Washington Mutual (WMI) - Attachments/Exhibits to the Final Report of the Examiner (Part 8/10)

Mr Michael Finn

August 17 2007

Page 4

CONFIDENTIAL TREATMENT REQUESTED

further requests that

if notwithstanding the foregoing the OTS should determine

preliminarily to make available to the public any of the information contained in this

Submission

it

will Inform the Association prior to any such release

If you have any questions regarding this letter please call Robert Monheit at

212 3266104 or me at 206 5004149

hn F Robinson

Executive Vice President

Corporate Risk Management

CONFIDENTIAL

Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002022.00010

Office of Thrift Supervision

SEP d 2007

Department of the Treasury West Region

101 Stewart Street Suite 1010 Seattle WA 981012419 Seattle Area Once

Telephone 206 8292600 Fax 206 8292620

September 20 2007

Mr John F Robinson Executive Vice President


Washington Mutual

1301 Second Avenue WMC 3201

Seattle WA 98101

Dew Mr Robinson

This responds to your August 17 2007 letter advising that Washington Mutual Bank WMB plans to issue

an additional class of preferred securities LLC Preferred Securities IV through Washington Mutual

Preferred Funding LLC WMPF and requesting OTS confirmation that such securities are eligible for

inclusion in core capital of WMB The LLC Preferred Securities IV will be issued to WMB in exchange for

not more than

$1 billion in cash

On February 24 2006 December 4 2006 and February 24 2007 this office confirmed that the three prior

classes of LLC Preferred Securities issued by WMPF could be included in WMBs capital subject to certain

representations and undertakings Similarly please be advised that OTS will not exercise its supervisory

authority and discretion to exclude the LLC Preferred Securities IV fromcore capital under 12 CFR

5675a1 footnote 4 or the reservation of authority provision 12 CFR 56711 of the OTS capital rule

and we hereby confirm that the preferred securities will qualify for inclusion in WMB core capital This

decision is based on the representations made in your August 17 letter

Notwithstanding the above the OTS reserves the right in its sole discretion to exclude the Preferred

Securities or prospective issuances of Preferred Securities if the terms are revised or it otherwise ceases to

provide meaningful capital support and a realistic ability to absorb losses or otherwise raises supervisory

concerns This may include OTS concerns about the capital mix or asset structure of the WMPF orWMB

If you have any questions regarding this letter please contact me at 206 8292603

cc FDIC

CONFIDENTIAL


CONFIDEI ALTREATMENTREQ ESTER

I

February 23 2006

Darrel Dodliow

Deputy Regional DirectorWest Region


101 Stewart Street Suite 1010

Seattle WA 981011048

Washington Mutual

John F Robinson


Corporbte Risk Manegeinenl

Re Washington Mutual BattkDocket Number 08551Requestforconfitmatid ofcapital treatment of two classes ofpreferred stock

DeaaMr Dochow

On behalf of Washingtari Mutual • WMIn I a•mwriting with reference to the riotice

filed January 30 2006 by Washington Mutual tank WMB toesstablish°a new

subsidiary Washington Mutual Preferred Fpding LC`°WMPF for the purposeof

issuing two classes of preferredsecurities to be eligibleforinclesiein in corecapital of

WMB the `Notice You provided notice of thenonobjectionof the Office of Thrift

Supervision STS to the establishtnejat of WMPPby your letierdated February 9 2005

Asyou are aware inthe NotieeWMB requestedthe OTSoonfirstrthat the We of the

Cayman Co Preferred Securities and the Delaware Issuer Securities as defined in the

Noticeto outside investors constitutes thesale oftheLLC Preferred Securities as defined

in th6Notice to outside investors and that the LLC Preferred Securities qualify for

inclusion iii core capital ofWMB

In connection with thatrequesttWM herebytndertakes

that if asa result of aSupervisory Event as defined in the Notice WMI exchanges its

Holding Company Shares as defilned

run the Notice for Cayman Co Preferred Securities

andthe Delaware Issuer tecurities or if WMI subsequent to such exchange acquires the

LLC Preferred Securities W7vnwillcontribute1toWMB the Cayman Co Preferred

Securities and the Delaware Issuer Securities or as appropriate the LLC Pitferred

Securities

If you have anyquestions regarding this letterplease call Robert Monheit at

2123266104 or meat 206 4906100

Zl•35hn` F Robinson

ExecWve Vice President


1201 Thi�d Avenue

wMr166

Seattle WA98101

phone 7064905100

Fax 2053775316

CONFIDENTIAL


N


Departmentofthe Trc4sw7 • wane Regina

lot S wzt 5tecd W

is l01Q SeMk WA 981012419 Sedde Arw Qfjlr

Telaphce 216 3292600 Fac 205 $29200

February 24 2006

Mr John FRobinson

Execultivc Vice President

Corporate Risk Manageunaat

Washington Mutual W1201 ThirdAvenun WMT 1601

Seattle WA 981 or

FEB 2 8 2006

LEGAL DEPARTMENT

Dear Mr Robinson

This letter further responds to the notice filed January 3020 advising that Washington Mutual

Bark rWMB plans to establish

it now subsidiary Washington Mutual Preferred Funding YYC

CVb9n for the purpose of issuing two classes of Preferred Secxnities to be eligible for

inclusion in cm capital ofWMB By letter dated February 92006 we took no objection to thr

establishment of the new operating subsidiary and the issuance of secsvities by WMPF

Please be advised that OTS will not exercise its supervisory authority and discretion to exclude

the Prefrsod Securities from core capital under 12 CFR 5675al footnote 4 or the

resaYation of authority provision 12 CFR 56711 of the OTS capital rule and we hereby

confirm thalthc Proffered Securities will qualify for inclusion in WMB core capital This

decision is based on the representations in theNotice attachment thereto and commitment

detailed in your confidential letter dated February 23 2006

Notwithstanding the above the OTS reserves the right in its sole dis tion to exchrdc the

Preferred Securities or prospective issuances ofPrefesred Securities if the teems are revised or

it otherwise ceases to provide meaningful capital support and a realistic ability to absorb losses

orotherwise raises supevisorp ccncems This may include OTS cancers about the capital mix

or asset structure of the Subsidiary or WMB


Sincerely

Darrel W Dochow

Regional Deputy Director

cc William L Lynch Secretary Washington Mutual

CONFIDENTIAL


Washington Mutual


November 14 2006

Darrel Dochow

Deputy Regional Director West Region




Re Washington Mutual Bank Docket Number 08551 Request for

confirmation of capital treatment of additional class of preferred stock

am

Dear Mr Dochow

On behalf of Washington Mutual Inc WMI and Washington Mutual Bank the

Association I am writing with reference to the notice filed January 30 2006 bythe Association to establish a new subsidiary Washington Mutual Preferred

