof ,” “ hereto ” and “ hereunder ” and similar terms refer to this Agreement as a whole and not to any particular Article, Section, subsection or clause in this Agreement.
 
(c)   References herein to an Annex, Schedule, Article, Section, subsection or clause refer to the appropriate Annex or Schedule to, or Article, Section, subsection or clause in this Agreement.
 
(d)   The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
 
(e)   Where the context requires, provisions relating to any Collateral, when used in relation to the Grantor, shall refer to the Grantor’s Collateral or any relevant part thereof.
 
(f)   Any reference in this Agreement to an Indenture shall include all appendices, exhibits and schedules thereto, and, unless specifically stated otherwise all amendments, restatements, amendments and restatements, supplements or other modifications thereto, and as the same may be in effect at any time such reference becomes operative.
 

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(g)   The term “ including ” means “including without limitation” except when used in the computation of time periods.
 
(h)   The terms “ Grantor ,” “ Trustee ,” “ Collateral Agent ” and “ Secured Party ” include their respective successors.
 
(i)   References in this Agreement to any statute shall be to such statute as amended or modified and in effect from time to time.
 
ARTICLE II  
Grant of Security Interest
 
Section 2.1  
Collateral
 
For the purposes of this Agreement, all of the following property now owned or at any time hereafter acquired by the Grantor or in which the Grantor now has or at any time in the future may acquire any right, title or interests is collectively referred to as the “ Collateral ,” in each case, only to the extent permitted by the applicable Governmental Authority and subject to the priority and payment provisions of the Indentures and the Intercreditor Agreement, including the Grantor’s right to receive the Issuer Incremental Amount:
 
(a)   the Collateral Account and all funds and assets held therein or credited thereto;
 
(b)   the Trustee Fees Account and all funds and assets held therein or credited thereto;
 
(c)   all Run-Off Proceeds received by the Grantor;
 
(d)   all rights of the Grantor to receive dividends or distributions in respect of the Run-Off Proceeds;
 
(e)   the Pledged Collateral;
 
(f)   to the extent not otherwise included, all Proceeds of the foregoing;
 
provided, however, that “ Collateral ” shall not include any Excluded Collateral; and provided , further , that if and when any property shall cease to be Excluded Collateral, such property shall be deemed at all times from and after the date hereof to constitute Collateral.
 
Section 2.2  
Grant of Security Interest in Collateral
 
The Grantor, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the First Lien Notes Obligations of the Grantor, hereby mortgages, pledges and hypothecates to the Collateral Agent for the benefit of the First Lien Secured Parties, and grants to the Collateral Agent for the benefit of the First Lien Secured Parties a first priority lien on and security interest in, all of its right, title and interest in, to and under the Collateral; provided , however , that, if and when any property that at any time constituted Excluded Collateral becomes Collateral, the Collateral Agent shall have, and at all times from and after the date hereof be deemed to have had, a security interest in such property.
 

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The Grantor, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Second Lien Notes Obligations of the Grantor, hereby mortgages, pledges and hypothecates to the Collateral Agent for the benefit of the Second Lien Secured Parties, and grants to the Collateral Agent for the benefit of the Second Lien Secured Parties a second priority lien on and security interest in, all of its right, title and interest in, to and under the Collateral; provided , however , that, if and when any property that at any time constituted Excluded Collateral becomes Collateral, the Collateral Agent shall have, and at all times from and after the date hereof be deemed to have had, a security interest in such property.
 
The Grantor, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Third Lien Obligations of the Grantor, hereby mortgages, pledges and hypothecates to the Collateral Agent for the benefit of the Third Lien Secured Parties, and grants to the Collateral Agent for the benefit of the Third Lien Secured Parties a third priority lien on and security interest in, all of its right, title and interest in, to and under the Collateral; provided , however , that, if and when any property that at any time constituted Excluded Collateral becomes Collateral, the Collateral Agent shall have, and at all times from and after the date hereof be deemed to have had, a security interest in such property.
 
ARTICLE III  
Representations and Warranties
 
To induce (i) each Trustee to enter into each Indenture and the Noteholders to accept the Notes issued thereunder and (ii) the Third Lien Agent to enter into the Third Lien Credit Agreement and the Third Lien Lenders to make loans thereunder, the Grantor hereby represents and warrants each of the following to the Collateral Agent and the other Secured Parties:
 
Section 3.1  
Title; No Other Liens
 
Except for the Lien granted to the Collateral Agent pursuant to this Agreement and the other Liens permitted to exist on the Collateral under the Note Documentation and the Third Lien Credit Agreement, the Grantor (a) is the record and beneficial owner of the Pledged Collateral pledged by it hereunder and (b) has rights in or the power to transfer each other item of Collateral in which a Lien is granted by it hereunder, in case of clauses (a) and (b) above, free and clear of any other Lien.
 
Section 3.2  
Perfection and Priority
 
The security interest granted pursuant to this Agreement shall constitute a valid and continuing perfected security interest in favor of the Collateral Agent in the Collateral for which perfection is governed by the UCC upon (i) filing a financing statement under the UCC in the applicable filing office in the state of Washington, (ii) the delivery to the Collateral Agent of all Collateral consisting of Certificated Securities, in each case properly endorsed for transfer to the Collateral Agent or in blank and (iii)  the execution of a Control Agreement with respect to the Collateral Account and the Trustee Fees Account.  Such security interest shall be prior to all other Liens on the Collateral except as otherwise permitted pursuant to the Indentures, the Third Lien Credit Agreement or the Intercreditor Agreement; provided , however , the Collateral Agent on behalf of the Secured Parties acknowledges that the Grantor’s interest in the Runoff Proceeds
 

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held by any Person is only through the Grantor’s ownership of the Pledged Collateral, Runoff Proceeds Distribution or other dividend or distribution in respect of equity interest in Owner.
 
Section 3.3  
Jurisdiction of Organization; Chief Executive Office
 
As of the date hereof, the Grantor’s jurisdiction of organization, legal name, organizational identification number and chief executive office or principal place of business are as listed on Schedule 3.3 hereto.
 
Section 3.4  
Pledged Collateral
 
All Pledged Collateral consisting of Certificated Securities has been delivered to the Collateral Agent in accordance with Section 4.4(a) ( Pledged Collateral ).
 
ARTICLE IV  
Covenants
 
The Grantor agrees with the Collateral Agent to the following, as long as any Secured Obligations remain outstanding:
 
Section 4.1  
Generally
 
The Grantor shall (a) except for the security interest created by this Agreement, not create or suffer to exist any Lien upon or with respect to any Collateral, except Liens permitted under the Note Documentation or the Third Lien Credit Agreement, (b) subject to the provisions of the Intercreditor Agreement, not sell, transfer or assign (by operation of law or otherwise) any Collateral except as permitted under the Note Documentation or the Third Lien Credit Agreement and (c) not enter into any agreement or undertaking restricting the right or ability of the Grantor or the Collateral Agent to sell, assign or transfer any Collateral.
 
Section 4.2  
Maintenance of Perfected Security Interest; Further Documentation
 
(a)   The Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 3.2 ( Perfection and Priority ) and shall defend such security interest and such priority against the claims and demands of all Persons.
 
(b)   At any time and from time to time, upon the written request of the Collateral Agent, and at the sole expense of the Grantor, the Grantor shall promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further action as the Collateral Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including the filing of any financing or continuation statement under the UCC (or other similar laws) in effect in any jurisdiction with respect to the security interest created hereby and the execution and delivery of Control Agreements.
 
Section 4.3  
Changes in Locations, Name, Etc.
 
(a)   Except upon 15 days’ prior written notice to the Collateral Agent and delivery to the Collateral Agent of all additional financing statements and other documents
 

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reasonably necessary to maintain the validity, perfection and priority of the security interests provided for herein, the Grantor shall not do any of the following:
 
(i)   change its jurisdiction of organization or the location of its chief executive office or the books and records relating to the Collateral, in each case from that referred to in Section 3.3 ( Jurisdiction of Organization; Chief Executive Office ) ; or
 
(ii)   (A) change its legal name or any trade name used to identify it in the conduct of its business or ownership of its properties or organizational identification number, if any, or (B) change its corporation, limited liability company or other organizational structure to such an extent that any financing statement filed in connection with this Agreement would become misleading.
 
(b)   The Grantor shall keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral.
 
Section 4.4  
Pledged Collateral
 
(a)   The Grantor shall deliver to the Collateral Agent all certificates representing or evidencing any Pledged Collateral, whether now existing or hereafter acquired, in suitable form for transfer by delivery or, as applicable, accompanied by the Grantor’s endorsement, where necessary, or duly executed instruments of transfer or assignment in blank.
 
(b)   Except as provided in Article V ( Remedial Provisions ) , the Grantor shall be entitled to receive all cash dividends paid in respect of the Pledged Collateral (other than liquidating or distributing dividends) with respect to the Pledged Collateral, provided that all Runoff Proceeds Distributions shall be deposited to the Collateral Account or the Trustee Fees Account, in each case, as provided in the Indentures and all other dividends shall be paid only in accordance with the Indentures and the Intercreditor Agreement.  Any sums paid upon or in respect of any Pledged Collateral upon the liquidation or dissolution of any issuer of any Pledged Collateral, and any distribution of capital made on or in respect of any Pledged Collateral or any property distributed upon or with respect to any Pledged Collateral pursuant to the recapitalization or reclassification of the capital of any issuer of Pledged Collateral or pursuant to the reorganization thereof shall, unless otherwise subject to a perfected security interest in favor of the Collateral Agent, be delivered to the Collateral Agent to be held by it hereunder as additional collateral security for the Secured Obligations.  If any sum of money or property so paid or distributed in respect of any Pledged Collateral shall be received by the Grantor, the Grantor shall, until such money or property is paid or delivered to the Collateral Agent, hold such money or property in trust for the Collateral Agent, segregated from other funds of the Grantor, as additional security for the Secured Obligations.
 
(c)   Except as provided in Article V ( Remedial Provisions ) , the Grantor shall be entitled to exercise all voting, consent and corporate, partnership, limited liability company and similar rights with respect to the Pledged Collateral; provided , however , that no vote shall be cast, consent given or right exercised or other action taken by the Grantor that would impair the Collateral, be inconsistent with or result in any violation of any provision of the Note Documentation or the Third Lien Credit Agreement or, without prior notice to the Collateral Agent, enable or permit any issuer of Pledged Collateral to issue any Stock or other equity Securities of any nature or to issue any other securities convertible into or granting the right to
 

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purchase or exchange for any Stock or other equity Securities of any nature of any issuer of Pledged Collateral.
 
(d)   The Grantor shall not, without the consent of the First Lien Trustee, the Second Lien Trustee and the Third Lien Agent, agree to any amendment of any Constituent Document that in any way adversely affects the perfection of the security interest of the Collateral Agent in the Pledged Collateral pledged by the Grantor hereunder, including any amendment electing to treat any membership interest or partnership interest that is part of the Pledged Collateral as a “security” under Section 8-103 of the UCC, or any election to turn any previously uncertificated Stock that is part of the Pledged Collateral into certificated Stock.
 
Section 4.5  
Payment of Obligations
 
The Grantor shall pay and discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of any kind (including claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of the Grantor and such proceedings could not reasonably be expected to result in a Lien on or the sale, forfeiture or loss of any material portion of the Collateral or any interest therein.
 
ARTICLE V  
Remedial Provisions
 
Section 5.1  
Code and Other Remedies
 
During the continuance of an Event of Default, the Collateral Agent may exercise, in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the UCC or any other applicable law.  Without limiting the generality of the foregoing, the Collateral Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon any Collateral, and may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver any Collateral (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Collateral Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  The Collateral Agent shall have the right upon any such public sale or sales, and, to the extent permitted by the UCC and other applicable law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption of any Grantor, which right or equity is hereby waived and released.  The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section 5.1 , after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any Collateral or in any way relating to the Collateral or the rights of the Collateral Agent and any other Secured Party hereunder, including reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations, in such order as the
 

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Intercreditor Agreement shall prescribe, and only after such application and after the payment by the Collateral Agent of any other amount required by any provision of law or the Intercreditor Agreement, need the Collateral Agent account for the surplus, if any, to any Grantor.  To the extent permitted by applicable law, the Grantor waives all claims, damages and demands it may acquire against the Collateral Agent or any other Secured Party arising out of the exercise by them of any rights hereunder.  If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.
 
Section 5.2  
Pledged Collateral
 
(a)   During the continuance of an Event of Default (to the extent such Event of Default (other than a Bankruptcy Event of Default) has been declared in writing), the Collateral Agent (at the direction of the applicable Secured Party Representative) to the Grantor, (i) the Collateral Agent shall have the right to receive any Proceeds of the Pledged Collateral and make application thereof to the Secured Obligations in the order set forth in the Indentures and subject to the Intercreditor Agreement and (ii) the Collateral Agent or its nominee may exercise (A) any voting, consent, corporate and other right pertaining to the Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right of conversion, exchange and subscription and any other right, privilege or option pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion any of the Pledged Collateral upon the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental change in the corporate or equivalent structure of any issuer of Pledged Collateral, the right to deposit and deliver any Pledged Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Collateral Agent may determine), all without liability except to account for property actually received by it; provided , however , that the Collateral Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.
 
(b)   In order to permit the Collateral Agent to exercise the voting and other consensual rights that it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions that it may be entitled to receive hereunder, (i) the Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, the Grantor hereby grants to the Collateral Agent an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or members, as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person (including the issuer of such Pledged Collateral or any officer or agent thereof) upon the occurrence and during the continuance of an Event of Default (to the extent such Event of Default (other than a Bankruptcy Event of Default) has been declared in writing) and which proxy shall only terminate upon the payment in full of the Secured Obligations.
 

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(c)   The Grantor hereby expressly authorizes and instructs each issuer of any Pledged Collateral pledged hereunder by the Grantor to (i) comply with any instruction received by it from the Collateral Agent in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from the Grantor, and the Grantor agrees that such issuer shall be fully protected in so complying and (ii) unless otherwise expressly permitted hereby, pay any dividend or other payment with respect to the Pledged Collateral directly to the Collateral Agent.
 
Section 5.3  
Proceeds to be Turned Over To Collateral Agent
 
Unless otherwise expressly provided in the Indentures, all Proceeds received by the Collateral Agent hereunder in cash or Cash Equivalents shall be held by the Collateral Agent in the Collateral Account.  All Proceeds while held by the Collateral Agent in the Collateral Account (or by the Grantor in trust for the Collateral Agent) shall continue to be held as collateral security for the Secured Obligations and shall not constitute payment thereof until applied as provided in the Indentures and the Intercreditor Agreement.
 
Section 5.4  
Non-Recourse
 
(a)           Notwithstanding any other provision of the Indentures, the Notes, the Intercreditor Agreement and the other Security Documents to the contrary, the Collateral Agent on behalf of itself and the Secured Parties, agrees that it and the Secured Parties shall not have or take any recourse (other than actions for specific performance in clause (b) below) with respect to the Notes Documentation against the Grantor or its assets and property or against WMMRC or the Owner or their respective assets and property (other than assets that were required to be transferred to the Protected Cell pursuant to the Insurance Book Closing), except (i) to the Collateral Account, (ii) if the Grantor fails to comply with its obligations pursuant to Sections 4.02(a), 4.02(b), 5.02 or 5.08 of the Indentures, to the assets of the Grantor in an amount equal to the aggregate amount of any Runoff Proceeds or Runoff Proceeds Distributions that were not deposited into the Collateral Account, (iii) to the equity interests in and the excess assets of the Owner to the extent a Lien has been granted therein pursuant to Section 2.2 in favor of the Collateral Agent and (iv) to the Owner or the Grantor for costs and expenses, including reasonable attorney’s fees, related to the enforcement of Sections 4.01, 4.02, 4.03, 5.02, 5.03, 5.07, 5.08, 5.10 and 5.13 of the Indentures, if the Noteholders or the Trustees, as applicable, are the prevailing party in such enforcement action.
 
(b)           The Grantor agrees that irreparable damage would occur and that the Trustees, the Collateral Agent and the Noteholders would not have any adequate remedy at law in the event that any of the provisions of the Indentures were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the Trustees, Collateral Agent and the Noteholders shall be entitled to an injunction or injunctions to prevent breaches of the Indentures and to enforce specifically the terms and provisions of the Indentures, including but not limited to Sections 4.02, 5.01, 5.02, 5.03, 5.07, 5.08, 5.11 and 5.13 of the Indentures, in any court of competent jurisdiction, without proof of actual damages (and each party hereby waives any requirement for the securing or posting of any bond or other security in connection therewith); specific performance being in addition to any other remedy to which the parties are entitled at law or in equity.
 

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ARTICLE VI  
The Collateral Agent
 
Section 6.1  
Appointment
 
The First Lien Trustee (on behalf of itself and the First Lien Secured Parties), the Second Lien Trustee (on behalf of itself and the Second Lien Secured Parties) and the Third Lien Agent (on behalf of itself and the Third Lien Secured Parties) hereby irrevocably designate and appoint Wilmington Trust, National Association as the Collateral Agent for the Secured Parties under this Agreement and the Security Documents, and irrevocably authorizes Wilmington Trust, National Association, as the Collateral Agent, to take such action on behalf of the Secured Parties under the provisions of this Agreement and the Security Documents and to exercise such powers and perform such duties as are expressly delegated to the Collateral Agent by the terms thereof, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary elsewhere in this Agreement, any Security Document or otherwise, the Collateral Agent shall not have any duties or responsibilities, except those expressly set forth herein and in the Security Documents, or any fiduciary relationship with any Secured Party, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Collateral Agent.  The provisions of this Agreement are solely for the benefit of the Secured Parties and no Grantor shall have any rights as a third party beneficiary or otherwise under any of the provisions hereof.  In performing its functions and duties hereunder and under the other Security Documents, the Collateral Agent shall act solely as the agent of the Secured Parties and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Grantor or any of its respective successors and assigns.

Section 6.2  
Exculpatory Provisions
 
(a)   The Collateral Agent shall not be responsible in any manner whatsoever for the correctness of any recitals, statements, representations or warranties herein or in any Security Document or in any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement or any Security Document.  The Collateral Agent makes no representations as to the value or condition of the Collateral or any part thereof, or as to the title of the Grantor or any other Person as to the security afforded by the Security Documents, or as to the validity, execution (except its own execution), enforceability, legality or sufficiency of this Agreement, the Security Documents or the Secured Obligations, and the Collateral Agent shall incur no liability or responsibility in respect of any such matters.  The Collateral Agent shall not be responsible for insuring the Collateral or for the payments of taxes, charges or assessments or discharging of Liens upon the Collateral or otherwise as to the maintenance of the Collateral (except as may be expressly set forth with respect to maintenance of Collateral in its possession in the applicable Security Document).
 
(b)   The Collateral Agent shall not be required to ascertain or inquire as to the observance or performance by the Grantor of any of the covenants or agreements contained in or conditions of the Security Documents or any other document or agreement or to inspect the properties, books or records of the Grantor.  Whenever it is necessary, or in the opinion of the Collateral Agent advisable, for the Collateral Agent to ascertain the amount of Secured Obligations or other obligations then held by the Secured Parties, the Collateral Agent may rely on a certificate of the applicable Trustee or Third Lien Agent, in the case of the applicable
 

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Secured Obligations or other obligations, and, if the applicable Trustee or Third Lien Agent shall not give such information to the Collateral Agent, the Collateral Agent shall be entitled to rely on the information with respect thereto most recently delivered by the Grantor, as the case may be, to the Collateral Agent.
 
(c)   The Collateral Agent shall be under no obligation or duty to take any action under this Agreement or the Security Documents if taking such action (i) would subject the Collateral Agent to a tax in any jurisdiction where it is not then subject to a tax, unless the Collateral Agent receives security or indemnity satisfactory to it against such tax or (ii) would require the Collateral Agent to qualify to do business in any jurisdiction where it is not then so qualified; provided , however , that the Collateral Agent will use reasonable efforts to promptly notify the Secured Party Representative in the event that any action or duty that the Collateral Agent would otherwise take would result in any such tax or qualification requirement (but failure to so provide such notice shall not result in any liability to the Collateral Agent).
 
(d)   The Collateral Agent shall not be under any obligation to exercise any of the rights or powers vested in the Collateral Agent by this Agreement and the Security Documents, at the request or direction of the Secured Parties or otherwise, unless the Collateral Agent shall have been provided adequate security and indemnity against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction, including such reasonable advances as may be requested by the Collateral Agent.
 
(e)   No provision of this Agreement or of the Security Documents shall be deemed to impose any duty or obligation on the Collateral Agent to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Collateral Agent shall be unqualified or incompetent, to perform any such act or acts or to exercise any such right, power, duty or obligation.
 
(f)   Notwithstanding any other provision of this Agreement, the Collateral Agent shall not be liable for any action taken or omitted to be taken by it in accordance with this Agreement or the Security Documents except for liabilities resulting solely from its own gross negligence or willful misconduct.
 
(g)   The Person serving as Collateral Agent hereunder shall have the same rights with respect to any Secured Obligations held by it as any other Secured Party and may exercise such rights as though it were not the Collateral Agent hereunder.  Without altering its obligations hereunder, the Person serving as Collateral Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Grantor as if it were not the Collateral Agent.
 
Section 6.3  
Collateral Agent’s Appointment as Attorney-in-Fact
 
(a)   The Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Grantor and in the name of the Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any appropriate action and to execute any document or instrument that may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, the Grantor hereby gives the Collateral Agent the power
 

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and right, on behalf of the Grantor, without notice to or assent by the Grantor, to do any of the following:
 
(i)   pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repair or pay any insurance called for by the terms of this Agreement (including all or any part of the premiums therefor and the costs thereof);
 
(ii)   execute, in connection with any sale provided for in Section 5.1 ( Code and Other Remedies ) , any endorsement, assignment or other instrument of conveyance or transfer with respect to the Collateral; and
 
(iii)   (A) direct any party liable for any payment under any Collateral to make payment of any moneys due or to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct, (B) ask or demand for, collect, and receive payment of and receipt for, any moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) commence and prosecute any suit, action or proceeding at law or in equity in any court of competent jurisdiction to collect any Collateral and to enforce any other right in respect of any Collateral, (D) defend any suit, action or proceeding brought against the Grantor with respect to any Collateral, (E) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Collateral Agent may deem appropriate, and (F) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and do, at the Collateral Agent’s option and the Grantor’s expense, at any time, or from time to time, all acts and things that the Collateral Agent deems necessary to protect, preserve or realize upon the Collateral and the Collateral Agent’s and the other Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as the Grantor might do.
 
Anything in this clause  (a) to the contrary notwithstanding, the Collateral Agent agrees that it shall not exercise any right under the power of attorney provided for in this clause  (a) unless an Event of Default shall be continuing.
 
(b)   If any Grantor fails to perform or comply with any of its agreements contained herein, the Collateral Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.
 
(c)   The expenses of the Collateral Agent incurred in connection with actions undertaken as provided in this Section 6.3 shall be payable by the Grantor to the Collateral Agent pursuant to the Intercreditor Agreement.
 
(d)   The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.  All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.
 

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Section 6.4  
Duty of Collateral Agent; Delegation of Duties
 
(a)   The Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as the Collateral Agent deals with similar property for its own account.  None of the Collateral Agent, any other Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to any Collateral.  The powers conferred on the Collateral Agent hereunder are solely to protect the Collateral Agent’s interest in the Collateral and shall not impose any duty upon the Collateral Agent or any other Secured Party to exercise any such powers.  The Collateral Agent and the other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their respective officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.
 
(b)   The Collateral Agent may execute any of its duties or powers hereunder or under the Security Documents either directly or by or through agents or attorneys-in-fact, who may include any Secured Party; provided, however, that the Collateral Agent will give prompt notice to the Secured Party Representative if it delegates a material portion of its duties.  The Collateral Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it without gross negligence or willful misconduct.
 
Section 6.5  
Reliance by Collateral Agent
 
(a)   Whenever in the administration of this Agreement or the Security Documents, the Collateral Agent shall deem it necessary or desirable that a factual matter be proved or established in connection with the Collateral Agent taking, suffering or omitting any action hereunder or thereunder, such matter (unless other evidence in respect thereof is herein specifically prescribed) may be deemed to be conclusively proved or established by a certificate of the Grantor or the applicable Secured Party delivered to the Collateral Agent, and such certificate shall be full warrant to the Collateral Agent for any action taken, suffered or omitted in reliance thereon.
 
(b)   The Collateral Agent may consult with legal counsel, independent accountants or other experts selected by it, and any advice of such experts shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder or under the Security Documents in accordance therewith.  The Collateral Agent shall have the right at any time to seek instructions concerning the administration of this Agreement and the Security Documents from any court of competent jurisdiction.  Any advice of experts may be based, insofar as it relates to factual matters, upon a certificate or other writing of the Secured Party Representative, the Grantor, the Secured Parties, or any other applicable Person or representations made by any of the foregoing furnished to the Collateral Agent.
 
(c)   The Collateral Agent may rely, and shall be fully protected in acting, upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document or conversation which it has no reason to believe to be other than genuine and to have been signed, presented or made by the proper party or parties.
 

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Section 6.6  
Actions by the Collateral Agent
 
The Collateral Agent shall not be under any obligation to take any action which is discretionary with the Collateral Agent under the provisions hereof or of the Security Documents except upon the written request of the Secured Party Representative.  All of the Secured Parties shall be bound by any direction or instruction given to the Collateral Agent by the Secured Party Representative.

Section 6.7  
Authorization of Financing Statements
 
The Grantor authorizes the Collateral Agent and its affiliates, counsel and other representatives, at any time and from time to time, to file or record financing statements, amendments to financing statements, and other filing or recording documents or instruments with respect to the Collateral in such form and in such offices as the Collateral Agent reasonably determines appropriate to perfect the security interests of the Collateral Agent under this Agreement.  The Grantor hereby also authorizes the Collateral Agent and its affiliates, counsel and other representatives, at any time and from time to time, to file continuation statements with respect to previously filed financing statements.  A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction.
 
Section 6.8  
Authority of Collateral Agent
 
The Grantor acknowledges that the rights and responsibilities of the Collateral Agent under this Agreement with respect to any action taken by the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Collateral Agent and the other Secured Parties, be governed by the Intercreditor Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Collateral Agent and the Grantor, the Collateral Agent shall be conclusively presumed to be acting as agent for the Collateral Agent and the other Secured Parties with full and valid authority so to act or refrain from acting, and the Grantor shall be under no obligation, or entitlement, to make any inquiry respecting such authority.
 
Section 6.9  
Non-Reliance on the Collateral Agent
 
Neither the Collateral Agent nor any of its officers, directors, employees, agents, attorneys, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by it hereinafter taken, including, without limitation, any review of the affairs of the Grantor, shall be deemed to constitute any representation or warranty by the Collateral Agent to any Secured Party.  Each Noteholder and each Third Lien Lender must independently and without reliance upon the Collateral Agent, and based on such documents and information as it has deemed appropriate, make its own appraisal of and investigation into the business, operations, property, prospects, financial and other condition and creditworthiness of the Grantor and has made its own decision to accept notes or extend credit to the Grantor.  Each Noteholder and each Third Lien Lender must independently and without reliance upon the Collateral Agent, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under the First Lien Indenture, the Second Lien Indenture or the Third Lien Credit Agreement, as applicable, or any other instrument or agreement, as applicable, and to make such investigation as it deems
 
 
18
 
necessary to inform itself as to the business, operations, property, prospects, financial and other condition and creditworthiness of the Grantor.  Except for notices, reports and other documents expressly required to be furnished to the Secured Parties by the Collateral Agent hereunder or under the Indentures or Third Lien Credit Agreement, the Collateral Agent shall not have any duty or responsibility to provide any Secured Party with any credit or other information concerning the business, operations, property, prospects, financial and other condition or creditworthiness of the Grantor which may come into its possession or the possession of any of its officers, directors, employees, agents, attorneys, attorneys-in-fact or affiliates.  The Collateral Agent and its affiliates may exercise all contractual and legal rights and remedies which may exist from time to time with respect to other existing and future relationships with the Grantor without any duty to account therefor to the Secured Parties.
 
Section 6.10  
Compensation and Indemnification
 
(a)   The Grantor shall pay to the Collateral Agent from time to time such compensation for its services hereunder as the parties shall agree in writing from time to time.  The Collateral Agent’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Grantor shall reimburse the Collateral Agent promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services.  Such expenses shall include the compensation and reasonable disbursements and expenses of the Collateral Agent’s agents and counsel.
 
(b)   The Grantor hereby agrees to indemnify the Collateral Agent (in its capacity as such) and its officers, directors, employees, representatives, agents and attorneys from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever (including, without limitation, the reasonable and documented fees and disbursements of counsel for the Collateral Agent or such Person in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not the Collateral Agent or such Person shall be designated a party thereto) which may at any time (including, without limitation, at any time following the payment of the Secured Obligations) be imposed on, incurred by or asserted against the Collateral Agent or such Person as a result of, in any way relating to or arising out of this Agreement or the Security Documents, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Collateral Agent hereunder or thereunder or in connection herewith or therewith; provided that the Grantor shall not be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Collateral Agent or such Person seeking indemnification hereunder as finally determined by a court of competent jurisdiction.  The agreements in this section shall survive the termination of this Agreement and the payment of the Secured Obligations and all other amounts payable to any of the Secured Parties.
 
(c)   To secure the payment obligations of the Grantor in this Section 6.10 , the Collateral Agent shall have a Lien on all money and property held or collected by the Collateral Agent, subject to the provisions of the Intercreditor Agreement.  Such Lien shall survive the satisfaction and discharge of this Agreement.
 




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Section 6.11  
Termination and Resignation of Collateral Agent
 
(a)   Subject to clause (f) below, the Collateral Agent may resign its appointment under this Agreement at any time by giving notice to the Trustees and the Grantor.
 
(b)   A successor Collateral Agent shall be selected (i) by the retiring Collateral Agent nominating one of its affiliates, following consultation with the Secured Party Representative and the Grantor or (ii) if the retiring Collateral Agent makes no such nomination following consultation with Grantor, by the Secured Party Representative.
 
(c)   The appointment of the Collateral Agent may be terminated and a successor Collateral Agent appointed at any time with the consent of the Trustees, the Third Lien Agent and the Grantor.
 
(d)   The resignation of the retiring Collateral Agent and the appointment of a successor Collateral Agent will become effective only upon the successor Collateral Agent accepting its appointment as Collateral Agent and upon the execution and delivery of all documents necessary to substitute the successor as holder of the security comprised in the Security Documents, if any, at which time, (i) the successor Collateral Agent will become bound by the obligations of the Collateral Agent and become entitled to all the rights, privileges, powers, authorities and discretions of the Collateral Agent under this agreement, (ii) the agency of the retiring Collateral Agent will terminate (but without prejudice to any liabilities which the retiring Collateral Agent may have incurred prior to the termination of agency) and (ii) the retiring Collateral Agent will be discharged from any further liability or obligation under or in connection with this Agreement or the Security Documents.
 
(e)   The retiring Collateral Agent will cooperate with the successor Collateral Agent in order to ensure that its functions are transferred to the successor Collateral Agent without disruption to the service provided to the Trustees, the Secured Parties and the Grantor and will promptly make available to the successor Collateral Agent the documents and records which have been maintained in connection with this Agreement and the other Security Documents in order that the successor Collateral Agent is able to discharge its functions.
 
(f)   The Collateral Agent may resign its appointment upon appointment of a successor Collateral Agent and such successor Collateral Agent having accepted the role of the Collateral Agent under this Agreement.
 
(g)   The provisions of this Agreement will continue in effect for the benefit of the retiring Collateral Agent in respect of actions taken or omitted to be taken by it or any event occurring before the termination of agency.
 
ARTICLE VII  
Miscellaneous
 
Section 7.1  
Amendments in Writing
 
None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in a writing signed by all parties hereto.
 

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Section 7.2  
Notices
 
All notices, requests and demands to or upon the Grantor, First Lien Trustee, the Second Lien Trustee, the Third Lien Agent and the Collateral Agent shall be made at the addresses specified in Schedule 7.2 hereto, as the same may be modified by written notice to both the Grantor and the Collateral Agent.
 
Section 7.3  
No Waiver by Course of Conduct; Cumulative Remedies
 
Neither the Collateral Agent nor any other Secured Party shall by any act (except by a written instrument pursuant to Section 7.1 ( Amendments in Writing ) ), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default.  No failure to exercise, nor any delay in exercising, on the part of the Collateral Agent or any other Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Collateral Agent or any other Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Collateral Agent or such other Secured Party would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.
 
Section 7.4  
Successors and Assigns
 
This Agreement shall be binding upon the successors and assigns of the Grantor and shall inure to the benefit of the Collateral Agent and each other Secured Party and their successors and assigns; provided , however , that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the First Lien Trustee, the Second Lien Trustee and the Third Lien Agent.
 
Section 7.5  
Counterparts
 
This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple counterparts and attached to a single counterpart so that all signature pages are attached to the same document.  Delivery of an executed counterpart by telecopy shall be effective as delivery of a manually executed counterpart.
 
Section 7.6  
Severability
 
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 

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Section 7.7  
Section Headings
 
The Article and Section titles contained in this Agreement are, and shall be, without substantive meaning or content of any kind whatsoever and are not part of the agreement of the parties hereto.
 
Section 7.8  
Entire Agreement
 
This Agreement together with the other Note Documentation represents the entire agreement of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof.
 
Section 7.9  
Governing Law
 
This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.
 
Section 7.10  
Release of Collateral
 
At the time provided in each of the First Lien Indenture, the Second Lien Indenture and the Third Lien Credit Agreement and subject to the provisions of the Intercreditor Agreement, the Collateral shall be released from the Lien created hereby and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Collateral Agent and the Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantor.  At the request and sole expense of any Grantor following any such termination, the Collateral Agent shall deliver to the Grantor any Collateral of the Grantor held by the Collateral Agent hereunder and execute and deliver to the Grantor such documents as the Grantor shall reasonably request to evidence such termination.
 
Section 7.11  
Reinstatement
 
The Grantor further agrees that, if any payment made by WMI or other Person and applied to the Secured Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by any Secured Party to such Loan Party, its estate, trustee, receiver or any other party, including any Grantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force and effect, as fully as if such payment had never been made or, if prior thereto the Lien granted hereby or other Collateral securing such liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), such Lien or other Collateral shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect any Lien or other Collateral securing the obligations of any Grantor in respect of the amount of such payment.
 

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Section 7.12  
Incorporation by Reference
 
The following provisions of the Indentures (as in effect on the date hereof) are hereby incorporated by reference to the extent that they purport to govern the responsibilities and rights of the Collateral Agent: Sections 4.03, 12.02, 12.03(c), 12.04 and 12.07.

Section 7.13  
Third Lien Agent Authority Subject to Third Lien Credit Agreement
 
U.S. Bank  National Association has been appointed the Third Lien Agent hereunder pursuant to Article VIII of the Third Lien Credit  Agreement.  Notwithstanding anything to the contrary herein, it is expressly understood and agreed by the parties to this Agreement that any authority conferred upon the Third Lien Agent hereunder is subject to the terms of the delegation of authority made by the Third Lien Lenders to the Third Lien Agent pursuant to the Third Lien Credit Agreement and that the Third Lien Agent has agreed to act (and any successor Third Lien Agent shall act) as such hereunder only on the express conditions and protections contained in the Third Lien Credit Agreement (including, without limitation, Section 8.03 thereof).  Any successor Third Lien Agent appointed in accordance with Section 8.07 of the Third Lien Credit Agreement shall be entitled to all the rights, interests and benefits of the Third Lien Agent hereunder.


[Signature Pages Follow]

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In witness whereof , each of the undersigned has caused this Pledge and Security Agreement to be duly executed and delivered as of the date first above written.
 
 
WMI Holdings Corp.,
as Grantor
 
 
       
 
By:
/s/   
    Name:  
    Title:  
       
 
 
 
Wilmington Trust, National Association ,
as First Lien Trustee
 
 
       
 
By:
/s/   
    Name:  
    Title:  
       
 
 
 
Law Debenture Trust Company of New York ,
as Second Lien Trustee
 
 
       
 
By:
/s/   
    Name:  
    Title:  
       
 
 
 
U.S. Bank National Association
as Third Lien Agent
 
 
       
 
By:
/s/   
    Name:  
    Title:  
       

 

[Signature Page to Pledge and Security Agreement]

 
 
 


 
Accepted and Agreed
as of the date first above written:
 
 
 
Wilmington Trust, National Association ,
as Collateral Agent
 
 
       
 
By:
/s/   
    Name:  
    Title:  
 
 
 
 
 
 
 
[Signature Page to Pledge and Security Agreement]
 
 
EXHIBIT 10.3

PLEDGE AND SECURITY AGREEMENT
 
PLEDGE AND SECURITY AGREEMENT (the " Agreement ") dated as of March 19, 2012, made by each of the Grantors referred to below, in favor of U.S. Bank National Association, a national banking association, in its capacity as agent for the Secured Parties referred to below (in such capacity, together with its successors and assigns in such capacity, if any, the " Agent ").
 
W I T N E S S E T H :
 
WHEREAS, WMI Holdings Corp., a Washington corporation (the " Borrower "), each subsidiary of the Borrower listed as a "Guarantor" on the signature pages thereto (together with each other Person (as defined in the Financing Agreement) that guarantees all or any portion of the Obligations (as defined in the Financing Agreement) from time to time, each a " Guarantor " and collectively, the " Guarantors ", and together with the Borrower and each other Person that executes a supplement hereto and becomes an "Additional Grantor" hereunder, each a " Grantor " and collectively, the " Grantors "), the lenders from time to time party thereto (each a " Lender " and collectively, the " Lenders "), and the Agent are parties to a Financing Agreement, dated as of March 19, 2012 (such agreement, as amended, restated, supplemented, modified or otherwise changed from time to time, including any replacement agreement therefor, being hereinafter referred to as the " Financing Agreement ");
 
WHEREAS, pursuant to the Financing Agreement, the Lenders have agreed to make certain term loans (each a " Loan " and collectively, the " Loans "), to the Borrower;
 
WHEREAS, it is a condition precedent to the Lenders making any Loan to the Borrower pursuant to the Financing Agreement that each Grantor shall have executed and delivered to the Agent a pledge to the Agent, for the benefit of the Secured Parties, and the grant to the Agent, for the benefit of the Secured Parties, of (a) a security interest in and Lien on the outstanding shares of Equity Interests (as defined in the Financing Agreement), subject to the terms and condition herein, and indebtedness from time to time owned by such Grantor of each Person now or hereafter existing and in which such Grantor has any interest at any time, and (b) a security interest in all other assets of such Grantor; and
 
WHEREAS, each Grantor has determined that the execution, delivery and performance of this Agreement directly benefit, and are in the best interest of, such Grantor, and the credit extended under the Financing Agreement will inure to the benefit of each Grantor;
 
NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Lenders to make the Loans and to provide other financial accommodations to the Borrower  pursuant to the Financing Agreement, and the Agent to maintain such Loans pursuant to the Financing Agreement, the Grantors hereby jointly and severally agree with the Agent, for its benefit and the ratable benefit of the other Secured Parties, as follows:
 

 
   
 
 
 
 
 

SECTION 1.   Definitions   .
 
(a)   Reference is hereby made to the Financing Agreement for a statement of the terms thereof.  All capitalized terms used in this Agreement and the recitals hereto which are defined in the Financing Agreement or in Article 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of New York (the " Code ") and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in the Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Agent may otherwise determine in its sole discretion.
 
(b)   The following terms shall have the respective meanings provided for in the Code:  "Accounts", "Account Debtor", "Cash Proceeds", "Chattel Paper", "Commercial Tort Claim", "Commodity Account", "Commodity Contracts", "Deposit Account", "Documents", "Electronic Chattel Paper", "Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments", "Inventory", "Investment Property", "Letter-of-Credit Rights", "Noncash Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes", "Record", "Security Account", "Software", "Supporting Obligations" and "Tangible Chattel Paper".
 
(c)   As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:
 
" Additional Collateral " has the meaning specified therefor in Section 4(a)(i) hereof.
 
" Cash Management Account " means each bank account of each Grantor maintained at one or more Cash Management Banks listed on Schedule IV.
 
" Cash Management Agreement " means a control agreement, in form and substance reasonably satisfactory to the Required Lenders, by and among a Grantor, the Agent and a Cash Management Bank with respect to each Cash Management Account, pursuant to which such Cash Management Bank shall irrevocably agree, among other things, that (i) it will comply at any time with the instructions originated by the Agent (or its designee) to such bank or financial institution directing the disposition of cash, Cash Equivalents, Commodity Contracts, securities, Investment Property and other items from time to time credited to such Cash Management Account, without further consent of such Grantor, (ii) all cash, Cash Equivalents, Commodity Contracts, securities, Investment Property and other items of such Grantor deposited with such institution shall be subject to a perfected, first priority security interest in favor of the Agent (or its designee), (iii) any right of set off, banker's Lien or other similar Lien, security interest or encumbrance shall be fully waived as against the Agent (or its designee), and (iv) upon receipt of written notice from the Agent upon the occurrence of an Event of Default, such Cash Management Bank shall immediately send to the Agent (or its designee) by wire transfer (to such account as the Agent (or its designee) shall specify, or in such other manner as the Agent (or its designee) shall direct) all such cash, Cash Equivalents, the value of any Commodity Contracts, securities, Investment Property and other items held by it and shall agree to cease to
 

 
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comply with any directive or instruction by such Grantor.
 
" Cash Management Bank " has the meaning specified therefor in Section 6(h) hereof.
 
" Certificated Entities " has the meaning specified therefor in Section 5(l) hereof.
 
" Code " has the meaning specified therefor in Section 1(a) hereof.
 
" Collateral " has the meaning specified therefor in Section 2 hereof.
 
" Collections " means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds).
 
" Copyright Licenses " means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing for the grant of any right to use or sell any works covered by any Copyright (including, without limitation, all Copyright Licenses set forth in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof)).
 
" Copyrights " means all domestic and foreign copyrights, whether registered or unregistered, including, without limitation, all copyright rights throughout the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression (including computer software and internet website content) now or hereafter owned, acquired, developed or used by any Grantor (including, without limitation, all copyrights described in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof)), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof.
 
" Current Value " has the meaning specified therefor in Section 6(l) hereof.
 
" Existing Issuer " has the meaning specified therefor in the definition of the term "Pledged Shares".
 
" Foreign Subsidiary " has the meaning specified therefor in Section 2 hereof.
 
" Insurance Assets " means Regulated Insurance Assets of an Insurance Subsidiary and Insurance Holdings.
 
" Intellectual Property " means all Copyrights, Patents, Trademarks and Other Intellectual Property.
 
" Licenses " means the Copyright Licenses, the Patent Licenses and the Trademark Licenses.
 

 
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" Mortgage " means a mortgage (including, without limitation, a leasehold mortgage), deed of trust or deed to secure debt or similar agreement or instrument, in form and substance satisfactory to the Required Lenders, made by a Grantor in favor of the Agent for the benefit of the Agent and the ratable benefit of the Lenders, securing the Obligations and delivered to the Agent.
 
" New Facility " has the meaning specified therefor in Section 6(l) hereof.
 
" Other Intellectual Property " means all trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and privacy and other general intangibles of like nature, now or hereafter acquired, owned, developed or used by any Grantor (including, without limitation, all Other Intellectual Property set forth in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof)).
 
" Patent Licenses " means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation, all Patent Licenses set forth in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof)).
 
" Patents " means all domestic and foreign letters patent, design patents, utility patents, industrial designs and inventions, now existing or hereafter acquired (including, without limitation, all of those described in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof)), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.
 
" Perfection Requirement " has the meaning specified therefor in Section 5(i) hereof.
 
" Pledge Amendment " has the meaning specified therefor in Section 4(a)(ii) hereof.
 
" Pledged Debt " means the indebtedness described in Schedule VII hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof) of the Grantors and all indebtedness from time to time owned or acquired by any Grantor, the Promissory Notes and other Instruments evidencing any or all of such indebtedness, and all interest, cash, Instruments, Investment Property, financial assets, securities, Equity Interests, stock options and Commodity Contracts, notes, debentures, bonds, Promissory Notes or other evidences of indebtedness and all other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness.
 
" Pledged Interests " means, collectively, (a) the Pledged Debt, (b) the Pledged Shares and (c) all security entitlements of any Grantor in any and all of the foregoing.
 

 
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" Pledged Issuer " has the meaning specified therefor in the definition of the term "Pledged Shares".
 
" Pledged Shares " means (a) the shares of Equity Interests described in Schedule VIII hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof), whether or not evidenced or represented by any stock certificate, certificated security or other Instrument, owned by the Grantors and issued by the Persons described in such Schedule VIII (the " Existing Issuers "), (b) the shares of Equity Interests at any time and from time to time acquired by a Grantor of any and all Persons now or hereafter existing (such Persons, together with the Existing Issuers, being hereinafter referred to collectively as the " Pledged Issuers " and each individually as a " Pledged Issuer "), whether or not evidenced or represented by any stock certificate, certificated security or other Instrument, and (c) the certificates representing such shares of Equity Interests, all options and other rights, contractual or otherwise, in respect thereof and all dividends, distributions, cash, Instruments, Investment Property, financial assets, securities, Equity Interests, stock options and Commodity Contracts, notes, debentures, bonds, Promissory Notes or other evidences of indebtedness and all other property (including, without limitation, any stock dividend and any distribution in connection with a stock split) from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Equity Interests.
 
" Runoff Assets Collateral " means "Collateral" under and as defined in the Runoff Assets Pledge and Security Agreement.
 
" Runoff Assets Pledge and Security Agreement " means that certain Pledge and Security Agreement, dated as of the date hereof, among the Borrower, as the Grantor, Wilmington Trust, National Association, as First Lien Trustee, Law Debenture Trust Company of New York, as Second Lien Trustee, the Agent, as Third Lien Agent, and Wilmington Trust, National Association, as Collateral Agent thereunder, as the same may be amended, restated, supplemented, modified or otherwise changed from time to time, including any replacement agreement therefor.
 
" Secured Parties " means, collectively, the Agent and the Lenders.
 
" Secured Obligations " has the meaning specified therefor in Section 3 hereof.
 
" Trademark Licenses " means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by any Grantor and now or hereafter covered by such licenses (including, without limitation, all Trademark Licenses described in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof)).
 
" Trademarks " means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a's, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general
 

 
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intangibles of like nature, now or hereafter owned, adopted, acquired or used by any Grantor (including, without limitation, all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a's, Internet domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof)), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks.
 
SECTION 2.   Grant of Security Interest  .  As collateral security for the payment, performance and observance of all of the Secured Obligations, each Grantor hereby pledges and assigns to the Agent (and its agents and designees), and grants to the Agent (and its agents and designees), for the benefit of the Secured Parties, a continuing security interest in, all personal property and Fixtures of such Grantor in which such Grantor has rights, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation, the following (all being collectively referred to herein as the " Collateral "):
 
(a)   all Accounts;
 
(b)   all Chattel Paper (whether tangible or electronic);
 
(c)   the Commercial Tort Claims specified on Schedule VI (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof);
 
(d)   all Deposit Accounts, all cash, and all other property from time to time deposited therein or otherwise credited thereto and the monies and property in the possession or under the control of the Agent or any Lender or any affiliate, representative, agent or correspondent of the Agent or any Lender;
 
(e)   all Documents;
 
(f)   all General Intangibles (including, without limitation, all Payment Intangibles, Intellectual Property and Licenses);
 
(g)   all Goods, including, without limitation, all Equipment, Fixtures and Inventory;
 
(h)   all Instruments (including, without limitation, Promissory Notes);
 
(i)   all Investment Property;
 
(j)   all Letter-of-Credit Rights;
 
(k)   all Pledged Interests;
 

 
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(l)   all Supporting Obligations;
 
(m)   all cash and cash equivalents;
 
(n)   all other tangible and intangible personal property of such Grantor (whether or not subject to the Code), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of such Grantor described in the preceding clauses of this Section 2 hereof (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by such Grantor in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without limitation, all tapes, disks, cards, Software, data and computer programs in the possession or under the control of such Grantor or any other Person from time to time acting for such Grantor that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 2 hereof or are otherwise necessary or helpful in the collection or realization thereof; and
 
(o)   all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;
 

 
in each case howsoever such Grantor's interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).
 
Notwithstanding anything herein to the contrary, the term "Collateral" shall not include (i) any Insurance Assets or Pledged Interests to the extent, but only for so long as, any insurance-related Governmental Authority does not permit such Insurance Assets or Pledged Interests to become "Collateral" hereunder, it being understood that "Collateral" shall include any such Insurance Assets or Pledged Interests (other than Runoff Assets Collateral to the extent set forth in clause (ii) of this paragraph) immediately upon any approval of such insurance-related Governmental Authority in accordance with Section 6.01(b) of the Financing Agreement, and (ii) Runoff Assets Collateral except as specifically set forth in the Runoff Assets Pledge and Security Agreement and the Intercreditor Agreement (as defined in the Runoff Assets Pledge and Security Agreement).

Notwithstanding anything herein to the contrary, the term "Collateral" shall not include in the case of a Subsidiary of such Grantor organized under the laws of a jurisdiction other than the United States, any of the states thereof or the District of Columbia (a " Foreign Subsidiary "), more than 65% (or such greater percentage that, due to a change in applicable law after the date hereof, (i) would not reasonably be expected to cause the undistributed earnings of such Foreign Subsidiary as determined for United States federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiary's United States parent and (ii) would not reasonably be expected to cause any material adverse tax consequences) of the issued and outstanding shares of Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (it being understood and agreed that the Collateral shall include 100% of the issued and outstanding shares of Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) or other equity interest of such Foreign Subsidiary).


 
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The Grantors agree that the pledge of the shares of Equity Interests of any Pledged Issuer who is a Foreign Subsidiary may be supplemented by one or more separate pledge agreements, deeds of pledge, share charges, or other similar agreements or instruments, executed and delivered by the relevant Grantors in favor of the Agent, which pledge agreements will provide for the pledge of such shares of Equity Interests in accordance with the laws of the applicable foreign jurisdiction.  With respect to such shares of Equity Interests, the Required Lenders may, at any time and from time to time, in their discretion, take, or request the Agent to take, actions in such foreign jurisdictions that will result in the perfection of the Lien created in such shares of Equity Interests, in each case, at the expense of the Grantors.

SECTION 3.   Security for Secured Obligations   .  The security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (the " Secured Obligations "):
 
(a)   the prompt payment by each Grantor, as and when due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of the Financing Agreement and/or the other Loan Documents, including, without limitation, (i) all Obligations, (ii) in the case of a Guarantor, all amounts from time to time owing by such Guarantor in respect of its guaranty made pursuant to Article IX of the Financing Agreement or under any other Guaranty to which it is a party, including, without limitation, all obligations guaranteed by such Guarantor and (iii) all interest, fees, commissions, charges, expense reimbursements, indemnifications and all other amounts due or to become due under any Loan Document (including, without limitation, all interest, fees, commissions, charges, expense reimbursements, indemnifications and other amounts that accrue after the commencement of any Insolvency Proceeding of any Grantor, whether or not the payment of such interest, fees, commissions, charges, expense reimbursements, indemnifications and other amounts are unenforceable or are not allowable, in whole or in part, due to the existence of such Insolvency Proceeding); and
 
(b)   the due performance and observance by each Grantor of all of its other obligations from time to time existing in respect of the Loan Documents.
 
SECTION 4.   Delivery of the Pledged Interests .
 
(a)   (i)  All Promissory Notes currently evidencing the Pledged Debt and all certificates currently representing the Pledged Shares shall be delivered to the Agent on or prior to the execution and delivery of this Agreement.  All other Promissory Notes, certificates and Instruments constituting Pledged Interests from time to time required to be pledged to the Agent pursuant to the terms of this Agreement or the Financing Agreement (the " Additional Collateral ") shall be delivered to the Agent promptly upon, but in any event within ten (10) days of, receipt thereof by or on behalf of any of the Grantors.  All such Promissory Notes, certificates and Instruments shall be held by or on behalf of the Agent pursuant hereto and shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment or undated stock powers executed in blank, all in suitable form and substance reasonably satisfactory to the Required Lenders to perfect and preserve the security interests purported to be created hereby.  If any Pledged Interests consist of uncertificated securities, unless the immediately following sentence is applicable thereto, such Grantor shall
 

 
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cause the Agent (or its designated custodian or nominee) to become the registered holder thereof, or cause each issuer of such securities to agree that it will comply with instructions originated by the Agent  with respect to such securities without further consent by such Grantor.  If any Pledged Interests consist of security entitlements, such Grantor shall transfer such security entitlements to the Agent (or its custodian, nominee or other designee), or cause the applicable securities intermediary to agree that it will comply with entitlement orders by the Agent without further consent by such Grantor.
 
(ii)   Within five (5) days of the receipt by a Grantor of any Additional Collateral, a Pledge Amendment, duly executed by such Grantor, in substantially the form of Exhibit A hereto (a " Pledge Amendment "), shall be delivered to the Agent, in respect of the Additional Collateral that must be pledged pursuant to this Agreement and the Financing Agreement.  The Pledge Amendment shall from and after delivery thereof constitute part of Schedules VII and VIII hereto.  Each Grantor hereby authorizes the Agent to attach each Pledge Amendment to this Agreement and agrees that all Promissory Notes, certificates or Instruments listed on any Pledge Amendment delivered to the Agent shall for all purposes hereunder constitute Pledged Interests and such Grantor shall be deemed upon delivery thereof to have made the representations and warranties set forth in Section 5 hereof with respect to such Additional Collateral.
 
(b)   If any Grantor shall receive, by virtue of such Grantor's being or having been an owner of any Pledged Interests, any (i) stock certificate (including, without limitation, any certificate representing a stock dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off), Promissory Note or other Instrument, (ii) option or right, whether as an addition to, substitution for, or in exchange for, any Pledged Interests, or otherwise, (iii) dividends payable in cash (except such dividends permitted to be retained by any such Grantor pursuant to Section 7 hereof) or in securities or other property or (iv) dividends, distributions, cash, Instruments, Investment Property and other property in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus, such Grantor shall receive such stock certificate, Promissory Note, Instrument, option, right, payment or distribution in trust for the benefit of the Agent, shall segregate it from such Grantor's other property and shall deliver it forthwith to the Agent, in the exact form received, with any necessary indorsement and/or appropriate stock powers duly executed in blank, to be held by the Agent as Pledged Interests and as further collateral security for the Secured Obligations.
 

 
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SECTION 5.   Representations and Warranties   .  Each Grantor jointly and severally represents and warrants as follows:
 
(a)   Schedule I hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof) sets forth a complete and accurate list as of the date hereof of (i) the exact legal name of each Grantor, (ii) the jurisdiction of organization of each Grantor, (iii) the type of organization of each Grantor, (iv) the organizational identification number of each Grantor or states that no such organizational identification number exists, and (v) the federal employer identification number of each Grantor.
 
(b)   All Equipment, Fixtures, Inventory and other Goods now existing are, and all Equipment, Fixtures, Inventory and other Goods hereafter existing will be, located at the addresses specified therefor in Schedule III hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof).  Each Grantor's places of business and chief executive office, the place where such Grantor keeps its Records concerning Accounts and all originals of all Chattel Paper, and each location where any Grantor has any Collateral are located at the addresses specified therefor in Schedule III hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof).  None of the Accounts is evidenced by Promissory Notes or other Instruments.  Set forth in Schedule IV hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof) is a complete and accurate list, of each Deposit Account, Securities Account and Commodities Account of each Grantor, together with the name and address of each institution at which each such Account is maintained, the account number for each such Account and a description of the purpose of each such Account.
 
(c)   Each Grantor has delivered to the Agent true, complete and correct copies of each License described in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof), including all schedules and exhibits thereto, which represents all of the Licenses existing on the date of this Agreement.
 
(d)   The Grantors own and control, or otherwise have the right to use, all Intellectual Property necessary for the operation of its business, without infringement, to their knowledge, upon or conflict with the rights of any other Person with respect thereto, except for such infringements and conflicts which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof) sets forth a complete and accurate list of all Intellectual Property and Licenses owned or used by each Grantor as of the date hereof.  All such Intellectual Property is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not been abandoned in whole or in part.  Except as set forth in Schedule II hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof), no such Intellectual Property is the subject of any licensing or franchising agreement.
 
(e)   The Existing Issuers set forth in Schedule VIII (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof) identified as a Subsidiary of a Grantor are each such Grantor's only Subsidiaries existing on the date hereof.  The Pledged Shares have been duly authorized and validly issued and, in the case of
 

 
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Grantors that are corporations, are fully paid and nonassessable and the holders thereof are not entitled to any preemptive, first refusal or other similar rights.  Except as noted in Schedule VIII hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof), the Pledged Shares constitute 100% (or in the case of a Foreign Subsidiary, 65% of the voting issued shares) of the issued shares of Equity Interests of the Pledged Issuers as of the date hereof.  All other shares of Equity Interests constituting Pledged Interests will be duly authorized and validly issued and, in the case of entities that are corporations, fully paid and nonassessable.
 
(f)   To the knowledge of the Grantors, the Promissory Notes currently evidencing the Pledged Debt have been, and all other Promissory Notes from time to time evidencing Pledged Debt, when executed and delivered, will have been, duly authorized, executed and delivered by the respective makers thereof, and, to the knowledge of the Grantors, all such Promissory Notes are or will be, as the case may be, legal, valid and binding obligations of such makers, enforceable against such makers in accordance with their respective terms, except as enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally.
 
(g)   The policies currently evidencing the Insurance Assets or any other Insurance Assets listed on Schedule IX hereto (as amended, supplemented or otherwise modified from time to time) have been, and all other policies from time to time evidencing Insurance Assets, when executed and delivered, will have been, duly authorized, executed and delivered by the parties thereto and all such policies or other Insurance Assets as may be relevant are or will be, as the case may be, legal, valid and binding obligations of each party thereto, enforceable against such makers in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally.
 
(h)   The Grantors are and will be at all times the sole and exclusive owners of, or otherwise have and will have adequate rights in, the Collateral free and clear of any Lien except for the Permitted Liens.  No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office except such as may have been filed to perfect or protect any Permitted Lien.
 
(i)   No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority (other than an insurance-related Governmental Authority) or any other Person, is required for (i) the grant by any Grantor of the security interest purported to be created hereby in the Collateral or (ii) the exercise by the Agent of any of its rights and remedies hereunder, except, in the case of this clause (ii), as may be required in connection with any sale of any Pledged Interests by laws affecting the offering and sale of securities generally.  No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other Person, is required for the perfection of the security interest purported to be created hereby in the Collateral, except (A) for the filing under the Uniform Commercial Code as in effect in the applicable jurisdiction of the financing statements described in Schedule V hereto (as amended, supplemented or otherwise modified from time to time), all of which financing statements have been duly filed and are in full force and effect, (B) with respect to the perfection of the security interest created hereby in the United
 

 
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States Intellectual Property and Licenses, for the recording of the appropriate Assignment for Security, substantially in the form of Exhibit B hereto in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, (C) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses, (D) with respect to any action that may be necessary to obtain control of Collateral constituting Deposit Accounts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the taking of such actions, and (E) the Agent's having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral (subclauses (A), (B), (C), (D) and (E), each a " Perfection Requirement " and collectively, the " Perfection Requirements ").
 
(j)   This Agreement creates a legal, valid and enforceable security interest in favor of the Agent, for the benefit of the Secured Parties, in the Collateral secured thereby, as security for the Secured Obligations.  On the date hereof, the Perfection Requirements result in the perfection of such security interests.  Such security interests are, or in the case of Collateral in which any Grantor obtains rights after the date hereof, will be, perfected, first priority security interests, subject in priority only to the Permitted Liens that, pursuant to the definition of the term "Permitted Liens", are not prohibited from being prior to the Liens in favor of the Agent, for the benefit of the Secured Parties, and the recording of such instruments of assignment described above.  Such Perfection Requirements and all other action necessary or desirable to perfect and protect such security interest have been duly made or taken.
 
(k)   As of the date hereof, no Grantor holds any Commercial Tort Claims in respect of which a claim has been filed in a court of law or a written notice by an attorney has been given to a potential defendant, except for such claims described in Schedule VI (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof).
 
(l)   With respect to each Grantor and its Subsidiaries that is a partnership or a limited liability company, each such Person has irrevocably opted into (and has caused each of its Subsidiaries that is a partnership or a limited liability company, and a Pledged Issuer to opt into) Article 8 of the Uniform Commercial Code (collectively, the " Certificated Entities ").  Such interests are securities for purposes of Article 8 of any relevant Uniform Commercial Code.
 
(m)   Each Grantor has good and marketable title to, valid leasehold interests in, or valid licenses to use, all property and assets material to its business, free and clear of all Liens, except Permitted Liens.  All such properties and assets are in good working order and condition, ordinary wear and tear excepted.
 
SECTION 6.   Covenants as to the Collateral   .  So long as any of the Secured Obligations (whether or not due) shall remain unpaid or any Lender shall have any Commitment under the Financing Agreement, unless the Agent shall otherwise consent in writing upon direction of the Required Lenders:
 

 
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(a)   Further Assurances .   Each Grantor will (x) execute and deliver, and cause each of its Subsidiaries to execute and deliver, to the Agent for the benefit of the Agent and the Lenders, at the time of the delivery of the financial statements of the Borrower and its Subsidiaries required by Section 6.01(a)(i) and (ii) of the Financing Agreement (in addition to any requirements hereunder to deliver a Pledge Amendment in respect of Additional Collateral), schedules identifying and describing any changes to the Collateral since the date of the last such schedules delivered to the Agent for the benefit of the Agent and the Lenders (and modify this Agreement by amending the Schedules hereto to include any Additional Collateral), and (y) take such action and execute, acknowledge and deliver such agreements, instruments or other documents as may be necessary from time to time or as the Required Lenders may reasonably request with respect to any Collateral or any Additional Collateral (including with respect to any Insurance Holdings and any Insurance Assets when otherwise required pursuant to the terms hereof) in order (i) to perfect and protect, or maintain the perfection of, the security interest and Lien purported to be created hereby in the relevant jurisdiction as necessary or advisable under applicable law; (ii) to enable the Agent to exercise and enforce its rights and remedies hereunder in respect of the Collateral; or (iii) otherwise to effect the purposes of this Agreement, including, without limitation:  (A) marking conspicuously all Chattel Paper, Instruments and Licenses beneficially owned by such Grantor and not held for sale or disposition in the ordinary course of such Grantor's business, and, at the request of the Agent, all of its Records pertaining to the Collateral with a conspicuous legend sufficient to indicate that such Chattel Paper, Instrument, License or Collateral is subject to the security interest created hereby, (B) if any Account shall be evidenced by a Promissory Note or other Instrument or Chattel Paper, delivering and pledging to the Agent such Promissory Note, other Instrument or Chattel Paper, duly endorsed and accompanied by executed instruments of transfer or assignment, all in form and substance necessary to perfect and preserve the security interest purported to be created hereby or as the Required Lenders may reasonably request, (C) executing and filing (to the extent, if any, that such Grantor's signature is required thereon) or authenticating the filing of, such financing or continuation statements, or amendments thereto, (D) with respect to Intellectual Property hereafter existing and not covered by an appropriate security interest grant, the executing and recording in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, delivery of all appropriate instruments granting a security interest, as may be necessary or desirable or that the Agent may request at the direction of the Required Lenders in order to perfect and preserve the security interest purported to be created hereby, (E) delivering to the Agent irrevocable proxies in respect of the Pledged Interests, (F) furnishing to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent  may reasonably request, all in reasonable detail, (G) if any Collateral with a book value in excess of $250,000 shall be in the possession of a third party (including, without limitation, any landlord by virtue of Collateral being located on such landlord's premises leased to a Grantor), notifying such Person of the Agent's security interest created hereby and using commercially reasonable efforts to obtain a written agreement, in form and substance satisfactory to the Required Lenders, waiving or subordinating any Liens of such Person in such Collateral, providing access to such Collateral in order to remove such Collateral from such premises during an Event of Default and acknowledging that such Person holds possession of the Collateral for the benefit of the Agent, (H) if at any time after the date hereof, any Grantor acquires or holds any Commercial Tort Claim, promptly notifying the Agent in a writing signed by such Grantor setting forth a brief
 

 
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description of such Commercial Tort Claim and granting to the Agent a security interest therein and in the proceeds thereof, which writing shall incorporate the provisions hereof and shall be in form and substance reasonably satisfactory to the Required Lenders sufficient to perfect and preserve the security interest purported to be created hereby, and (I) taking all actions required by law in any relevant Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign jurisdiction.  No Grantor shall take or fail to take any action which would in any manner impair the validity or enforceability of the Agent's security interest in and Lien on any Collateral.
 
(b)   Location of Equipment and Inventory .  Each Grantor will keep the Equipment and Inventory (other than Equipment and Inventory sold in the ordinary course of business at the locations specified in Schedule III hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof) or, upon not less than thirty (30) days' prior written notice to the Agent accompanied by a new Schedule III hereto indicating each new location of the Equipment and Inventory, at such other locations in the United States as the Grantors may elect, provided that all action has been taken to (i) grant to the Agent a perfected, first priority security interest in such Equipment and Inventory (subject in priority only to Permitted Liens that, pursuant to the definition of the term "Permitted Liens", are not prohibited from being prior to the Liens in favor of the Agent, for the benefit of the Secured Parties) and (ii) comply with 6(a)(G), if applicable
 
(c)   Condition of Equipment .  Each Grantor will maintain or cause the Equipment which is reasonably necessary or useful in the proper conduct of its business to be maintained and preserved in good condition, repair and working order as when acquired, ordinary wear and tear and casualty excepted, and will forthwith, or in the case of any loss or damage to any material Equipment promptly after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary or desirable, consistent with sound business practice.
 
(d)   Insurance .  Each Grantor will, at its own expense, maintain insurance with respect to the Collateral in accordance with the terms of the Financing Agreement.  Each Grantor will deliver to the Agent (for delivery to the Lenders) original or duplicate insurance policies to the extent not previously delivered to the Agent.  Each Grantor will also, execute and deliver to the extent not previously delivered, loss payee endorsements or evidence of additional insured status naming the Agent on behalf of the Lenders in form and substance reasonably satisfactory to the Required Lenders (to the extent not previously delivered).
 
(e)   Provisions Concerning the Accounts and the Licenses .
 
(i)   The Grantors shall, at its own expense, take all reasonable steps to enforce, collect and receive all amounts owing or to become due on the Accounts Receivable of the Grantors or any of their Subsidiaries and may settle, adjust or compromise the amount due in the ordinary course of business consistent with past practices.  After the occurrence and during the continuance of an Event of Default, the Agent (at the written direction of the Required Lenders) may send a notice of assignment and/or notice of the Lenders' security interest to any and all Account Debtors or third parties holding or otherwise concerned with any
 

 
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of the Collateral, and thereafter the Agent or its designee shall have the sole right to collect the Accounts Receivable and/or take possession of the Collateral and the books and records relating thereto and/or to enforce collection of any such Accounts Receivable, and/or to settle, adjust or compromise the amount or payment thereof.  After receipt by any Grantor of a notice from the Agent that the Agent has notified, intends to notify, or has enforced or intends to enforce a Grantor's rights against the Account Debtors or obligors under any Accounts Receivable as referred to in the immediately preceding sentence after the occurrence and during the continuance of an Event of Default, (A) all amounts and proceeds (including Instruments) received by such Grantor in respect of the Accounts Receivable shall be received in trust for the benefit of the Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Agent or its designated agent in the same form as so received (with any necessary endorsement) to be applied as specified in Section 9(d) hereof, and (B) such Grantor will not adjust, settle or compromise the amount or payment of any Account Receivable or extend the time of payment thereof, or release wholly or partly any Account Debtor or obligor thereof, or allow any allowance, credit or discount thereon.
 
(ii)   Each Grantor hereby appoints the Agent or its designee on behalf of the Agent as the Grantors' attorney-in-fact with power exercisable during the continuance of an Event of Default to endorse any Grantor's name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Accounts Receivable, to sign any Grantor's name on any invoice or bill of lading relating to any of the Accounts Receivable, drafts against Account Debtors with respect to Accounts Receivable, assignments and verifications of Accounts Receivable and notices to Account Debtors with respect to Accounts Receivable, to send verification of Accounts Receivable, and to notify the Postal Service authorities to change the address for delivery of mail addressed to any Grantor to such address as the Agent or its designee may designate and to do all other acts and things necessary to carry out this Agreement.  All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission (other than acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction), or for any error of judgment or mistake of fact or law; this power being coupled with an interest is irrevocable until all of the Loans and other Obligations under the Loan Documents are paid in full, all Commitments are terminated and all of the Loan Documents are terminated.
 
(iii)   Nothing herein contained shall be construed to constitute the Agent as agent of any Grantor for any purpose whatsoever, and the Agent and Secured Parties shall not be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof (other than from acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction).  The Agent and Secured Parties shall not, under any circumstance or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Accounts Receivable or any instrument received in payment thereof or for any damage resulting therefrom (other than acts of omission or commission constituting gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction).  The Agent, by anything herein or in any assignment or otherwise, does not assume any of the obligations under any contract or agreement assigned to the Agent and
 

 
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shall not be responsible in any way for the performance by any Grantor of any of the terms and conditions thereof.
 
(iv)   Upon the occurrence and during the continuance of any material breach or default under any material License by any party thereto other than a Grantor, (A) the relevant Grantor will, promptly after obtaining knowledge thereof, give the Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to take with respect thereto, and (B) after the occurrence and during the continuance of an Event of Default, each Grantor will, upon written instructions from the Agent (at the written direction of the Required Lenders and at such Grantor's expense, take such action as the Agent may deem necessary or advisable in respect thereof.
 
(f)   Provisions Concerning the Pledged Interests .  Each Grantor will:
 
(i)   not make or consent to any amendment or other modification or waiver with respect to any Pledged Interests or enter into any agreement or permit to exist any restriction with respect to any Pledged Interests other than pursuant to the Loan Documents; and
 
(ii)   not permit the issuance of (A) any additional shares of any class of Equity Interests of any Pledged Issuer unless pledged to the Agent hereunder, (B) any securities convertible voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or condition into, or exchangeable for, any such shares of Equity Interests or (C) any warrants, options, contracts or other commitments entitling any Person to purchase or otherwise acquire any such shares of Equity Interests.
 
(g)   Intellectual Property .
 
(i)   If applicable, each Grantor has duly executed and delivered the applicable Assignment for Security in the form attached hereto as Exhibit B.  Each Grantor (either itself or through licensees) will, and will cause each licensee thereof to, take all reasonable action necessary to maintain all of the Intellectual Property that is necessary for the conduct of such Grantor's business in full force and effect, including, without limitation, using the proper statutory notices and markings and using the Trademarks on each applicable trademark class of goods in order to so maintain the Trademarks in full force, free from any claim of abandonment for non-use, and no Grantor will (nor permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Intellectual Property may become invalidated.
 
(ii)   Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, no Grantor shall have an obligation to use or to maintain any Intellectual Property (A) that relates solely to any product or work, that has been, or is in the process of being, discontinued, abandoned or terminated, (B) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien created by this Agreement or (C) that is substantially the same as any other Intellectual Property that is in full force, so long as the failure
 

 
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to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual Property is subject to the Lien and security interest created by this Agreement.
 
(iii)   Each Grantor will cause to be taken all reasonably necessary steps in any proceeding before the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in any other country or political subdivision thereof to maintain each registration of the Intellectual Property (other than Intellectual Property not necessary for the conduct of such Grantor's business described in clause (ii) above), including, without limitation, filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment of maintenance fees, filing fees, taxes or other governmental fees.  If any Intellectual Property (other than the Intellectual Property not necessary for the conduct of such Grantor's business as described in (ii) above) is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Grantors shall (x) upon obtaining knowledge of such infringement, misappropriation, dilution or other violation, promptly notify the Agent and (y) to the extent the Grantors shall deem appropriate under the circumstances, promptly sue for infringement, misappropriation, dilution or other violation, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation, dilution or other violation, or take such other actions as the Grantors shall deem appropriate under the circumstances to protect such Intellectual Property.
 
(iv)   Upon the acquisition of any Intellectual Property or License by any Grantor, such Grantor shall promptly, but in any event not later than 30 days after the acquisition thereof, furnish to the Agent notice of the acquisition of such Intellectual Property or License and shall within 30 days thereafter take such actions as are required or advisable to perfect the Agent's lien in such property.  Notwithstanding anything herein to the contrary, no failure on the part of a prior owner of any Intellectual Property or License acquired by any Grantor to comply with the covenants imposed on the Grantors under Section 6(g) of this Agreement will be attributed to or otherwise deemed a breach of those covenants by any Grantor acquiring such Intellectual Property or License.
 
(v)   Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default, no Grantor may abandon or otherwise permit any material Intellectual Property to become invalid without the prior written consent of the Agent, and if any material Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Grantors will take such action as the Agent (at the direction of the Required Lenders) shall reasonably deem appropriate under the circumstances to protect such Intellectual Property.  Upon the occurrence and during the continuance of any Event of Default, the Agent shall have the right but shall in no way be obligated to file applications for protection of the Intellectual Property and/or bring suit in the name of any Grantor, the Agent or the Secured Parties to enforce the Intellectual Property and any License thereunder.  In the event of such suit, each Grantor shall, at the reasonable request of the Agent (at the direction of the Required Lenders), do any and all lawful acts and execute any and all documents requested by the Agent (at the direction of the Required Lenders) in aid of such enforcement and the Grantors shall promptly reimburse and indemnify the Agent for all costs and expenses incurred by the Agent in the exercise of its rights under this Section 6(g)(vi) in accordance with Section 10.04 of the Financing Agreement.
 

 
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(vi)   In the event that any Grantor shall (A) obtain rights to any new Trademarks necessary for the operation of its business, or any reissue, renewal or extension of any existing Trademark necessary for the operation of its business, (B) obtain rights to or develop any new patentable inventions, or become entitled to the benefit of any Patent, or any reissue, division, continuation, renewal, extension or continuation-in-part of any existing Patent or any improvement thereof (whether pursuant to any license or otherwise), (C) obtain rights to or develop any new works protectable by Copyright, or become entitled to the benefit of any rights with respect to any Copyright or any registration or application therefor, or any renewal or extension of any existing Copyright or any registration or application therefor, or (D) obtain rights to or develop new Other Intellectual Property, the provisions of Section 2 hereof shall automatically apply thereto and such Grantor shall give to the Agent prompt notice thereof in accordance with the terms of this Agreement and the Financing Agreement.  Except as otherwise provided herein or in the Financing Agreement each Grantor, either itself or through any agent, employee, licensee or designee, shall give the Agent written notice of each application submitted by it for the registration of any Trademark or Copyright or the issuance of any Patent with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision thereof.
 
(vii)   Each Grantor shall execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Agent (at the direction of the Required Lenders) may reasonably request to evidence the Agent's security interest hereunder in such Intellectual Property and the General Intangibles of such Grantor relating thereto or represented thereby, and each Grantor hereby appoints the Agent its attorney-in-fact to execute and/or authenticate and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such power (being coupled with an interest) shall be irrevocable until the date on which all of the Secured Obligations have been paid in full in cash after the termination of each Lender's Commitment and each of the Loan Documents.
 