Funding LLC WMPF for the purpose of issuing two classes of preferred

securities collectively the LLC Preferred Securities to be eligible for inclusion in

core capital of WMB the Notice You provided notice of the nonobjection of the

Office of Thrift Supervision OTS to the establishment of WMPF by your letter

dated February 9 2006

As you are aware in the Notice the Association requested the OTS confirm that the

sale of the Cayman Co Preferred Securities and the Delaware Issuer securities

as defined in the Notice to outside investors constitutes the sale of the LLC

Preferred Securities as defined

in

the Notice to outside investors and that the LLC

Preferred Securities qualify for inclusion in core capital of the Association You

advised by letter dated February 24 2006 that the OTS will not exercise its

supervisory authority and discretion to exclude the LLC Preferred Securities from

core capital under 12 CFR 5675a1footnote 4 or the reservation of authority

provision 12 CFR 56711 of the OTS capital rule and confirmed that the LLC

Preferred Securities will qualify for inclusion

in

the Associations core capital

WMPF is planning to issue an additional class of LLC Preferred Securities the

FixedtoFloating Rate Perpetual Noncumulative Preferred Securities Series

2006C LLC Preferred Securities II The LLC Preferred Securities II will

include terms substantially the same as the LLC Variable Rate Preferred

Securities as defined in the Notice including the requirement for the prior

approval of the OTS for any proposed redemption Like the LLC Variable Rate

Preferred Securities the LLC Preferred Securities II will have a stated amount to

be determined based upon market conditions and will pay distributions on anoncumulativebasis at a fixed rate for a period to be determined and thereafter will

pay distributions based on a variable rate of interest plus an applicable spread

However the dividend rates dividend payment dates and redemption dates and

prices will be different than the LLC Variable Rate Preferred Securities

Corporate Execatlve Offices

1301 Second Avenue

Seattla WA 98101

CONFIDENTIAL


Mr Darrel Dochow

November 14 2006

Page 2


The LLC Preferred Securities II will be issued to the Association in exchange for

not more than approximately $10 billion in assets consisting of a pool of option

ARMs originated by the Association Simultaneously the Association will then sell

the LLC Preferred Securities 11 to a new entity Washington Mutual Preferred

Funding Trust

II Delaware Issuer III for not more than approximately $10 billion

in cash Delaware Issuer 11

will be a trust formed under the laws of the State of

Delaware and will not be a subsidiary of the Association for purposes of the

notice requirement set forth in 12 CFR § 55911 Delaware Issuer

II will own all of

the LLC Preferred Securities1

1 which will be the sole asset of the Delaware Issuer

II

Delaware Issuer II will issue a single class of securities Delaware Issuer Il

Securities which will represent undivided beneficial ownership interests in the LLC

Preferred Securities 11 held by Delaware Issuer II Delaware Issuer 11 willpassthroughany distributions or payments upon redemption or upon liquidation with

respect to the LLC Preferred Securities II to be holders of the Delaware Issuer II

Securities Delaware Issuer

11 Securities will be sold solely to US persons who are

qualified institutional buyers within the meaning of Rule 144A under the

Securities Act of 1933 as amended Securities Act who are also qualified

purchasers within the meaning of the Investment Company act of 1940

Investment Company Act in a transaction exempt from the registration

requirements of the Securities Act pursuant to Rule 144A thereunder

In the Notice the Association agreed that the amount of the Associations core

capital that may be comprised of the LLC Preferred Securities plus any other

future issuances of subsidiary preferred stock will not exceed 25 percent of the

Associations core capital including the LLC Preferred Securities and any future

subsidiary preferred securities issuances The issuance of LLC Preferred

Securities 11 will not cause the Association to exceed this limit On a pro forma

basis based upon an October 10 2006 forecast the amount of LLC Preferred

Securities and LLC Preferred Securities II will constitute no more than

approximately 1402 percent of the Associations core capital as of December 312006

In connection with the request In

the Notice regarding the capital treatment of the

LLC Preferred Securities WMI by letter to you dated February 23 2006 stated

i

In addition to the creation of Delaware Issuer

II a new asset trust Washington Mutual Option ARM

Trust I Asset Trust l1 will be formed Asset Trust It will be a trust formed under the laws of the

State of Delaware pursuant to a trust agreement between WMPF as depositor and a trustee

unaffiliated with the Association as Delaware Trustee Asset Trust II will own approximately $30billion of first lien closedend optionARM home loans the Asset Trust I

f Assets acquired from

the Association WMPF and from university Street Inc REIT any property that secured a loan

that Asset Trust Il acquires by foreclosure or deed in lieu of foreclosure as well as other assets

authorized for federal savings associations under federal law

CONFIDENTIAL


Mr Darrel Dochow

November 14 2006

Page 3


that it will undertake that if as a result of a Supervisory Event as defined in the

Notice WMI exchanges its Holding Company Shares as defined in the Notice for

Cayman Co Preferred Securities and the Delaware Issuer Securities or if WMI

subsequent to such exchange acquires the LLC Preferred Securities WMI will

contribute to WMB the Cayman Co Preferred Securities and the Delaware Issuer

Securities or as appropriate the LLC Preferred Securities On behalf of WMI I

hereby extend that undertaking to the issuance of LLC Preferred Securities li and

the Delaware Issuer II Securities

Based on the foregoing the Association respectfully requests the OTS to confirm

that the OTS will not exercise its supervisory authority and discretion to exclude the

LLC Preferred Securities II from corecapital under 12 CFR 5675a1footnote 4

or the reservation of authority provision 12 CFR 56711 of the OTS capital rule

and confirm that the LLC Preferred Securities 11 will qualify for inclusion in the