(h)   Deposit, Commodities and Securities Accounts .  (i)  Each Grantor shall (x) establish and maintain cash management services of a type and on terms reasonably satisfactory to the Required Lenders at one or more of the banks reasonably acceptable to the Required Lenders set forth on Schedule IV (each a " Cash Management Bank ") and (y) deposit or cause to be deposited promptly, and in any event no later than the next Business Day after the date of receipt thereof, all proceeds in respect of any Collateral, all Collections (of a nature susceptible to a deposit in a bank account) and all other amounts received by any Grantor (including payments made by Account Debtors directly to any Grantor) into a Cash Management Account; (ii) On or prior to the Effective Date, the Grantors shall, with respect to each Cash Management Account, deliver to the Agent a Cash Management Agreement with respect to such Cash Management Account.  From and after the Effective Date, the Grantors shall not maintain, and shall not permit any of their Subsidiaries to maintain, cash, Cash Equivalents or other amounts in any Deposit Account or Securities Account, unless the Agent shall have received a Cash Management Agreement in respect of each such Deposit Account or Securities Account; (iii) Upon the terms and subject to the conditions set forth in a Cash Management Agreement with respect to a Cash Management Account, upon the direction of the Agent upon an Event of Default having occurred and continuing, all amounts received in such Cash Management Account shall be wired each Business Day into the Agent's Account; (iv) Any such securities,
 

 
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cash, investments and other items so received by the Agent shall be held as additional Collateral for the Secured Obligations or applied in accordance with Section 9 hereof; (v) So long as no Default or Event of Default has occurred and is continuing, the Borrower may amend Schedule IV to add or replace a Cash Management Bank or Cash Management Account; provided , however , that prior to the time of the opening of such Cash Management Account, each Grantor and such prospective Cash Management Bank shall have executed and delivered to the Agent a Cash Management Agreement; (vi) Each Grantor shall close any of its Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of notice from the Agent that the creditworthiness of any Cash Management Bank is no longer acceptable to the Required Lenders, or that the operating performance, funds transfer, or availability procedures or performance of such Cash Management Bank with respect to Cash Management Accounts or the Agent's liability under any Cash Management Agreement with such Cash Management Bank is no longer acceptable in the respective Lender's and Agent's reasonable judgment; (vii) The Cash Management Accounts shall be cash collateral accounts, with all cash, checks and similar items of payment in such accounts securing payment of the Obligations, and in which the Grantors are hereby deemed to have granted a Lien to the Agent for the benefit of the Agent and the Lenders; and (viii) All checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness received directly by any Grantor from any of its Account Debtors, as proceeds from Accounts of such Grantor or as proceeds of any other Collateral shall be held by such Grantor in trust for the Agent and the Lenders and if of a nature susceptible to a deposit in a bank account, upon receipt be deposited by such Grantor in original form and no later than the next Business Day after receipt thereof into a Cash Management Account or other bank account referenced in the definition of Cash Management Accounts as excluded from the scope thereof.  Each Grantor shall not commingle such collections with the proceeds of any assets, if any, not included in the Collateral.  No checks, drafts or other instrument received by the Agent shall constitute final payment to the  Agent unless and until such instruments have actually been collected.
 
(i)   Control .  Each Grantor hereby agrees to take any or all action that may be necessary or desirable or that the Agent may request in order for the Agent to obtain control in accordance with Sections 9-104, 9-105, 9-106, and 9-107 of the Code with respect to the following Collateral:  (i) Deposit Accounts, (ii) Electronic Chattel Paper, (iii) Investment Property and (iv) Letter-of-Credit Rights.  Each Grantor hereby acknowledges and agrees that any agent or designee of the Agent shall be deemed to be a "secured party" with respect to the Collateral under the control of such agent or designee for all purposes.
 
(j)   Records; Inspection and Reporting .
 
(i)   Each Grantor shall keep adequate records concerning the Accounts, Chattel Paper and Pledged Interests.  Each Grantor shall permit the Agent, or any agents or representatives thereof or such professionals or other Persons as the Agent may designate, upon reasonable advance notice, at the expense of the Grantors (provided that so long as no Event of Default shall have occurred and be continuing, the Grantors shall pay for only (I) one examination described in the following clause (A) per year, (II) one visit and inspection described in the following clause (B) per year, (III) one verification described in the following clause (C) per year, (IV) one audit, physical count, appraisal, valuation or examination described
 

 
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in the following clause (D) per year, and (V) one discussion described in the following clause (E) per year): (A) to examine and make copies of and abstracts from such Grantor's books and records, (B) to visit and inspect its properties, (C) to verify materials, leases, notes, Accounts, Inventory and other assets of such Grantor from time to time, (D) to conduct audits, physical counts, appraisals and/or valuations, or examinations at the locations of such Grantor and (E) to discuss such Grantor's affairs, finances and accounts with any of its directors, officers, managerial employees, independent accountants or any of its other representatives. In furtherance of the foregoing, each Grantor hereby authorizes its independent accountants, and the independent accountants of each of its Subsidiaries, to discuss the affairs, finances and accounts of such Person (independently or together with representatives of such Person) with the agents and representatives of the Agent in accordance with this Section 6(j).
 
(ii)   Except as otherwise expressly permitted by Section 6.02(j) of the Financing Agreement, no Grantor shall, without prior written notice to the Agent and the Lenders, amend, modify or otherwise change (A) its name, organizational identification number or FEIN (B) its jurisdiction of organization as set forth in Schedule I hereto or (C) its chief executive office as set forth in Schedule III hereto.  Each Grantor shall promptly notify the Agent upon obtaining an organizational identification number, if on the date hereof such Grantor did not have such identification number.
 
(iii)   The Borrowers acknowledge that pursuant to this Section 6(j), representatives of the Lenders and the Agent may visit any or all of the Grantors and/or conduct an inspection, including audits, valuations, assessments, appraisals, and/or examinations of any or all of the Grantors at any time and from time to time provided , however , that so long as no Event of Default shall have occurred and be continuing, the Borrower shall pay for only one such inspection per year.  The Borrower agrees to pay (i) out-of-pocket costs and reasonable expenses incurred in connection with all such visits, inspections, audits, physical counts, valuations, assessments, appraisals,  and/or examinations and (ii) the cost of all visits, inspections, audits, physical counts, valuations, assessments, appraisals, and/or examinations conducted by a third party on behalf of the Agent and/or the Lenders.
 
(k)   Partnership and Limited Liability Company Interest .  Except with respect to partnership interests and membership interests evidenced by a certificate, which certificate has been pledged and delivered to the Agent pursuant to Section 4 hereof, no Grantor that is a partnership or a limited liability company shall, nor shall any Grantor with any Subsidiary that is a partnership or a limited liability company, permit such partnership interests or membership interests to (i) be dealt in or traded on securities exchanges or in securities markets, (ii) become a security for purposes of Article 8 of any relevant Uniform Commercial Code, (iii) become an investment company security within the meaning of Section 8-103 of any relevant Uniform Commercial Code or (iv) be evidenced by a certificate.  Each Grantor agrees that such partnership interests or membership interests shall constitute General Intangibles.
 
(l)   After-Acquired Real Property .  Upon the acquisition by any Grantor after the date hereof of any fee interest in any real property (wherever located) (each such interest being a " New Facility "), or leasehold interest in any real property, such Grantor shall promptly  notify the Agent and the Lenders thereof, setting forth with specificity a description of the interest acquired, the location of the real property, any structures or
 

 
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improvements thereon and either an appraisal or such Grantor's good-faith estimate of the current value of such real property (for purposes of this Section, the " Current Value "). Upon the acquisition by any Grantor after the date hereof of any interest in any (i) New Facility with a Current Value in excess of $250,000 individually, or $1,000,000 in the aggregate, such Grantor shall deliver a Mortgage (and, with respect to any New Facility with a Current Value of $2,500,000  or more (or, with respect to the delivery of title insurance, $1,000,000 or more)) at the time of such acquisition,  any other real property deliverables (including, without limitation, appraisals, title insurance and a Phase 1 report) in favor of the Agent for the benefit of the Secured Parties, in each case in form  reasonably acceptable to the Required Lenders with respect to such New Facility and (ii) any leasehold interest in a property at which Collateral with a value of $50,000 or more is located, such Grantor shall use its commercially reasonable efforts to provide a landlord’s waiver, in form reasonably acceptable to the Required Lenders, with respect to such leasehold interest.  The Borrower shall pay all fees and expenses, including reasonable attorneys' fees and expenses, and all customary title insurance charges and premiums, in connection with each Grantor's obligations under this Section 6(l).  It is understood by the parties hereto that no leasehold mortgages shall be requested with respect to any interest in real property  consisting of office space so long as a landlord waiver in a form reasonably acceptable to the Required Lenders has been obtained with respect to such real property.
 
(m)   Validity of Security Documents .  Each Security Agreement, each Mortgage or each other security document, after delivery thereof pursuant hereto, shall at all times continue to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien in favor of the Agent for the benefit of the Agent and the Lenders on any Collateral purported to be covered thereby.
 
SECTION 7.   Voting Rights, Dividends, Etc. in Respect of the Pledged Interests .
 
(a)   So long as no Event of Default shall have occurred and be continuing:
 
(i)   each Grantor may exercise any and all voting and other consensual rights pertaining to any Pledged Interests for any purpose not inconsistent with the terms of this Agreement or the Financing Agreement; provided , however , that (A) none of the Grantors will exercise or refrain from exercising any such right, as the case may be, that could reasonably be expected to have a Material Adverse Effect and (B) each Grantor will give the Agent at least five (5) Business Days' notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right which could reasonably be expected to have a Material Adverse Effect;
 
(ii)   each of the Grantors may receive and retain any and all dividends, interest or other distributions paid in respect of the Pledged Interests to the extent permitted by the Financing Agreement and subject to Section 4(b) hereof; and
 
(iii)   the Agent will (at the direction of the Required Lenders) execute and deliver (or cause to be executed and delivered) to a Grantor all such proxies and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to Section
 

 
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7(a)(i) hereof and to receive the dividends, interest and/or other distributions which it is authorized to receive and retain pursuant to Section 7(a)(ii) hereof.
 
(b)   Upon the occurrence and during the continuance of an Event of Default:
 
(i)   all rights of each Grantor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 7(a)(i) hereof, and to receive the dividends, distributions, interest and other payments that it would otherwise be authorized to receive and retain pursuant to Section 7(a)(ii) hereof, shall cease, and all such rights shall thereupon become vested in the Agent, which shall thereupon have the sole right to exercise such voting and other consensual rights and to receive and hold as Pledged Interests such dividends, distributions and interest payments;
 
(ii)   the Agent is authorized to notify each debtor with respect to the Pledged Debt to make payment directly to the Agent (or its designee) and may collect any and all moneys due or to become due to any Grantor in respect of the Pledged Debt, and each of the Grantors hereby authorizes each such debtor to make such payment directly to the Agent (or its designee) without any duty of inquiry;
 
(iii)   without limiting the generality of the foregoing, the Agent may at its option exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any of the Pledged Interests as if it were the absolute owner thereof, including, without limitation, the right to exchange, in its discretion, any and all of the Pledged Interests upon the merger, consolidation, reorganization, recapitalization or other adjustment of any Pledged Issuer, or upon the exercise by any Pledged Issuer of any right, privilege or option pertaining to any Pledged Interests, and, in connection therewith, to deposit and deliver any and all of the Pledged Interests with any committee, depository, transfer agent, registrar or other designated agent upon such terms and conditions as it may determine; and
 
(iv)   all dividends, distributions, interest and other payments that are received by any of the Grantors contrary to the provisions of Section 7(b)(i) hereof shall be received in trust for the benefit of the Agent, shall be segregated from other funds of the Grantors, and shall be forthwith paid over to the Agent as Pledged Interests in the exact form received with any necessary indorsement and/or appropriate stock powers duly executed in blank, to be held by the Agent as Pledged Interests and as further collateral security for the Secured Obligations.
 
SECTION 8.   Additional Provisions Concerning the Collateral   .
 
(a)   To the maximum extent permitted by applicable law, and for the purpose of taking any action that the Agent and/or the Required Lenders may deem reasonably necessary or advisable to accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes the Agent to execute any such agreements, instruments or other documents in such Grantor's name and to file such agreements, instruments or other documents in such Grantor's name and in any appropriate filing office, (ii) authorizes the Agent at any time and from time to time to file, one or more financing or continuation statements and amendments thereto, relating
 

 
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to the Collateral (including, without limitation, any such financing statements that (A) describe the Collateral as "all assets" or "all personal property" (or words of similar effect) or that describe or identify the Collateral by type or in any other manner as the Agent may determine, regardless of whether any particular asset of such Grantor falls within the scope of Article 9 of the Uniform Commercial Code, and (B) contain any other information required by Part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including, without limitation, whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor) and (iii) ratifies such authorization to the extent that the Agent has filed any such financing statements, continuation statements, or amendments thereto, prior to the date hereof.  A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.
 
(b)   Each Grantor hereby irrevocably appoints the Agent as its attorney-in-fact and proxy, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, effective upon the occurrence and during the continuance of an Event of Default (other than as to clause (vi) below which appointment is effective whether or not an Event of Default has occurred or is continuing), to take any action and to execute any instrument that the Required Lenders may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of a Grantor under Section 6 hereof and Section 7(a) hereof), (i) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral, (ii) to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel Paper in connection with clause (i) or (ii) above, (iii) to receive, indorse and collect all Instruments made payable to such Grantor representing any dividend, interest payment or other distribution in respect of any Pledged Interests and to give full discharge for the same, (iv) to file any claims or take any action or institute any proceedings which the Required Lenders may  deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of the Agent and the Lenders with respect to any Collateral, (v) to execute assignments, licenses and other documents to enforce the rights of the Agent and the Lenders with respect to any Collateral, (vi) to pay or discharge taxes or Liens levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Required Lenders in their discretion, and such payments made by the Agent to become Obligations of such Grantor to the Agent, due and payable immediately without demand, and (vii) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, assignments, verifications and notices in connection with Accounts, Chattel Paper and other documents relating to the Collateral.  This power is coupled with an interest and is irrevocable until the date on which all of the Secured Obligations have been paid in full in cash after the termination of each Lender's Commitment and each of the Loan Documents.
 
(c)   For the purpose of enabling the Agent to exercise rights and remedies hereunder upon the occurrence and during the continuance of an Event of Default, at such time as the Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby (i) grants to the Agent an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, assign, license or sublicense any Intellectual Property now or hereafter owned by any Grantor, wherever the same may be located, including in such license reasonable access to all media in which any
 

 
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of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof; and (ii) assigns to the Agent, to the extent assignable, all of its rights to any Intellectual Property now or hereafter licensed or used by any Grantor.  Notwithstanding anything contained herein to the contrary, but subject to any provisions of the Financing Agreement that limit or condition the right of a Grantor to dispose of its property and Section 6(g) hereof, so long as no Event of Default shall have occurred and be continuing, each Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of its business.  In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing, the Agent shall from time to time, upon the request of a Grantor, execute and deliver any instruments, certificates or other documents, in the form so requested, which such Grantor shall have certified are appropriate (in such Grantor's judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual Property).  Further, upon the date on which all of the Secured Obligations have been paid in full in cash after the termination of each Lender's Commitment and each of the Loan Documents, the Agent (subject to Section 13(e) hereof) shall release and reassign to the Grantors all of the Agent's right, title and interest in and to the Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever and at the Grantors' sole expense.  The exercise of rights and remedies hereunder by the Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by any Grantor in accordance with the second sentence of this clause (c).  Each Grantor hereby releases the Agent from any claims, causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Agent under the powers of attorney granted herein other than actions taken or omitted to be taken through the Agent's gross negligence or willful misconduct, as determined by a final determination of a court of competent jurisdiction.
 
(d)   Upon the occurrence and during the continuance of a Default if any Grantor fails to perform any agreement or obligation contained herein the Agent may itself perform, or cause performance of, such agreement or obligation, in the name of such Grantor or the Agent, and the expenses of the Agent incurred in connection with such performance shall be jointly and severally payable by the Grantors pursuant to Section 10.04 of the Financing Agreement and shall be secured by the Collateral.
 
(e)   The powers conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Other than the exercise of reasonable care to assure the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral and shall be relieved of all responsibility for any Collateral in its possession upon surrendering it or tendering surrender of it to any of the Grantors (or whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct).  The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Agent accords its own property, it being understood that the Agent shall not have responsibility for ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Agent has or is deemed to have knowledge of such matters.  The
 

 
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Agent shall not be liable or responsible for any loss or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehouseman, carrier, forwarding agency, consignee or other agent or bailee selected by the Agent in good faith.
 
(f)   Anything herein to the contrary notwithstanding (i) each Grantor shall remain liable under the Licenses and otherwise in respect of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by the Agent of any of its rights hereunder shall not release any Grantor from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Agent shall not have any obligation or liability by reason of this Agreement under the Licenses or otherwise in respect of the Collateral, nor shall the Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
 
(g)   Upon the occurrence and during the continuance of a Default or an Event of Default, the Agent may at any time in its discretion (i) without notice to any Grantor, transfer or register in the name of the Agent or any of its nominees any or all of the Pledged Interests, subject only to the revocable rights of such Grantor under Section 7(a) hereof, and (ii) exchange certificates or Instruments constituting Pledged Interests for certificates or Instruments of smaller or larger denominations.
 
SECTION 9.   Remedies Upon Default   .  If any Event of Default shall have occurred and be continuing:
 
(a)   The Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer into the Agent's name or into the name of its nominee or nominees (to the extent the Agent has not theretofore done so) and thereafter receive, for the benefit of the Agent and the Lenders, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Agent forthwith, assemble all or part of the Collateral as directed by the Agent and make it available to the Agent at a place or places to be designated by the Agent that is reasonably convenient to both parties, and the Agent may enter into and occupy any premises owned or leased by any Grantor where the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Agent's rights and remedies hereunder or under law, without obligation to any Grantor in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral   or any part thereof in one or more parcels at public or private sale, at any of the Agent's offices, at any exchange or broker's board or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Agent may  deem commercially reasonable and/or (B) lease, license or otherwise dispose of the Collateral or any part thereof upon such terms as the Agent may  deem commercially reasonable.  The Agent or any other Secured Party or any of their respective Affiliates may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof at any such sale and shall be entitled,
 

 
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for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations owed to such person as a credit on account of the purchase price of the Collateral or any part thereof payable by such person at such sale.  Each Grantor agrees that, to the extent notice of sale or any other disposition of the Collateral shall be required by law, at least five (5) days' prior notice to the applicable Grantor of the time and place of any public sale or the time after which any private sale or other disposition of the Collateral is to be made shall constitute reasonable notification.  The Agent shall not be obligated to make any sale or other disposition of Collateral regardless of notice of sale having been given.  The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  Each Grantor hereby waives any claims against the Agent and the Lenders arising by reason of the fact that the price at which the Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Secured Obligations, even if the Agent accepts the first offer received and does not offer the Collateral to more than one offeree, and waives all rights that such Grantor may have to require that all or any part of the Collateral be marshaled upon any sale (public or private) thereof.  Each Grantor hereby acknowledges that (i) any such sale of the Collateral by the Agent shall be made without warranty, (ii) the Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, (iii) the Agent may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness), if permitted by law, for the purchase, lease, license or other disposition of the Collateral or any portion thereof for the account of the Agent (on behalf of itself and the Lenders) and (iv) such actions set forth in clauses (i), (ii) and (iii) above shall not adversely affect the commercial reasonableness of any such sale of the Collateral.  In addition to the foregoing, (i) upon written notice to any Grantor from the Agent, each Grantor shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (ii) the Agent may, at any time and from time to time, upon ten (10) days' prior notice to any Grantor, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Agent shall in its sole discretion determine; and (iii) the Agent may, at any time, pursuant to the authority granted in Section 8 hereof (such authority being effective upon the occurrence and during the continuance of an Event of Default), execute and deliver on behalf of a Grantor, one or more instruments of assignment of the Intellectual Property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.
 
(b)   In the event that the Agent determines to exercise its right to sell all or any part of the Pledged Interests pursuant to Section 9(a) hereof, each Grantor will, at such Grantor's expense and upon request by the Agent:  (i) to the extent an exemption from applicable registration requirements is unavailable, execute and deliver, and cause each issuer of such Pledged Interests and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Agent, advisable to register such Pledged Interests under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus
 

 
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which, in the opinion of the Agent , are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto, (ii) to the extent an exemption from applicable registration requirements is unavailable, cause each issuer of such Pledged Interests to qualify such Pledged Interests under the state securities or "Blue Sky" laws of each jurisdiction, and to obtain all necessary governmental approvals for the sale of the Pledged Interests, as requested by the Agent, (iii) cause each Pledged Issuer to make available to its securityholders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 11(a) of the Securities Act, and (iv) do or cause to be done all such other acts and things as may be necessary to make such sale of such Pledged Interests valid and binding and in compliance with applicable law.  Each Grantor acknowledges the impossibility of ascertaining the amount of damages which would be suffered by the Agent by reason of the failure by any Grantor to perform any of the covenants contained in this Section 9(b) and, consequently, agrees that, if any Grantor fails to perform any of such covenants, it shall pay, as liquidated damages and not as a penalty, an amount equal to the value of the Pledged Interests on the date the Agent demands compliance with this Section 9(b); provided , however , that the payment of such amount shall not release any Grantor from any of its obligations under any of the other Loan Documents.
 
(c)   Notwithstanding the provisions of Section 9(b) hereof, each Grantor recognizes that the Agent may  deem it impracticable to effect a public sale of all or any part of the Pledged Shares or any other securities constituting Pledged Interests and that the Agent may , therefore, determine to make one or more private sales of any such securities to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sales shall be deemed to have been made in a commercially reasonable manner and that the Agent shall have no obligation to delay the sale of any such securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act.  Each Grantor further acknowledges and agrees that any offer to sell such securities which has been (i) publicly advertised on a bona fide basis in a newspaper or other publication of general circulation in the financial community of New York, New York (to the extent that such an offer may be so advertised without prior registration under the Securities Act) or (ii) made privately in the manner described above to not less than fifteen bona fide offerees shall be deemed to involve a "public disposition" for the purposes of Section 9-610(c) of the Code (or any successor or similar, applicable statutory provision) as then in effect in the State of New York, notwithstanding that such sale may not constitute a "public offering" under the Securities Act, and that the Agent may, in such event, bid for the purchase of such securities.
 
(d)   Any cash held by or for the benefit of the Agent (or its agent or designee) as Collateral and all Cash Proceeds received by the Agent (or its agent or designee) in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent (or its agent or designee) as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Agent pursuant to Section 10.04 of the Financing Agreement) in whole or in part by the Agent against, all or any part of the Secured Obligations in such order as the Agent  shall
 

 
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elect, consistent with the provisions of the Financing Agreement.  Any surplus of such cash or Cash Proceeds held by the Agent (or its agent or designee) and remaining after the date on which all of the Secured Obligations have been indefeasibly paid in full in cash after the termination of each Lender's Commitment, and each of the Loan Documents, shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.
 
(e)   In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Agent and the Lenders are legally entitled, the Grantors shall be jointly and severally liable for the deficiency, together with interest thereon at the highest rate specified in any applicable Loan Document for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Agent to collect such deficiency.
 
(f)   Each Grantor hereby acknowledges that if the Agent complies with any applicable requirements of law in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of the Collateral.
 
(g)   The Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Agent's rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising.  To the extent that any Grantor lawfully may, such Grantor hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Agent's rights under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.
 
(h)   Upon the occurrence and during the continuance of any Default or Event of Default, the Agent or its designee may at any time and from time to time employ and maintain on the premises of any Grantor a custodian selected by the Agent or its designee who shall have full authority to do all acts necessary to protect the Agent's and the Lenders' interests.  Each Grantor hereby agrees to, and to cause its Subsidiaries to, cooperate with any such custodian and to do whatever the Agent or its designee may reasonably request to preserve the Collateral.  All costs and expenses incurred by the Agent or its designee by reason of the employment of the custodian shall be the responsibility of the Borrower and shall be payable on demand and shall be subject to and encompassed by Section 10.04 of the Financing Agreement.
 
(i)   Grant of Intellectual Property License .  For the purpose of enabling the Agent, during the continuance of an Event of Default, to exercise rights and remedies under Section 9 hereof at such time as the Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Agent, to the extent assignable, an irrevocable, non-exclusive license to use, assign, license or sublicense any of the
 

 
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Intellectual Property owned or hereafter acquired by such Grantor, wherever the same may be located, and all customer lists, formulae and other Records of any Grantor relating to the distribution of products and services in connection with which any of such Intellectual Property is used.  Such license shall include access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof.
 
SECTION 10.   Notices, Etc.     All notices and other communications provided for hereunder shall be given in accordance with the notice provision of the Financing Agreement.
 
SECTION 11.   Security Interest Absolute; Joint and Several Obligations   .
 
(a)   All rights of the Secured Parties, all Liens and all obligations of each of the Grantors hereunder shall be absolute and unconditional irrespective of (i) any lack of validity or enforceability of the Financing Agreement or any other Loan Document, (ii) any change in the time, manner or place of payment of, or in any other term in respect of, all or any of the Secured Obligations, or any other amendment or waiver of or consent to any departure from the Financing Agreement or any other Loan Document, (iii) any exchange or release of, or non-perfection of any Lien on any Collateral, or any release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Secured Obligations, or (iv) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any of the Grantors in respect of the Secured Obligations.  All authorizations and agencies contained herein with respect to any of the Collateral are irrevocable and powers coupled with an interest.
 
(b)   Each Grantor hereby waives (i) promptness and diligence, (ii) notice of acceptance and notice of the incurrence of any Obligation by any Borrower, (iii) notice of any actions taken by the Agent, any Lender, any Guarantor or any other Person under any Loan Document or any other agreement, document or instrument relating thereto, (iv) all other notices, demands and protests, and all other formalities of every kind in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this subsection (b), might constitute grounds for relieving such Grantor of any such Grantor's obligations hereunder and (v) any requirement that the Agent or any Lender protect, secure, perfect or insure any security interest or other lien on any property subject thereto or exhaust any right or take any action against any Grantor or any other Person or any collateral.
 
(c)   All of the obligations of the Grantors hereunder are joint and several.  The Agent may, in its sole and absolute discretion, enforce the provisions hereof against any of the Grantors and shall not be required to proceed against all Grantors jointly or seek payment from the Grantors ratably.  In addition, the Agent may , in its sole and absolute discretion, select the Collateral of any one or more of the Grantors for sale or application to the Secured Obligations, without regard to the ownership of such Collateral, and shall not be required to make such selection ratably from the Collateral owned by all of the Grantors.  The release or discharge of any Grantor by the Agent shall not release or discharge any other Grantor from the obligations of such Person hereunder.
 
SECTION 12.   Agent  .  In case of the pendency of any proceeding under the Bankruptcy Code or any other judicial proceeding relative to any Grantor, the Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein
 

 
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expressed or by declaration or otherwise and irrespective of whether any Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
 
(a)   to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Agent and the Lenders (including any claim for the compensation, expenses, disbursements and advances of the Agent and the Lenders and their respective agents and counsel and all other amounts due the Agent and the Lenders hereunder and under the other Loan Documents) allowed in such judicial proceeding; and
 
(b)   to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
 
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Agent and each Lender to make such payments to the Agent and, in the event that the Agent shall consent to the making of such payments directly to the Agents and the Lenders, to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agent and its agents and counsel, and any other amounts due the Agent hereunder and under the other Loan Documents.
 
SECTION 13.   Miscellaneous  .
 
(a)   No amendment of any provision of this Agreement (including any Schedule attached hereto) shall be effective unless it is in writing and signed by each Grantor effected thereby and the Agent, and no waiver of any provision of this Agreement, and no consent to any departure by any Grantor therefrom, shall be effective unless it is in writing and signed by the Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
 
(b)   No failure on the part of the Secured Parties to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.  The rights and remedies of the Secured Parties provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.  The rights of the Secured Parties under any Loan Document against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights under any other Loan Document against such party or against any other Person, including but not limited to, any Grantor.
 
(c)   This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to paragraph (e) below, until the date on which all of the Secured Obligations have been indefeasibly paid in full in cash after the termination of each Lender's Commitment, and each of the Loan Documents and (ii) be binding on each Grantor all other Persons who become bound as debtor to this Agreement in accordance
 

 
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with Section 9-203(d) of the Code, and shall inure, together with all rights and remedies of the Secured Parties hereunder, to the benefit of the Secured Parties and their respective successors, transferees and assigns.  Without limiting the generality of clause (ii) of the immediately preceding sentence, the Secured Parties may assign or otherwise transfer their respective rights and obligations under this Agreement and any other Loan Document to any other Person pursuant to the terms of the Financing Agreement, and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to the Secured herein or otherwise.  Upon any such assignment or transfer, all references in this Agreement to any Secured Party shall mean the assignee of any such Secured Party.  None of the rights or obligations of any Grantor hereunder may be assigned or otherwise transferred without the prior written consent of the Agent , and any such assignment or transfer shall be null and void.
 
(d)   Upon the date on which all of the Secured Obligations have been indefeasibly paid in full in cash after the termination of each Lender's Commitment and each of the Loan Documents, (i) subject to paragraph (e) below, this Agreement and the security interests and licenses created hereby shall terminate and all rights to the Collateral shall revert to the Grantors and (ii) the Agent will, upon the Grantors' request and at the Grantors' expense, without any representation, warranty or recourse whatsoever, (A) return to the Grantors (or whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct) such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence such termination.
 
(e)   This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment or performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a "voidable preference," "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
 
(f)   Upon the execution and delivery, or authentication, by any Person of a security agreement supplement in substantially the form of Exhibit C hereto (each a " Security Agreement Supplement "), (i) such Person shall be referred to as an " Additional Grantor " and shall be and become a Grantor, and each reference in this Agreement to "Grantor" shall also mean and be a reference to such Additional Grantor, and each reference in this Agreement and the other Loan Documents to "Collateral" shall also mean and be a reference to the Collateral of such Additional Grantor, and (ii) the supplemental Schedules I-IX attached to each Security Agreement Supplement shall be incorporated into and become a part of and supplement Schedules I-IX , respectively, hereto, and the Agent may attach such Schedules as supplements to such Schedules, and each reference to such Schedules shall mean and be a reference to such Schedules, as supplemented pursuant hereto.
 

 
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(g)   THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
 
(h)   In addition to and without limitation of any of the foregoing, this Agreement shall be deemed to be a Loan Document and shall otherwise be subject to all of terms and conditions contained in Sections 10.10 and 10.11 of the Financing Agreement, mutatis mutandis .
 
(i)   Each Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding with respect to this Agreement any special, exemplary, punitive or consequential damages.
 
(j)   Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
 
(k)   Section headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
 
(l)   This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which shall be deemed an original, but all of such counterparts taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of this Agreement by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart.
 

 
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(m)   For purposes of this Agreement, all references to Schedule I-IX attached hereto shall be deemed to refer to each such Schedule as updated from time to time in accordance with the terms of this Agreement.
 
SECTION 14.     Authority of the Agent  .  Each Grantor acknowledges that the rights and powers of the Agent under this Agreement with respect to any action taken by the Agent or the exercise or non-exercise by the Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement or any amendment, supplement or other modification of this Agreement shall, as between the Agent and the Secured Parties, be governed by the Financing Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Agent and each of the Grantors, the Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.
 
Section 15.   Authority Subject to Financing Agreement  .  U.S. Bank  National Association has been appointed the Agent hereunder pursuant to Article VIII of the Financing  Agreement.  Notwithstanding anything to the contrary herein, it is expressly understood and agreed by the parties to this Agreement that any authority conferred upon the Agent hereunder is subject to the terms of the delegation of authority made by the Lenders to the Agent pursuant to the Financing Agreement and that the Agent has agreed to act (and any successor Agent shall act) as such hereunder only on the express conditions and protections contained in the Financing Agreement (including, without limitation, Section 8.03 thereof).  Any successor Agent appointed in accordance with Section 8.07 of the Financing Agreement shall be entitled to all the rights, interests and benefits of the Agent hereunder.
 
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written.
 
  GRANTORS:  
 
 
W MI HOLDINGS CORP .
 
       
 
By:
/s/   
    Name:  
    Title:  
       
 
 
W MI INVESTMENT CORP .
 
       
 
By:
/s/   
    Name:  
    Title:  
       

     
 
 
 
 
 


SCHEDULE I
 

 
LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; JURISDICTIONS OF ORGANIZATION; FEDERAL EMPLOYER IDENTIFICATION NUMBER
 


 
Sched. I-1
 
 
 
 
 
 


SCHEDULE II
 

 
INTELLECTUAL PROPERTY AND LICENSES; TRADE NAMES
 
 
A.
COPYRIGHTS
 
1.           Registered Copyrights
 
2.           Copyright Applications
 
3.           Copyright Licenses
 

 
 
B.
PATENTS

1.           Registered Patents
 
2.           Patents Applications
 
3.           Patents Licenses
 

 
 
C.
TRADEMARKS

1.           Registered Trademarks
 
2.           Trademark Applications
 
3.           Trademark Licenses
 


D.
OTHER INTELLECTUAL PROPERTY AND LICENSES
   
E.
TRADENAMES
   
F.
NAME OF, AND EACH TRADENAME USED BY, EACH PERSON FROM WHICH A GRANTOR HAS ACQUIRED ANY SUBSTANTIAL PART OF THE COLLATERAL WITHIN THE PRECEDING FIVE YEARS


 
Sched. II-1
 

 
 
 


SCHEDULE III
 
LOCATIONS OF GRANTORS

LOCATION
Description of Location (state if Location
 
(i) contains Equipment, Fixtures, Inventory or other Goods
 
(ii) is chief place of business and
 
chief executive office, or
 
(iii) contains Records concerning Accounts
 
and originals of Chattel Paper)


 
Sched. III-1
 
 
 
 
 
 


SCHEDULE IV
 

 
DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS
 
Name and Address
of Institution
Maintaining Account                                                        Account Number                                             Type of Account

 


 
Sched. IV-1
 
 
 
 
 
 


SCHEDULE V
 

 
UCC FINANCING STATEMENTS
 
 
UCC Financing Statements have been filed in the jurisdictions below against the Grantors:
Name of Grantor
Secretary of State
   
   
   
   
   


 
Sched. V-1
 
 
 
 
 
 


SCHEDULE VI
 

 
COMMERCIAL TORT CLAIMS
 

 
Sched. VI-1
 
 
 
 
 
 


 
SCHEDULE VII
 
 
PLEDGED DEBT
 
 


Grantor
Name of Maker
Description
Principal Amount
Outstanding as of
       


 
 
 
Sched. VII-1
 
 
 
 
 
 


 
SCHEDULE VIII
 
 
PLEDGED SHARES
 
 
 
Grantor
 
Name of Pledged Issuer
 
Number of Shares
Percentage of Outstanding Shares
 
 
Class
 
Certificate Number
           
           
           
           
           
           
           
           
           
           


 
Sched. VIII-1
 
 
 
 
 
 


 
SCHEDULE IX
 
INSURANCE ASSETS

 
Sched. IX-1
 
 
 
 
 
 

EXHIBIT A
 
PLEDGE AMENDMENT
 
This Pledge Amendment, dated _________ __, ___, is delivered pursuant to Section 4 of the Pledge and Security Agreement referred to below.  The undersigned hereby agrees that this Pledge Amendment may be attached to the Pledge and Security Agreement, dated March 19, 2012, as it may heretofore have been or hereafter may be amended, restated, supplemented, modified or otherwise changed from time to time (the " Security Agreement ") and that the Promissory Notes or shares listed on this Pledge Amendment shall be hereby pledged and assigned to the Agent and become part of the Pledged Interests referred to in such Pledge Agreement and shall secure all of the Secured Obligations referred to in such Security Agreement.
 
Pledged Debt
Grantor
Name of Maker
Description
Principal Amount
Outstanding as of
       
       

Pledged Shares
 
Grantor
Name of
Pledged Issuer
Number of  Shares
Percentage of Outstanding  Shares
Class
Certificate Number
           
           
 
 
  [GRANTO R]  
       
 
By:
/s/   
    Name   
    Title   
       
 
U.S. BANK NATIONAL
ASSOCIATION ,
as the Agent:
 
     
By:
/s/   
  Name   
  Title   
     



 
Exh. A-1
 

 
 
 

EXHIBIT B
 
ASSIGNMENT FOR SECURITY - - [TRADEMARKS] [PATENTS] [COPYRIGHTS]
 
WHEREAS, ________________ (the " Assignor ") [has adopted, used and is using, and holds all right, title and interest in and to, the trademarks and service marks listed on the attached Schedule A, which trademarks and service marks are registered or applied for in the United States Patent and Trademark Office (the " Trademarks ")] [holds all right, title and interest in the letter patents, design patents and utility patents listed on the attached Schedule A, which patents are issued or applied for in the United States Patent and Trademark Office (the " Patents ")] [holds all right, title and interest in the copyrights listed on the attached Schedule A, which copyrights are registered in the United States Copyright Office (the " Copyrights ")];
 
WHEREAS, the Assignor has entered into a Pledge and Security Agreement, dated March 19, 2012 (as amended, restated, supplemented, modified or otherwise changed from time to time, the " Security Agreement "), in favor of U.S. Bank National Association, as the Agent for itself and certain lenders (in such capacity, together with its successors and assigns, if any, the " Assignee "); and
 
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned to the Assignee and granted to the Assignee for the benefit of the Secured Parties (as defined in the Security Agreement) a continuing security interest in all right, title and interest of the Assignor in, to and under the [Trademarks, together with, among other things, the good-will of the business symbolized by the Trademarks] [Patents] [Copyrights] and the applications and registrations thereof, and all proceeds thereof, including, without limitation, any and all causes of action which may exist by reason of infringement thereof and any and all damages arising from past, present and future violations thereof (the " Collateral "), to secure the payment, performance and observance of the Secured Obligations (as defined in the Security Agreement);
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor does hereby pledge, convey, sell, assign, transfer and set over unto the Assignee and grants to the Assignee for the benefit of the Assignee and the Lenders a continuing security interest in the Collateral to secure the prompt payment, performance and observance of the Secured Obligations.
 