Associations core capital

Request for Confidential Treatment Consistent with the standards of the Freedom

of

Information Act 5 USC § 552b the Association hereby requests confidential

treatment of the information contained in this letter the Submission The

Submission contains information that is commercial or financial information

obtained from a person and privileged and confidential thatis exempt from

disclosure under paragraph b4 of the Freedom of Information Act 5 USC

§552b4 and the applicable regulations of the Department of the Treasury 31

CFR §§ 12c1 and 16a The information is proprietary compiled for internal

use only and is made available to regulatory authorities only upon request The

Association requests that the information contained in this document be treated as

confidential indefinitely because the basis for confidential treatment will continue to

exist after the issues presented by this Submission are resolved The Association




Submission it will inform the Association prior to any such release


212 3266104 or me at 206 5004149

ohn F Robinson



CONFIDENTIAL


U

M


Department of the Treasury

1551 Nottb T ssda Avenue Suits 1050 Santa Ana CA 927058635

TeScpltone 714 7964700 FAX 714 7964710

December 4 2006

Mr John F Robinson



Washington mutual

1301 Second Avenue

Seattle WA 98101

bear Mr Robinson

W4VVL

West lzs toh

Santa Ana Area Offim

Prist1t brand tax transmittal memo 7671 Ff popes r

•

To ro

Dept phone

TaTi

This responds to your November 142006 letter advising that Washington Mutual Bank hWNB plate to

issue an additional class ofpicferred securities C LLC PreierrrdSecurities 11 Rough Washington

Mutual Professed Funding LLC WMPF and requcatin OTS confirmation that such securities are

eligible for inclusion in core capital of WMB The LLC Pre1 red securities 11 wil bo issued to WMB in

exchange for not more than $1 billion is assets consisting of a pool of option ABMs origiuate+l by WMIB

By letter dated February 24 2006 this office con niad that the initial two classes of LLC Preferred

Securities issued by WMPF could be included inWW Is capital subject to certain representations and

=krWdngs Similarly please be advised that OTS will not exercise its atpe rvisory authority and

discretion to exclude the LLC Preferred Securities 11 timmcore capital under 12 CFR $675a1 footnote 4

or the reservation of authority provision 12 CFR 56711 of the OTS capital zuie and we hereby confirm

that the preferred securities will qualify for inclusion in WMB core capital This decision is based on the

r esentations made in your November 141etter

Notwiibatanding the above the OTS reserves the right in its cote discretion to exclude she Pr+efeured

Securities or prospective issuances of Preferred Securities if the terms are revised or it otherwise ceases

to provide meaningibl capital support and a realistic ability to absorb losses or otherwise raises

supervisory concerns This may include OTS concerns about the capital mix or asset struttwc ofthe

Subsidiary or WMB

If you have any questions regarding this letter please contact we at 206 8292603

Sincercly

Darrel W Doehow


cc FDIC

CONFIDENTIAL



August 17 2007

Michael Finn

Regional Director West Region




John P Rabhnaan

Executive V ce President


1301 Second Avenue

WMC3Z01

Seattle WA 98101

206 500 4149 phone

206 377 3018 fax



Dear Mr Finn


Association I am writing with reference to the notice filed January 30 2006 by

the Association to establish a new subsidiary Washington Mutual Preferred



core capital of WMB the Notice The Office of Thrift Supervision COTSprovided notice of Its nonobjection to the establishment of WMPF by letter dated

February 9 2006 All capitalized terms used but not otherwise defined herein shall

have the same meaning ascribed to them in the Notice

As you are aware in the Notice the Association requested that the OTS confirm

that the sale of the Cayman Co Preferred Securities and the Delaware Issuer

Securities to outside investors constitutes the sale of the LLC Preferred Securities

to outside investors and that the LLC Preferred Securities qualify for inclusion incore capital of the Association The OTS advised by letter dated February 242006 that it will not exercise its supervisory authority and discretion to exclude the

LLC Preferred Securities from core capital under 12 CFR 5675a1footnote 4 or

the reservation of authority provision 12 CFR 56711 of the OTS capital rule and

confirmed that the LLC Preferred Securities qualify for inclusion in the Associations

core capital

Subsequently the Association by letter dated November 14 2006 requested the

OTS confirm the capital treatment of an issuance of an additional class of LLC

Preferred Securities the Fixed toFloating Rate Perpetual Noncumulative

Preferred Securities Series 2006C LLC Preferred Securities 11 The OTS

advised by letter dated December 4 2006 that it will not exercise its supervisory

authority and discretion to exclude the LLC Preferred Securities II from core capital

under 12 CFR 5675a1footnote 4 or the reservation of authority provision 12CFR 56711 of the OTS capital rule and confirmed that the LLC Preferred

Securities It qualify for inclusion

in


QEqual Honing Lander

CONFIDENTIAL


Mr Michael Finn

August 17 2007

Page 2


Following that issuance the Association by letter dated February 7 2007

requested the OTS confirm the capital treatment of an issuance of another

additional class of LLC Preferred Securities the Fixedto Floating Rate Perpetual

Noncumulative Preferred Securities Series 2007A LLC Preferred Securities

Ill The OTS indicated it consent by return of the letter stamped No Objection

as of February 24 2007

WMPF

is now planning to issue an additional class of LLC Preferred Securities theLLC Preferred Securities IV The LLC Preferred Securities IV will be fixed rate

and will include terms substantially the same as the LLC Fixed Rate Preferred

Securities as defined in the Notice including the requirement for theprior approval

of the OTS for any proposed redemption Like the LLC Fixed Rate Preferred

Securities the LLC Preferred Securities IV will have a stated amount to be

determined based upon market conditions and will pay distributions on anoncumulativebasis However the dividend rates and redemption dates and prices will

be different than the LLC Fixed Rate Preferred Securities Also the LLC Preferred

Securities IV will not be callable during the first five years following issuance and

then may be called at any time thereafter in the discretion of WMPF subject to

prior approval of the OTS

The LLC Preferred Securities IV will be issued to the Association in exchange for

not more than approximately $10 billion in cash Simultaneously the Association

will then sell the LLC Preferred Securities IV to a new entity Washington Mutual

Preferred Funding Trust IV Delaware Issuer IV for not more than approximately

$10 billion in cash2 Delaware Issuer IV will be a trust formed under the laws of

the State of Delaware and will not be a subsidiary of the Association for purposesof the notice requirement set forth in 12 CFR § 55911 Delaware Issuer IV will

own all of the LLC Preferred Securities IV which will be the sole asset of the

Delaware Issuer IV

Delaware Issuer IV will issue a single class of securities Delaware Issuer IV

Securities which will represent undivided beneficial ownership interests

in

the LLC

Preferred Securities IV held by Delaware Issuer IV Delaware Issuer IV will pass

through any distributions or payments upon redemption or upon liquidation with

respect to the LLC Preferred Securities 1V to the holders of the Delaware Issuer IV

Securities Delaware Issuer IV Securities will be sold solely to US persons whoare qualified institutional buyers within the meaning of Rule 144A under the