The Assignor does hereby further acknowledge and affirm that the rights and remedies of the Assignee with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth herein.
 

 
Exh. B-1
 
 
 
 
 
 


IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed by its officer thereunto duly authorized as of _____________ __, 201_.
 
  [GR ANTOR]  
       
 
By:
/s/   
    Name   
    Title   
       




 
STATE OF ____________
ss.:
COUNTY OF __________
 
On this ____ day of _______________, 201_, before me personally came ________________, to me known to be the person who executed the foregoing instrument, and who, being duly sworn by me, did depose and say that s/he is the ________________ of _______________________________________, a ____________________, and that s/he executed the foregoing instrument in the firm name of _______________________________________, and that s/he had authority to sign the same, and s/he acknowledged to me that he executed the same as the act and deed of said firm for the uses and purposes therein mentioned.
 
 



 
Exh. B-2
 
 
 
 
 
 


SCHEDULE A TO ASSIGNMENT FOR SECURITY
 

 

[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________


 
Exh. B-3
 

 
 
 

EXHIBIT C
 

 
FORM OF SECURITY AGREEMENT SUPPLEMENT
 
[Date of Security Agreement Supplement]
 
U.S. Bank National Association, as Agent
214 North Tryon Street, 26 th Floor
Charlotte, NC 28202
 
Ladies and Gentlemen:
 
Reference hereby is made to (i) the Financing Agreement, dated as of March 19, 2012 (such agreement, as amended, restated, supplemented, modified or otherwise changed from time to time, including any replacement agreement therefor, being hereinafter referred to as the " Financing Agreement ") by and among WMI Holdings Corp., a Washington corporation (the " Borrower ", sometimes referred to herein as the " Borrower "), each subsidiary of the Borrower listed as a "Guarantor" on the signature pages thereto (together with each other Person (as defined in the Financing Agreement) that guarantees all or any portion of the Obligations (as defined in the Financing Agreement) from time to time, each a " Guarantor " and collectively, the " Guarantors ", and together with the Borrowers, each a " Grantor " and collectively, the " Grantors "), the lenders from time to time party thereto (each a " Lender " and collectively, the " Lenders "), and U.S. Bank National Association, a national banking association, in its capacity as Agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, if any, the " Agent ") and (ii) the Pledge and Security Agreement, dated as of March 19, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the " Security Agreement "), made by the Grantors from time to time party thereto in favor of the Agent.  Capitalized terms defined in the Financing Agreement or the Security Agreement and not otherwise defined herein are used herein as defined in the Financing Agreement or the Security Agreement.
 
SECTION 1.                       Grant of Security .  The undersigned hereby grants to the Agent, for the ratable benefit of the Secured Parties, a security interest in, all of its right, title and interest in and to all of the Collateral (as defined in the Security Agreement) of the undersigned, whether now owned or hereafter acquired by the undersigned, wherever located and whether now or hereafter existing or arising, including, without limitation, the property and assets of the undersigned set forth on the attached supplemental schedules to the Schedules to the Security Agreement.
 
SECTION 2.                       Security for Obligations .  The grant of a security interest in the Collateral by the undersigned under this Security Agreement Supplement and the Security Agreement secures the payment of all Secured Obligations of the undersigned now or hereafter existing under or in respect of the Loan Documents, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise.  Without limiting the generality of the foregoing, each of this Security Agreement Supplement and the Security
 

 
Exh. C-1
 
 
 
 
 
 

Agreement secures the payment of all amounts that constitute part of the Secured Obligations and that would be owed by the undersigned to the Agent or any Secured Party under the Loan Documents but for the fact that such Secured Obligations are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving a Grantor.
 
SECTION 3.                       Supplements to Security Agreement Schedules .  The undersigned has attached hereto supplemental Schedules I through VIII to Schedules I through VIII , respectively, to the Security Agreement, and the undersigned hereby certifies, as of the date first above written, that such supplemental Schedules have been prepared by the undersigned in substantially the form of the equivalent Schedules to the Security Agreement, and such supplemental Schedules include all of the information required to be scheduled to the Security Agreement and do not omit to state any information material thereto.
 
SECTION 4.                       Representations and Warranties .  The undersigned hereby makes each representation and warranty set forth in Section 5 of the Security Agreement (as supplemented by the attached supplemental Schedules) to the same extent as each other Grantor.
 
SECTION 5.                       Obligations Under the Security Agreement .  The undersigned hereby agrees, as of the date first above written, to be bound as a Grantor by all of the terms and provisions of the Security Agreement to the same extent as each of the other Grantors.  The undersigned further agrees, as of the date first above written, that each reference in the Security Agreement to an "Additional Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.
 
SECTION 6.                       Governing Law .  This Security Agreement Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.
 

 
   

 
 
 


 
SECTION 7.                       Loan Document .  In addition to and without limitation of any of the foregoing, this Security Agreement Supplement shall be deemed to be a Loan Document and shall otherwise be subject to all of terms and conditions contained in Sections 10.10 and 10.11 of the Financing Agreement, mutatis mutandis .
 
 
Very truly yours,
 
 
  [NAME OF ADDITIONAL GR ANTOR ]  
       
 
By:
/s/   
    Name   
    Title   
       
 
A c knowledged and Agree d:  
 
U.S. BANK NATIONAL
ASSOCIATION
As Agent
 
     
By:
/s/   
  Name   
  Title   
     
 
 
 
 
 
 
 
 
 
 
 
 
   

 

 
EXHIBIT 10.4

 
Execution Version


 
INTERCREDITOR AGREEMENT
 
 
INTERCREDITOR AGREEMENT (this “ Agreement ”) dated as of March 19, 2012, by and among Wilmington Trust, National Association, as collateral agent under the Runoff Security Agreement (as defined below) (in such capacity, the " Collateral Agent "), Wilmington Trust, National Association, as trustee under the Initial First Lien Indenture (as defined below) (in such capacity, the " First Lien Trustee "), Law Debenture Trust Company of New York, as trustee under the Initial Second Lien Indenture (as defined below) (in such capacity, the " Second Lien Trustee "), and U.S. Bank National Association, as administrative agent under the Initial Credit Agreement (as defined below) (in such capacity, the " Credit Agreement Agent ").
 
 
A.  WMI Holdings Corp., a Washington corporation (“ WMI ” or " Issuer "), as issuer, and the First Lien Trustee are party to the Senior First Lien Notes Indenture, dated as of the date hereof (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement, the “ Initial First Lien Indenture ”) pursuant to which WMI will issue certain notes to the First Lien Noteholders (as defined below).
 
 
B.  WMI, as issuer, and the Second Lien Trustee are party to the Senior Second Lien Notes Indenture, dated as of the date hereof (as amended, amended or restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement, the “ Initial Second Lien Indenture ”) pursuant to which WMI will issue certain notes to the Second Lien Noteholders (as defined below);
 
C.  WMI, as borrower, each subsidiary of WMI party thereto, the lenders party thereto (together with their successors and assigns, the “ Credit Agreement Lenders ”), and the Credit Agreement Agent are party to the Financing Agreement, dated as of the date hereof (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement, the “ Initial Credit Agreement ”) pursuant to which the Credit Agreement Lenders have agreed to make loans to the Issuer in its capacity as borrower thereunder on the terms and conditions contained therein.
 
D.  The Issuer and the other Obligors (as defined herein) have granted to the Collateral Agent separate Liens (as defined below) on the Collateral (as defined below), for the benefit of the First Lien Creditors (as defined below), the Second Lien Creditors (as defined below) and the Third Lien Creditors (as defined below) and have also provided to the First Lien Creditors and the Second Lien Creditors certain rights of recourse to the Issuer and certain of the Obligors, as more particularly described in the First Lien Documents (as defined below) and the Second Lien Documents (as defined below).
 
E.  The First Lien Trustee, on behalf of the First Lien Creditors, the Second Lien Trustee, on behalf of the Second Lien Creditors, the Credit Agreement Agent, on behalf of the Third Lien Creditors, and the Collateral Agent wish to set forth their agreement as to certain of their respective rights and remedies, and the priority, protection and enforcement thereof, with respect to the Collateral and the Issuer and other Obligors.
 

 
 
 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:
 
Section 1.   Definitions.
 
1.1   General Terms .  Capitalized terms used but not defined herein shall have the respective meanings set forth in the Initial First Lien Indenture as in effect on the date of this Agreement.  As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and the plural forms of the terms defined:
 
“ Agreement ” shall have the meaning set forth in the preamble hereof.
 
“ Bankruptcy Code ” means the provisions of Title 11 of the United States Code, 11 U.S.C. §§101 et seq. or Chapter 431, Article 15 of the Hawaii Code.
 
“ Bankruptcy Law ” means the Bankruptcy Code and any other federal, state or foreign bankruptcy, insolvency, reorganization or other law affecting creditors’ rights.
 
“ Business Day ” means any day of the year that is not a Saturday, a Sunday or a day on which banks are required or authorized to close in the State of New York, the place of payment or the State of Washington.
 
“ Collateral ” means all of the Obligors' rights and interests in the following, whether now owned or hereafter acquired:  (i) the Collateral Account and all funds and assets held therein or credited thereto, (ii) the Trustee Fee Account and all funds and assets held therein or credited thereto, (iii) all Runoff Proceeds held by the Trusts, (iv) all Runoff Proceeds held by WMMRC (to the extent permitted by the applicable Governmental Authority), (v) all Runoff Proceeds held by the Protected Cell (to the extent permitted by the applicable Governmental Authority), (vi) all Runoff Proceeds received by the Issuer, (vii) all rights of the Issuer to receive dividends or distributions in respect of the Runoff Proceeds, (viii) the Capital Stock of WMMRC owned or held by the Issuer (to the extent permitted by the applicable Governmental Authority), (ix) the Capital Stock in the Protected Cell owned or held by the Issuer (to the extent permitted by the applicable Governmental Authority), (x) the excess assets of the Protected Cell (to the extent permitted by the applicable Governmental Authority) and (xi) all proceeds of the foregoing.  For the avoidance of doubt, the term "Collateral" does not include any property or assets of the Issuer or other Obligors constituting Credit Agreement Separate Collateral.
 
" Collateral Agent " means Wilmington Trust, National Association, in its capacity as collateral agent under the Runoff Security Agreement, and its permitted successors and assigns in such capacity.
 
“ Collateral Enforcement Action ” means (a) any exercise or enforcement of remedial rights with respect to Collateral (whether through a judicial proceeding or otherwise, including any exercise of any right or remedy with respect to Collateral under any of the applicable Documents or law), including any action to foreclose on the Lien of such Person in any Collateral, any exercise of any right or remedy with respect to Collateral, taking of
 

 
2
 

possession or control of or selling (whether publicly or privately) or otherwise realizing upon any Collateral, any action taken to receive a transfer of any Collateral in satisfaction of any Obligations secured thereby or to exercise any other rights or remedies with respect to any Collateral, including any exercise of any right of setoff or recoupment with respect to Collateral, and any Disposition after the occurrence of an Event of Default of any Collateral by an Obligor with the consent of, or at the direction of, a Secured Creditor, any notification to account debtors or notification to depositary banks under deposit account control agreements, and/or (b) the exercise of voting rights in respect of equity interests comprising Collateral or the commencement by any Secured Creditor of any legal proceedings or other actions against or with respect to any Obligor or all or any portion of the Collateral to facilitate any of the actions described in clause (a) above, including the commencement of any Insolvency Proceeding; provided that "Collateral Enforcement Action" shall not include any Specific Performance Action or any Recourse Action; and provided , further , that, for the avoidance of doubt, "Collateral Enforcement Action" shall not include any action taken by any Third Lien Creditor (whether pursuant to the Third Lien Documents, applicable law, or otherwise) (i) to collect the Third Lien Obligations or enforce any right or remedy with respect to the Third Lien Obligations, except to the extent that such action is against the Collateral or (ii) in respect of the Credit Agreement Separate Collateral.
 
“ Credit Agreement Agent ” means U.S. Bank National Association, in its capacity as administrative agent for the Third Lien Creditors under the Third Lien Documents, and its successors and assigns in such capacity (including one or more other agents or similar contractual representatives for one or more lenders that at any time succeed to or Refinance any or all of the Third Lien Obligations at any time and from time to time not in violation of this Agreement).
 
“ Credit Agreement ” means (a) the Initial Credit Agreement and (b) each loan or credit agreement evidencing any replacement, substitution, renewal, or Refinancing in whole or in part of the Obligations under the Initial Credit Agreement, in each case as the same may from time to time be amended, amended and restated, supplemented, modified, replaced, substituted, or renewed in accordance with the terms of this Agreement.
 
"Credit Agreement Separate Collateral" means all assets and properties of the Issuer and the other Obligors in which the Credit Agreement Agent for the benefit of the Third Lien Creditors may have been granted a Lien pursuant to the Third Lien Documents to secure the Third Lien Obligations, other than the property and assets expressly described in the first sentence of the definition of "Collateral".
 
“ Credit Agreement Lenders ” shall have the meaning set forth in the recitals hereto.
 
“ Disposition ” means any sale, lease, exchange, transfer or other disposition, and “ Dispose ” and “ Disposed of ” shall have correlative meanings.
 
“ Documents ” means the First Lien Documents, the Second Lien Documents and the Third Lien Documents, or any of them, as applicable.
 

 
3
 

“ Event of Default ” means each “Event of Default” or similar term, as such term is defined in any First Lien Document, any Second Lien Document or any Third Lien Document, as applicable.
 
“First Lien Avoidance ” shall have the meaning set forth in Section 5.4(a) .
 
“ First Lien Creditors ” means the First Lien Trustee, the First Lien Noteholders and the other Persons from time to time holding First Lien Obligations.
 
“ First Lien Documents ” means the First Lien Indenture, the First Lien Notes, the Runoff Security Agreement and all other Security Documents (as such term is defined in the First Lien Indenture) and all other agreements, documents and instruments at any time executed and/or delivered by any Obligor or any other Person with, to or in favor of the First Lien Trustee or any other First Lien Creditor in connection therewith or related thereto, including such documents evidencing successive Refinancings of the First Lien Obligations in each case, as amended, amended and restated, supplemented, modified, replaced, substituted or renewed from time to time in accordance with the terms of this Agreement.
 
“ First Lien Indenture ” means (a) the Initial First Lien Indenture and (b) each indenture or loan agreement evidencing any replacement, substitution, renewal, or Refinancing in whole or in part of the Obligations under the First Lien Indenture, in each case as amended, amended and restated, supplemented, modified, replaced, substituted or renewed from time to time in accordance with the terms of this Agreement.
 
“ First Lien Indenture Waterfall ” means the order of payments set forth in Section 4.02(b) of the First Lien Indenture.
 
“ First Lien Noteholders ” means any holder of the First Lien Notes together with their successors and assigns.
 
“ First Lien Notes ” means the notes issued or loans borrowed and outstanding under the First Lien Documents and any notes or loans that may be subsequently issued or borrowed in exchange therefor pursuant to the First Lien Documents, including in connection with successive Refinancings of the First Lien Obligations.
 
“ First Lien Obligations ” means all obligations, liabilities and indebtedness of every kind, nature and description owing by one or more of the Obligors to one or more of the First Lien Creditors evidenced by or arising under one or more of the First Lien Documents (including the First Lien Notes), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and reasonable expenses, however evidenced, and whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the First Lien Indenture and whether arising before, during or after the commencement of any Insolvency Proceeding with respect to one or more of the Obligors (and including the payment of any principal, interest, fees, cost, expenses and other amounts (including default rate interest) which would accrue and become due but for the commencement of such Insolvency Proceeding
 

 
4
 

whether or not such amounts are allowed or allowable in whole or in part in any such Insolvency Proceeding).
 
“ First Lien Termination Date ” means the date on which all First Lien Obligations have been Paid in Full.
 
“ First Lien Trustee ” means Wilmington Trust, National Association, in its capacity as trustee for the First Lien Creditors under the First Lien Documents, and its permitted successors and assigns in such capacity (including one or more other trustees or similar contractual representatives for one or more lenders or note holders that at any time succeed to or Refinance any or all of the First Lien Obligations at any time and from time to time not in violation of this Agreement).
 
“ Initial Credit Agreement ” shall have the meaning set forth in the recitals hereto.
 
 “ Initial First Lien Indenture ” shall have the meaning set forth in the recitals hereto.
 
“ Initial Second Lien Indenture ” shall have the meaning set forth in the recitals hereto.
 
 “ Insolvency Proceeding ” means, as to any Obligor, any of the following, whether voluntary or involuntary:  (a) any case or proceeding with respect to such Person under the Bankruptcy Code or any other Bankruptcy Law or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Obligor, (b) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Obligor or any of its assets, (c) any proceeding for liquidation, dissolution or other winding up of the business of such Obligor or (d) any assignment for the benefit of creditors or any marshalling of assets of such Obligor.
 
“ Issuer ” shall have the meaning set forth in the recitals hereof.
 
“ Lien ” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or otherwise), security interest or other security arrangement and any other preference, priority or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention arrangement, the interest of a lessor under a capital lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.
 
“ Maximum First Lien Amount ” means as of any date of determination, an amount equal to (a) the aggregate principal amount of initial First Lien Notes issued under the Initial First Lien Indenture, but in any event not greater than the sum of (i) $110,000,000 plus (ii) the amount of any reasonable and customary premiums paid and fees and expenses incurred in connection with a Refinancing of the First Lien Notes, minus   (b) the sum of all principal payments of such initial First Lien Notes after the date hereof other than in connection with a
 

 
5
 

Refinancing thereof, plus   (c) interest, premiums, fees, costs, expenses, indemnities and other amounts payable pursuant to the terms of the First Lien Documents, whether or not the same are added to the principal amount of the First Lien Obligations (including interest payable by issuance of additional Notes and capitalized interest) and including any interest as would accrue and become due but for the commencement of an Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in any such Insolvency Proceeding.
 
“ New First Lien Documents ” shall have the meaning set forth in Section 4.4(a) .
 
“ New First Lien Obligations ” shall have the meaning set forth in Section 4.4(a) .
 
“ New First Lien Trustee ” shall have the meaning set forth in Section 4.4(a) .
 
“ New Second Lien Documents ” shall have the meaning set forth in Section 4.4(b) .
 
“ New Second Lien Obligations ” shall have the meaning set forth in Section 4.4(b) .
 
“ New Second Lien Trustee ” shall have the meaning set forth in Section 4.4(b) .
 
“ New Third Lien Agent ” shall have the meaning set forth in Section 4.4(c) .
 
“ New Third Lien Documents ” shall have the meaning set forth in Section 4.4(c) .
 
“ New Third Lien Obligations ” shall have the meaning set forth in Section 4.4(c) .
 
" Notes " means the First Lien Notes and the Second Lien Notes
 
“ Obligations ” means the First Lien Obligations, the Second Lien Obligations and the Third Lien Obligations, or any of them, as applicable.
 
“ Obligor ” means the Issuer and each other Person liable on or in respect of the Obligations or that has granted a Lien on any property or assets as Collateral, together with such Person’s successors and assigns, including a receiver, trustee or debtor-in-possession on behalf of such Person.
 
“ Paid in Full ” or “ Payment in Full ” means, with respect to any Obligations, that: (a) all of such Obligations (other than contingent indemnification obligations for which no claim or demand for payment, whether oral or written, has been made at such time) have been indefeasibly paid in full in cash or otherwise satisfied, as such satisfaction is determined by the applicable Representative in accordance with the applicable Documents, and (b) no Person has any further right to obtain any loans, advances or other extensions of credit under the documents relating to such Obligations.
 
“ Person ” means an individual, partnership, corporation (including a business trust and a public benefit corporation), joint stock company, estate, association, firm, enterprise, trust,
 

 
6
 

limited liability company, unincorporated association, joint venture, governmental authority or any other entity or regulatory body.
 
“ Protected Cell ” means a protected cell established by WMI in connection with the Insurance Book Closing upon the receipt of approval of the applicable Governmental Authority and maintained pursuant to § 431:19-303 of Title 24 of the Hawaii Insurance Code, in conformance with all applicable Requirements of Law.
 
“ Recourse Action" means the commencement by any First Lien Creditor or Second Lien Creditor of any legal proceedings, or the taking of any other action against or with respect to the Issuer or the Owner or any of such Person’s property or assets, to enforce any right of recourse against the Issuer or the Owner or their property or assets pursuant to Section 7.16 of the First Lien Indenture or Section 7.16 of the Second Lien Indenture, and the corresponding provisions of the First Lien Notes or Second Lien Notes, as applicable, or any successor provision of any other First Lien Document or Second Lien Document, but shall not include any of the actions listed in clauses (a) and (b) of the definition of Collateral Enforcement Action.
 
“ Recourse Proceeds ” means any payment, distribution or collection of cash, property, securities, or otherwise received or realized as a result of or in connection with any Recourse Action.
 
“ Refinance ”, “ Refinancings ” and “ Refinanced ” means, in respect of any Obligations, to issue or incur other indebtedness in exchange for or to refinance, refund, redeem, renew, replace, defease, or discharge such Obligations, in whole or in part.
 
“ Release Documentation” shall have the meaning set forth in Section 2.9 .
 
“ Release Event ” means the Disposition of any Collateral as a result of any Collateral Enforcement Action by the First Lien Creditors (or, after the First Lien Termination Date, by the Second Lien Creditors), including a Disposition conducted by any Obligor with the consent of the First Lien Trustee (or, after the First Lien Termination Date, by the Second Lien Trustee) or, after the occurrence and during the continuance of an Insolvency Proceeding by or against any Obligor, the entry of an order of any bankruptcy court pursuant to Section 363 of the Bankruptcy Code authorizing the sale of all or any portion of the Collateral.
 
" Representative " means the First Lien Trustee, the Second Lien Trustee or the Credit Agreement Agent, as applicable.
 
" Runoff Proceeds Distributions " shall have the meaning ascribed to it in the First Lien Indenture or the Second Lien Indenture.
 
" Runoff Security Agreement " means the Pledge and Security Agreement, dated as of March 19, 2012, by and among the Issuer, the First Lien Trustee, the Second Lien Trustee, the Credit Agreement Agent, and the Collateral Agent, and any other security agreement providing for Liens on the Collateral entered into in connection with any Refinancing of the First Lien Obligations, the Second Lien Obligations or the Third Lien Obligations, in each case as the
 

 
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same may be amended, restated, amended and restated, renewed, replaced, supplemented or otherwise modified from time to time.
 
“ Second Lien Avoidance ” shall have the meaning set forth in Section 5.4(b) .
 
“ Second Lien Creditors ” means the Second Lien Trustee, the Second Lien Noteholders and the other Persons from time to time holding Second Lien Obligations.
 
“ Second Lien Default ” means any “Event of Default” under the Second Lien Documents.
 
“ Second Lien Default Notice ” means with respect to any Second Lien Default, a written notice from the Second Lien Trustee to the First Lien Trustee and the Collateral Agent, with a copy to the Obligors, indicating that such Second Lien Default has occurred and describing such Second Lien Default in reasonable detail.
 
“ Second Lien Disposition Notice ” shall have the meaning set forth in Section 2.10(a) .
 
“ Second Lien Documents ” means the Second Lien Indenture, the Second Lien Notes, the Runoff Security Agreement and all other Security Documents (as such term is defined in the Second Lien Indenture) and all other agreements, documents and instruments at any time executed and/or delivered by any Obligor or any other Person with, to or in favor of the Second Lien Trustee or any Second Lien Creditor in connection therewith or related thereto, including such documents evidencing successive Refinancings of the Second Lien Obligations in each case, as amended, amended and restated, supplemented, modified, replaced, substituted or renewed from time to time in accordance with the terms of this Agreement.
 
“ Second Lien Indenture ” means (a) the Initial Second Lien Indenture and (b) each indenture or loan agreement evidencing any replacement, substitution, renewal, or Refinancing of the Obligations under the Second Lien Indenture, in each case as amended, amended and restated, supplemented, modified, replaced, substituted or renewed from time to time in accordance with the terms of this Agreement.
 
“ Second Lien Indenture Waterfall ” means the order of payments set forth in Section 4.02(b) of the Second Lien Indenture.
 
“ Second Lien Noteholders ” means any holder of the Second Lien Notes together with their successors and assigns.
 
“ Second Lien Notes” means the notes issued or loans borrowed and outstanding under the Second Lien Documents and any notes or loans that may be subsequently issued or borrowed in exchange therefor pursuant to the Second Lien Documents, including in connection with successive Refinancings of the Second Lien Obligations.
 
“ Second Lien Obligations ” means all obligations, liabilities and indebtedness of every kind, nature and description owing by one or more Obligors to one or more of the Second Lien Creditors evidenced by or arising under one or more of the Second Lien Documents
 

 
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(including the Second Lien Notes), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and reasonable expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Second Lien Indenture and whether arising before, during or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including the payment of any principal, interest, fees, cost, expenses and other amounts (including default rate interest)  which would accrue and become due but for the commencement of such Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in any such Insolvency Proceeding).
 
“ Second Lien Standstill Period ” means the period commencing on the date of a Second Lien Default and ending upon the date which is the earliest of (a) commencement of an Insolvency Proceeding, (b) the expiration of 90 days after the First Lien Trustee has received a Second Lien Default Notice with respect to such Second Lien Default that has occurred and is continuing under the Second Lien Indenture, and (c) the First Lien Termination Date.
 
“ Second Lien Termination Date ” means the date on which all Second Lien Obligations have been Paid in Full.
 
“ Second Lien Trustee ” means Law Debenture Trust Company of New York, in its capacity as trustee for the Second Lien Creditors under the Second Lien Documents, and its permitted successors and assigns in such capacity (including one or more other trustees or similar contractual representatives for one or more lenders or note holders that at any time succeed to or Refinance any or all of the Second Lien Obligations at any time and from time to time not in violation of this Agreement).
 
“ Secured Creditors ” means the First Lien Creditors, the Second Lien Creditors and the Third Lien Creditors, or any of them, as applicable.
 
“ Senior Adequate Protection Liens ” shall have the meaning set forth in Section 5.2(a) .
 
" Specific Performance Action " means the filing of any action in any court of competent jurisdiction to specifically enforce any of the provisions of the First Lien Documents or the Second Lien Documents as contemplated by Section 7.04 of the First Lien Indenture or Section 7.04 of the Second Lien Indenture, as applicable.
 
“ Third Lien Creditors ” means the Credit Agreement Agent, the Credit Agreement Lenders and the other Persons from time to time holding Third Lien Obligations.
 
“ Third Lien Default ” means any “Event of Default” under the Third Lien Documents.
 
“ Third Lien Default Notice ” means with respect to any Third Lien Default, a written notice from the Credit Agreement Agent to (i) prior to the First Lien Termination Date, the First Lien Trustee, the Second Lien Trustee and the Collateral Agent and (ii) thereafter but
 

 
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prior to the Second Lien Termination Date, the Second Lien Trustee and the Collateral Agent, with a copy to the Obligors, indicating that such Third Lien Default has occurred and describing such Third Lien Default in reasonable detail.
 
“ Third Lien Documents ” the Credit Agreement, all Loan Documents (as such term is defined in the Third Lien Credit Agreement) and all other agreements, documents and instruments at any time executed and/or delivered by any Obligor or any other Person with, to or in favor of the Third Lien Trustee or any Third Lien Creditor in connection therewith or related thereto, including such documents evidencing successive Refinancings of the Third Lien Obligations, in each case, as amended, amended and restated, supplemented, modified, replaced, substituted or renewed from time to time in accordance with the terms of this Agreement.
 
“ Third Lien Obligations ” means all obligations, liabilities and indebtedness of every kind, nature and description owing by one or more Obligors to one or more of the Third Lien Creditors evidenced by or arising under one or more of the Third Lien Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and reasonable expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Third Lien Credit Agreement and whether arising before, during or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including the payment of any principal, interest, fees, cost, expenses and other amounts (including default rate interest) which would accrue and become due but for the commencement of such Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in any such Insolvency Proceeding).
 
“ Third Lien Standstill Period ” means the period commencing on the date of a Third Lien Default and ending upon the date which is the earlier of (a)  commencement of an Insolvency Proceeding and (b) the later to occur of the First Lien Termination Date and the Second Lien Termination Date.
 
“ UCC ” means the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of New York.
 
“ UCC Notice ” shall have the meaning set forth in Section 3.1 .
 
1.2   Certain Matters of Construction .   The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement and section references are to this Agreement unless otherwise specified.  For purposes of this Agreement, the following additional rules of construction shall apply: (a) wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter, (b) the term “including” shall not be limiting or exclusive, unless specifically indicated to the contrary, (c) all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations and
 

 
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(d) unless otherwise specified, all references to any instruments or agreements, including references to any of this Agreement and the Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof, in each case, made in accordance with the terms hereof.  Any agreement, consent, waiver or acceptance, as applicable, by the First Lien Trustee set forth herein shall be construed to mean an agreement, consent, waiver or acceptance, as applicable, by First Lien Trustee on behalf of itself and each of the other First Lien Creditors.  Any agreement, consent, waiver or acceptance, as applicable, by the Second Lien Trustee set forth herein shall be construed to mean an agreement, consent, waiver or acceptance, as applicable, by the Second Lien Trustee on behalf of itself and each of the other Second Lien Creditors.  Any agreement, consent, waiver or acceptance, as applicable, by the Credit Agreement Agent set forth herein shall be construed to mean an agreement, consent, waiver or acceptance, as applicable, by the Credit Agreement Agent on behalf of itself and each of the other Third Lien Creditors.
 
 
Section 2.   Security Interests; Priorities.
 
2.1   Priorities .  (a)  The Liens on the Collateral of the Collateral Agent for the benefit of the First Lien Trustee or any other First Lien Creditor are and shall at all times be senior and prior in all respects to the Liens on the Collateral of the Collateral Agent for the benefit of the Second Lien Trustee or any other Second Lien Creditor and the Credit Agreement Agent or any other Third Lien Creditor, and such Liens on the Collateral of the Collateral Agent for the benefit of the Second Lien Trustee or any other Second Lien Creditor and the Credit Agreement Agent or any other Third Lien Creditor are and shall be junior and subordinate in all respects to the Liens on the Collateral of the Collateral Agent or for the benefit of the First Lien Trustee or any other First Lien Creditor.  The Liens on the Collateral of the Collateral Agent for the benefit of the Second Lien Trustee or any other Second Lien Creditor are and shall at all times be senior and prior in all respects to the Liens on the Collateral of the Collateral Agent for the benefit of the Credit Agreement Agent or any other Third Lien Creditor, and such Liens on the Collateral of the Collateral Agent for the benefit of the Credit Agreement Agent or any other Third Lien Creditor are and shall be junior and subordinate in all respects to the Liens on the Collateral of the Collateral Agent for the benefit of the Second Lien Trustee or any other Second Lien Creditor.
 
(b)  To the extent that the Liens of, or for the benefit of, the First Lien Trustee on the Collateral secure any amount which is greater than the Maximum First Lien Amount, then such Lien shall in all respects be junior and subordinate to all Liens granted to, or for the benefit of, the Second Lien Trustee (and the Second Lien Creditors) and the Credit Agreement Agent (and the Third Lien Creditors) in such Collateral.
 
(c)  The priorities of the Liens provided in this Section 2.1 shall not be altered or otherwise affected by any amendment, amendment and restatement, modification, supplement, renewal, replacement or Refinancing of any of the Obligations, nor by any action or inaction which any of the Secured Creditors or Obligors may take or fail to take in respect of the Collateral or any such Lien.
 
2.2   No Alteration of Priority.   The priorities set forth in this Agreement are applicable irrespective of (i) the order or time of attachment, (ii) the order, time or manner of perfection,
 

 
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(iii) the order or time of filing or recording any document or instrument, or other method of perfecting a Lien in favor of each Secured Creditor in any Collateral, or (iv) any other circumstance whatsoever (including, without limitation, any provision of the UCC or any applicable law or any conflicting terms or conditions which may be contained in any of the Documents).
 
2.3   Perfection; Contesting Liens.   Pursuant to the Runoff Security Agreement and the other applicable Documents, the Obligors shall be solely responsible for perfecting and maintaining the perfection of the Collateral Agent's Liens in the Collateral.  This Section 2 is intended solely to govern the respective Lien priorities as among the Secured Creditors and shall not impose on any Secured Creditor any obligations in respect of the Disposition or proceeds of any Collateral that would conflict with prior perfected Liens therein in favor of any other Person or any order or decree of any court or governmental authority or any applicable law.  Each Secured Creditor agrees that it will not, directly or indirectly institute or join in any contest of, or support any other Person in contesting (including, in either case, in any Insolvency Proceeding), the validity, perfection, priority or enforceability of the Liens of any of the other Secured Creditors in the Collateral or the enforceability of the First Lien Obligations, the Second Lien Obligations or the Third Lien Obligations or any provision of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of the Collateral Agent, the First Lien Trustee, the Second Lien Trustee or the Credit Agreement Agent to enforce this Agreement, including the provisions hereof relating to Lien priority.  Notwithstanding any failure by any of the Collateral Agent, the First Lien Trustee, the Second Lien Trustee or the Credit Agreement Agent to perfect any security interests in the Collateral or any avoidance, invalidation or subordination by any third party or court of competent jurisdiction of the security interests in the Collateral granted to the Collateral Agent, the First Lien Trustee, the Second Lien Trustee or the Credit Agreement Agent, the priority and rights as between (x) the Liens of the Collateral Agent for the benefit of the First Lien Trustee, on the one hand, and the Liens of the Collateral Agent for the benefit of the Second Lien Trustee and the Credit Agreement Agent, on the other hand, and (y) the Liens of the Collateral Agent for the benefit of the First Lien Trustee and the Second Lien Trustee, on the one hand, and the Liens of the Collateral Agent for the benefit of the Credit Agreement Agent, on the other hand, in each case, shall be as set forth herein.
 
2.4   Proceeds of Collateral and Recourse Assets; Turnover.
 
(a)           All amounts on deposit in the Collateral Account or the Trustee Fees Account and any other Runoff Proceeds Distributions that are not received in connection with any Collateral Enforcement Action or other exercise of remedies with respect to the Collateral shall be distributed by the Collateral Agent at the direction of the Issuer as follows: (i) first , (w) to the First Lien Trustee, the Second Lien Trustee and the Collateral Agent for application to the pro rata payment of any compensation, fees and expenses, if any, due to the First Lien Trustee, the Second Lien Trustee, and the Collateral Agent, and their agents and attorneys, for amounts due under Section 8.07 of the First Lien Indenture, Section 8.07 of the Second Lien Indenture and Section 6.10 of the Runoff Security Agreement, (x) to the Issuer for application to the Issuer Incremental Amount on the Issuer Priority Amount, and any unpaid Issuer Priority Amount and (y), to the paying agent under the First Lien Indenture for application to the First Lien

 
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Obligations until Payment in Full of the First Lien Obligations, in the case of each of (w), (x) and (y) in accordance with the First Lien Indenture Waterfall as in effect on the date hereof; (ii) second , (x) to the Issuer for application to the Issuer Incremental Amount on the Issuer Secondary Amount and any unpaid Issuer Secondary Amount, and (y) to the paying agent under the Second Lien Indenture for application to the Second Lien Obligations until Payment in Full of the Second Lien Obligations in the case of each of (x) and (y) in accordance with the Second Lien Indenture Waterfall as in effect on the date hereof, and (iii)  third , (A) if a Third Lien Default has occurred and is continuing and the Credit Agreement Agent has delivered a Third Lien Default Notice that has not been withdrawn, to the Credit Agreement Agent for application to the Third Lien Obligations in accordance with the Third Lien Credit Agreement, otherwise, (B) to the Issuer.

(b)           All Collateral, including any such Collateral constituting proceeds, received in connection with any Collateral Enforcement Action or other exercise of remedies with respect to the Collateral shall be distributed by the Collateral Agent as follows: (i) first , to the First Lien Trustee, the Second Lien Trustee, and the Collateral Agent, for application to the pro rata payment of any compensation, fees and expenses, if any, due to the First Lien Trustee, the Second Lien Trustee and the Collateral Agent, and their agents and attorneys, for amounts due under Section 8.07 of the First Lien Indenture, Section 8.07 of the Second Lien Indenture and Section 6.10 of the Runoff Security Agreement, including payment of all compensation, expenses and liabilities incurred, and all advances made, by such Persons and the costs and expenses of collection; (ii) second , to the paying agent under the First Lien Indenture for application to the payment to the First Lien Noteholders for amounts due and unpaid on the First Lien Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the First Lien Notes for principal, premium, if any, and interest, respectively until Payment in Full of the First Lien Obligations; (iii) third , to the paying agent under the Second Lien Indenture for application to the payment to the Second Lien Noteholders for amounts due and unpaid on the Second Lien Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Second Lien Notes for principal, premium, if any, and interest, respectively, until Payment in Full of the Second Lien Obligations; and (iv)  fourth , (A) if a Third Lien Default has occurred and is continuing and the Credit Agreement Agent has delivered a Third Lien Default Notice that has not been withdrawn, to the Credit Agreement Agent for application to the Third Lien Obligations in accordance with the Third Lien Credit Agreement, otherwise, (B) to the Issuer.
 
(c)           Any Collateral, including such Collateral constituting proceeds, (including any Runoff Proceeds Distributions) received by any Second Lien Creditor or Third Lien Creditor prior to the First Lien Termination Date (i) in connection with any Collateral Enforcement Action or other exercise of remedies with respect to the Collateral, (ii) in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation) with respect to the Collateral, (iii) from the collection or other Disposition of, or realization on, the Collateral, whether or not pursuant to an Insolvency Proceeding or (iv) in violation of this Agreement, shall be segregated and held in trust and promptly paid over to the Collateral Agent, for the benefit of the First Lien Creditors, in the same form as received, with any necessary endorsements, and each Second Lien Creditor and Third Lien Creditor hereby authorizes the
 

 
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Collateral Agent to make any such endorsements as agent for the Second Lien Creditors or Third Lien Creditor, as applicable (which authorization, being coupled with an interest, is irrevocable).
 