1 At the time the letter was submitted WMPF had not determined whether the LLC Preferred

Securities

III would be fixedtofloating rate or fixed rate

2Alternatively WMPF may sell the LLC Preferred Securities

III

directly to Delaware Issuer IV for

$10 billion in cash The Association undertakes to advise the OTS If this alternative is selected

prior to the launch date of the issuance

CONFIDENTIAL


Mr Michael Finn

August 17 2007

Page 3





In

the Notice the Association agreed that the amount of the Associations core





Securities IV will not cause the Association to exceed this limit On a pro forma

basis based upon a forecast dated August 9 2007 the amount of LLC Preferred

Securities LLC Preferred Securities

II LLC Preferred Securities

III and LLC

Preferred Securities IV will constitute no more than approximately 1821 percent of

the Associations core capital at September 30 2007

In connection with the request in the Notice regarding the capital treatment of the

LLC Preferred Securities WMI by letter to the OTS dated February 23 2006stated that

it

will undertake that

if as a result of a Supervisory Event WMI

exchanges its Holding Company Shares for Cayman Co Preferred Securities and

the Delaware Issuer Securities or if WMI subsequent to such exchange acquires

the LLC Preferred Securities WMI will contribute to WMB the Cayman CoPreferred Securities and the Delaware Issuer Securities or as appropriate the LLC

Preferred Securities On behalf of WMI I hereby extend that undertaking to the

issuance of LLC Preferred Securities IV and the Delaware Issuer IV Securities



LLC Preferred Securities IV from core capital under 12 CFR 5675a1footnote 4or the reservation of authority provision 12 CFR 56711 of the OTS capital rule

and confirm that the LLC Preferred Securities IV will qualify for inclusion in the


Request for Confidential Treatment Consistent with the standards of the Freedomof Information Act 5 USC § 552b the Association hereby requests confidential

treatment of the information contained in this letter the Submission TheSubmission contains information that is commercial or financial information

obtained from a person and privileged and confidential that is exempt from

disclosure under paragraph b4 of the Freedom of Information Act 5 USC§552b4 and the applicable regulations of the Department of the Treasury 31

CFR §§ 12c1 and 16a The information

is proprietary compiled for internal

use only and is made available to regulatory authorities only upon request TheAssociation requests that the information contained

in

this document be treated as



CONFIDENTIAL


Mr Michael Finn

August 17 2007

Page 4





Submission

it



212 3266104 or me at 206 5004149

hn F Robinson



CONFIDENTIAL



SEP d 2007



Telephone 206 8292600 Fax 206 8292620

September 20 2007



Washington Mutual


Seattle WA 98101

Dew Mr Robinson





not more than

$1 billion in cash













cc FDIC

CONFIDENTIAL


CONFIDEI ALTREATMENTREQ ESTER

I

February 23 2006

Darrel Dodliow

Deputy Regional DirectorWest Region




Washington Mutual

John F Robinson


Corporbte Risk Manegeinenl

Re Washington Mutual BattkDocket Number 08551Requestforconfitmatid ofcapital treatment of two classes ofpreferred stock

DeaaMr Dochow

On behalf of Washingtari Mutual • WMIn I a•mwriting with reference to the riotice

filed January 30 2006 by Washington Mutual tank WMB toesstablish°a new

subsidiary Washington Mutual Preferred Fpding LC`°WMPF for the purposeof

issuing two classes of preferredsecurities to be eligibleforinclesiein in corecapital of

WMB the `Notice You provided notice of thenonobjectionof the Office of Thrift

Supervision STS to the establishtnejat of WMPPby your letierdated February 9 2005

Asyou are aware inthe NotieeWMB requestedthe OTSoonfirstrthat the We of the


Noticeto outside investors constitutes thesale oftheLLC Preferred Securities as defined

in th6Notice to outside investors and that the LLC Preferred Securities qualify for

inclusion iii core capital ofWMB

In connection with thatrequesttWM herebytndertakes

that if asa result of aSupervisory Event as defined in the Notice WMI exchanges its

Holding Company Shares as defilned

run the Notice for Cayman Co Preferred Securities

andthe Delaware Issuer tecurities or if WMI subsequent to such exchange acquires the

LLC Preferred Securities W7vnwillcontribute1toWMB the Cayman Co Preferred

Securities and the Delaware Issuer Securities or as appropriate the LLC Pitferred

Securities

If you have anyquestions regarding this letterplease call Robert Monheit at

2123266104 or meat 206 4906100

Zl•35hn` F Robinson

ExecWve Vice President


1201 Thi�d Avenue

wMr166

Seattle WA98101

phone 7064905100

Fax 2053775316

CONFIDENTIAL


N


Departmentofthe Trc4sw7 • wane Regina

lot S wzt 5tecd W

is l01Q SeMk WA 981012419 Sedde Arw Qfjlr

Telaphce 216 3292600 Fac 205 $29200

February 24 2006

Mr John FRobinson

Execultivc Vice President

Corporate Risk Manageunaat

Washington Mutual W1201 ThirdAvenun WMT 1601

Seattle WA 981 or

FEB 2 8 2006

LEGAL DEPARTMENT

Dear Mr Robinson

This letter further responds to the notice filed January 3020 advising that Washington Mutual

Bark rWMB plans to establish

it now subsidiary Washington Mutual Preferred Funding YYC

CVb9n for the purpose of issuing two classes of Preferred Secxnities to be eligible for

inclusion in cm capital ofWMB By letter dated February 92006 we took no objection to thr

establishment of the new operating subsidiary and the issuance of secsvities by WMPF


the Prefrsod Securities from core capital under 12 CFR 5675al footnote 4 or the

resaYation of authority provision 12 CFR 56711 of the OTS capital rule and we hereby

confirm thalthc Proffered Securities will qualify for inclusion in WMB core capital This

decision is based on the representations in theNotice attachment thereto and commitment

detailed in your confidential letter dated February 23 2006

Notwithstanding the above the OTS reserves the right in its sole dis tion to exchrdc the

Preferred Securities or prospective issuances ofPrefesred Securities if the teems are revised or


orotherwise raises supevisorp ccncems This may include OTS cancers about the capital mix



Sincerely

Darrel W Dochow



CONFIDENTIAL


Washington Mutual


November 14 2006

Darrel Dochow







am

Dear Mr Dochow


Association I am writing with reference to the notice filed January 30 2006 bythe Association to establish a new subsidiary Washington Mutual Preferred



core capital of WMB the Notice You provided notice of the nonobjection of the

Office of Thrift Supervision OTS to the establishment of WMPF by your letter

dated February 9 2006

As you are aware in the Notice the Association requested the OTS confirm that the

sale of the Cayman Co Preferred Securities and the Delaware Issuer securities

as defined in the Notice to outside investors constitutes the sale of the LLC

Preferred Securities as defined

in

the Notice to outside investors and that the LLC

Preferred Securities qualify for inclusion in core capital of the Association You

advised by letter dated February 24 2006 that the OTS will not exercise its

supervisory authority and discretion to exclude the LLC Preferred Securities from

core capital under 12 CFR 5675a1footnote 4 or the reservation of authority

provision 12 CFR 56711 of the OTS capital rule and confirmed that the LLC

Preferred Securities will qualify for inclusion

in


WMPF is planning to issue an additional class of LLC Preferred Securities the

FixedtoFloating Rate Perpetual Noncumulative Preferred Securities Series

2006C LLC Preferred Securities II The LLC Preferred Securities II will

include terms substantially the same as the LLC Variable Rate Preferred

Securities as defined in the Notice including the requirement for the prior

approval of the OTS for any proposed redemption Like the LLC Variable Rate

Preferred Securities the LLC Preferred Securities II will have a stated amount to

be determined based upon market conditions and will pay distributions on anoncumulativebasis at a fixed rate for a period to be determined and thereafter will

pay distributions based on a variable rate of interest plus an applicable spread

However the dividend rates dividend payment dates and redemption dates and

prices will be different than the LLC Variable Rate Preferred Securities

Corporate Execatlve Offices

1301 Second Avenue

Seattla WA 98101

CONFIDENTIAL


Mr Darrel Dochow

November 14 2006

Page 2


The LLC Preferred Securities II will be issued to the Association in exchange for

not more than approximately $10 billion in assets consisting of a pool of option

ARMs originated by the Association Simultaneously the Association will then sell

the LLC Preferred Securities 11 to a new entity Washington Mutual Preferred

Funding Trust

II Delaware Issuer III for not more than approximately $10 billion

in cash Delaware Issuer 11

will be a trust formed under the laws of the State of

Delaware and will not be a subsidiary of the Association for purposes of the

notice requirement set forth in 12 CFR § 55911 Delaware Issuer

II will own all of

the LLC Preferred Securities1

1 which will be the sole asset of the Delaware Issuer

II

Delaware Issuer II will issue a single class of securities Delaware Issuer Il

Securities which will represent undivided beneficial ownership interests in the LLC

Preferred Securities 11 held by Delaware Issuer II Delaware Issuer 11 willpassthroughany distributions or payments upon redemption or upon liquidation with

respect to the LLC Preferred Securities II to be holders of the Delaware Issuer II

Securities Delaware Issuer

11 Securities will be sold solely to US persons who are

qualified institutional buyers within the meaning of Rule 144A under the





In the Notice the Association agreed that the amount of the Associations core





Securities 11 will not cause the Association to exceed this limit On a pro forma

basis based upon an October 10 2006 forecast the amount of LLC Preferred

Securities and LLC Preferred Securities II will constitute no more than

approximately 1402 percent of the Associations core capital as of December 312006

In connection with the request In

the Notice regarding the capital treatment of the

LLC Preferred Securities WMI by letter to you dated February 23 2006 stated

i

In addition to the creation of Delaware Issuer

II a new asset trust Washington Mutual Option ARM

Trust I Asset Trust l1 will be formed Asset Trust It will be a trust formed under the laws of the

State of Delaware pursuant to a trust agreement between WMPF as depositor and a trustee

unaffiliated with the Association as Delaware Trustee Asset Trust II will own approximately $30billion of first lien closedend optionARM home loans the Asset Trust I

f Assets acquired from

the Association WMPF and from university Street Inc REIT any property that secured a loan

that Asset Trust Il acquires by foreclosure or deed in lieu of foreclosure as well as other assets

authorized for federal savings associations under federal law

CONFIDENTIAL


Mr Darrel Dochow

November 14 2006

Page 3


that it will undertake that if as a result of a Supervisory Event as defined in the

Notice WMI exchanges its Holding Company Shares as defined in the Notice for

Cayman Co Preferred Securities and the Delaware Issuer Securities or if WMI

subsequent to such exchange acquires the LLC Preferred Securities WMI will

contribute to WMB the Cayman Co Preferred Securities and the Delaware Issuer

Securities or as appropriate the LLC Preferred Securities On behalf of WMI I

hereby extend that undertaking to the issuance of LLC Preferred Securities li and

the Delaware Issuer II Securities



LLC Preferred Securities II from corecapital under 12 CFR 5675a1footnote 4

or the reservation of authority provision 12 CFR 56711 of the OTS capital rule

and confirm that the LLC Preferred Securities 11 will qualify for inclusion in the


Request for Confidential Treatment Consistent with the standards of the Freedom

of

Information Act 5 USC § 552b the Association hereby requests confidential

treatment of the information contained in this letter the Submission The

Submission contains information that is commercial or financial information

obtained from a person and privileged and confidential thatis exempt from

disclosure under paragraph b4 of the Freedom of Information Act 5 USC

§552b4 and the applicable regulations of the Department of the Treasury 31

CFR §§ 12c1 and 16a The information is proprietary compiled for internal

use only and is made available to regulatory authorities only upon request The

Association requests that the information contained in this document be treated as






Submission it will inform the Association prior to any such release


212 3266104 or me at 206 5004149

ohn F Robinson



CONFIDENTIAL


U

M



1551 Nottb T ssda Avenue Suits 1050 Santa Ana CA 927058635

TeScpltone 714 7964700 FAX 714 7964710

December 4 2006

Mr John F Robinson



Washington mutual

1301 Second Avenue

Seattle WA 98101

bear Mr Robinson

W4VVL

West lzs toh

Santa Ana Area Offim

Prist1t brand tax transmittal memo 7671 Ff popes r

•

To ro

Dept phone

TaTi

This responds to your November 142006 letter advising that Washington Mutual Bank hWNB plate to

issue an additional class ofpicferred securities C LLC PreierrrdSecurities 11 Rough Washington

Mutual Professed Funding LLC WMPF and requcatin OTS confirmation that such securities are

eligible for inclusion in core capital of WMB The LLC Pre1 red securities 11 wil bo issued to WMB in

exchange for not more than $1 billion is assets consisting of a pool of option ABMs origiuate+l by WMIB

By letter dated February 24 2006 this office con niad that the initial two classes of LLC Preferred

Securities issued by WMPF could be included inWW Is capital subject to certain representations and