(d)           Any Collateral, proceeds (including any Runoff Proceeds Distributions) received by any Third Lien Creditor after the First Lien Termination Date and prior to the Second Lien Termination Date (i) in connection with any Collateral Enforcement Action or other exercise of remedies with respect to the Collateral, (ii) in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation) with respect to the Collateral, (iii) from the collection or other Disposition of, or realization on, the Collateral, whether or not pursuant to an Insolvency Proceeding or (iv) in violation of this Agreement, shall be segregated and held in trust and promptly paid over to the Collateral Agent, for the benefit of the Second Lien Creditors, in the same form as received, with any necessary endorsements, and each Third Lien Creditor hereby authorizes the Collateral Agent to make any such endorsements as agent for the Third Lien Creditor (which authorization, being coupled with an interest, is irrevocable).
 
(e)           As between the First Lien Creditors, the Second Lien Creditors and the Third Lien Creditors, all Recourse Proceeds shall be distributed as follows:
 
FIRST:  To the pro rata payment of any compensation, fees and expenses, if any, due to the First Lien Trustee, the Second Lien Trustee and the Collateral Agent, and their agents and attorneys, for amounts due under Section 8.07 of the First Lien Indenture, Section 8.07 of the Second Lien Indenture and Section 6.10 of the Runoff Security Agreement, as the case may be;
 
SECOND:  To the First Lien Trustee to be applied to the payment to the First Lien Noteholders of any accrued and unpaid interest, if any, with respect to the First Lien Notes;
 
THIRD:  To the First Lien Trustee to be applied to the payment to the First Lien Noteholders of the unpaid principal of the First Lien Notes and all other First Lien Obligations;
 
FOURTH:  To the Second Lien Trustee to be applied to the payment to the Second Lien Noteholders of any accrued and unpaid interest, if any, with respect to the Second Lien Notes;
 
FIFTH:  To the Second Lien Trustee to be applied to the payment to the Second Lien Noteholders of the unpaid principal of the Second Lien Notes and all other Second Lien Obligations;
 
SIXTH:  To the Credit Agreement Agent to be applied to the payment to the Third Lien Creditors of the Third Lien Obligations in the order and manner provided in the Third Lien Documents; and
 
SEVENTH:  To the Issuer or to such party as a court of competent jurisdiction shall direct.
 

 
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Any such Recourse Proceeds that may be received by any Second Lien Creditor or Third Lien Creditor prior to the First Lien Termination Date shall be shall be segregated and held in trust and promptly paid over to the Collateral Agent to be paid in accordance with clause FIRST above. Following the payment in full of clause FIRST  above, such Recourse Proceeds shall be promptly paid over to the First Lien Trustee, for the benefit of the First Lien Creditors, in the same form as received, with any necessary endorsements, and each Second Lien Creditor and Third Lien Creditor hereby authorizes the First Lien Trustee to make any such endorsements as agent for the Second Lien Creditors and the Third Lien Creditors (which authorization, being coupled with an interest, is irrevocable).  Any such Recourse Proceeds that may be received by any Third Lien Creditor after the First Lien Termination Date but prior to the Second Lien Termination Date shall be segregated and held in trust and promptly paid over to the Second Lien Trustee, for the benefit of the Second Lien Creditors, in the same form as received, with any necessary endorsements, and each Third Lien Creditor hereby authorizes the Second Lien Trustee to make any such endorsements as agent for the Third Lien Creditors (which authorization, being coupled with an interest, is irrevocable).
 
2.5   Waiver .  Each of the First Lien Trustee, on behalf of each of the First Lien Creditors, the Second Lien Trustee, on behalf of each of the Second Lien Creditors, and the Credit Agreement Agent, on behalf of each of the Third Lien Creditors,  (a) waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations under the Documents and notice of or proof of reliance by the Secured Creditors upon this Agreement and protest, demand for payment or notice except to the extent otherwise specified herein and (b) acknowledges and agrees that each of the other Secured Creditors have relied upon the Lien priority and other provisions hereof in entering into the Documents and creating the Obligations.
 
2.6   Notice of Interest In Collateral .  This Agreement is intended, in part, to constitute an authenticated notification of a claim by each Secured Creditor to the other Secured Creditors of an interest in the Collateral in accordance with the provisions of Sections 9-611 and 9-621 of the UCC.
 
2.7   New Liens .  Until the First Lien Termination Date, the First Lien Trustee on behalf of the First Lien Creditors and the Second Lien Trustee on behalf of the Second Lien Creditors agree that, regardless of whether any Insolvency Proceeding shall have been commenced against any Obligor, no additional Liens shall be granted or permitted on any asset of the Issuer or any other Obligor to secure any (i) Second Lien Obligation unless, subject to the terms of this Agreement, immediately after giving effect to such grant or concurrently therewith, a senior and prior Lien shall be granted to the Collateral Agent on such asset to secure the First Lien Obligations or (ii) First Lien Obligation unless, subject to the terms of this Agreement, immediately after giving effect to such grant or concurrently therewith, a junior and subordinate Lien in respect of the Second Lien Obligations shall be granted to the Collateral Agent on such asset to secure the Second Lien Obligations.  If and to the extent that the Third Lien Creditors do not already have a Lien on such asset covered in the immediately preceding sentence, then a junior and subordinate Lien shall also be granted to the Collateral Agent on such asset to secure the Third Lien Obligations.  Each asset subject to such additional Liens shall constitute Collateral for all purposes of this Agreement as if expressly included in the definition of such term.  To the extent that the foregoing provisions are not complied with for any reason, without
 

 
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limiting any other rights and remedies available to the First Lien Trustee and/or the First Lien Creditors, the Second Lien Trustee, on behalf of the Second Lien Creditors, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.7 shall be distributed in accordance with Section 2.4 and in all other respects shall be subject to the terms of this Agreement.
 
2.8   Same Liens and Agreements .  The parties hereto acknowledge and agree that (subject to Section 2.7 ) it is their intention that the Collateral in which Liens are granted pursuant to the Runoff Security Agreement to secure the First Lien Obligations, the Second Lien Obligations and the Third Lien Obligations be the same.  In furtherance of the foregoing, and subject to Section 2.7 , the parties hereto agree:
 
(a)         to cooperate in good faith in order to determine, upon any request by the First Lien Trustee, the Second Lien Trustee or the Credit Agreement Agent, the specific assets included in the Collateral securing their respective Obligations, the steps taken to perfect the Liens thereon and the identity of the respective parties obligated under any Document;
 
(b)         that the documents, agreements and instruments creating or evidencing the Liens of such parties in the Collateral, as of the date hereof, are in all material respects substantively similar, other than with respect to the relative priority of the Liens created or evidenced thereunder (it being understood, for the avoidance of doubt, that nothing in this subsection shall apply to any Third Lien Documents to the extent granting Liens in any Credit Agreement Separate Collateral); and
 
(c)         any Lien on the Collateral obtained by any Secured Creditor in respect of any judgment obtained in respect of any Obligations shall be subject in all respects to the terms of this Agreement.
 
2.9   Release .
 
(a)           If in connection with any Release Event prior to the First Lien Termination Date, the First Lien Trustee, for itself or on behalf of any of the First Lien Creditors, instructs the Collateral Agent to release any of its Liens on any part of the Collateral, then the Liens, if any, of the Collateral Agent for the benefit of the Second Lien Trustee, for itself or for the benefit of the Second Lien Creditors, on such Collateral, and the Liens, if any, of the Collateral Agent for the benefit of the Credit Agreement Agent, for itself or for the benefit of the Third Lien Creditors, on such Collateral shall be each automatically, unconditionally and simultaneously released.  The Second Lien Trustee, for itself or on behalf of the Second Lien Creditors, and the Credit Agreement Agent, for itself or on behalf of the Third Lien Creditors, promptly shall execute and deliver to the Collateral Agent, the First Lien Trustee or the Issuer such termination statements, releases and other documents (collectively, the “ Release Documentation ”) as the Collateral Agent, the First Lien Trustee or the Issuer may request to effectively confirm the foregoing releases.
 
(b)           If in connection with any Disposition prior to the First Lien Termination Date permitted under the terms of the First Lien Documents (other than in connection with a Release Event prior to the First Lien Termination Date which shall be governed by Section 2.9(a)
 

 
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above), the First Lien Trustee, for itself or on behalf of any of the First Lien Creditors, instructs the Collateral Agent to release any of its Liens on any part of the Collateral, in each case, other than in connection with, the First Lien Termination Date, then the Liens, if any, of the Collateral Agent for the benefit of the Second Lien Trustee, for itself or for the benefit of the Second Lien Creditors, on such Collateral, and the Liens, if any, of the Collateral Agent for the benefit of  the Credit Agreement Agent, for itself or for the benefit of the Third Lien Creditors, on such Collateral shall be each automatically, unconditionally and simultaneously released; provided , however , that the Liens of the Collateral Agent for the benefit of the First Lien Trustee, the Second Lien Trustee and the Credit Agreement Agent shall attach to the proceeds of such Disposition and such proceeds shall be applied in accordance with Section 2.4(a) above.  The Second Lien Trustee, for itself or on behalf of the Second Lien Creditors, and the Credit Agreement Agent, for itself or on behalf of the Third Lien Creditors, promptly shall execute and deliver to the Collateral Agent, the First Lien Trustee, or the Issuer such Release Documentation as the Collateral Agent, the First Lien Trustee, or the Issuer may request to effectively confirm the foregoing releases.
 
(c)           If in connection with any Release Event after the First Lien Termination Date but prior to the Second Lien Termination Date, the Second Lien Trustee, for itself or on behalf of any of the Second Lien Creditors, instructs the Collateral Agent to release any of its Liens on any part of the Collateral, then the Liens, if any, of the Collateral Agent for the benefit of the Credit Agreement Agent, for itself or for the benefit of the Third Lien Creditors, on such Collateral shall be each automatically, unconditionally and simultaneously released.  The Credit Agreement Agent, for itself or on behalf of the Third Lien Creditors, promptly shall execute and deliver to the Second Lien Trustee, or the Issuer such Release Documentation as the Collateral Agent, the Second Lien Trustee or the Issuer may request to effectively confirm the foregoing releases.
 
(d)           If in connection with any Disposition after the First Lien Termination Date but prior to the Second Lien Termination Date permitted under the terms of the Second Lien Documents (other than in connection with a Release Event after the First Lien Termination Date but prior to the Second Lien Termination Date which shall be governed by Section 2.9(c) above), the Second Lien Trustee, for itself or on behalf of any of the Second Lien Creditors, instructs the Collateral Agent to release any of its Liens on any part of the Collateral, in each case, other than in connection with the Second Lien Termination Date, then the Liens, if any, of the Collateral Agent for the benefit of the Credit Agreement Agent, for itself or for the benefit of the Third Lien Creditors, on such Collateral shall be each automatically, unconditionally and simultaneously released; provided , however , that the Liens of the Collateral Agent for the benefit of the Second Lien Trustee and the Credit Agreement Agent shall attach to the proceeds of such Disposition and such proceeds shall be applied in accordance with Section 2.4(a) above.  The Credit Agreement Agent, for itself or on behalf of the Third Lien Creditors, promptly shall execute and deliver to the Collateral Agent, the Second Lien Trustee or the Issuer such Release Documentation as the Collateral Agent, the Second Lien Trustee or the Issuer may request to effectively confirm the foregoing releases.
 

 
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Section 3.   Enforcement of Security .
 
3.1   Management of Collateral .  (a)  Subject to the other terms and conditions of this Agreement, prior to the First Lien Termination Date, the First Lien Trustee and the First Lien Creditors shall have the exclusive right to enforce the rights and exercise remedies with respect to the Collateral (including taking or retaking control or possession of the Collateral), to instruct the Collateral Agent to commence and maintain any Collateral Enforcement Action, to make determinations regarding the release, Disposition or liquidation of the Collateral and to instruct the Collateral Agent to exercise all the rights and remedies with respect to the Collateral of a secured lender under the UCC or other applicable law of any applicable jurisdiction, all in such order in such manner as they may determine in the exercise of their sole discretion and without consultation with the Second Lien Trustee or the Second Lien Creditors or the Credit Agreement Agent or the Third Lien Creditors and regardless of whether any such exercise or enforcement is adverse to the interest of any Second Lien Creditor or Third Lien Creditor.  In conducting any public or private sale of the Collateral under the UCC, the First Lien Trustee shall give (or instruct the Collateral Agent to give) the Second Lien Trustee and Credit Agreement Agent such notice (a “ UCC Notice ”) of such sale as may be required by the applicable UCC; provided , however , that 10 days’ notice shall be deemed to be commercially reasonable notice.  Except as specifically provided in this Section 3.1 or Section 3.3 below, notwithstanding any rights or remedies available to a Second Lien Creditor or Third Lien Creditor under any of the Second Lien Documents or Third Lien Documents, applicable law or otherwise, no Second Lien Creditor and no Third Lien Creditor shall, directly or indirectly, take (or instruct the Collateral Agent to take) any Collateral Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral; provided that , subject at all times to the provisions of Section 2 , upon the expiration of the applicable Second Lien Standstill Period, the Second Lien Creditors may take or instruct the Collateral Agent to take any Collateral Enforcement Action (provided that they give or instruct the Collateral Agent to give the First Lien Trustee and Credit Agreement Agent at least five (5) Business Days' written notice prior to taking such Collateral Enforcement Action); provided , however , that notwithstanding the expiration of the Second Lien Standstill Period or anything herein to the contrary, in no event shall any Second Lien Creditor commence or continue or instruct the Collateral Agent to commence or continue any Collateral Enforcement Action or any other exercise of any rights or remedies with respect to the Collateral if the First Lien Trustee or any First Lien Creditor (or the Collateral Agent on behalf of the First Lien Trustee) shall have commenced, and be diligently pursuing any Collateral Enforcement Action or other exercise of rights and remedies in each case in respect to all or any material portion of the Collateral (prompt notice of such exercise to be given to the Second Lien Trustee and the Credit Agreement Agent (including, without limitation, any of the following (if undertaken and pursued to consummate a Disposition of Collateral within a commercially reasonable time): the solicitation of bids from third parties to conduct the liquidation of all or any material portion of the Collateral, the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, auctioneers or other third parties for the purpose of valuing, marketing, promoting or selling all or any material portion of the Collateral, the notification of account debtors to make payments to the Collateral Agent or the First Lien Trustee, the initiation of any action to take possession of all or any material portion of the Collateral or the commencement of any legal proceedings or actions against or with respect to the foreclosure and sale of all or any material portion of the Collateral), or diligently attempting in good faith to vacate any stay
 

 
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prohibiting an Collateral Enforcement Action with respect to all or any material portion of the Collateral or diligently attempting in good faith to vacate any stay prohibiting an Collateral Enforcement Action.
 
(b)           Subject to the other terms and conditions of this Agreement, after the First Lien Termination Date but prior to the Second Lien Termination Date, the Second Lien Trustee and the Second Lien Creditors shall have the exclusive right to enforce the rights and exercise remedies with respect to the Collateral (including taking or retaking control or possession of the Collateral), to instruct the Collateral Agent to commence and maintain any Collateral Enforcement Action, to make determinations regarding the release, Disposition or liquidation of the Collateral and to exercise all the rights and remedies with respect to the Collateral of a secured lender under the UCC or other applicable law of any applicable jurisdiction, all in such order in such manner as they may determine in the exercise of their sole discretion and without consultation with the Credit Agreement Agent or the Third Lien Creditors and regardless of whether any such exercise or enforcement is adverse to the interest of any Third Lien Creditor.  In conducting any public or private sale under the UCC, the Second Lien Trustee shall give (or instruct the Collateral Agent to give) the Credit Agreement Agent a UCC Notice; provided , however , that 10 days’ notice shall be deemed to be commercially reasonable notice.  Except as specifically provided in this Section 3.1 or Section 3.3 below, notwithstanding any rights or remedies available to a Third Lien Creditor under any of the Third Lien Documents, applicable law or otherwise, no Third Lien Creditor shall, directly or indirectly, take (or instruct the Collateral Agent to take) any Collateral Enforcement Action prior to the expiration of the Third Lien Standstill Period.
 
(c)           Prior to the First Lien Termination Date, the Second Lien Trustee and the other Second Lien Creditors shall not contest or object to any Collateral Enforcement Action taken by any First Lien Creditor (or by the Collateral Agent on behalf of the First Lien Creditor) or to any forbearance or delay by any First Lien Creditor (or by the Collateral Agent on behalf of the First Lien Creditor) in commencing or maintaining any Collateral Enforcement Action.

(d)           The Credit Agreement Agent and the other Third Lien Creditors shall not contest or object to any Collateral Enforcement Action taken by any First Lien Creditor or Second Lien Creditor (or by the Collateral Agent on behalf of the First Lien Creditors or Second Lien Creditors) or to any forbearance or delay by any First Lien Creditor or Second Lien Creditor (or by the Collateral Agent on behalf of the First Lien Creditors or Second Lien Creditors) in commencing or maintaining any Collateral Enforcement Action.
 
 
3.2   Notices of Default .  Each Representative agrees to use commercially reasonable efforts to give to the other Representatives and the Collateral Agent concurrently with the giving thereof to any Obligor (a) a copy of any written notice by any Secured Creditor of an Event of Default under any of its Documents or a written notice of demand for payment from any Obligor and (b) a copy of any written notice sent by such Secured Creditor or the Collateral Agent to any Obligor stating such Secured Creditor’s or the Collateral Agent’s intention to take any Collateral Enforcement Action; provided that the failure of any Representative to give such required notice shall not result in any liability to such Representative or affect the enforceability of any provision of this Agreement, including the relative priorities of the Liens of the Secured Creditors as
 

 
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provided herein, and shall not affect the validity or effectiveness of any such notice as against any Obligor; provided , further , that the foregoing shall not in any way impair any claims that any Secured Creditor may have against any other Secured Creditor as a result of any failure of any Representative to provide a UCC Notice in accordance with the provisions of this Agreement and applicable law (including without limitation any liability that any Secured Creditor may have to any other Secured Creditor as a result of any such failure).  Each Representative will provide (or instruct the Collateral Agent to provide) such information as it may have to the other Representative or Representatives as the other Representative or Representatives may from time to time reasonably request concerning the status of the exercise of any Collateral Enforcement Action, and each Representative shall be available on a reasonable basis during normal business hours to review with the other Representatives alternatives available in exercising such rights, including, but not limited to, advising each other of any offers which may be made from time to time by prospective purchasers of the Collateral; provided that (i) the failure of any party to do any of the foregoing shall not affect the relative priorities of the respective Liens as provided herein or the validity or effectiveness of any notices or demands as against any Issuer or any Obligor and (ii) in no event will the First Lien Trustee or any First Lien Creditor (and after the First Lien Termination Date, the Second Lien Trustee or any Second Lien Creditor) have any obligation to obtain the consent of or to accept any recommendation from any Second Lien Creditor or Third Lien Creditor with respect to any actions taken or contemplated to be taken (or not taken) with respect to any Collateral Enforcement Action.  Each Obligor, by its acknowledgment hereto, hereby consents and agrees to each Secured Creditor providing any such information to the other Secured Creditors (subject to the confidentiality obligations applicable to the Secured Creditors under the relevant Documents in each case) and to such actions by the Secured Creditors and waives any rights or claims against any Secured Creditors arising as a result of such information or actions.
 
3.3   Permitted Actions .   Section 3.1 shall not be construed to limit or impair in any way the right of:  (a) any Secured Creditor to commence or continue any Specific Performance Action (but all Secured Creditors shall cooperate with each other in respect of all Specific Performance Actions pursued), (b) any Secured Creditor to bid for or purchase Collateral at any private or judicial foreclosure upon such Collateral initiated by any Secured Creditor, ( provided , that such bid may not include a "credit bid" in respect of any Second Lien Obligations or Third Lien Obligations unless the proceeds of such bid are otherwise sufficient to cause the Payment in Full of the Obligations held by all Secured Creditors that are senior in priority of Liens hereunder), (c) any Secured Creditor to join (but not control) any foreclosure or other judicial lien enforcement proceeding with respect to the Collateral initiated by another Secured Creditor for the sole purpose of protecting such Secured Creditor’s Lien on the Collateral, so long as it does not delay or interfere with the exercise by such other Secured Creditor of its rights under this Agreement, the Documents and under applicable law; (d) any Secured Creditor to file a claim or statement of interest in any Insolvency Proceeding); (e) any Secured Creditor to take action to create, perfect or maintain the perfection of its Lien on the Collateral (so long as such action is not adverse to the priority hereunder of any other Secured Creditor’s Lien or the rights hereunder of any Secured Creditor to take Collateral Enforcement Action; (f) any Secured Creditor to file any pleadings to oppose any claim or action that objects to or seeks to disallow such Secured Creditor’s Lien or Obligations; (g) any Secured Creditor to vote on any plan of reorganization; (h) the Second Lien Creditors to receive any remaining proceeds of Collateral
 

 
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after the First Lien Obligations have been Paid in Full and (i) the Third Lien Creditors to receive any remaining proceeds of Collateral after the First Lien Obligations and Second Lien Obligations have been Paid in Full.  Any proceeds of Collateral received in connection with any such Collateral Enforcement Action permitted under this Section 3.3 shall be applied in accordance with Section 2 of this Agreement.  Except as specifically set forth in Sections 3.1, nothing in this Agreement shall prohibit the receipt by the Credit Agreement Agent or any Third Lien Creditor of the required payments of interest, principal and other amounts owed in respect of the Third Lien Obligations so long as such receipt is not the direct or indirect result of the exercise by the Credit Agreement Agent or any Third Lien Creditor (or the Collateral Agent on their behalf) of rights or remedies as a secured creditor with respect to the Collateral (including set-off and recoupment) or enforcement in contravention of this Agreement of any Lien on the Collateral held by any of them.
 
3.4   Collateral In Possession .
 
(a)   In the event that any Secured Creditor takes possession of or has control (as such term is used in the UCC as in effect in each applicable jurisdiction) over any Collateral for purposes of perfecting the Lien for its benefit hereunder, such Secured Creditor shall be deemed to be holding such Collateral as gratuitous bailee for the other Secured Creditors, solely for purposes of perfection of their Lien under the UCC; provided that such Secured Creditor shall not have any obligation to ensure that any such Collateral is genuine or owned by any Obligor or any duty or liability to protect or preserve any rights pertaining to any of the Collateral for the other Secured Creditors.  At the request of the Collateral Agent, the Secured Creditor having such possession or control shall promptly deliver possession or control of such Collateral to the Collateral Agent.
 
(b)   It is understood and agreed that this Section 3.4 is intended solely to assure continuous perfection of the Liens granted under the applicable Documents, and nothing in this Section 3.4 shall be deemed or construed as altering the priorities or obligations set forth elsewhere in this Agreement.  The duties of each party under this Section 3.4 shall be mechanical and administrative in nature, and no party shall have, or be deemed to have, by reason of this Agreement or otherwise a fiduciary relationship in respect of the other party.  No Representative or other Secured Creditor shall have any liability to any other Secured Creditor in connection with acting as gratuitous bailee with respect to any Collateral except for actual damages directly caused by its gross negligence or willful misconduct as determined in a final non-appealable order of a court of competent jurisdiction.
 
(c)   Contemporaneously with the execution of this Agreement, each of the Representatives agrees to cooperate in a commercially reasonable manner to enter into, and instruct the Collateral Agent to enter into, an account control agreement with respect to the Collateral Account and the Trustee Fees Account and each other deposit or securities account into which any Runoff Proceeds or other Collateral may be credited or deposited, which grants the Collateral Agent control over such account for purposes of perfecting its security interest.
 
3.5   Waiver of Marshalling and Similar Rights .  Each Representative for itself and each Secured Creditor it represents to the fullest extent permitted by applicable law, waives as to all other Secured Creditors any requirement regarding, and agrees not to demand, request, plead
 

 
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or otherwise claim the benefit of, any marshalling, appraisement, valuation or other similar right that may otherwise be available under applicable law.
 
3.6   Insurance and Condemnation Awards .  So long as the First Lien Termination Date has not occurred, the First Lien Trustee shall have the exclusive right, subject to the First Lien Documents and the rights of the Obligors under the First Lien Documents, to settle and adjust (or instruct the Collateral Agent to settle or adjust) claims in respect of Collateral under policies of insurance and to approve any award granted in any condemnation or similar proceeding, or any deed in lieu of condemnation, in respect of the Collateral.  After the occurrence of the First Lien Termination Date and so long as the Second Lien Termination Date has not occurred, the Second Lien Trustee shall have the exclusive right, subject to the Second Lien Documents and the rights of the Obligors under the Second Lien Documents, to settle and adjust (or instruct the Collateral Agent to settle or adjust) claims in respect of Collateral under policies of insurance and to approve any award granted in condemnation or similar proceeding, or any deed in lieu of condemnation, in respect of the Collateral.
 
Section 4.   Covenants
 
4.1   Amendment of First Lien Documents .  The First Lien Creditors may at any time and from time to time and without consent of or notice to any Second Lien Creditor or Third Lien Creditor, without incurring any liability to any Second Lien Creditor or Third Lien Creditor and without impairing or releasing any rights or obligations hereunder or otherwise, agree with the Obligors to amend, restate, supplement, modify, substitute, renew or replace any or all of the First Lien Documents; provided , however , that without the consent of the Second Lien Trustee and, only with respect to clauses (b) and (c) below, the Credit Agreement Agent, no First Lien Creditor shall amend, restate, supplement, modify, substitute, renew or replace any or all of the First Lien Documents to (a) increase the amount of the First Lien Obligations in excess of the Maximum First Lien Amount (except through the issuance of additional notes in payment of, or the capitalization of, interest at the rate set forth in the First Lien Indenture as in effect on the date hereof), (b) modify or add any covenant or event of default under the First Lien Documents, which directly restricts one or more Obligors from making payments or granting Liens on the Collateral under the Second Lien Documents and Third Lien Documents which would otherwise be permitted under the First Lien Documents as in effect on the date hereof or (c) make any other change or changes to the First Lien Documents that are otherwise adverse, individually or in the aggregate, to the Second Lien Creditors or Third Lien Creditors in any manner.
 
4.2   Amendments to Second Lien Documents .  The Second Lien Creditors may at any time and from time to time and without consent of or notice to any First Lien Creditor or Third Lien Creditor, without incurring any liability to any First Lien Creditor or Third Lien Creditor and without impairing or releasing any rights or obligations hereunder or otherwise, agree with the Obligors to amend, restate, supplement, modify, substitute, renew or replace any or all of the Second Lien Documents; provided, however , that without the consent of the First Lien Trustee (if the First Lien Termination Date has not occurred) and Credit Agreement Agent, no Second Lien Creditor shall amend, restate, supplement, modify, substitute, renew or replace any or all of the Second Lien Documents to (a) modify or add any covenant or event of default under the Second Lien Documents, which directly restricts one or more Obligors from making payments or granting Liens on the Collateral under the First Lien Documents and Third Lien Documents
 

 
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which would otherwise be permitted under the Second Lien Documents as in effect on the date hereof or (b) make any other change or changes to the Second Lien Documents that are otherwise adverse, individually or in the aggregate, to the First Lien Creditors or Third Lien Creditors in any manner.
 
4.3   Amendment of Third Lien Documents .  The Third Lien Creditors may at any time and from time to time and without consent of or notice to any First Lien Creditor or Second Lien Creditor, without incurring any liability to any First Lien Creditor or Second Lien Creditor and without impairing or releasing any rights or obligations hereunder or otherwise, agree with the Obligors to amend, restate, supplement, modify, substitute, renew or replace any or all of the Third Lien Documents; provided, however, that without the consent of the First Lien Trustee (if the First Lien Termination Date has not occurred) and Second Lien Trustee (if the Second Lien Termination Date has not occurred), no Third Lien Creditor shall amend, restate, supplement, modify, substitute, renew or replace any or all of the Third Lien Documents to modify or add any covenant or event of default under the Third Lien Documents, which directly restricts one or more Obligors from making payments or granting Liens on the Collateral under the First Lien Documents and Second Lien Documents which would otherwise be permitted under the Third Lien Documents as in effect on the date hereof.
 
4.4   Effect of Refinancing .
 
(a)   If the Payment in Full of the First Lien Obligations is being effected through a Refinancing; provided , that the credit agreement and the other documents evidencing such new First Lien Obligations (the “ New First Lien Documents ”) do not effect an amendment, supplement or other modification of the terms of the First Lien Obligations in a manner that is prohibited by Section 4.1 , then (A) such Payment in Full of First Lien Obligations shall be deemed not to have occurred for all purposes of this Agreement, (B) the indebtedness under such Refinancing and all other obligations under the credit documents evidencing such indebtedness (the “ New First Lien Obligations ”) shall be treated as First Lien Obligations for all purposes of this Agreement, (C) the New First Lien Documents shall be treated as the First Lien Documents and (D) the trustee or agent under the New First Lien Documents (the “ New First Lien Trustee ”) shall be deemed to be the First Lien Trustee for all purposes of this Agreement.  Upon receipt of a notice of Refinancing under the preceding sentence, which notice shall include the identity of the New First Lien Trustee, the Second Lien Trustee and Credit Agreement Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the New First Lien Trustee may reasonably request in order to provide to the New First Lien Trustee the rights and powers set forth herein.
 
(b)   If the Payment in Full of the Second Lien Obligations is being effected through a Refinancing; provided , that the credit agreement and the other documents evidencing such New Second Lien Obligations (the “ New Second Lien Documents ”) do not effect an amendment, supplement or other modification of the terms of the Second Lien Obligations in a manner that is prohibited by Section 4.2 , then (A) such Payment in Full of Second Lien Obligations shall be deemed not to have occurred for all purposes of this Agreement, (B) the indebtedness under such Refinancing and all other obligations under the credit documents evidencing such indebtedness (the “ New Second Lien Obligations ”) shall be treated as Second Lien Obligations for all purposes of this Agreement, (C) the New Second Lien Documents shall
 

 
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be treated as the Second Lien Documents and (D) the trustee or agent under the New Second Lien Documents (the “ New Second Lien Trustee ”) shall be deemed to be the Second Lien Trustee for all purposes of this Agreement.  Upon receipt of a notice of Refinancing under the preceding sentence, which notice shall include the identity of the New Second Lien Trustee, the First Lien Trustee and Credit Agreement Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the New Second Lien Trustee may reasonably request in order to provide to the New Second Lien Trustee the rights and powers set forth herein.
 
(c)   If the Payment in Full of the Third Lien Obligations is being effected through a Refinancing; provided , that the credit agreement and the other documents evidencing such New Third Lien Obligations (the “ New Third Lien Documents ”) do not effect an amendment, supplement or other modification of the terms of the Third Lien Obligations in a manner that is prohibited by Section 4.3 , then (A) such Payment in Full of Third Lien Obligations shall be deemed not to have occurred for all purposes of this Agreement, (B) the indebtedness under such Refinancing and all other obligations under the credit documents evidencing such indebtedness (the “ New Third Lien Obligations ”) shall be treated as Third Lien Obligations for all purposes of this Agreement, (C) the New Third Lien Documents shall be treated as the Third Lien Documents and (D) the trustee or agent under the New Third Lien Documents (the “ New Third Lien Agent ”) shall be deemed to be the Credit Agreement Agent for all purposes of this Agreement.  Upon receipt of a notice of Refinancing under the preceding sentence, which notice shall include the identity of the New Third Lien Agent, the First Lien Trustee and Second Lien Trustee shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the New Third Lien Agent may reasonably request in order to provide to the New Third Lien Agent the rights and powers set forth herein.
 
(d)   By their acknowledgement hereto, Obligors agree to cause the agreement, document or instrument pursuant to which any New First Lien Trustee, any New Second Lien Trustee or any New Third Lien Agent is appointed to provide that the New First Lien Trustee and other First Lien Creditors thereunder, New Second Lien Trustee and other Second Lien Creditors thereunder, or New Third Lien Agent and other Third Lien Creditors thereunder, as applicable, agree to be bound by the terms of this Agreement.
 
Section 5.   Bankruptcy Matters .
 
5.1   Bankruptcy .  This Agreement shall be applicable both before and after the filing of any petition by or against any Obligor under the Bankruptcy Code or any other Insolvency Proceeding and all converted or succeeding cases in respect thereof, and all references herein to any Obligor shall be deemed to apply to the trustee for such Obligor and such Obligor as a debtor-in-possession.  The relative rights of the First Lien Creditors, the Second Lien Creditors and the Third Lien Creditors in respect of any Collateral or proceeds thereof shall continue after the filing of such petition on the same basis as prior to the date of such filing, subject to any court order approving the financing of, or use of cash collateral by, any Obligor.  This Agreement shall constitute a “subordination agreement” for the purposes of Section 510(a) of the Bankruptcy Code and shall be enforceable in any Insolvency Proceeding in accordance with its terms.
 

 
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5.2   Adequate Protection .
 
(a)   Adequate Protection .   The Second Lien Creditors and Third Lien Creditors shall not contest or oppose in any manner any adequate protection provided to the First Lien Creditors to compensate for the diminution in value of the Collateral and shall be deemed to have waived any objections to such adequate protection.  If the First Lien Creditors (or any subset thereof) are, or the Collateral Agent on their behalf is, granted adequate protection in the form of any “replacement Liens” granted to the First Lien Creditors as adequate protection of their interests in the Collateral (the “ Senior Adequate Protection Liens ”), the Second Lien Creditors and Third Lien Creditors may seek (and the First Lien Creditors shall not oppose) adequate protection of their interests in the Collateral in the form of replacement Liens on the additional collateral subject to the Senior Adequate Protection Liens (the “ Junior Adequate Protection Liens ”), which Junior Adequate Protection Liens, if granted, will be subordinate to all Liens securing the First Lien Obligations and to the extent granted to the Third Lien Creditors, to the Second Lien Obligations, on the same basis as the other Liens securing the Second Lien Obligations and Third Lien Obligations are so subordinated under this Agreement.  The Second Lien Creditors and Third Lien Creditors may seek other forms of adequate protection of their interests in the Collateral in any Insolvency Proceeding, subject to the rights of the First Lien Creditors to oppose and object to any such other forms of adequate protection, including, without limitation, any payments proposed to be made by any Obligor to the Second Lien Creditors and Third Lien Creditors.
 
5.3   Sale of Collateral; Waivers .  Each of the Second Lien Creditors and Third Lien Creditors agree that they will not object to or oppose a Disposition of any Collateral securing the First Lien Obligations (or any portion thereof) free and clear of Liens or other claims under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code, if the First Lien Creditors have consented to such Disposition of such assets in accordance with the First Lien Documents, so long as the security interests of the Collateral Agent for the benefit of the Second Lien Creditors and the Third Lien Creditors in such Collateral attach to the proceeds thereof subject to the terms of this Agreement, including, without limitation, the order of application provided in Section 2.4 ; provided that the Second Lien Trustee, on behalf of itself and the other Second Lien Creditors, and the Credit Agreement Agent, on behalf of itself and the other Third Lien Creditors, may raise any objections to any such Disposition of such Collateral that could be raised by any unsecured creditor of the Obligors solely in its capacity as an unsecured creditor, provided , further , that, neither the Second Lien Trustee, the Second Lien Creditors, the Credit Agreement Agent nor the Third Lien Creditors may raise any objections based on rights afforded by Sections 363(e) and (f) of the Bankruptcy Code to secured creditors (or by any comparable provision of any Bankruptcy Law).   The Second Lien Trustee, the Second Lien Creditors, the Credit Agreement Agent and the Third Lien Creditors waive any claim they may now or hereafter have arising out of the First Lien Creditors’ election in any proceeding instituted under Chapter 11 of the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code.  The Second Lien Trustee, the Second Lien Creditors, the Credit Agreement Agent and the Third Lien Creditors agree not to initiate or prosecute or join with any other Person to initiate or prosecute any claim, action or other proceeding (i) challenging the enforceability of the First Lien Creditors’ claims as fully secured claims with respect to all or part of the First Lien Obligations or for allowance of any First Lien Obligations (including those
 

 
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consisting of post-petition interest, fees or expenses) or opposing any action by the First Lien Trustee or the First Lien Creditors to enforce (or instruct the Collateral Agent on their behalf to enforce) their rights or remedies arising under the First Lien Documents in a manner which is not prohibited by the terms of this Agreement, (ii) challenging the enforceability, validity, priority or perfected status of any Liens on assets securing the First Lien Obligations under the First Lien Documents, (iii) asserting any claims which the Obligors may hold with respect to the First Lien Creditors, (iv) seeking to lift the automatic stay to the extent that such action is opposed by the First Lien Trustee or (v) opposing a motion by the First Lien Trustee (or the Collateral Agent on its behalf) to lift the automatic stay.  The First Lien Creditors agree not to initiate or prosecute or join with any person to initiate or prosecute any claim, action or other proceeding challenging the enforceability, validity, priority or perfected status of any Liens on assets securing the Second Lien Obligations under the Second Lien Documents or the Third Lien Obligations under the Third Lien Documents.  After the First Lien Termination Date, the Second Lien Trustee and Second Lien Creditors shall succeed to the rights and benefits accorded the First Lien Trustee and First Lien Creditors under this Section 5.3 , and the Credit Agreement Agent and the Third Lien Creditors shall be deemed to have agreed that all of the provisions of this Section 5.3 relating to such rights and benefits shall inure to the benefit of the Second Lien Trustee and the Second Lien Creditors as if provisions to such effect were expressly set forth in full in this Section.
 