=krWdngs Similarly please be advised that OTS will not exercise its atpe rvisory authority and

discretion to exclude the LLC Preferred Securities 11 timmcore capital under 12 CFR $675a1 footnote 4

or the reservation of authority provision 12 CFR 56711 of the OTS capital zuie and we hereby confirm

that the preferred securities will qualify for inclusion in WMB core capital This decision is based on the

r esentations made in your November 141etter

Notwiibatanding the above the OTS reserves the right in its cote discretion to exclude she Pr+efeured

Securities or prospective issuances of Preferred Securities if the terms are revised or it otherwise ceases

to provide meaningibl capital support and a realistic ability to absorb losses or otherwise raises

supervisory concerns This may include OTS concerns about the capital mix or asset struttwc ofthe

Subsidiary or WMB

If you have any questions regarding this letter please contact we at 206 8292603

Sincercly

Darrel W Doehow


cc FDIC

CONFIDENTIAL



August 17 2007

Michael Finn

Regional Director West Region




John P Rabhnaan

Executive V ce President


1301 Second Avenue

WMC3Z01

Seattle WA 98101

206 500 4149 phone

206 377 3018 fax



Dear Mr Finn


Association I am writing with reference to the notice filed January 30 2006 by

the Association to establish a new subsidiary Washington Mutual Preferred



core capital of WMB the Notice The Office of Thrift Supervision COTSprovided notice of Its nonobjection to the establishment of WMPF by letter dated

February 9 2006 All capitalized terms used but not otherwise defined herein shall

have the same meaning ascribed to them in the Notice

As you are aware in the Notice the Association requested that the OTS confirm

that the sale of the Cayman Co Preferred Securities and the Delaware Issuer

Securities to outside investors constitutes the sale of the LLC Preferred Securities

to outside investors and that the LLC Preferred Securities qualify for inclusion incore capital of the Association The OTS advised by letter dated February 242006 that it will not exercise its supervisory authority and discretion to exclude the

LLC Preferred Securities from core capital under 12 CFR 5675a1footnote 4 or

the reservation of authority provision 12 CFR 56711 of the OTS capital rule and

confirmed that the LLC Preferred Securities qualify for inclusion in the Associations

core capital

Subsequently the Association by letter dated November 14 2006 requested the

OTS confirm the capital treatment of an issuance of an additional class of LLC

Preferred Securities the Fixed toFloating Rate Perpetual Noncumulative

Preferred Securities Series 2006C LLC Preferred Securities 11 The OTS

advised by letter dated December 4 2006 that it will not exercise its supervisory

authority and discretion to exclude the LLC Preferred Securities II from core capital

under 12 CFR 5675a1footnote 4 or the reservation of authority provision 12CFR 56711 of the OTS capital rule and confirmed that the LLC Preferred

Securities It qualify for inclusion

in


QEqual Honing Lander

CONFIDENTIAL


Mr Michael Finn

August 17 2007

Page 2


Following that issuance the Association by letter dated February 7 2007

requested the OTS confirm the capital treatment of an issuance of another

additional class of LLC Preferred Securities the Fixedto Floating Rate Perpetual

Noncumulative Preferred Securities Series 2007A LLC Preferred Securities

Ill The OTS indicated it consent by return of the letter stamped No Objection

as of February 24 2007

WMPF

is now planning to issue an additional class of LLC Preferred Securities theLLC Preferred Securities IV The LLC Preferred Securities IV will be fixed rate

and will include terms substantially the same as the LLC Fixed Rate Preferred

Securities as defined in the Notice including the requirement for theprior approval

of the OTS for any proposed redemption Like the LLC Fixed Rate Preferred

Securities the LLC Preferred Securities IV will have a stated amount to be

determined based upon market conditions and will pay distributions on anoncumulativebasis However the dividend rates and redemption dates and prices will

be different than the LLC Fixed Rate Preferred Securities Also the LLC Preferred

Securities IV will not be callable during the first five years following issuance and

then may be called at any time thereafter in the discretion of WMPF subject to

prior approval of the OTS

The LLC Preferred Securities IV will be issued to the Association in exchange for

not more than approximately $10 billion in cash Simultaneously the Association

will then sell the LLC Preferred Securities IV to a new entity Washington Mutual

Preferred Funding Trust IV Delaware Issuer IV for not more than approximately

$10 billion in cash2 Delaware Issuer IV will be a trust formed under the laws of

the State of Delaware and will not be a subsidiary of the Association for purposesof the notice requirement set forth in 12 CFR § 55911 Delaware Issuer IV will

own all of the LLC Preferred Securities IV which will be the sole asset of the

Delaware Issuer IV

Delaware Issuer IV will issue a single class of securities Delaware Issuer IV

Securities which will represent undivided beneficial ownership interests

in

the LLC

Preferred Securities IV held by Delaware Issuer IV Delaware Issuer IV will pass

through any distributions or payments upon redemption or upon liquidation with

respect to the LLC Preferred Securities 1V to the holders of the Delaware Issuer IV

Securities Delaware Issuer IV Securities will be sold solely to US persons whoare qualified institutional buyers within the meaning of Rule 144A under the


1 At the time the letter was submitted WMPF had not determined whether the LLC Preferred

Securities

III would be fixedtofloating rate or fixed rate

2Alternatively WMPF may sell the LLC Preferred Securities

III

directly to Delaware Issuer IV for

$10 billion in cash The Association undertakes to advise the OTS If this alternative is selected

prior to the launch date of the issuance

CONFIDENTIAL


Mr Michael Finn

August 17 2007

Page 3





In

the Notice the Association agreed that the amount of the Associations core





Securities IV will not cause the Association to exceed this limit On a pro forma

basis based upon a forecast dated August 9 2007 the amount of LLC Preferred

Securities LLC Preferred Securities

II LLC Preferred Securities

III and LLC

Preferred Securities IV will constitute no more than approximately 1821 percent of

the Associations core capital at September 30 2007

In connection with the request in the Notice regarding the capital treatment of the

LLC Preferred Securities WMI by letter to the OTS dated February 23 2006stated that

it

will undertake that

if as a result of a Supervisory Event WMI

exchanges its Holding Company Shares for Cayman Co Preferred Securities and

the Delaware Issuer Securities or if WMI subsequent to such exchange acquires

the LLC Preferred Securities WMI will contribute to WMB the Cayman CoPreferred Securities and the Delaware Issuer Securities or as appropriate the LLC

Preferred Securities On behalf of WMI I hereby extend that undertaking to the

issuance of LLC Preferred Securities IV and the Delaware Issuer IV Securities



LLC Preferred Securities IV from core capital under 12 CFR 5675a1footnote 4or the reservation of authority provision 12 CFR 56711 of the OTS capital rule

and confirm that the LLC Preferred Securities IV will qualify for inclusion in the


Request for Confidential Treatment Consistent with the standards of the Freedomof Information Act 5 USC § 552b the Association hereby requests confidential

treatment of the information contained in this letter the Submission TheSubmission contains information that is commercial or financial information

obtained from a person and privileged and confidential that is exempt from

disclosure under paragraph b4 of the Freedom of Information Act 5 USC§552b4 and the applicable regulations of the Department of the Treasury 31

CFR §§ 12c1 and 16a The information

is proprietary compiled for internal

use only and is made available to regulatory authorities only upon request TheAssociation requests that the information contained

in

this document be treated as



CONFIDENTIAL


Mr Michael Finn

August 17 2007

Page 4





Submission

it



212 3266104 or me at 206 5004149

hn F Robinson



CONFIDENTIAL



SEP d 2007



Telephone 206 8292600 Fax 206 8292620

September 20 2007



Washington Mutual


Seattle WA 98101

Dew Mr Robinson





not more than

$1 billion in cash













cc FDIC

CONFIDENTIAL




101 Stewart Street Suite 1010 Seattle WA 981011048

Telephone 206 8292600 + Fax 206 8292620

February 9 2006

Mr John F Robinson



Washington Mutual Bank

1201 Third Avenue WMT 1601

Seattle Washington 98101

Dear Mr Robinson

West Region

Seattle Area Office

This responds to the notice filed January 30 2006 advising that Washington Mutual Bank WMBplans to establish a new subsidiary Washington Mutual Preferred Funding LLC WMPF for the

purpose of issuing two classes of preferred securities to be eligible for inclusion in core capital of WMBBased upon the representations made in the notice we do not object to establishment of the new operating

subsidiary or to the issuance of securities by WMPF Notwithstanding please be advised that this letter

should not be construed as authorizing the proposed capital treatment of the SI5 billion in LLC Preferred

Securities to be issued by WMPF That issue remains under review and we will provide an answer when

our review is

completedInthe future we will expect that WMB will plan appropriately so as to allow for the full thirtyday review

by OTS of notices of this type

Please contact me at 206 8292601 if you have any questions

Sincerely

DarrelW Dochow



CONFIDENTIAL


Washington Mutual

CONFIDENTIAL TREATMENT QUESTEDSohn F Robinson


Corporate RiiskManagement

February 23 2006

Darrel Dochow


Office ofThrift Supervision

101 Stewart Street Suite 10 10



confirmation of capital treatment of two classes ofpreferred stock

Dear Mr Dochow

fin behalf of Washington Mutual Inc I I I am writing with reference to the notice

filed January 30 2006 by Washington Mutual Bank WMB to establish a new

subsidiary Washington Mutual Preferred Funding LLC VilMPF for the purpose of

issuingtwo classes of preferred securities to be eligible far inclusion in core capital of

WMB the Notice You provided notice of the nonobjection of the Office of Thrift

Supervision OTS to the establishment of WMPP by your letter dated February 9 2006

As you are aware in the Notice WMB requested the OTS confirm that the sale of the


Notice to outside investors constitutes the sale of the LLCPreferred Securities as defined

in the Notice to outside investors and that the LLC Preferred Securities qualify for

inclusion in core capital ofWMB In connection wit=h thatrequest WM1 hereby undertakes

that if as a result of Supervisory Event as defined inthe Notice WMI exchanges its

Holding Company Shares as defined in the Notice for Cayman Co Preferred Securities

and the l ielaware Issuer Securities or if WTI subsequent to such exchange a quires the

LLC Preferred Securities W IIWill contribute to VMB the Cayman Co Preferred

Securities and the Delaware IssuerSecurities or as appropriate the LLC Preferred

Securities

If you have any questions regarding this letter please call RobertMonheit at

212 3266104 or me at 206 4906100

SiereI

oho F Robinson



12111 Third Avenue

Seattle WA 981

2064906€3Ephone

fax 206 3 5I8

CONFIDENTIAL



Department ofthe Treasury

101 Stewart Street Suite 3010 Seattle WA 981012419

Telephone 206 8292600 Fax 206 8292620

February 24 2006

West Region

Seattle Area oft e

Mr John F Robinson

Executive Vice President FEB 2 8 2006c


Washington Mutual Inc LEGAL DEPARTMENT

1201 Third Avenue WMT 1601

Seattle WA 98101

Dear Mr Robinson

This letter further responds to the notice filed January 30 2006 advising that Washington Mutual

Bank WMB plans to establish a new subsidiary Washington Mutual Preferred Funding LLC

WMPF for the purpose of issuing two classes of Preferred Securities to be eligible for

inclusion in core capital of WMB By letter dated February 9 2006 we took no objection to the

establishment of the new operating subsidiary and the issuance of securities by WMPF


the Preferred Securities from core capital under 12 CFR 5675a1 footnote 4 or the

reservation of authority provision 12 CFR 56711 ofthe OTS capital rule and we hereby

confirm that the Preferred Securities will qualify for inclusion in WMB core capital This

decision is based on the representations in the Notice attachment thereto and commitment

detailed in yourconfidential letter dated February 23 2006

Notwithstanding the above the 0TS reserves The right in its sole discretion to exclude the

Preferred Securities or prospective issuances of Preferred Securities if the terms are revised or


or otherwise raises supervisory concerns This mayinclude OTS concerns about the capital mix



Sincerely

•WA W•LDarrel W Dochow



CONFIDENTIAL


Mailstop WMC 3301

1301 Second Avenue

Seattle WA 98101

Via Electronic Mail

September 25 2008


Examinations

Attn John Bisset

Attn Benjamin Franklin

2065008302 direct phone

steverotellawamunet

WMI will issue a press release on September 26 2008 announcing that each Conditional Exchange will

occur at 800 am New York time on September 26 2008 Pursuant to Section 2 of each Exchange

Agreement the Conditional Exchange will then occur automatically at that time and WMI will become

the owner of all the Delaware issuer trust securities and all the Preferred Securities issued by

Washington Preferred Funding Cayman I Ltd the Cayco Preferred Securities The occurrence of the

Conditional Exchange has the effect of dissolving each of the Delaware issuer trusts so that the WMPF