5.4   Invalidated Payments .  (a) To the extent that the First Lien Creditors receive payments on the First Lien Obligations or proceeds of Collateral for application to the First Lien Obligations which are subsequently invalidated, declared to be preferential or fraudulent transfers or conveyances, set aside and/or required to be repaid to a trustee, receiver or any other party under any Bankruptcy Law, common law, equitable cause or otherwise (and whether as a result of any demand, settlement, litigation or otherwise) (each a “ First Lien Avoidance ”), then to the extent of such payment or proceeds received, such Obligations, or part thereof, intended to be satisfied by such payment or proceeds shall be revived and continue in full force and effect as if such payments or proceeds had not been received by the First Lien Creditors, and this Agreement, if theretofore terminated, shall be reinstated in full force and effect as of the date of such First Lien Avoidance, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the Lien priorities and the relative rights and obligations of the First Lien Creditors, the Second Lien Creditors and the Third Lien Creditors provided for herein with respect to any event occurring on or after the date of such First Lien Avoidance.  The Second Lien Creditors agree that none of them shall be entitled to benefit from any First Lien Avoidance, whether by preference or otherwise, it being understood and agreed that the benefit of such First Lien Avoidance otherwise allocable to them shall instead be allocated and turned over for application in accordance with the priorities set forth in this Agreement.
 
(b)           To the extent that the Second Lien Creditors receive payments on the Second Lien Obligations or proceeds of Collateral for application to the Second Lien Obligations which are subsequently invalidated, declared to be preferential or fraudulent transfers or conveyances, set aside and/or required to be repaid to a trustee, receiver or any other party under any Bankruptcy Law, common law, equitable cause or otherwise (and whether as a result of any demand, settlement, litigation or otherwise) (each a “ Second Lien Avoidance ”), then to the extent of such payment or proceeds received, such Obligations, or part thereof, intended to be
 

 
26
 

satisfied by such payment or proceeds shall be revived and continue in full force and effect as if such payments or proceeds had not been received by the Second Lien Creditors, and this Agreement, if theretofore terminated, shall be reinstated in full force and effect as of the date of such Second Lien Avoidance, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the Lien priorities and the relative rights and obligations of the Second Lien Creditors and the Third Lien Creditors provided for herein with respect to any event occurring on or after the date of such Second Lien Avoidance.
 
5.5   Payments .  In the event of any Insolvency Proceeding involving one or more Obligors, all distributions constituting proceeds of Collateral and all Recourse Proceeds shall be paid or delivered by the Collateral Agent directly to the First Lien Trustee (or the Second Lien Trustee, if the First Lien Obligations have been Paid in Full) and applied pursuant to the waterfall in Section 2.4(b) .  Each of the Second Lien Trustee and the Credit Agreement Agent irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such distributions in respect of any Second Lien Obligation or Third Lien Obligation, as applicable, to the Collateral Agent for the benefit of the First Lien Trustee; provided that the foregoing provision shall not apply to such distributions made in respect of the Second Lien Obligation or the Third Lien Obligation pursuant to a plan of reorganization under the Bankruptcy Code with respect to such Obligors which has been accepted by all classes composed of the holders of First Lien Obligations and which has been confirmed pursuant to a final order of the bankruptcy court or other body having jurisdiction over such Insolvency Proceeding.  After the First Lien Termination Date, each Third Lien Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such distributions in respect of any Third Lien Obligation to the extent constituting proceeds of Collateral or Recourse Proceeds to the Collateral Agent for the benefit of the Second Lien Trustee; provided that the foregoing provision shall not apply to any such distributions made in respect of the Third Lien Obligations pursuant to a plan of reorganization under the Bankruptcy Code with respect to such Obligors which has been approved by all classes composed of holders of the Second Lien Obligations and which has been confirmed pursuant to a final order of the bankruptcy court or other body having jurisdiction over such Insolvency Proceeding.  Each Second Lien Creditor and Third Lien Creditor also irrevocably authorizes and empowers the First Lien Trustee (or the Collateral Agent on its behalf), in the name of each Second Lien Creditor or Third Lien Creditor, as applicable, to demand, sue for, collect and receive any and all such distributions constituting proceeds of the Collateral or Recourse Proceeds otherwise payable in respect of any Second Lien Obligation or Third Lien Obligation but to which the First Lien Creditors are entitled by application of this Section 5.5 .  After the First Lien Termination Date, each Third Lien Creditor also irrevocably authorizes and empowers the Second Lien Trustee (or the Collateral Agent on its behalf), in the name of each Third Lien Creditor, to demand, sue for, collect and receive any and all such distributions constituting proceeds of the Collateral or Recourse Proceeds otherwise payable in respect of any Third Lien Obligation but to which the Second Lien Creditors are entitled by application of this Section 5.5 .  Notwithstanding the foregoing, to the extent that the Second Lien Creditors and the Third Lien Creditors are granted adequate protection in any Insolvency Proceeding in the form of cash payments not inconsistent with the terms of this Agreement, the provisions of this Section 5.5 shall not apply to such payments.
 

 
27
 

5.6   Separate Grants of Security and Separate Classification .  Each First Lien Creditor, Second Lien Creditor and Third Lien Creditor acknowledges and agrees that (a) the grants of Liens pursuant to the Runoff Security Agreement for the benefit of the First Lien Creditors, the Second Lien Creditors and the Third Lien Creditors constitute three separate and distinct grants of Liens and (b) because of, among other things, their differing rights in the Collateral, the First Lien Obligations, the Second Lien Obligations and the Third Lien Obligations are fundamentally different from each other and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding.  The First Lien Creditors, Second Lien Creditors and Third Lien Creditors shall not seek in any Insolvency Proceeding to be treated as part of the same class of creditors with one another and shall not oppose any pleading or motion by any of them for the First Lien Creditors, the Second Lien Creditors and the Third Lien Creditors to be treated as separate classes of creditors.  Notwithstanding the foregoing, if it is held that the Obligations of all or any combination of two of the First Lien Creditors, the Second Lien Creditors and the Third Lien Creditors in respect of the Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then each of the parties hereto hereby acknowledges and agrees that, consistent with Section 2.1 , all distributions shall be made as if there were three separate classes of senior and junior secured claims against the Obligors in respect of the Collateral, with the effect being that, to the extent that the aggregate value of the Collateral exceeds the amount of the First Lien Obligations, the First Lien Creditors shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest, and fees, costs and charges incurred subsequent to the commencement of the applicable Insolvency Proceeding before any distribution is made in respect of any of the claims held by the Second Lien Creditors and Third Lien Creditors, and to the extent that the aggregate value of the Collateral exceeds the amount of the First Lien Obligations and the Second Lien Obligations, the Second Lien Creditors shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest, and fees, costs and charges incurred subsequent to the commencement of the applicable Insolvency Proceeding before any distribution is made in respect of any of the claims held by the Third Lien Creditors.  The Second Lien Creditors and Third Lien Creditors hereby acknowledge and agree to turn over to the First Lien Creditors amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of the preceding sentence, even if such turnover has the effect of reducing the claim or recovery of the Second Lien Creditors and Third Lien Creditors, and the Third Lien Creditors hereby acknowledge and agree to turn over to the Second Lien Creditors amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of the preceding sentence, even if such turnover has the effect of reducing the claim or recovery of the Third Lien Creditors.
 
Section 6.   Miscellaneous .
 
6.1   Termination .  Subject to Section 4.4 , this Agreement shall terminate and be of no further force and effect (a) as to the First Lien Creditors, upon the Payment in Full of the First Lien Obligations and (b) following the Payment in Full of the First Lien Obligations, upon the first to occur of the Payment in Full of (i) the Second Lien Obligations or (ii) the Third Lien Obligations.
 

 
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6.2   Successors and Assigns ; No Third Party Beneficiaries .
 
(a)   This Agreement shall be binding upon each Secured Creditor and its respective successors and assigns and shall inure to the benefit of each Secured Creditor and its respective successors, participants and assigns.  No other Person shall have or be entitled to assert rights or benefits hereunder.
 
(b)   Each Secured Creditor reserves the right (subject to any restrictions in the applicable Document) to grant participations in, or otherwise sell, assign, transfer or negotiate all or any part of, or any interest in, their respective Obligations; provided that no Secured Creditor shall be obligated to give any notices to or otherwise in any manner deal directly with any participant in the Obligations and no participant shall be entitled to any rights or benefits under this Agreement, except through the Secured Creditor with which it is a participant.
 
(c)   In connection with any participation or other transfer or assignment, a Secured Creditor (i) may, subject to its respective Documents, disclose to such assignee, participant or other transferee or assignee all documents and information which such Secured Creditor now or hereafter may have relating to any Obligor or the Collateral and (ii) shall disclose to such participant or other transferee or assignee the existence and terms and conditions of this Agreement.
 
6.3   Notices .  All notices and other communications provided for hereunder shall be in writing and shall be mailed, sent by overnight courier, telecopied or delivered, as follows:
 
(a)   if to First Lien Trustee, to it at the following address:
 
Wilmington Trust, National Association
Corporate Capital Markets
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Washington Mutual, Inc. Administrator
Facsimile: 612-217-5651

(b)   if to Second Lien Trustee, to it at the following address:
 
Law Debenture Trust Company of New York
400 Madison Avenue, 4th Floor
New York, NY 10017
Attention: Managing Director
 
Facsimile No:  (212) 750-1361
 


(c)   if to Credit Agreement Agent, to it at the following address:
 
U.S. Bank Corporate Trust Services
214 North Tryon Street, 26 th Floor

 
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Charlotte, NC 28202
Attention: CDO Trust Services
Facsimile No.: (704) 335-4678


(d)   if to the Obligors, to the following address:
 
WMI Holdings Corp.
1201 Third Avenue, Suite 3000
Seattle, Washington 98101
Attention: General Counsel

With a copy to:

Schwabe Williamson & Wyatt, P.C.
1211 SW Fifth Ave., Suite 1500-1900
Portland, Oregon 97204
Attention: A. Jeffery Bird, Esq. and Darius Hartwell, Esq.

or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 6.3 .  All such notices and other communications shall be effective (i) if sent by registered mail, return receipt requested, when received or 3 Business Days after mailing, whichever first occurs, (ii) if telecopied, when transmitted and a confirmation is received, provided the same is on a Business Day and, if not, on the next Business Day or (iii) if delivered by messenger or overnight courier, upon delivery, provided the same is on a Business Day and, if not, on the next Business Day.
 
 
6.4   Counterparts .  This Agreement may be executed by the parties hereto in several counterparts, and each such counterpart shall be deemed to be an original and all of which shall constitute together but one and the same agreement.
 
6.5   GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE .  THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.  EACH OF THE PARTIES HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE PARTIES HERETO PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT; PROVIDED THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT OF COMPETENT JURISDICTION LOCATED OUTSIDE OF NEW YORK COUNTY, NEW YORK.  EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
 

 
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SUCH COURT, AND EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS .
 
6.6   MUTUAL WAIVER OF JURY TRIAL .  THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS RELATED THERETO.
 
6.7   Amendments .  No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Person from the terms hereof, shall in any event be effective unless it is in writing and signed by each Agent.  In no event shall the consent of any Obligor be required in connection with any amendment or other modification of this Agreement, unless such amendment or other modification imposes any additional obligations or changes any existing obligations of such Obligor under this Agreement.
 
6.8   No Waiver .  No failure or delay on the part of any Secured Creditor in exercising any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right.
 
6.9   Severability .  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provisions in any other jurisdiction.
 
6.10   Further Assurances .  Each party hereto agrees to cooperate fully with each other party hereto to effectuate the intent and provisions of this Agreement and, from time to time, to execute and deliver any and all other agreements, documents or instruments, and to take such other actions, as may be reasonably necessary or desirable to effectuate the intent and provisions of this Agreement.
 
6.11   Headings .  The section headings contained in this Agreement are and shall be without meaning or content whatsoever and are not part of this Agreement.
 
6.12   Lien Priority Provisions .  This Agreement and the rights and benefits hereunder shall inure solely to the benefit of the Collateral Agent, the First Lien Trustee, the First Lien Creditors, the Second Lien Trustee, the Second Lien Creditors, the Credit Agreement Agent and the Third Lien Creditors and their respective successors and permitted assigns and no other Person (including the Obligors or any trustee, receiver, debtor in possession or bankruptcy estate in a bankruptcy or like proceeding) shall have or be entitled to assert rights or benefits hereunder.  Nothing contained in this Agreement is intended to or shall impair the obligation of any Obligor to pay the Obligations as and when the same shall become due and payable in accordance with their respective terms, or to affect the relative rights of the creditors of any Obligor, other than
 

 
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the rights of the First Lien Trustee, the First Lien Creditors, the Second Lien Trustee, the Second Lien Creditors, the Credit Agreement Agent and the Third Lien Creditors as between themselves with respect to the Collateral and the other matters expressly set forth herein.  Without intending the limit the scope of the preceding sentence, each of the parties hereto agree that, except as expressly set forth herein with respect to the Collateral, nothing in this Agreement is intended to apply to, limit or otherwise affect any rights or remedies of the Third Lien Creditors under the Third Lien Documents or applicable law with respect to the Third Lien Obligations or the Credit Agreement Separate Collateral.
 
6.13   Credit Analysis .  The Secured Creditors shall each be responsible for keeping themselves informed of (a) the financial condition of the Obligors and all other all endorsers, obligors and/or guarantors of the  Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the Obligations.  Except as expressly set forth in Section 3.2 , no Secured Creditor shall have any duty or obligation to advise any other Secured Creditor of information known to it regarding such condition or any such other circumstances.  No Secured Creditor assumes any liability to any other Secured Creditor or to any other Person with respect to:  (i) the financial or other condition of Obligors, (ii) the enforceability, validity, value or collectibility of the Obligations, any Collateral therefor or any guarantee or security which may have been granted in connection with any of the Obligations or (iii) any Obligor’s title or right to transfer any Collateral or security.
 
6.14   Waiver of Claims .  To the maximum extent permitted by law, each party hereto waives any claim it might have against any Secured Creditor with respect to, or arising out of, any action or failure to act or any error of judgment or negligence, mistake or oversight whatsoever on the part of any other party hereto or their respective directors, officers, employees or agents with respect to any exercise of rights or remedies relating to the Collateral in accordance with this Agreement.  None of the Secured Creditors, nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or, except as specifically provided herein, shall be under any obligation to Dispose of any Collateral upon the request of any Obligor or any Secured Creditor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.
 
6.15   Conflicts .  In the event of any conflict between the provisions of this Agreement and the provisions of the Documents (other than Section 7.16 of the First Lien Indenture and Section 7.16 of the Second Lien Indenture), the provisions of this Agreement shall govern.
 
6.16   Specific Performance .  Each Representative may demand specific performance of this Agreement and, on behalf of itself and the respective other Secured Creditors, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action which may be brought by the respective Secured Creditors.
 
6.17   Subrogation .  The Second Lien Trustee, the Second Lien Creditors, the Credit Agreement Agent and the Third Lien Creditors hereby agree that until the First Lien Termination Date has occurred they will not assert any rights of subrogation it or they may acquire as a result of any payment hereunder; provided that as between the Obligors, on the one hand, and the
 

 
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Second Lien Creditors or the Third Lien Creditors (as applicable), on the other hand, any such payment otherwise payable to the Second Lien Creditors or Third Lien Creditors that is paid over to the First Lien Trustee (or the Collateral Agent on its behalf) pursuant to this Agreement shall be deemed not to reduce any of the First Lien Obligations.  The Credit Agreement Agent and the Third Lien Creditors hereby further agree that until the Second Lien Termination Date has occurred they will not assert any rights of subrogation it or they may acquire as a result of any payment hereunder; provided that as between the Obligors, on the one hand, and the Third Lien Creditors, on the other hand, any such payment otherwise payable to Third Lien Creditors that is paid over to the Second Lien Trustee (or the Collateral Agent on its behalf) pursuant to this Agreement shall be deemed not to reduce any of the Second Lien Obligations.
 
6.18   Entire Agreement .  This Agreement and the Documents embody the entire agreement of the Obligors, the Collateral Agent, , the First Lien Trustee, the First Lien Creditors, the Second Lien Trustee, the Second Lien Creditors, the Credit Agreement Agent and the Third Lien Creditors with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings relating to the subject matter hereof and thereof and any draft agreements, negotiations and/or discussions involving any Obligor and any of the Collateral Agent, the First Lien Trustee, the First Lien Creditors, the Second Lien Trustee, the Second Lien Creditors, the Credit Agreement Agent and the Third Lien Creditors relating to the subject matter hereof.
 
6.19   Credit Agreement Agent Authority Subject to Credit Agreement .  U.S. Bank  National Association has been appointed the Credit Agreement Agent hereunder pursuant to Article VIII of the Credit  Agreement.  Notwithstanding anything to the contrary herein, it is expressly understood and agreed by the parties to this Agreement that any authority conferred upon the Credit Agreement Agent hereunder is subject to the terms of the delegation of authority made by the Credit Agreement Lenders to the Credit Agreement Agent pursuant to the Credit Agreement and that the Credit Agreement Agent has agreed to act (and any successor Credit Agreement Agent shall act) as such hereunder only on the express conditions and protections contained in the Credit Agreement (including, without limitation, Section 8.03 thereof).  Any successor Credit Agreement Agent appointed in accordance with Section 8.07 of the Credit Agreement shall be entitled to all the rights, interests and benefits of the Credit Agreement Agent hereunder.
 

 
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

  FIRST LIEN TRUSTEE:  
       
 
WILMINGTON TRUST, NATIONAL
ASSOCIATION
 
 
as First Lien Trustee
 
 
 
 
By:
/s/   
  Name:    
  Title:    
       
 
 
  SECOND LIEN TRUSTEE:  
       
 
LAW DEBENTURE TRUST COMPANY OF
NEW YORK
 
 
as Second Lien Trustee
 
 
 
 
By:
/s/   
  Name:    
  Title:    
       
 
 
  CREDIT AGREEMENT AGENT:  
       
 
U.S. BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely as Credit
Agreement Agent
 
 
 
 
 
 
By:
/s/   
  Name:    
  Title:    
       
 
 
 
  COLLATERAL AGENT:  
       
 
WILMINGTON TRUST, NATIONAL
ASSOCIATION
 
 
as Collateral Agent
 
 
 
By:
/s/   
  Name:    
  Title:    
       
 
 
   
[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]
 
 
Each of the undersigned hereby acknowledges and agrees to the foregoing terms and provisions.
 
 
 
 
OBLIGORS:
 
       
 
WMI HOLDINGS CORP.
 
 
 
 
 
 
By:
/s/   
  Name:    
  Title:    
       
 
 

   
[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]


 

 
EXHIBIT 10.5

 
March 21, 2012




Weijia (Vicky) Wu, CFA
8927 192nd St. SW   
Edmonds, WA 98026



Dear Vicky:

On behalf of WMI Holdings Corp. (as successor to Washington Mutual, Inc., and referred to herein as “WMI”), I am pleased to offer you a position in WMI’s Seattle office as Director of Finance.  This offer is entered into as of the date first written above; however, it will be given effect as though it were executed and entered into on March 19, 2012.  You will report to me, in my capacity as Interim Chief Executive Officer, until such time as WMI’s Board of Directors determines an alternative reporting relationship.  This letter agreement (the “ Agreement ”) outlines the terms and conditions of your employment.

Duties

You will have the title of Senior Vice President & Director of Finance and will be responsible to perform all of the duties customarily associated with that position or as otherwise directed.

Employment Period

WMI agrees to employ you, and you are accepting such employment, on an “at will” basis; provided , that employment under this Agreement may be terminated by either party for any reason on at least thirty (30) days’ advance written notice; provided, that no such notice shall be necessary for termination for “Cause” (as defined below).

Compensation

Base Salary .  You will be compensated with an annual base salary of $170,274.45 (“Base Salary”), before all customary payroll withholding and deductions and payable in installments in accordance with WMI’s payroll practices in effect from time to time.


 
 
 

Severance

On the 60 th day following termination of this Agreement by the Company (unless termination of this Agreement is a result of WMI employing you pursuant to a mutually acceptable form of employment agreement replacing this Agreement), WMI will make a lump sum payment to you equal to two (2) months of the Base Salary as in effect at the time of termination.  In addition, for six (6) months following the date of termination (the “Six-Month Coverage Period”), you and your eligible dependents will have continued access to group medical coverage under WMI’s group health plan and the Company will pay the premiums necessary to continue the same coverage levels as in effect immediately prior to such termination of employment; provided, that if WMI cancels its group health plan during the Six-Month Coverage Period (or such group health plan terminates automatically as a result of WMI no longer having employees on its payroll for any reason), then WMI will make a payment to you equal to the lesser of (x) the amount paid by WMI to provide coverage at the same level of coverage in effect immediately prior to termination of employment under WMI’s group health plan and (y) the amount you otherwise would be required to pay to obtain substantially similar coverage under a private health insurance policy, in each case for the remainder of the Six-Month Coverage Period following termination  of the group health plan; provided, further, that your access to WMI’s group health plan shall cease upon you becoming or continuing to be employed by another employer.

For purposes of this Agreement, "Cause" shall include, without limitation, the occurrence of one or more of the following events: failure or refusal to carry out your lawful duties or any directions of the WMI Board of Directors; your violation of a state or federal criminal law involving the commission of a crime against WMI or its employees or a felony; deception, fraud, misrepresentation or dishonesty by you; misuse of alcohol or controlled substances that materially interferes with your performance of your duties to WMI; any incident materially compromising your reputation or ability to represent WMI with the public; any act or omission by you which materially impairs WMI's business, good will or reputation; or any other serious misconduct by you.

Vacation .  You will be entitled to vacation consistent with WMI’s vacation policies applicable to its employees to be established by the Compensation Committee of the Board of Directors of the Company.

Health Benefits Package .  You will be eligible to participate in a health benefits plan sponsored by WMI (as successor to Washington Mutual, Inc.) or any successor plan WMI may sponsor after the date of this Agreement, if any.

Confidentiality and Code of Conduct.   You agree and acknowledge that during the term of this Agreement, you will be bound by and subject to the terms of WMI’s (a) code of conduct and (b)
 
 
 
 
 
 
 
policy governing the treatment of confidential information, in each case as amended, modified, supplemented or replaced from time to time.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 

If you agree and accept the terms of this offer of employment, please sign below and return a copy of this Agreement to me.

Very truly yours,


/s/  Charles Edward Smith            
Charles Edward Smith
Interim Chief Executive Officer
WMI Holdings Corp.



I accept employment with WMI Holdings Corp. under the terms set forth in this Agreement.  I acknowledge that my employment is “at will”, subject to applicable notice requirements set forth herein.  In accepting employment with WMI, I am not relying on any promises or representations that are not set forth in this Agreement.

Accepted by:

/s/  Vicky Wu                             
Weijia (Vicky) Wu, CFA
 
 
EXHIBIT 10.6
March 21, 2012




Peter L. Struck
9130 SE 54 th Street
Mercer Island, Washington 98040


Dear Peter:

On behalf of WMI Holdings Corp. (as successor to Washington Mutual, Inc., and referred to herein as “WMI”), I am pleased to offer you a position in WMI’s Seattle office as Director of Operations.  This offer is entered into as of the date first written above; however, it will be given effect as though it were executed and entered into on March 19, 2012.  You will report to me, in my capacity as Interim Chief Executive Officer, until such time as WMI’s Board of Directors determines an alternative reporting relationship.  This letter agreement (the “ Agreement ”) outlines the terms and conditions of your employment.

Duties
 
You will have the title of Senior Vice President & Director of Operations and will continue to be responsible to perform all of the duties you have been performing since December 11, 2008 on behalf of Washington Mutual, Inc. and its subsidiaries, including WM Reinsurance Company, Inc. (“WMMRC”), prior to the date hereof and otherwise as customarily associated with that position or as otherwise directed.

Employment Period

WMI agrees to employ you, and you are accepting such employment, on an “at will” basis; provided , that employment under this Agreement may be terminated by either party for any reason on at least thirty (30) days’ advance written notice; provided, that no such notice shall be necessary for termination for “Cause” (as defined below).

Compensation

Base Salary .  You will be compensated with an annual base salary of $209,633.84 (“Base Salary”), before all customary payroll withholding and deductions and payable in installments in accordance with WMI’s payroll practices in effect from time to time.

 
 
 


Severance

On the 60 th day following termination of this Agreement by the Company (unless termination of this Agreement is a result of WMI employing you pursuant to a mutually acceptable form of employment agreement replacing this Agreement), WMI will make a lump sum payment to you equal to two (2) months of Base Salary as in effect at the time of termination.  In addition, for six (6) months following the date of termination (the “Six-Month Coverage Period”), you and your eligible dependents will have continued access to group medical coverage under WMI’s group health plan and the Company will pay the premiums necessary to continue the same coverage levels as in effect immediately prior to such termination of employment; provided, that if WMI cancels its group health plan during the Six-Month Coverage Period (or such group health plan terminates automatically as a result of WMI no longer having employees on its payroll for any reason), then WMI will make a payment to you equal to the lesser of (x) the amount paid by WMI to provide coverage at the same level of coverage in effect immediately prior to termination of employment under WMI’s group health plan and (y) the amount you otherwise would be required to pay to obtain substantially similar coverage under a private health insurance policy, in each case for the remainder of the Six-Month Coverage Period following termination  of the group health plan; provided, further, that your access to WMI’s group health plan shall cease upon you becoming or continuing to be employed by another employer.

For purposes of this Agreement, "Cause" shall include, without limitation, the occurrence of one or more of the following events: failure or refusal to carry out your lawful duties or any directions of the WMI Board of Directors; your violation of a state or federal criminal law involving the commission of a crime against WMI or its employees or a felony; deception, fraud, misrepresentation or dishonesty by you; misuse of alcohol or controlled substances that materially interferes with your performance of your duties to WMI; any incident materially compromising your reputation or ability to represent WMI with the public; any act or omission by you which materially impairs WMI's business, good will or reputation; or any other serious misconduct by you.

Vacation .  You will be entitled to vacation consistent with WMI’s vacation policies applicable to its employees to be established by the Compensation Committee of the Board of Directors of the Company.

Health Benefits Package .  You will be eligible to participate in a health benefits plan sponsored by WMI (as successor to Washington Mutual, Inc.) or any successor plan WMI may sponsor after the date of this Agreement, if any.

Confidentiality and Code of Conduct.   You agree and acknowledge that during the term of this Agreement, you will be bound by and subject to the terms of WMI’s (a) code of conduct and (b)
 
 
 
 
 
 
 
policy governing the treatment of confidential information, in each case as amended, modified, supplemented or replaced from time to time.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 

 
 
 
If you agree and accept the terms of this offer of employment, please sign below and return a copy of this Agreement to me.

Very truly yours,


/s/  Charles Edward Smith                
Charles Edward Smith
Interim Chief Executive Officer
WMI Holdings Corp.



I accept employment with WMI Holdings Corp. under the terms set forth in this Agreement.  I acknowledge that my employment is “at will”, subject to applicable notice requirements set forth herein.  In accepting employment with WMI, I am not relying on any promises or representations that are not set forth in this Agreement.

Accepted by:

/s/  Peter L. Struck                          
Peter L. Struck
 
 
 
 
 
 
 
 
EXHIBIT 10.7
 
 
EXECUTION VERSION
 

 
 
 
 
 
 
 
 
 
 
 
 
 
TRANSITION SERVICES AGREEMENT
 
by and among
 
WMI HOLDINGS CORP.
 
and
 
WMI LIQUIDATING TRUST
 
Dated as of March 22, 2012
 

 
 
 

TRANSITION SERVICES AGREEMENT
 
This TRANSITION SERVICES AGREEMENT (this “ Agreement ”), dated as of March 22, 2012 (the “ Effective Date ”), by and between WMI Holdings Corp., a Washington corporation (“ Reorg. WMI ”), and WMI Liquidating Trust, a Delaware liquidating trust qualified under the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder (the “ Liquidating Trust ”).  Reorg. WMI and the Liquidating Trust shall be collectively referred to herein as the “ Parties ,” and each individually as a “ Party ”.
 
ARTICLE I
DEFINITIONS
 
Section 1.1.   Definitions .  For the purposes of this Agreement, the following terms shall have the meanings given to them in this Article I :
 
“ Affiliate ” means, with respect to any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any investment fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.  The terms “ controls ,” “ controlled ” and “ common control with ” mean the ability, by ownership of voting securities, contract, agreement or otherwise, directly or indirectly, to direct the managerial and operating policies of a Person.
 
“ Governmental Entity ” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether foreign, federal, state, or local, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).
 
“ Person ” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Entity or other entity.
 
“ Service Provider ” means, (i) with respect to the Liquidating Trust Services, the Liquidating Trust, the trustees or employees and officers of the Liquidating Trust, and any of their authorized representatives, and (ii) with respect to the Reorg. WMI Services, Reorg. WMI and its employees, officers and any of their authorized representatives.
 
“ Service Recipient ” means (i) with respect to the Liquidating Trust Services, Reorg. WMI (and its Affiliates), and (ii) with respect to the Reorg. WMI Services, the Liquidating Trust (and its Affiliates).
 

 
 
 


 
ARTICLE II
SERVICES
 
Section 2.1.   Services to be Provided .
 
(a)   Subject to Section 2.1(c), the Liquidating Trust shall provide, or shall cause its Affiliates or third parties to provide, to Reorg. WMI the services set forth on each of Schedule A and Schedule E (collectively, the “ Liquidating Trust Services ”).
 
(b)   Subject to Section 2.1(c), Reorg. WMI shall provide, or shall cause its Affiliates or third parties to provide, to the Liquidating Trust the services set forth on Schedule B (the “ Reorg. WMI Services ” and, together with the Liquidating Trust Services, the “ Services ”).
 
(c)   The Service Provider may engage a third party to provide Services provided the Service Provider obtains the prior consent of the Service Recipient, such consent not to be unreasonably delayed, conditioned and withheld.
 
Section 2.2.   Services to be Excluded .
 
(a)   Unless and until requested by Reorg. WMI as contemplated by Section 2.2(b) hereof, the Liquidating Trust shall not provide, or shall not cause its Affiliates or third parties to provide, to Reorg. WMI the services set forth on Schedule C (the “ Excluded Liquidating Trust Services ”).  For the avoidance of doubt, the omission of one or more services from inclusion on Schedule C shall not be, and shall not be deemed to be, a service to be provided by a Service Provider to a Service Recipient unless and until any such service becomes a “Liquidating Trust Service” or “Reorg. WMI Service”, as the case may be, in accordance with the terms of this Agreement.
 
(b)   The Liquidating Trust Service Recipient may request certain Excluded Liquidating Trust Services or other services it may identify, in writing, in each case on mutually agreeable terms and conditions, specified before any Excluded Liquidating Trust Services are so provided.
 
Section 2.3.   Service Standards; Level of Service .
 
(a)   The Service Provider shall provide the Services to the Service Recipient in a commercially reasonable manner and with at least the same degree of care, skill and diligence with which the Service Provider performs or would perform similar services for itself (collectively, the “ Service Standards ”).
 
(b)   The parties acknowledge that the Liquidating Trust and Reorg. WMI are, respectively, making employees available hereunder subject to the Maximum Hours Allocation set forth on Schedule D and Schedule F .  The parties acknowledge that there can be no assurance that the Maximum Hours Allocation will provide sufficient time for the Service Provider to complete a particular Service contemplated hereunder.  As a result, the parties agree that it shall
 
 
 
 
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not constitute a breach of this Agreement if a Service is not completed if doing so would result in the relevant Service Provider exceeding its Maximum Hours Allocation.  In connection with the foregoing, the Service Provider and the Service Recipient may agree from time to time to temporarily increase any applicable Maximum Hours Allocation.
 
(c)   Subject to Section 2.3(b), to the extent the Service Provider fails to provide any of the Services in accordance with Schedule A or Schedule B , as applicable, and is unable to cure such failure within a twenty (20) day period (or such shorter period of time as the circumstances may reasonably require) after written notice thereof from the Service Recipient, then the Service Recipient shall be entitled to hire a third party to provide such Services.  The Service Provider shall reimburse the Service Recipient for the difference of (i) the fees charged by such third party for such Services, and (ii) the fees that would have been charged by the Service Provider for such Services consistent with past practices hereunder.  The Service Provider will not invoice the Service Recipient for any Services not provided by the Service Provider.  The right of the Service Recipient to engage a third party and to receive reimbursement from the Service Provider under this subsection does not limit or otherwise impair the ability of the Service Recipient to exercise any other rights or remedies in respect of a failure by the Service Provider to provide the Services in accordance with the terms of this Agreement.
 
Section 2.4.   Personnel; Subcontracting .
 
(a)   The Service Provider will retain and employ a staff (including, subject to Section 2.1(c), by use of third parties) with the experience, skill, diligence, availability and expertise necessary to perform the Services in accordance with the Service Standards.  The Service Provider and its personnel, as the case may be, shall be under no obligation to provide Services in excess of the “Maximum Hours Allocation” set forth on Schedule D and Schedule F . Subject to Section 2.1(c), the Service Provider shall have sole discretion over the selection of such staff; provided, however, that in the case of the Liquidating Trust Services (other than Excluded Liquidating Trust Services), Charles Edward Smith and Doreen Logan shall be available to Reorg. WMI on a non-exclusive, reasonable basis, so long as he or she, as the case may be, continues to be an employee of the Liquidating Trust.  The Service Provider will maintain the assets and other resources (including, subject to Section 2.1(c), by retention of third parties) necessary to perform the Services in accordance with the Service Standards.
 
(b)   Except as provided in Section 2.4(a) above, the Service Provider may, upon the Service Recipient’s consent, engage, or cause one of its Affiliates to engage, one or more parties (including Affiliates of the Service Provider and, subject to Section 2.1(c), third parties) to provide some or all of the Services.  In the event the Service Provider or its Affiliates so engage any such parties, the Service Provider shall remain responsible for ensuring adherence to the Service Standards in the performance of the Services and compliance by such parties with the applicable terms of this Agreement.
 
Section 2.5.   Cooperation .
 
(a)   The Service Recipient will share information and otherwise cooperate to the extent necessary to facilitate the provision of Services pursuant to this Agreement.  The
 
 
 
 
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Parties will cooperate in a commercially reasonable manner in order that the obligations of the Service Provider hereunder will be promptly discharged.  Each Party shall, at all reasonable times under the circumstances, make available to the other Parties properly authorized personnel for the purpose of consultation and decision regarding the provision of the Services pursuant to this Agreement.
 
(b)   The Service Recipient shall follow the policies, procedures and practices of the Service Provider and its Affiliates, if any, applicable to the Services that are in effect as of the Effective Date, as may be modified or supplemented from time to time subject to Section 2.6, so long as the Service Provider has provided the Service Recipient with notice (in writing, where available) of such policies, procedures and practices.
 
(c)   A failure of the Service Recipient to act in accordance with this Section 2.5 that prevents the Service Provider or its Affiliates or third parties from providing a material Service hereunder shall relieve the Service Provider of its obligation to provide such Service until such time as the failure has been cured; provided , that the Service Provider has previously notified the Service Recipient in writing of such failure.
 
Section 2.6.   Certain Changes .  Unless otherwise required by this Agreement, the Service Provider may change (a) its policies and procedures, (b) any Affiliates and/or third parties that provide any Services, or (c) the location (except location of office space and support services related thereto) from which any Service is provided at any time; provided that the Service Provider shall remain responsible for the performance of the Services in accordance with this Agreement.  The Service Provider shall provide the Service Recipient with written notice of any changes described in the prior sentence.  Any such notice shall be provided to the Service Recipient as soon as practicable prior to the effectiveness of such change or, if prior notice of such change is not practicable, as soon as practicable after the effectiveness of such change.  The Service Provider shall work with the Service Recipient in good faith to minimize any negative impact that any change in the policies, procedures and practices of the Service Provider and its Affiliates may have on the ability of the Service Recipient to use the Services.
 
Section 2.7.   Representations and Warranties .  Each Party represents and warrants to the other Party that, to its knowledge, its execution, delivery and performance of this Agreement will not infringe or misappropriate any intellectual property right of any third party.
 

 
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ARTICLE III
LIMITATIONS
 
Section 3.1.   General Limitations .
 
(a)   Except as provided in Section 2.4(a), in no event shall the Service Provider be obligated to maintain the employment of any specific employee or acquire any specific additional equipment or software, unless the Service Recipient agrees to bear their allocated portion of any associated costs; provided that the Service Provider shall remain responsible for the performance of the Services in accordance with this Agreement.
 
(b)   The Service Provider shall not be obligated to provide, or cause to be provided, any Service to the extent that the provision of such Service would require the Service Provider, any of its Affiliates or any of their respective officers, directors, employees, agents or representatives to violate any applicable federal, state, local or foreign law, statute, code, ordinance, rule or regulation (“ Law ”).
 
Section 3.2.   Third Party Consents and Limitations .
 
(a)   The Service Provider shall obtain, with the cooperation of the Service Recipient as reasonably requested by the Service Provider, such third party consents as are necessary for the provision of the Services.  To the extent practicable, such consents shall be obtained prior to the Effective Date.  The costs, if any, associated with obtaining any required third party consents shall be borne by the Service Recipient.
 
(b)   The Service Recipient acknowledges and agrees that the Services provided by the Service Provider and its Affiliates through third parties or using third party intellectual property are subject to the terms and conditions of any applicable agreements between the Service Provider or its Affiliates and such third parties.
 
Section 3.3.   Force Majeure .  In the event that the Service Provider is wholly or partially prevented from, or delayed in, providing one or more Services, or one or more Services are interrupted or suspended, by reason of events beyond the Service Provider’s reasonable control (including acts of God, fire, explosion, accident, floods, embargoes, epidemics, war, acts of terrorism, nuclear disaster, labor strikes, civil unrest and/or riots) (each, a “ Force Majeure Event ”), the Service Provider shall not be obligated to deliver the affected Services during such period, and the Service Recipient shall not be obligated to pay for any Services not delivered.
 
ARTICLE IV
PAYMENT
 
Section 4.1.   Fees .  The Service Recipient shall pay to the Service Provider an amount equal to the Service Recipient’s pro rata share of the direct out-of-pocket costs and expenses reasonably incurred by the Service Provider in connection with, and directly related to, the performance of the Services hereunder.
 
 
 
 
5
 
 
 
 
(i)   For work performed by any employee of the Service Provider or its Affiliates in connection with, and directly related to, the performance of the Services, the direct cost incurred by the Service Provider shall be calculated based on the Service Provider’s actual number of hours such employee spent performing the Services for the applicable period, up to the each employee’s maximum hours allocation (“ Maximum Hours Allocation ” – subject to adjustment as contemplated by Section 2.3(b)), multiplied by the Applicable Hourly Rate, plus the pro rata share of such employee’s overhead expenses.  The “ Applicable Hourly Rate ” for each employee is set forth on Schedule D (in the case of Liquidating Trust) and Schedule F (in the case of Reorg. WMI) and shall be equal to (A) such employee’s aggregate compensation (which includes annual base salary, target bonus, if any, and benefits), divided by (B) the number of hours associated with such employee’s terms of employment.  For purposes of this Agreement, “full-time employment” assumes an employee works 2,080 hours annually.  The Service Provider shall provide a general description of tasks performed during hours such employee spent performing the Services.  The Applicable Hourly Rate and Maximum Hours Allocation are set forth on Schedule D (in the case of Liquidating Trust) and Schedule F (in the case of Reorg. WMI).  An illustrative example of the form of monthly invoice to be submitted periodically to Reorg. WMI is appended to this Agreement on Schedule G.
 
(ii)   For office space, use of the office systems infrastructure, use of technology support and administrative support, Reorg. WMI as Service Recipient will pay a monthly fee representing the Reorg. WMI share of the overhead expenses, as outlined in Schedule E (the “ Monthly Overhead Expense ”).
 
Section 4.2.   Retainer .  In order to assure the Liquidating Trust of its ability to act as a “Service Provider” under this Agreement, Reorg. WMI, in its capacity as a “Service Recipient” will promptly remit to the Liquidating Trust an initial retainer of $50,000.00 (the “ Retainer ”).  The Retainer will be applied against the Liquidating Trust’s fees and charges under this Agreement.  If any amount remaining in the Retainer exceeds the outstanding balance for fees and expenses for services to be paid by Reorg. WMI at the time this Agreement is terminated, the Liquidating Trust will refund the unused portion thereof.  To the extent the Liquidating Trust’s aggregate charges have reduced, or are about to exhaust, the Retainer, at the Liquidating Trust’s request, Reorg. WMI will promptly remit an additional Retainer in the amount set forth above, or as the Liquidating Trust may otherwise consider reasonably necessary.
 
Section 4.3.   Billing and Payment Terms .  The Service Provider shall invoice the Service Recipient monthly for the Services that the Service Provider provides during the term of this Agreement and shall provide the Service Recipient with a reasonably detailed written invoice.  The Service Recipient shall pay all invoices in full within thirty (30) days of receipt except to the extent that any invoice is being contested in good faith by the Service Recipient.  Any late payment of an amount that is required to be paid under this Agreement shall bear simple interest from and including the date such payment is due under this provision until, but excluding, the date of payment, at a rate per annum equal to the rate announced by Citibank, N.A. as its “Base Rate”, plus two percent (2%).
 

 
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Section 4.4.   Sales Taxes .  All consideration under this Agreement is exclusive of any sales, transfer, value-added, goods or services tax or similar gross receipts based tax (excluding all other taxes including taxes based upon or calculated by reference to income, receipts or capital) imposed against or on the Services (“ Sales Taxes ”).  The Service Recipient shall be responsible for, and shall indemnify and hold the Service Provider harmless from and against, any such Sales Taxes.
 
Section 4.5.   Record Keeping .
 
(a)   The Service Provider shall keep, and, as applicable, cause its Affiliates to keep, complete and accurate books and records relating to the costs charged to the Service Recipient hereunder, including the basis for calculating such costs and daily tracking of Transition Service Hours, for a period of ten (10) months following the expiration of the term of this Agreement (the “ Record Retention Period ”).
 
(b)   The Service Provider shall, and shall cause its Affiliates to, keep books and records relating to the performance of Services hereunder consistent with their document and information retention policies in effect as of the Effective Date (the “ Service Records ”).  During the Document Retention Period, the Service Recipient shall have the right to inspect the Service Records (upon reasonable prior written notice during normal business hours) for the purpose of confirming that the Services are being performed in accordance with the Services Standards.  The Service Recipient may only exercise the foregoing inspection right once per calendar quarter, except to address any matter that the Service Recipient reasonably believes represents material non-compliance by the Service Provider or its Affiliates with any Service Standards or any material error in the provision of any Services.
 
ARTICLE V
ACCESS AND SECURITY
 
Section 5.1.   Access; Work Policy .
 
(a)   At all times during the term of this Agreement, the Service Recipient shall provide the Service Provider, its Affiliates and their respective personnel reasonable ingress to and egress from their facilities and premises, and reasonable access to their equipment and personnel, to the extent that such access is required for the purpose of providing the Services hereunder.
 
(b)   The Service Provider’s personnel shall comply with the Service Recipient’s safety and security regulations applicable to each specific site or facility while working at such site or facility so long as the Service Recipient has provided written copies of such safety and security regulations to the Service Provider.
 
Section 5.2.   Security Level; Additional Security Measures .  The Service Provider may take physical or information security measures that (a) affect the manner in which the Services are provided to maintain its current level (or, if greater, an industry-standard level) of physical and electronic security during the term of this Agreement (including data security and data privacy), and (b) address any new security-related issues, including compliance with
 
 
 
 
7
 
 
 
 
applicable Law related to security and issues related to new technologies or threats, so long as, in each case, the substance or overall functionality of any affected Services remains reasonably comparable to such substance and overall functionality as in effect prior to the Effective Date.  The Service Provider shall provide the Service Recipient reasonable prior written notice of any such physical or information security measures that are material to the Service Provider’s delivery of the Services.  The Service Recipient shall provide all assistance reasonably requested by the Service Provider in connection with such security measures.
 
Section 5.3.   Systems Security .
 
(a)   If the Service Provider, the Service Recipient, or any of their respective personnel will be given access to any of the Service Provider’s or the Service Recipient’s, as applicable, computer systems or software (“ Systems ”) in connection with the performance of the Services, the accessing Party or its personnel, as the case may be, shall comply with all of such other Party’s system security policies, procedures and requirements to the extent provided to the accessing Party or its personnel (as amended from time to time, the “ Security Regulations ”), and will not tamper with, compromise or circumvent any security or audit measures employed by such other Party.
 
(b)   Each Party shall ensure that only those of its personnel who are specifically authorized to have access to the Systems of the other Party gain such access, and to prevent unauthorized access, use, destruction, alteration or loss of information contained therein, including notifying its personnel regarding the restrictions set forth in this Agreement.
 
(c)   The Service Provider, the Service Recipient, and their respective personnel shall access and use only those Systems, and only such data and information within such Systems, to such Party and its personnel have been granted access.  Each Party shall have the right to deny the personnel of the other Party access to such Party’s Systems, after prior written notice, in the event the Party reasonably believes that such personnel pose a security concern.  If, at any time, either Party determines that the other Party or its personnel has sought to circumvent, or has circumvented, its Security Regulations, that any unauthorized personnel of the other Party has accessed its Systems, or that the other Party or any of its personnel has engaged in activities that may lead to the unauthorized access, use, destruction, alteration or loss of data, information or software, such Party shall immediately terminate any such personnel’s access to the Systems and immediately notify the other Party in writing.
 
(d)   All user identification numbers and passwords of a Party disclosed to the other Party, and any information obtained from the use of such disclosing Party’s Systems, shall be deemed Service Provider Confidential Information or Service Recipient Confidential Information, as applicable, of the disclosing Party.
 
(e)   Each Party will cooperate with the other Party in investigating any apparent unauthorized access to such Party’s Systems or any apparent unauthorized release by a Party or such Party’s personnel of Service Provider Confidential Information or Service Recipient Confidential Information, as applicable.  Each Party will immediately revoke any access to the other Party’s Systems once its personnel no longer have a need to access the other Party’s Systems.
 

 
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(f)   The Service Provider and its Affiliates may take any steps reasonably necessary to protect the security and integrity of their information technology and other systems against breaches of the Security Regulations by the Service Recipient or other security threats arising out of the interconnection between such systems and those of the Service Recipient, including termination of any such interconnection, provided that (i) the Service Provider and its Affiliates shall use reasonable efforts not to adversely affect the Services, and to minimize any such adverse effect that could occur, and (ii) if such steps result in any interruption of Services received by the Service Recipient, the Service Provider shall resume the provision of the Services as soon as reasonably practicable after such breach or other threat has been resolved and the Service Provider has received assurances from the Service Recipient in a form reasonably acceptable to the Service Provider that the Service Recipient is and will continue to be in compliance with all applicable Security Regulations.  Any adverse impact or interruption to the Services that occurs as a result of the Service Provider or its Affiliates exercising their rights under this Section 5.3 shall not be deemed a breach of this Agreement by the Service Provider or a failure by the Service Provider or its Affiliates to provide the Services.
 
ARTICLE VI
CONFIDENTIALITY
 
Section 6.1.   Confidential Information .  As used in this Agreement, Service Provider Confidential Information and Service Recipient Confidential Information are defined as follows:
 
(a)   “ Service Provider Confidential Information ” means information disclosed by the Service Provider to the Service Recipient pursuant to this Agreement (including information disclosed in the course of the negotiation of this Agreement and the terms of this Agreement) and all Service Provider Data, in each case that is not generally known to the public, except for:
 
(i)   information that is or becomes publicly available (other than through disclosure by the Service Recipient in violation of this Agreement), from and after the date of such public availability;
 
(ii)   information disclosed to the Service Recipient by a third party not known to be bound by any confidentiality agreement with the Service Provider; provided , that (A) under the circumstances of disclosure, the Service Recipient does not owe a duty of non-disclosure to such third party, (B) to the knowledge of the Service Recipient, the third party’s disclosure does not violate a duty of non-disclosure owed to another Person, including the Service Provider, and (C) the disclosure by the third party is not otherwise unlawful;
 
(iii)   information developed by the Service Recipient independent of any information of the Service Provider;
 
(iv)   information that is rightfully in the possession of the Service Recipient and not subject to any duty of confidentiality as of the Effective Date; or
 

 
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(v)   Service Recipient Data (as defined below).
 
(b)   “ Service Recipient Confidential Information ” means information disclosed by the Service Recipient to the Service Provider, its Affiliates or third party providers of the Services pursuant to this Agreement (including information disclosed in the course of the negotiation of this Agreement and the terms of this Agreement), Service Recipient Data and information constituting assets of the business and operations of the Service Recipient or that directly relate to the business and operations of the Service Recipient (collectively, “ Service Recipient Business Information ”), in each case, that is not generally known to the public, except for:
 
(i)   information that is or becomes publicly available (other than through disclosure by the Service Provider), from and after the date of such public availability;
 
(ii)   information disclosed to the Service Provider by a third party not known to be bound by any confidentiality agreement with the Service Recipient; provided , that (A) under the circumstances of disclosure, the Service Provider does not owe a duty of non-disclosure to such third party, (B) to the knowledge of the Service Provider, the third party’s disclosure does not violate a duty of non-disclosure owed to another Person, including the Service Recipient, and (C) the disclosure by the third party is not otherwise unlawful;
 
(iii)   information developed by the Service Provider  independent of any information of the Service Recipient;
 
(iv)   information that is rightfully in the possession of the Service Provider and not subject to any duty of confidentiality as of the Effective Date; or
 
(v)   Service Provider Data.
 
(c)   The Service Provider and the Service Recipient shall not, and shall cause their respective Affiliates and each of their Affiliates’ directors, partners, personnel, agents, accountants, counsel and other professional advisers (“ Representatives ”) not to disclose to any other person or use, except for the purposes of this Agreement (and only in accordance with applicable Law) any information that is Service Recipient Confidential Information or Service Provider Confidential Information, respectively, provided , however , that each Party may disclose Service Recipient Confidential Information or Service Provider Confidential Information, as the case may be, (i) to its Representatives on a need-to-know basis in connection with the performance of such Party’s obligations under this Agreement, (ii) in any report, statement, testimony or other submission to any Governmental Entity having jurisdiction over the disclosing Party to the extent necessary to comply with applicable Law, or (iii) in order to comply with any applicable Law applicable to the disclosing Party, or in response to any summons, subpoena or other legal process or formal or informal investigative demand issued to the disclosing Party in the course of any litigation, investigation or administrative proceeding.
 

 
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(d)   In the event that the Service Provider, the Service Recipient, or any of their respective Representatives, becomes legally compelled in any report, statement, testimony or other submission to any Governmental Entity or by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar judicial or administrative process to disclose any Service Recipient Confidential Information or Service Provider Confidential Information, respectively, such disclosing Party shall provide the other Party with prompt prior written notice of such requirement, and, to the extent reasonably practicable, cooperate with the other Party (at such other Party’s expense) to obtain a protective order or similar remedy to cause Service Recipient Confidential Information or Service Provider Confidential Information, as the case may be, not to be disclosed, including interposing all available objections thereto, such as objections based on settlement privilege.  In the event that such protective order or other similar remedy is not obtained, the disclosing Party shall furnish only that portion of Service Recipient Confidential Information or Service Provider Confidential Information, as the case may be, that is or has been legally compelled, and shall exercise commercially reasonable efforts to obtain assurance that confidential treatment will be accorded such disclosed Service Recipient Confidential Information or Service Provider Confidential Information, as the case may be.
 
(e)   Each Party shall, and shall cause its Representatives to, protect Service Recipient Confidential Information or Service Provider Confidential Information, as the case may be, by using the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized disclosure of such as the Party uses to protect its own confidential information of a like nature.
 
(f)   Each Party shall cause its Representatives to agree to be bound by the same restrictions on use and disclosure of Service Recipient Confidential Information or Service Provider Confidential Information, as the case may be, as bind the Party in advance of the disclosure of any such Service Recipient Confidential Information or Service Provider Confidential Information to them.
 
(g)   The Service Provider and its Affiliates may take any steps reasonably necessary to protect the confidentiality of Service Provider Confidential Information against breaches of this Section 6.1 by the Service Recipient, provided , that (i) the Service Provider and its Affiliates shall use reasonable efforts not to adversely affect the Services, and to minimize any such adverse effect that could occur, and (ii) if such steps result in any interruption of Services received by the Service Recipient, the Service Provider shall resume the provision of the Services as soon as reasonably practicable after such breach has been resolved and the Service Provider has received assurances from the Service Recipient in a form reasonably acceptable to the Service Provider that the Service Recipient is and will continue to be in compliance with this Section 6.1.  Any adverse impact or interruption to the Services that occurs as a result of the Service Provider or its Affiliates exercising their rights under this Section 6.1(g) shall not be deemed a breach of this Agreement by the Service Provider or a failure by the Service Provider or its Affiliates to provide the Services.
 

 
11
 


 
ARTICLE VII
INTELLECTUAL PROPERTY AND DATA
 
Section 7.1.   Ownership of Data and Intellectual Property .  Each Party acknowledges and agrees that the Service Provider and the Service Recipient shall each retain exclusive rights to and ownership of their own data and intellectual property, and no other license or other right, express or implied (except as provided in the last sentence of this Section 7.1), is granted hereunder by either Party to its intellectual property.  As between the Service Provider and the Service Recipient, the Service Provider shall exclusively own all right, title and interest throughout the world in and to all business processes and other intellectual property rights created by it in connection with the performance of the Services (excluding any Service Recipient Business Information) (the “ Service Provider Intellectual Property ”), and the Service Recipient hereby assigns any and all right, title or interest it may have in any such intellectual property to the Service Provider.  The Service Recipient shall, and shall cause the Service Recipient’s Representative to, execute any documents and take any other actions reasonably requested by the Service Provider to effectuate the purposes of the preceding sentence.  The Service Provider hereby grants to the Service Recipient a royalty-free, fully paid-up, non-exclusive license to use the Service Provider Intellectual Property during the term of this Agreement, solely to the extent necessary for the Service Recipient to receive the benefit of the Services.
 
Section 7.2.   Ownership of Data .  The Service Recipient shall own all right, title and interest in and to all data and information processed or generated for Service Recipient by the Service Provider or its Affiliates, as applicable, in performing the Services and all data and information provided to the Service Provider by the Service Recipient in connection with the Services (collectively, “ Service Recipient Data ”).  The Service Provider shall be the sole and exclusive owner of all data relating to (i) the operation of the systems and infrastructure of the Service Provider or its Affiliates, or (ii) the Service Provider Intellectual Property (the “ Service Provider Data ”).
 
ARTICLE VIII
DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY
 
Section 8.1.   Disclaimer of Warranties .  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, THE SERVICE PROVIDER EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE SERVICES TO BE PROVIDED UNDER THIS AGREEMENT, INCLUDING WARRANTIES WITH RESPECT TO MERCHANTABILITY, OR SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON-INFRINGEMENT OF ANY SOFTWARE OR HARDWARE PROVIDED HEREUNDER, AND ANY WARRANTIES ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE OR TRADE USAGE.
 
Section 8.2.   Limitation of Liability .  In no event shall any Party hereto be liable under or in connection with this Agreement for consequential, indirect, or punitive damages.  Except for losses resulting from the gross negligence, bad faith or willful misconduct of the other
 
 
 
 
12
 
 
 
 
Party, the liability of either party hereunder shall not exceed the aggregate amounts actually due and payable hereunder from the Effective Date through the date the claim accrued.
 
Section 8.3.   Indemnification .  Each Party hereto shall indemnify, defend and hold harmless the other Party hereto and its Affiliates from and against any claims, demands, suits, proceedings, judgments, losses, liabilities, damages, interest, fines, penalties, assessments, awards and costs and expenses relating to or arising out of any breach of this Agreement by such Party or the inaccuracy of any representations and warranties made by such Party hereunder.
 
ARTICLE IX
TERM AND TERMINATION
 
Section 9.1.   Term of Agreement .  Except as otherwise provided in Schedules A or B , this Agreement shall become effective, and each Service shall commence, on the Effective Date, and this Agreement shall remain in force, and each Service shall continue, until the date that is six (6) months after the Effective Date, unless earlier terminated as provided in this Article IX or extended by the parties in writing.
 
Section 9.2.   Termination .
 
(a)   Partial Termination .  The Service Recipient, as the case may be, may, on ten (10) days’ prior written notice to the Service Provider, as the case may be, terminate one or more Services provided by the Service Provider.  Any such terminated Service shall be deleted from Schedule A, Schedule B or Schedule E , as applicable.  Any termination notice delivered by the Service Recipient to the Service Provider shall identify the specific Service or Services to be terminated, and the effective date of such termination.  For any terminated Services which required the software or other services of a third party (i) if the Service Provider paid for such software or services in advance, the Service Provider may invoice the Service Recipient for any portion of such advance payments allocable on a reasonable basis to the Service Recipient, and (ii) if, as a result of such termination, the Service Provider terminates all or part of its agreement with the third party, the Service Provider may invoice the Service Recipient for any applicable termination fees allocable on a reasonable basis to the Service Recipient.  The Service Provider shall not enter into any new agreements with third parties for software or services that include any termination fees that would be charged to the Service Recipient without the Service Recipient’s prior written consent, which consent shall not be unreasonably withheld.
 
(b)   Automatic Termination .  This Agreement shall automatically terminate upon termination of all of the Services.
 
(c)   Termination for Material Breach .  The Service Recipient may terminate this Agreement in the event that the Service Provider materially breaches any provisions of this Agreement and fails to cure such breach within twenty (20) days of written notice thereof from the Service Recipient.
 
Section 9.3.   Effect of Termination .  In the event that this Agreement or a Service is terminated:
 
 
 
 
13
 
 
 
 
(a)   The Service Recipient agrees and acknowledges that the obligation of the Service Provider to provide the terminated Services, or to cause the terminated Services to be provided, hereunder shall immediately cease.  Upon cessation of the Service Provider’s obligation to provide any Service, the Service Recipient shall stop using, directly or indirectly, such Service.
 
(b)   Upon request, each Party shall return to the other Party all tangible personal property and books, records or files owned by such other Party and used in connection with the provision of Services that are in its possession as of the termination date.
 
(c)   The following matters shall survive the termination of this Agreement:  (i) the rights and obligations of each Party under Section 4.4, Articles VI, VII, VIII, this Section 9.3 and Article X, and (ii) the obligations under Article IV of the Service Recipient to pay the applicable fees for the Services furnished prior to the effective date of termination.
 
(d)   Upon the termination of a Service, except to the extent required for the Service Provider to provide another Service under this Agreement, the Service Provider shall, or shall cause its Affiliates to, deliver and transfer to the Service Recipient all Service Recipient Data and Service Recipient Business Information in its possession (including all financial, claims and statistical data and other information in their possession necessary for the Service Recipient to prepare and make all required regulatory, statistical and financial filings and to provide the applicable Service for itself) (collectively, the “ Terminated Service Information ”).  Upon termination of a Service, in addition to the transfer and delivery requirements of the preceding sentence, the Service Recipient may require the Service Provider and its Affiliates to promptly destroy copies of any of the Terminated Service Information in their possession and to certify in writing to the Service Recipient that all such Terminated Service Information has been destroyed; provided, however , that the Service Provider and its Affiliates may retain copies of the Terminated Service Information to the extent required by applicable Law.
 
ARTICLE X
MISCELLANEOUS
 
Section 10.1.   Amendment, Modification and Waiver .
 
(a)   Neither this Agreement nor any provision hereunder may be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the Parties hereto.
 
(b)   No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided under applicable Law.
 
Section 10.2.   Entire Agreement .  This Agreement (together with the exhibits hereto and the other agreements, documents and instruments delivered in connection herewith) constitutes the entire agreement between the Parties with respect to the subject matter hereof and
 
 
 
 
14
 
 
 
 
supersedes all other prior agreements and understandings, both written and verbal, between the Parties with respect to the subject matter hereof.
 
Section 10.3.   Governing Law .  This Agreement shall be governed by and construed in accordance with the laws of the State of Washington, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.
 
Section 10.4.   Severability .  Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.
 
Section 10.5.   Counterparts .  This Agreement may be executed in counterparts (including by facsimile), each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.
 
Section 10.6.   Third Party Beneficiaries .  Nothing in this Agreement, express or implied, is intended to or shall confer upon any person other than the Parties hereto any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.
 
Section 10.7.   Binding Effect; Assignment .  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns and legal representatives.  Except as set forth herein, neither this Agreement, nor any rights, interests or obligations hereunder, may be directly or indirectly assigned, delegated, sublicensed or transferred by any Party to this Agreement, in whole or in part, to any other person by operation of law or otherwise, whether voluntarily or involuntarily, without the prior written consent of the other Parties hereto, and any attempt at same shall be null and void ab initio.
 
Section 10.8.   Expenses .  Unless otherwise specifically provided herein, all costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense.
 
Section 10.9.   Notices .  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy (which is confirmed), or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties to this Agreement as follows:
 

 
15
 


 
If to WMI Holdings Corp.:
 
1201 Third Avenue, Suite 3000
Seattle, WA 98101
Attention:  Chad Smith and Peter Struck
Telephone No.:  206-432-8731
Facsimile No.:  206-432-8879
 
with a copy (which shall not constitute effective notice) to:
 
Schwabe, Williamson and Wyatt
US Bank Centre
1420 5th, Suite 3400
Seattle, WA 98101
Attn: A. Jeffery Bird
Facsimile No. 206-292-0460
 
If to WMI Liquidating Trust:
 
1201 Third Avenue, Suite 3000
Seattle, WA 98101
Attention:  William C. Kosturos
Facsimile No.:  206-787-1939
 
with a copy (which shall not constitute effective notice) to:
 
Alvarez & Marsal
100 Pine Street, Suite 900
San Francisco, CA 94111
Attention:  William C. Kosturos
Facsimile No.:  415-837-1684
 
or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.  In no event shall the provision of notice pursuant to this Section 10.09 constitute notice for service of any writ, process or summons in any suit, action or other proceeding.
 
Section 10.10.   Relationship of the Parties .  The relationship hereby established between the Parties is and shall be solely that of independent contractors.  Nothing in this Agreement is intended or shall be deemed to (a) constitute a partnership, agency, franchise or joint venture relationship between the Parties hereto, (b) give any Party hereto the power to direct or control the day-to-day activities of the employees of any other Party, (c) cause any employees or agents of any Party to be deemed to be employees or agents of any other Party for any purpose, or (d) allow any Party to create or assume any obligation on behalf of any other Party, except as expressly provided herein.  In addition, no Party shall have any power to act for or represent the other, except as expressly provided in this Agreement.
 

 
16
 

Section 10.11.   No Employment Relationship .  Except as otherwise specified in this Agreement, at all times the employees of the Service Provider providing Services hereunder shall be deemed to be employees of the Service Provider (or an Affiliate, as the case may be), and the Service Provider (or an Affiliate, as the case may be) shall have sole and exclusive authority over all such employees and labor matters for such employees, including, without limitation, determination of wages, benefits, vacation and holiday schedules, hours of work, job assignments, and other terms and conditions of employment.
 

 
 
[Remainder of page intentionally left blank]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
17
 

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be duly executed on its behalf as of the day and year first above written.


 
WMI HOLDINGS CORP.
 
By:
/s/  Charles Edward Smith
   
Name:
Charles Edward Smith
   
Title:
Interim Chief Executive Officer
   
   
 
WMI LIQUIDATING TRUST
 
By:
/s/  William C. Kosturos
   
Name:
William C. Kosturos
   
Title:
Trustee
 
 
 
 
 
 
 
 
 
 

 
 
 
 

 

 
 
Schedule A
 
Liquidating Trust Services

Chad Smith
Ø  
Prepare for initial in-person meeting of Reorg. WMI’s Board of Directors
Ø  
Prepare for initial meetings of Board Committees
Ø  
Initiate and manage conversion of WMMRC into protected cell
Ø  
Institute Sarbanes-Oxley control procedures
Ø  
Work with Reorg. WMI personnel to identify immediate strategic opportunities (e.g., PMI commutation)
Ø  
Supervise, coordinate and assist with SEC compliance matters
Ø  
Other matters as determined in consultation with Reorg. WMI’s Chairman

Doreen Logan
HR Support
Ø  
Payroll processing, including review of time, post payroll journal entries, ensure payroll funding
Ø  
Managing Branch, Richards & Co. payroll processing

Accounting
Ø  
General ledger set-up on existing accounting system
Ø  
Posting transactions to the general ledger
Ø  
General ledger management, research and reconciliations
Ø  
Create vendor file for accurate tax information reporting – 1099s, etc.

Banking and Accounts Payable Oversight
Ø  
Complete set up of bank accounts, ability to transfer/wire funds, check-writing
Ø  
Cash management / treasury management – ordering checks for bank account, confirming online access to bank accounts
Ø  
Bank account management and reconciliation
Ø  
Check / accounts payable review, approval and management

Transfer Agent Support
Ø  
Contact for transfer agent (BNY Mellon) on common stock, notices to DTC

Curt Brouwer
Tax Returns
Ø  
State of Washington Business & Occupation (B&O) tax quarterly return due 4/30/2012; basic return that can be completed without substantial time

Yana Hirata
Corporate Governance and New Board Transition Support
 
 
 
 
 
 
 
 
Ø  
Ensure any upcoming state filings are complete and paid, if necessary
Ø  
Follow up on any remaining issues with subsidiaries remaining under WMIHC
Ø  
Assist in creation of new board committees and assisting with initial meetings of such committees
Ø  
Assist in creation, coordination, assembling of materials for first board meeting

Litigation Support
Ø  
Process and coordinate review of service of process requests

Dennis Suzuki
Accounts Payable
Ø  
Daily cash/treasury management, including any forecast needs, track daily activity
Ø  
Accounts payable, including tracking invoices, preparing/tracking wires and checks
Ø  
Bank account reconciliation
Ø  
Bank relationship contact
Ø  
Online bank account administration
Ø  
Prepare financial reporting report statements
 
 
 
 
 
 
 
 
 
 

 

 
 
 

 
Schedule B
 
Reorg. WMI Services
 

Transition Services related to Settlement Agreement
Ø  
Pension transfer to JPMorgan Chase

Transition Services related to the WMI Liquidating Trust
Ø  
Services related to fulfilling the requirements of the Global Settlement Agreement

General Services
Ø  
Use of Reorg. WMI benefits (Employee Plans) contract for WMI Liquidating Trust employees
Ø  
Access to Bloomberg terminal and data
Ø  
Access to Reorg. WMI employees with specific knowledge base (e.g., legal, tax, accounting)

WMMRC
Ø  
Provide background and transition service for historical WMMRC reporting

 

 
 
 

 
Schedule C
 
Excluded Liquidating Trust Services
 
 
For purposes of this Agreement, unless and until Reorg. WMI requests these services in accordance with Section 2.2(b), the “Excluded Liquidating Trust Services” includes, but is not limited to, the following:
 

Financial Reporting
Ø  
Establish templates for required reporting under Financing Agreement, Runoff Notes, Board of Directors and management
Ø  
Prepare financial reporting report statements
Ø  
Tracking, calculating and reporting payments on Runoff Notes
Ø  
Coordination with Runoff Notes indenture trustees
Ø  
Consolidation and review of Marsh monthly financial statements

Accounting
Ø  
Creating and implementing Sarbanes-Oxley compliant internal control processes for a public company

SEC Reporting
Ø  
Preparation of SLB2 Opening Balance Sheet
Ø  
Preparation of future periodic reports
Ø  
Preparation of historical financial information to be included in filings
Ø  
Coordination, oversight and representation required for audited and reviewed financial information

Financial Planning and Analysis
Ø  
Forecasting and budget planning for Reorg. WMI, including Financing Agreement and Runoff Notes

WMMRC Operations
Ø  
Preparation of WMMRC 2011 financial statements
Ø  
Support for WMMRC 2011 regulatory audit (due by June 30, 2012)
Ø  
Preparation and audit of historical WMMRC audited financial statements
Ø  
Financial and valuation analysis on potential WMMRC transactions and commutations

Office Space
Ø  
Use of additional office and interior cube space. During the term of this Agreement, Reorg. WMI may, at its sole option, request and utilize 1 additional office and 4 interior cubes for its employees and consultants but shall not be charged for such space until used, so long as the relevant space is available.

Equipment & Supplies
 
 
 
 
 
 
 
 
Ø  
Access to mail services – Pitney Bowes machine/FedEx account (assumes WMI Holdings Corp. will set up new FedEx account)

Technology Support
Ø  
IT infrastructure transition, when approved, separate WMI Holdings Corp. from Liquidating Trust, including email, network, server storage, which will require planning and coordination with Z7 technology provider

Records Management
Ø  
Off-site records management
Ø  
Files destruction/retention schedule management
Ø  
Subpoena records and management

Tax Accounting
Ø  
Compile tax accounting information for deferred tax assets, including amount of WMB NOL
Ø  
If required, prepare WMI Holdings Corp. background and insight on tax issues, especially pertaining to their need to do a FIN48 analysis.  Alvarez & Marsal has done a substantial amount of this work
Ø  
Prepare memos relating to the fact that the WMB NOL is not an uncertain position for purposes of documenting the FIN48 work.  Currently this is being drafted by Alvarez & Marsal
Ø  
Potentially need documentation as to how liabilities for any past state issues are liabilities of WMI Liquidating Trust and not WMI Holdings Corp.

Records Management
Ø  
Reasonable use of the Information Access Agreement with JPMorgan Chase




 
 
 

 
Schedule D
 
Monthly Employee Rates – WMI Liquidating Trust
 
 
 
Employee
Maximum
Hours
Allocation
 
Applicable
Hourly
Rate
 
         
Chad Smith
40 hours
  $ 387.64  
           
Doreen Logan
40 hours
  $ 224.42  
           
Curt Brouwer
10 hours
  $ 207.69  
           
Dennis Suzuki
20 hours
  $ 55.26  
           
Yana Hirata
40 hours
  $ 59.72  
           
           
     Employee Overhead Charge per Hour
    $ 17.04  



 
 
 

 
Schedule E
 
Monthly Overhead Expense
 
 
Overhead
 
Vendor
 
Allocation
   
Monthly Expense
 
               
Office – Peter Struck
1201 Third Avenue
    100.0 %   $ 240.00  
Office – Vicky Wu
1201 Third Avenue
    100.0 %   $ 240.00  
Office Common Area
1201 Third Avenue
    12.5 %   $ 560.00  
Total
      7.1 %   $ 1,040.00  
                   
Property maintenance
1201 Third Avenue
    7.1 %   $ 74.13  
                   
Payroll
Branch Richards
    22.2 %   $ 306.69  
                   
Cell phones
AT&T Mobility
    22.2 %   $ 298.09  
                   
Phones
Integra Telecom
    12.5 %   $ 165.96  
                   
Internet connection
Comcast
    12.5 %   $ 24.99  
                   
Network system and support
Z7Networks
    12.5 %   $ 2,500.00  
                   
Technology Support
Thomas Cronk
    12.5 %   $ 1,436.69  
(see details below)
Thomas Cronk overhead
    12.5 %   $ 369.11  
                   
Data preservation
DataSite
    12.5 %   $ 286.60  
                   
Copier / printer lease
AGI Leasing
    25.0 %   $ 355.77  
                   
Copier / printer service
Pacific Office Automation
    25.0 %   $ 135.62  
                   
Supplies
Office Depot, Puget Sound
    12.5 %   $ 43.47  
                   
Administrative Support
Helen Grayson
    12.5 %   $ 1,061.96  
(see details below)
Helen Grayson overhead
    12.5 %   $ 369.11  
                   
Total Overhead to Reorg. WMI
            $ 8,468.19  

_______________________________
Note: Allocation of expenses calculated as: 11.0% (800 sq. ft. allocated to Reorg. WMI / 7,281 total sq. ft.), 12.5% (2 Reorg. WMI employees / 16 people occupying entire office space), 22.2% (2 Reorg. WMI employees / 9 WMI Liquidating Trust employees), 25.0% (1 Reorg. WMI copier/printer / 4 total copier/printers in office space)

Office Space
Ø  
Two (2) offices occupied by Weijia (“Vicky”) Wu and Peter Struck on the Effective Date, which offices shall remain furnished and equipped in the general manner that they exist on the Effective Date of this Agreement
Ø  
Allocation of common area, which includes access hallways, copier/printer area and break room
 
 
 
 
 
 
 
 

 
Equipment & Supplies
Ø  
Equipment Certificates of Insurance (AGI – printers requirement)
Ø  
Reasonable use of office equipment – copier, phones, fax, computers, printers, network equipment, blackberries, conference calling cards
Ø  
Use of supplies – pens, paper, tablets, folders, and break room supplies
Ø  
IT infrastructure (directly or indirectly through Z7’s (or an alternative vendor’s) contract) – e-mail, access to internet, dedicated storage, server, maintenance, software applications (e.g., QuickBooks and Lexis/Nexis)

Records Management
Ø  
Off-site data storage of saved external hard drives (DataSite)
Ø  
Confidential shred bins
Ø  
Preservation/access to books and records of Reorg. WMI

Technology Support [Thomas Cronk]
Ø  
Support Peter and Vicky as necessary with printing, email, Blackberry, phone and technology issues that come up

Administrative Support [Helen Grayson]
Ø  
Compile documents and coordinate document signature requests
Ø  
Coordinate office facility requests (repair services, building announcements)
Ø  
Order supplies, as needed
Ø  
Process expense reports, when submitted
Ø  
Book travel itineraries, if needed
Ø  
File paperwork, as directed
Ø  
Handle incoming mail and FedEx
Ø  
Assist with setting up and sending out meeting invites
 
 
 
 
 
 
 
 
 
 

 
 
 
 

 
Schedule F
 
Monthly Employee Rates – WMI Holdings Corp.
 
 
 
Employee
Maximum
Hours
Allocation
 
Applicable
Hourly
Rate
 
         
Peter Struck
10 hours
  $ 120.94  
           
Vicky Wu
20 hours
  $ 98.24  
           
           
     Employee Overhead Charge per Hour
    $ 17.04  




 
 
 

 
Schedule G
 
Liquidating Trust Services Invoice Example
 
 
 
 
EXHIBIT 10.8

 
WMI HOLDINGS CORP.
 
INDEMNIFICATION AGREEMENT
 
This Indemnification Agreement (this " Agreement "), dated as of ________, 2012, is entered into by and between WMI Holdings Corp., a Washington corporation (the " Company "), and [______________________] (" lndemnitee ").
 
RECITALS
 
A.           Indemnitee performs a valuable service for the Company.
 
B.           The Company's Amended and Restated Articles of Incorporation (the " Articles ") and Amended and Restated Bylaws (the " Bylaws ") contain certain provisions for indemnification of the Company's directors and/or officers to the full extent permitted by the Washington Business Corporation Act (the " Statute ").
 
C.           The Indemnitee has indicated a desire to supplement the indemnification provisions in the Articles and Bylaws to provide additional protections against the risks associated with his or her service to the Company and further clarify his rights with respect to indemnification in certain circumstances.
 
D.           To induce Indemnitee to accept and continue his or her service as a director and/or officer of the Company, the Company and the Indemnitee now agree that they should enter into this Indemnification Agreement.
 
AGREEMENT
 
1.
Indemnification of Indemnitee
 
 
1.1
Scope
 
Subject to Section 4.1 and all other terms and conditions of this Agreement, the Company agrees to indemnify and hold harmless Indemnitee, to the full extent permitted by law, whether or not specifically authorized by this Agreement, the Articles, the Bylaws, the Statute or otherwise, for any Indemnifiable Losses (as defined below) which the Indemnitee is or becomes legally obligated to pay in connection with any Proceeding (as defined below).  In the event of any change, after the date of this Agreement, in any applicable law, statute or rule regarding the right of a Washington corporation to indemnify a director and/or officer, any such change, to the extent that they would expand Indemnitee's indemnification rights, shall be within the purview of Indemnitee's rights and the Company's obligations under this Agreement, and, to the extent that any such change would narrow Indemnitee's indemnification rights, shall not adversely affect or limit the scope of this Agreement; provided, however, that any such change that is required by applicable laws, statutes or rules to be applied to this Agreement shall be so applied regardless of whether the effect of such change is to narrow Indemnitee's rights hereunder.
 
 
 
 
 
 
 
 
 
 
1.2
Nonexclusivity
 
The indemnification provided by this Agreement is not exclusive of any rights to which Indemnitee may be entitled under the Articles, the Bylaws, any other agreement, any vote of shareholders or disinterested directors, the Statute, or otherwise, whether as to action in Indemnitee's official capacity or otherwise.
 
 
1.3
Definition of Indemnifiable Losses
 
For purposes of this Agreement, the term " Indemnifiable Losses " shall include (without limitation) any and all damages (compensatory, exemplary, punitive or otherwise), judgments, fines, penalties, settlements, and expenses (including but not limited to costs, attorneys’ and expert fees and disbursements, costs of attachment or similar bonds, investigations, and expenses of establishing a right to indemnification under this Agreement ("Expenses")), and any other losses, claims, liabilities or other expenses incurred in connection with a Proceeding, subject to the limitations set forth in Section 4.1 below.
 
 
1.4
Definition of Proceeding
 
For purposes of this Agreement, the term " Proceeding " shall include (without limitation) any threatened, pending or completed claim, action, suit or proceeding, whether brought by or in the right of the Company or otherwise, and whether of a civil, criminal, administrative or investigative nature, in which the Indemnitee may be or may have been involved as a party or otherwise (including without limitation as a witness) (a) by reason of the fact that Indemnitee is or was, or has agreed to become, a director and/or officer of the Company, (b) by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, trustee, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise (including without limitation employee benefit plans and administrative committees thereof) (an "Enterprise") (which request will be conclusively presumed in the case of any of the foregoing that are "affiliates" of the Company as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended), (c) by reason of any actual or alleged error or misstatement or misleading statement made or suffered by the Indemnitee while acting as a director and/or officer of the Company or while serving at the request of the Company and acting as a director, trustee, officer, employee or agent of an Enterprise, or (d) by reason of any action taken by Indemnitee or of any inaction on Indemnitee's part while acting as a director and/or officer of the Company or while serving at the request of the Company and acting as a director, trustee, officer, employee or agent of an Enterprise; provided, however, that, except with respect to an action to enforce the provisions of this Agreement or to enforce insurance rights under policies of insurance purchased by the Company or an Enterprise on Indemnitee's behalf, the term "Proceeding" shall not include any action, suit, claim or proceeding instituted by or at the direction of Indemnitee unless such action, suit, claim or proceeding is or was authorized or ratified by the Company's Board of Directors.
 
 
 
 
 
 
 
 
 
 
1.5
Determination of Entitlement
 
In the event that a determination of Indemnitee's entitlement to indemnification is required pursuant to Section 23B.08.550 of the Statute or its successor or pursuant to other applicable law, the party specified therein as the determining party shall make such determination; provided, however, (a) that Indemnitee shall initially be presumed in all cases to be entitled to indemnification, (b) that Indemnitee may establish a conclusive presumption of any fact necessary to such a determination by delivering to the Company a declaration made under penalty of perjury that such fact is true and (c) that, unless the Company shall deliver to Indemnitee written notice of a determination that Indemnitee is not entitled to indemnification within twenty (20) days of the Company's receipt of Indemnitee's initial written request for indemnification, such determination shall conclusively be deemed to have been made in favor of the Company's provision of indemnification and Company agrees not to assert otherwise.
 
 
1.6
Survival
 
The indemnification provided under this Agreement shall apply to any and all Proceedings, notwithstanding that Indemnitee has ceased to serve in a capacity referred to in Section 1.4(a)-(d) above.
 
2.
Expense Advances
 
 
2.1
Generally
 
The right to indemnification for Indemnifiable Losses conferred by Section 1 above shall include the right to have the Company pay Indemnitee's expenses in any Proceeding as such expenses are incurred and in advance of such Proceeding's final disposition (such right is referred to hereinafter as an " Expense Advance "), subject to Sections 2.2, 4 and 5 below and all other terms and conditions of this Agreement.
 
 
2.2
Conditions to Expense Advance
 
The Company's obligation to provide an Expense Advance is subject to (a) Indemnitee or his or her representative having first executed and delivered to the Company an undertaking, which need not be secured and shall be accepted without reference to Indemnitee's financial ability to make repayment, by or on behalf of Indemnitee to repay all Expense Advances if and to the extent that it shall ultimately be determined by a final, unappealable decision rendered by a court having jurisdiction over the parties and the subject matter of the dispute that Indemnitee is not entitled to be indemnified under this Agreement or otherwise; and (b) Indemnitee furnishing, upon request by the Company and if required under applicable law, a written affirmation of Indemnitee's good faith belief that Indemnitee has met any applicable standards of conduct.
 
 
 
 
 
 
 
 
 
 
2.3
Subrogation
 
In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
 
3.
Procedures for Enforcement
 
 
3.1
Enforcement
 
In the event that a claim for indemnification hereunder is made and is not paid in full within twenty days after written notice of such claim is delivered to the Company, Indemnitee may, but need not, at any time bring suit against the Company to recover the unpaid amount of the claim (an " Enforcement Action "), subject to all other terms, conditions and limitations of this Agreement.
 
 
3.2
Presumptions in Enforcement Action
 
In any Enforcement Action the following presumptions (and limitation on presumptions) shall apply:
 
(a)           The Company shall conclusively be presumed to have entered into this Agreement and assumed the obligations imposed on it to induce Indemnitee to accept the position of, or to continue as director and/or officer of the Company; and
 
(b)           Neither (i) the failure of the Company (including its Board of Directors, independent or special legal counsel or the Company's shareholders) to have made a determination prior to the commencement of the Enforcement Action that indemnification of Indemnitee is proper in the circumstances nor (ii) an actual determination by the Company (including its Board of Directors, independent or special legal counsel or the Company's shareholders) that Indemnitee is not entitled to indemnification shall be a defense to the Enforcement Action or create a presumption that Indemnitee is not entitled to indemnification.  An Enforcement Action shall be conducted in all respects as a de novo trial on the merits and Indemnitee shall not be prejudiced by reason of a previous adverse determination by the Company (including its Board of Directors, independent or special legal counsel or the Company's shareholders).  In any Enforcement Action, the Company shall have the burden of proving Indemnitee is not entitled to indemnification or Expense Advances, as the case may be.
 
 
3.3
Attorneys' Fees and Expenses for Enforcement Action
 
The Company shall indemnify and hold harmless Indemnitee against all of Indemnitee's reasonable fees and expenses in bringing and pursuing any Enforcement Action (including reasonable attorneys' fees at any stage, including on appeal); provided, however, that the Company shall not be required to provide such indemnity (a) if a court of competent
 
 
 
 
 
 
 
jurisdiction determines that each of the material assertions made by Indemnitee in such Enforcement Action was not made in good faith or was frivolous or (b) to the extent limited under Section 4.1 or 6.2 below.
 
4.
Limitations
 
 
4.1
Limitation on Indemnity
 
Notwithstanding any other provision of this Agreement, the Company shall not be obligated to provide indemnification (other than Expense Advances) pursuant to this Agreement:
 
(a)           on account of any suit in which a final, unappealable decision is rendered by a court having jurisdiction over the parties and the subject matter of the dispute for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company in violation of the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto;
 
(b)           for Indemnifiable Losses that actually have been paid directly to Indemnitee by an insurance carrier under a policy of insurance maintained by the Company;
 
(c)           on account of Indemnitee's conduct which is finally adjudged with no further right of appeal to have been intentional misconduct, a knowing violation of law, a violation of RCW 23B.08.310 or any successor provision of the Statute, or a transaction from which Indemnitee derived personal benefit in money, property or services to which Indemnitee was not legally entitled;
 
(d)           to the extent that the Indemnitee is actually indemnified and actually paid otherwise than pursuant to this Agreement;
 
(e)           if a final, unappealable decision is rendered by a court having jurisdiction over the parties and the subject matter of the dispute finding that paying such indemnification is prohibited by applicable law;
 
(f)           to the extent that attorneys' fees, costs and disbursements, or similar expenses, that otherwise would constitute Indemnifiable Losses hereunder are determined to be unreasonable by a final, unappealable decision rendered by a court having jurisdiction over the parties and the subject matter of the dispute, provided that the burden of proof that any Indemnifiable Losses are unreasonable shall be on the Company; or
 
(g)           for any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the securities laws of the United States, including but not limited to the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
 
 
 
 
 
 
 
 
 
 
4.2
Partial Indemnification and Contribution
 
If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Indemnifiable Losses in connection with a Proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Indemnifiable Losses to which Indemnitee is entitled.
 
To the fullest extent permissible under applicable law, if, for any reason whatsoever, the indemnification provided for in this Agreement is unavailable to Indemnitee with respect to a Proceeding or a particular claim in a Proceeding but the Company is able to indemnify the Indemnitee with respect to another claim in the Proceeding or indemnify or pay the Expenses or liabilities of another person or entity that is a party to the Proceeding, then, in lieu of indemnifying Indemnitee with respect to the matter for which indemnification is unavailable, the Company shall contribute to the amount actually and reasonably incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid or to be paid in settlement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the events and transactions giving cause to such Proceeding and (ii) the relative fault of the Company (and its directors, officers, employees and agents), on the one hand, and Indemnitee, on the other hand, in connection with such events and transactions.  The Company hereby agrees to indemnify and hold harmless Indemnitee from any claims for contribution which may be brought by directors, officers or employees of the Company (other than Indemnitee) who may be jointly liable with Indemnitee for matters for which Indemnitee would be entitled to indemnification or contribution by the Company under this Agreement.
 
 
4.3
Mutual Acknowledgment
 
The Company and Indemnitee acknowledge that, in certain instances, federal law or public policy may override applicable state law and prohibit the Company from indemnifying Indemnitee under this Agreement or otherwise.  For example, the Company and Indemnitee acknowledge that the Securities and Exchange Commission has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislation prohibits indemnification for certain ERISA violations.  Furthermore, Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee.
 
5.
Notification and Defense of Claim
 
 
5.1
Notification
 
Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee will, if a claim is to be made against the Company under this
 
 
 
 
 
 
 
Agreement, notify an executive officer of the Company in writing of the nature and status of the Proceeding; provided, however, that the omission so to notify an executive officer of the Company will not relieve the Company from any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such omission can be shown to have prejudiced the Company.
 
If, at the time of the receipt of a notice of a claim pursuant to this Section 5.1, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies (unless there is no basis for asserting coverage).  The Company shall take all necessary action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
 
 
5.2
Defense of Claim
 
With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof pursuant to Section 5.1 above or otherwise seeks indemnification hereunder:
 
(a)           The Company may participate at its own expense in such Proceeding;
 
(b)           The Company, jointly with any other indemnifying party similarly notified, may assume the defense of the Proceeding with counsel reasonably satisfactory to Indemnitee.  After notice from the Company to Indemnitee of its election to assume the defense, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any legal or other expenses of counsel (other than reasonable costs of investigation) subsequently incurred by Indemnitee in connection with the defense of such Proceeding, unless (i) the employment of counsel by Indemnitee has been authorized in advance by the Company in writing, (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of the defense of such action and notified the Company in writing to that effect in advance of the expense, (iii) the Company shall not in fact have employed counsel to assume the defense of such action, or (iv) the Company is not financially or legally able to perform its indemnification obligations, in each of which cases the fees and expenses of Indemnitee's counsel in connection with such Proceeding shall be at the expense of the Company.  The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the conclusion provided for in clauses (ii) or (iv) above; and
 
(c)           The Company shall not without Indemnitee's written consent settle any action or claim in any manner which would impose any penalty or limitation on Indemnitee that would not be an Indemnifiable Loss hereunder for which indemnification would be provided by the Company.
 
 
 
 
 
 
 
 
 
6.
Miscellaneous
 
 
6.1
Entire Agreement
 
This Agreement is the entire agreement of the parties regarding its subject matter and supersedes all prior written or oral communications or agreements regarding the subject matter covered by this Agreement.
 
 
6.2
Severability
 
Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law.  The Company's inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement.  The provisions of this Agreement shall be severable.  If this Agreement or any portion shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any portion of this Agreement not invalidated, and the balance of this Agreement shall be enforceable in accordance with its terms.
 
 
6.3
Notices
 
Notices given pursuant to this Agreement shall be deemed duly given on the date of personal delivery, on the date sent by fax or three days after mailing if mailed by certified or registered mail, return receipt requested, postage prepaid, to the party at its address below or such other address of which the addressee may subsequently notify the other party in writing.
 
 
6.4
Governing Law
 
This Agreement and the rights and obligations of the parties shall be governed by and construed in accordance with the laws of the state of Washington, without giving effect to principles of conflicts of law.
 
 
6.5
Counterparts
 
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
 
 
6.6
Amendments; Waivers
 
This Agreement may not be amended except by written agreement signed by the parties.  No waiver of any breach or default shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default.
 
6.7           Duration
 
This Agreement shall continue for the duration of Indemnitee's service as a director and/or officer of the Company or as a director, trustee, officer, employee or agent of the
 
 
 
 
 
 
 
Company or any other Enterprise and thereafter for so long as Indemnitee may be subject to any pending or possible claim due for Indemnifiable Losses.
 
 
6.8
Successors and Assigns
 
This Agreement shall be binding upon the Company and its successors and assigns, and inure to the benefit of Indemnitee and Indemnitee's heirs, legal representatives and assigns.  The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
 
(Signature page follows)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 


 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the date first above written.

 
WMI HOLDINGS CORP.
 
 
 
By:                                                                 
 
Name:_ Charles Edward Smith ______________
 
Its: Interim Chief Executive Officer
 
Address:    1201 Third Avenue, Suite 3000
  Seattle, WA  98101
 
Fax:    (206) 432-8879
 
 
INDEMNITEE:
 
 
 
 
 
Name:____________________________________
 
Address:__________________________________
        __________________________________
             __________________________________
 
 
Fax: _________________________________

 
 
 
 
 
[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]
 
 
EXHIBIT 99.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

 
  :  
I n re   :   Chapter 11
  :    
WASHINGTON MUTUAL, INC., et al. , 1   :    
  :   Case No. 08-12229 (MFW)  
  :    
  :    (Jointly Administered)  
Debtors.   :    
  :    
 
 
NOTICE REGARDING ABANDONMENT OF
EQUITY INTERESTS IN WASHINGTON MUTUAL BANK
 
PLEASE TAKE NOTICE that, pursuant to the Order Authorizing Washington Mutual, Inc. to Abandon Its Equity Interests in Washington Mutual Bank , dated July 11, 2011 [D.I. 8135], and the Order Reaffirming Order Authorizing Washington Mutual, Inc. to Abandon Its Equity Interests in Washington Mutual Bank , dated September 19, 2011 [D.I. 8629] (collectively, the “ Orders ”), the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”) (i) authorized Washington Mutual, Inc. (“ WMI ”) and its chapter 11 estate, upon the entry of an order confirming a chapter 11 plan in their chapter 11 cases, to abandon their equity interests in the outstanding stock (the “ WMB Stock ”) of Washington Mutual Bank (“ WMB ”), and (ii) established that, upon such abandonment, WMI and its chapter 11 estate shall automatically be deemed to have permanently surrendered and relinquished all of their right, title and interest to the WMB Stock, including any recovery rights and/or litigation claims with respect thereto; provided , however , that such abandonment shall not constitute a withdrawal or release of any claims asserted by WMI as a creditor of WMB against the Federal Deposit Insurance Corporation (the “ FDIC ”), in its capacity as receiver for WMB or in its corporate capacity, on account of WMI’s status as a creditor, and does not constitute a withdrawal or release of any rights under the Second Amended and Restated Settlement Agreement, dated as of February 7, 2011, among WMI, FDIC and the other signatories thereto (as amended, the “ Global Settlement Agreement ”).
 
PLEASE TAKE FURTHER NOTICE that, on February 23, 2012, the Bankruptcy Court entered an order confirming the Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code [D.I. 9759].
 
PLEASE TAKE FURTHER NOTICE that Revised Code of Washington Chapter 63.29 generally provides for the delivery or payment of unclaimed or abandoned

___________________________  
1 The debtors in these chapter 11 cases along with the last four digits of each debtor’s federal tax identification number are: (i) Washington Mutual, Inc. (3725); and (ii) WMI Investment Corp. (5395).  The debtors’ principal offices are located at 1201 Third Avenue, Suite 3000, Seattle, Washington 98101.
 

 
 
 

 
intangible property to the Washington State Department of Revenue where the last known address of the holder is in the State of Washington.
 
PLEASE TAKE FURTHER NOTICE that, on the date hereof and pursuant hereto, (i) WMI and its chapter 11 estate hereby abandon their equity interests in the WMB Stock and hereby surrender and relinquish all right, title and interest to the WMB Stock, including any recovery rights and/or litigation claims with respect thereto; provided , however , for the avoidance of doubt, WMI and its chapter 11 estate do not hereby withdraw or release any claims asserted by WMI as a creditor of WMB against FDIC, in its capacity as receiver for WMB or in its corporate capacity, on account of WMI’s status as a creditor, and do not withdraw or release any rights under the Global Settlement Agreement, (ii) all references to ownership of the WMB Stock shall be stricken from WMI’s and its chapter 11 estate’s books and records, and (iii) the stock certificate representing the shares of common stock of WMB having been lost or misplaced, WMI has caused an affidavit with respect to the lost or misplaced stock certificate representing shares of common stock of WMB to be delivered to WMB, and, in accordance with RCW 63.29.170, a copy of such affidavit together with a copy of this Notice will be served by registered first class mail to the Washington State Department of Revenue.


 
Dated:            March 16, 2012     
 
Seattle, Washington
   
     
     
  WASHINGTON MUTUAL, INC.  
       
Date
By:
/s/  Charles Edward Smith  
    Name:  Charles Edward Smith  
    Title:  General Counsel   

 

 
 
 
 
 
 
 
 
 
 
2
 
 
EXHIBIT 99.2
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

 
  :  
    Chapter 11
     
WASHINGTON MUTUAL, INC., et al. , 1   Case No. 08-12229 (MFW)  
     
     (Jointly Administered)  
Debtors.    
     

NOTICE OF (A) ENTRY OF ORDER
CONFIRMING THE SEVENTH AMENDED JOINT PLAN OF
AFFILIATED DEBTORS PURSUANT TO CHAPTER 11 OF THE UNITED
STATES BANKRUPTCY CODE AND (B) OCCURRENCE OF THE EFFECTIVE DATE

TO CREDITORS, EQUITY INTEREST HOLDERS, AND OTHER PARTIES IN INTEREST:

PLEASE TAKE NOTICE that, pursuant to an order, dated February 23, 2012 (the “ Confirmation Order ”), the Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code, dated December 12, 2011 (as modified, the “ Plan ”), of Washington Mutual, Inc. (“ WMI ”) and WMI Investment Corp. (together with WMI, the “ Debtors ”), as debtors and debtors in possession, was confirmed by the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”).  Unless otherwise defined in this Notice, capitalized terms used herein shall have the meanings ascribed to them in the Plan and the Confirmation Order.
 
PLEASE TAKE FURTHER NOTICE that the Effective Date of the Plan occurred on March 19, 2012 and the Plan was substantially consummated.
 
PLEASE TAKE FURTHER NOTICE that copies of the Confirmation Order, the Plan, and related documents, are available at http://www.kccllc.net/wamu or the Bankruptcy Court’s website at www.deb.uscourts.gov and also are available for inspection during regular business hours in the office of the Clerk of the Bankruptcy Court, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801.
 
PLEASE TAKE FURTHER NOTICE that, pursuant to Article III of the Plan and paragraph 47 of the Confirmation Order, the deadline for filing proofs of or requests for payment of
 

____________________________  
1 The Debtors in these chapter 11 cases along with the last four digits of each Debtor’s federal tax identification number are: (i) Washington Mutual, Inc. (3725); and (ii) WMI Investment Corp. (5395).  The Debtors’ principal offices are located at 1201 Third Avenue, Suite 3000, Seattle, Washington 98101.
 

 
 
 

Administrative Expense Claims (“ Administrative Expense Requests ”) is June 17, 2012 ; provided , however , that no Administrative Expense Request shall be required if such Administrative Expense Claim was incurred in accordance with an order of the Bankruptcy Court or with the consent of the Debtors and in the ordinary course of the Debtors’ operations.  All Administrative Expense Requests should be sent to the following:
 
Washington Mutual Claims Processing
c/o Kurtzman Carson Consultants LLC
2335 Alaska Ave.
El Segundo, CA 90245
 
Administrative Expense Requests will be deemed timely filed only if actually   received by Kurtzman Carson Consultants LLC by 5:00 p.m. (prevailing Eastern Time) on June 17, 2012 (the “ Administrative Deadline ”).  Administrative Expense Requests may   not   be delivered by facsimile, telecopy, or electronic mail transmission.
 
PLEASE TAKE FURTHER NOTICE that, if you are required to file an Administrative Expense Request pursuant to Section 3.1 of the Plan and paragraph 47 of the Confirmation Order and fail to do so by the Administrative Deadline, you will be forever barred, estopped, and enjoined from asserting such Administrative Expense Claim (and from filing an Administrative Expense Request with respect to such Administrative Expense Claim) against the Debtors, their estates, and their property and the Debtors, the Reorganized Debtors, and the Liquidating Trust will be forever discharged from any and all indebtedness or liability with respect to such Administrative Expense Claim.
 
PLEASE TAKE NOTICE that, pursuant to Sections 3.2 and 41.18 of the Plan and paragraph 48 of the Confirmation Order, any Entity seeking an award by the Bankruptcy Court of compensation or reimbursement of expenses in accordance with section 328, 330 or 331 of the Bankruptcy Code or entitled to priorities established pursuant to section 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code shall (1) file with the Clerk of the Bankruptcy Court on or prior to 5:00 p.m. (prevailing Eastern Time) on June 17, 2012 , an application, including, without limitation, a final fee application (collectively, the “ Fee Applications ”), for such award of compensation or reimbursement and (2) serve a copy thereof, together with exhibits and schedules related thereto, upon (a) Weil, Gotshal & Manges LLP, Attorneys for the Debtors, 767 Fifth Avenue, New York, NY 10153, Attn: Brian S. Rosen, Esq., (b) Richards, Layton & Finger, P.A., Attorneys for the Debtors, 920 North King Street, Wilmington, DE 19801, Attn: Mark D. Collins, Esq., (c) Akin, Gump, Strauss, Hauer & Feld LLP, Attorneys for the Creditors’ Committee, One Bryant Park, New York, NY 10036, Attn: Fred Hodara, Esq., (d) Ashby & Geddes, P.A., Attorneys for the Equity Committee, 500 Delaware Avenue, 8th Floor, Wilmington, DE 19899, Attn: Gregory A. Taylor, Esq., and (e) the Office of the United States Trustee, 844 King Street, Suite 2207, Wilmington, DE 19801, Attn: Jane Leamy, Esq.
 
PLEASE TAKE FURTHER NOTICE   that, pursuant to paragraph 49 of the Confirmation Order, objections or responses, if any, to the Fee Applications must be (1) filed with the Bankruptcy Court, together with proof of service thereof, and (2) served upon (a) the applicable applicant, (b) Weil, Gotshal & Manges LLP, Attorneys for the Debtors, 767 Fifth Avenue, New York, NY 10153, Attn: Brian S. Rosen, Esq., (c) Richards, Layton & Finger, P.A., Attorneys for the
 

 
2
 

Debtors, 920 North King Street, Wilmington, DE 19801, Attn: Mark D. Collins, Esq., (d) Akin, Gump, Strauss, Hauer & Feld LLP, Attorneys for the Creditors’ Committee, One Bryant Park, New York, NY 10036, Attn: Fred Hodara, Esq., (e) Ashby & Geddes, P.A., Attorneys for the Equity Committee, 500 Delaware Avenue, 8th Floor, Wilmington, DE 19899, Attn: Gregory A. Taylor, Esq., (f) the Office of the United States Trustee, 844 King Street, Suite 2207, Wilmington, DE 19801, Attn: Jane Leamy, Esq., and (g) all parties entitled to receive notice in these Chapter 11 Cases pursuant to Bankruptcy Rule 2002, so as to be received not later than July 13, 2012, at 4:00 p.m. (prevailing Eastern Time) (the “ Objection Deadline ”).
 
PLEASE TAKE FURTHER NOTICE that a hearing to consider the Fee Applications and the relief requested therein shall be held before the Honorable Mary F. Walrath, United States Bankruptcy Judge, in the United States Bankruptcy Court for the District of Delaware, 824 North Market Street, 5th Floor, Wilmington, Delaware 19801, on July 30, 2012, at 10:30 a.m. (prevailing Eastern Time) to consider the Fee Applications.
 
PLEASE TAKE FURTHER NOTICE that, if no objections to the Fee Applications are timely filed, served and received in accordance with the provisions of this Notice by the Objection Deadline, the Bankruptcy Court may grant the relief requested in the Fee Applications, in whole or in part, without further notice or hearing.
 
PLEASE TAKE FURTHER NOTICE that, pursuant to Section 34.5 of the Plan and paragraph 27 of the Confirmation Order, if the rejection of an executory contract or unexpired lease by the Debtors thereunder results in damages to the other party or parties to such contract or lease, any claim for such damages, if not heretofore evidenced by a filed proof of Claim, shall be forever barred and shall not be enforceable against the Debtors, or their properties or agents, successors, or assigns, including, without limitation, the Reorganized Debtors and the Liquidating Trust, unless a proof of Claim is filed with the Bankruptcy Court and served upon the Liquidating Trustee on or before thirty (30) days after the latest to occur of (i) the Confirmation Date, and (ii) the date of entry of an order by the Bankruptcy Court authorizing rejection of a particular executory contract or unexpired lease.
 
PLEASE TAKE FURTHER NOTICE that the Plan and its provisions are binding on the Debtors, the Reorganized Debtors, the Liquidating Trust, any holder of a Claim against, or Equity Interest in, the Debtors and such holder’s respective successors and assigns, whether or not the Claim or Equity Interest of such holder is impaired by the Plan and whether or not such holder or Entity voted to accept the Plan.
 
 
 
 
 
 
 
 
 
 
 
3
 
 
 
 
Dated:  Wilmington, Delaware   
  March 19, 2012   
       
   
Mark D. Collins, Esq. (No. 2981)
Michael J. Merchant, Esq. (No. 3854)
Travis A. McRoberts, Esq. (No. 5274)
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, Delaware 19801
Telephone:  (302) 651-7700
Facsimile:  (302) 651-7701
 
– and –
 
Brian S. Rosen, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone:  (212) 310-8000
Facsimile:  (212) 310-8007
 
Attorneys for the Debtors and
Debtors in Possession
 
 
 

 

 
 

 
 
4
 
 
Exhibit 99.3

 
 
Claim Amount (1)
   
Distributions & Value Consideration (2)
       
 
Base
   
Less: Contribution
   
Net
               
Pro Rata Share in $
                   
 
Claim Amount
   
to Reorg WMI
   
Claim Amount
   
Net Cash
   
Runoff Notes
   
of C/S Allocation
   
LTI Value
   
Total
   
LTI Face
 
                                                     
Senior Notes Claim
                                                   
Floating Rate
                                                   
           Prepetition $ 1,346,821,851.88     $ (13,036,569.11 )   $ 1,333,785,282.76     $ 1,333,785,282.76     $ 0.00     $ 0.00     $ 0.00     $ 1,333,785,282.76     $ 0.00  
           Post-Petition   48,317,113.57       0.00       48,317,113.57       38,294,447.41       0.00       0.00       3,773,758.92       42,068,206.32       10,022,666.16  
    45,294,222.79       0.00       45,294,222.79       0.00       0.00       0.00       0.00       0.00       45,294,222.79  
    1,440,433,188.23       (13,036,569.11 )     1,427,396,619.12       1,372,079,730.17       0.00       0.00       3,773,758.92       1,375,853,489.09       55,316,888.95  
Fixed Rate
                                                                     
           Prepetition $ 2,785,595,596.11     $ (26,963,187.05 )   $ 2,758,632,409.06     $ 2,758,632,409.06     $ 0.00     $ 0.00     $ 0.00     $ 2,758,632,409.06     $ 0.00  
           Post-Petition   492,736,506.69       0.00       492,736,506.69       389,541,982.23       592,520.00       391,149.00       38,484,682.72       429,010,333.95       102,210,855.46  
    3,278,332,102.80       (26,963,187.05 )     3,251,368,915.75       3,148,174,391.30       592,520.00       391,149.00       38,484,682.72       3,187,642,743.01       102,210,855.46  
                                                                       
Total
  4,673,471,068.24       (39,999,756.16 )     4,633,471,312.08       4,520,254,121.47       592,520.00       391,149.00       42,258,441.63       4,563,496,232.10       157,527,744.40  
                                                                       
Senior Subordinated Notes Claim
                                                                     
           Prepetition   1,666,464,969.68     $ (35,000,000.00 )     1,631,464,969.68       1,603,172,258.58       221,598.00       9,227,879.00       53,843,234.10       1,666,464,969.68     $ 18,843,234.10  
           Post-Petition   412,382,798.12       0.00       412,382,798.12       0.00       0.00       0.00       108,523,052.30       108,523,052.30       412,382,798.12  
    2,078,847,767.80       (35,000,000.00 )     2,043,847,767.80       1,603,172,258.58       221,598.00       9,227,879.00       162,366,286.40       1,774,988,021.98       431,226,032.22  
                                                                       
General Unsecured Claims (3)
                                                                     
           Prepetition   846,739,274.42       0.00       846,739,274.42       790,877,036.59       1,334,791.00       380,972.00       24,675,271.97       817,268,071.55     $ 54,146,474.84  
           Post-Petition   55,803,504.36       0.00       55,803,504.36       0.00       0.00       0.00       0.00       0.00       55,803,504.36  
    902,542,778.78       0.00       902,542,778.78       790,877,036.59       1,334,791.00       380,972.00       24,675,271.97       817,268,071.55       109,949,979.20  
                                                                       
CCB Guarantees Claims (4)
                                                                     
           Prepetition   69,851,847.14       0.00       69,851,847.14       0.00       0.00       0.00       0.00       0.00     $ 69,851,847.14  
           Post-Petition   11,949,420.05       0.00       11,949,420.05       0.00       0.00       0.00       0.00       0.00       11,949,420.05  
    81,801,267.19       0.00       81,801,267.19       0.00       0.00       0.00       0.00       0.00       81,801,267.19  
                                                                       
PIERS Claims (4), (5)
  241,423,587.54       0.00       241,423,587.54       0.00       0.00       0.00       0.00       0.00       241,423,587.54  
                                                                       
Total
$ 7,978,086,469.55     $ (74,999,756.16 )   $ 7,903,086,713.39     $ 6,914,303,416.63     $ 2,148,909.00     $ 10,000,000.00     $ 229,300,000.00     $ 7,155,752,325.63     $ 1,021,928,610.55  

 
Notes:
(1) 
Claim amounts shown net of opt-out elections; total contribution from all Senior Note claimants total $40mm.
(2)
Cash, Runoff Notes and Reorganized Common Stock distributions shown for total class; however, distributions to claimants within the class will vary depending on individual elections.
(3) 
Includes claims paid day one and in the the disputed claims reserve.
(4)
Amounts reflect both the preferred and common portions of total claim amounts.
(5)
Despite the PIERS having a prepetition claim of $789 mm, because of their obligation to payover interest at the contract rate (which exceeds the federal judgment rate for all  classes except the Senior Floating Rate Notes) their recovery is effectively capped.  As of the Effective date, that cap amount is $241.4mm and will continue to be reduced every month due to the delta between the FJR and contract rate.
 
 

 
 
 
 
 

   
Claim Amount (1)
   
Distributions & Value Consideration (2)
       
 
Base
         
Net
               
Common
                   
 
Claim
   
Less:
   
Claim
         
Runoff
   
Stock
                   
 
Amount
   
Contribution
   
Amount
   
Net Cash
   
Notes
   
Allocation
   
LTI Value
   
Total
   
LTI Face
 
                                                     
Senior Notes Claim
                                                   
Floating Rate
                                                   
Prepetition
$ 1,346.8     $ (13.0 )   $ 1,333.8     $ 1,333.8     $ 0.0     $ 0.0     $ 0.0     $ 1,333.8     $ 0.0  
Post-Petition
  48.3       -       48.3       38.3       -       -       3.8       42.1       10.0  
Remaining Post-Petition
  45.3       -       45.3       -       -       -       -       -       45.3  
    1,440.4       (13.0 )     1,427.4       1,372.1       -       -       3.8       1,375.9       55.3  
Fixed Rate
                                                                     
Prepetition
  2,785.6       (27.0 )     2,758.6       2,758.6       -       -       -       2,758.6       -  
Post-Petition
  492.7       -       492.7       389.5       0.6       0.4       38.5       429.0       102.2  
    3,278.3       (27.0 )     3,251.4       3,148.2       0.6       0.4       38.5       3,187.6       102.2  
                                                                       
Total
  4,718.8       (40.0 )     4,678.8       4,520.3       0.6       0.4       42.3       4,563.5       157.5  
                                                                       
Senior Subordinated Notes Claim
                                                                     
Prepetition
  1,666.5       (35.0 )     1,631.5       1,603.2       0.2       9.2       53.8       1,666.5       18.8  
Post-Petition
  412.4       -       412.4       -       -       -       108.5       108.5       412.4  
    2,078.8       (35.0 )     2,043.8       1,603.2       0.2       9.2       162.4       1,775.0       431.2  
                                                                       
General Unsecured Claims (3)
                                                                     
Prepetition
  846.7       -       846.7       790.9       1.3       0.4       24.7       817.3       54.1  
Post-Petition
  55.8       -       55.8       -       -       -       -       -       55.8  
    902.5       -       902.5       790.9       1.3       0.4       24.7       817.3       109.9  
                                                                       
CCB Guarantees Claims (4)
                                                                     
Prepetition
  69.9       -       69.9       -       -       -       -       -       69.9  
Post-Petition
  11.9       -       11.9       -       -       -       -       -       11.9  
    81.8       -       81.8       -       -       -       -       -       81.8  
                                                                       
PIERS Claims (4), (5)
  241.4       -       241.4       -       -       -       -       -       241.4  
                                                                       
Total
$ 8,023.4     $ (75.0 )   $ 7,948.4     $ 6,914.3     $ 2.1     $ 10.0     $ 229.3     $ 7,155.8     $ 1,021.9  
 
Notes:
(1) 
Claim amounts shown net of opt-out elections
(2) 
Cash, Runoff Notes and Reorganized Common Stock distributions shown for total class; however, distributions to claimants within the class will vary depending on individual elections.
(3)
Includes claims paid day one and in the the disputed claims reserve.
(4)
Amounts reflect both the preferred and common portions of total claim amounts.
(5) 
Despite the PIERS having a prepetition claim of $789 mm, because of their obligation to payover interest at the contract rate (which exceeds the federal judgment rate for all classes except the Senior Floating Rate Notes) their recovery is effectively capped.  As of the Effective date, that cap amount is $241.4mm and will continue to be reduced every month due to the delta between the FJR and contract rate.
 
 
EXHIBIT 99.4
Press Release


For Immediate Release

WASHINGTON MUTUAL, INC. COMPLETES CHAPTER 11 RESTRUCTURING PROCESS

Distributions to Creditors and Equity Holders Expected to Commence


SEATTLE, March 19, 2012 – Washington Mutual, Inc. (Pink Sheets: WAMUQ.PK) (“WMI” or the “Company”) announced that its Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code (as modified, and as confirmed by order, dated February 23, 2012, the “Plan”), became effective today, marking the successful completion of the chapter 11 restructuring process.

In connection with the Plan becoming effective, the Company will commence the distribution of funds of approximately $7 billion to parties-in-interest on account of their allowed claims and the distribution of substantially all of the stock in the reorganized company to equity holders.  The Company’s common stock, traded over the counter under the ticker symbol WAMUQ, has been cancelled.

As a result of the Plan becoming effective, WMI has emerged as a newly reorganized company, WMI Holdings Corp. (“WMI Holdings”), which will consist primarily of WM Mortgage Reinsurance Company, Inc. (“WMMRC”), a wholly owned subsidiary of WMI that is incorporated in Hawaii, and which will be funded by a $75 million contribution from certain WMI creditors.  In addition, the Company will have access to a $125 million senior credit facility to be used for working capital and permitted acquisitions and originations in the financial services sector.  Initially, the primary business of WMI Holdings will be a legacy reinsurance business that is currently operated in runoff mode by WMMRC.

“The outcome of this process is a significant achievement for the equity holders of WMI, who will have the opportunity to benefit from an ownership interest in the reorganized company,” said Michael Willingham, Chairman of the Official Committee of Equity Security Holders for WMI and a member of the Board of Directors of WMI Holdings.  “The new Board of Directors will form a Corporate Strategy and Development Committee to begin exploring opportunities available to the Company to enhance the value of the reorganized Company’s assets for the benefit of the company’s new shareholders.”

As previously announced, Michael Willingham, Diane Glossman, Mark Holliday, Gene Davis, Timothy Graham, Steve Scheiwe, and Michael Renoff will comprise the Board of Directors of WMI Holdings.


#  #  #

Contact

Andrew Siegel / Jed Repko / Aaron Palash
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449