Preferred Securities held by the trusts will be owned by WMl as a result of such dissolution In any event

lawardth Dt t eo eeffective September25 2008 WMI has assigned to WMB all of its right title and interes

i tpthe Cayco Preferred Securities and the WMPF Preferred Securities and upon rece

trust securities

the Delaware trust securities the Cayco Preferred Securities and the WMPF Preferred Securities WM

will immediately contribute and transfer same to WMB and such contribution and transfer will occur

regardless of any events which may occur prior to such contribution and transfer

Sincerely

WASHINGTON MUTUAL INC

ByName Steve Rotella

Title President and Chief Operating Officer

CONFIDENTIAL


ASSIGNMENT AGREEMENT

between

WASHINGTON MUTUAL BANKas Assignee

and

WASHINGTON MUTUAL INCas Assignor

Effective as of September 25 2008

17535196 05129267

CONFIDENTIAL



THIS ASSIGNMENT AGREEMENT as amended modified or supplemented

from time to time after the date hereof the Agreement is effective as of September 25

2008 and is made by and between WASHINGTON MUTUAL BANK afederallychartered

savings association as Assignee the Assignee and WASHINGTON

MUTUAL INC a Washington corporation as Assignor the Assignor

RECITALS

A Assignor wishes to assign to Assignee certain securities and Assignee

wishes to accept such assignment which Securities shall be assigned upon the

execution of this Agreement

AGREEMENT

In consideration of the premises and the mutual agreements hereinafter set forth

and for other good and valuable consideration the receipt and sufficiency of which are

hereby acknowledged the Assignee and Assignor agree as follows

ARTICLE I

DEFINITIONS GENERAL INTERPRETIVE PRINCIPLES

Section 101 Definitions

Whenever used in this Agreement the following words and phrases unless the

context otherwise requires shall have the following meanings

Agreement This Assignment Agreement including all exhibits hereto and all

amendments hereof and supplements hereto

Certificate Any instrument constituting evidence of ownership of a Security

Effective Date September 25 2008

Code The Internal Revenue Code of 1986 as amended and the regulations

promulgated thereunder and rulings issued thereunder Section references to the Code

are to the Code as in

effect as the date of this Agreement and any subsequent

provisions of the Code amendatory thereof supplemental thereto or substituted

therefore

Assignment The assignment to Assignee by Assignor of Securities pursuant to

this Agreement

Delive Is deemed to occur as of September 25 2008

WMBNWI Master Securities

Assignment Agreement

17535196 05129267

CONFIDENTIAL


Person Any individual corporation limited liability company partnership joint

venture association jointstock company trust unincorporated organization or

government or any agency or political subdivision thereof

Assignee Washington Mutual Bank a federallychartered savings association

and its successors and assigns

Securities The securities listed in

Exhibit A that are the subject of this

Agreement The term Securities includes without limitation such securities any

Certificates corresponding to such securities and all other rights benefits proceeds and

obligations of the owner of such securities arising from or in connection with such

securities whether now owned or hereafter acquired

Assignor Washington Mutual Inc a Washington corporation and its successors

and assigns

Section 102 General Interpretive Principles

For purposes of this Agreement except as otherwise expressly provided or

unless the context otherwise requires

a the terms defined in this Agreement have the meanings assigned to them

in this Agreement and include the plural as well as the singular and the

use of any gender herein shall be deemed to include the other gender

b accounting terms not otherwise defined herein have the meanings

assigned to them in accordance with generally accepted accounting

principles

references herein to Articles Sections Subsections Paragraphs

and other subdivisions without reference to a document are to designated

Articles Sections Subsections Paragraphs and other subdivisions of this

Agreement

d a reference to a Subsection without further reference to a Section is a

reference to such Subsection as contained in the same Section in which

the reference appears and this rule shall also apply to Paragraphs and

other subdivisions

e the words herein hereof hereunder and other words of similar

import refer to this Agreement as a whole and not to any particular

provision and

f the term include or including shall mean without limitation by reason of

enumeration

2

17535196 05129267

CONFIDENTIAL


ARTICLE II

ASSIGNMENT OF SECURITIES

Section 201 Assignment of Securities

With respect to the Securities listed on Exhibit A attached hereto Assignor

hereby contributes transfers assigns sets over and conveys to Assignee without

recourse but subject to the terms of this Agreement all of Assignors right title and

interest whether now owned or hereafter acquired in

and to the Securities

Upon execution and delivery of this Agreement by Assignor and Assignee all

rights and benefits arising out of the Securities which come into the possession of

Assignor including but not limited to funds which may be received by Assignor on or in

connection with the Securities and the ownership of all records and documents with

respect to the Securities which are prepared by or which come into the possession of

Assignor shall immediately vest in Assignee

Assignee acknowledges that the assignment by Assignor to Assignee under this

Agreement are intended to qualify as taxfree transactions under Section 351 of the

Code

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 301 Mutual Representations and Warranties Each party hereby

represents and warrants to the other that it has all requisite power and authority to enter

into and perform its obligations under this Agreement

It is understood and agreed that the representationsand warranties set forth in

this Article V shall survive delivery of the respective Securities to the Assignee and shall

continue throughout the term of this Agreement

ARTICLE IV

COSTS

Section 401 Costs

Each partyshall bear its own costs and expenses All other costs and expenses

incurred in

connection with the transfer and delivery of the Securities including without

limitation recording and filing fees shall be paid by Assignee

Each remittance or distribution made pursuant to this Agreement shall be made

in the manner agreed to by the parties To the extent that the amount of a remittance or

distribution made pursuant to this Agreement is greater than the amount that was

supposed to be made each party agrees to give prompt written notice thereof to the

other party after discovery thereof including the amount of such remittance or

distribution that was paid in error and to refund such overpayment immediately

3

17535196 05129267

CONFIDENTIAL


ARTICLE V

MISCELLANEOUS PROVISIONS

Section 501 Amendment

This Agreement may be amended from time to time only by written agreement

signed by Assignor and Assignee

Section 502 Governing Law

This Agreement shall be construed in accordance with the internal laws of the

State of Washington except to the extent preempted by federal law and without

reference to the choice of law doctrine of such state and the obligations rights and

remedies of the parties hereunder shall be determined in

accordance with such laws

Section 503 Notices

All demands notices and communications hereunder shall be in writing and shall

be deemed to have been duly given if personallydelivered at or mailed by registered or

certified mail postage prepaid to a in the case of Assignor

Washington Mutual Inc



Attention Corporate Secretary

or such other address as may hereafter be furnished by Assignor to Assignee in writing

and

b in the case of Assignee

Washington Mutual Bank



Attention Corporate Secretary

or such other address as may hereafter be furnished by Assignee to Assignor in writing

Section 504 Merger Severability of Provisions

This Agreement and the documents and instruments referred to herein

constitute the entire agreement of and is the final and complete expression of the parties

relating to the subject matter of this Agreement and supersedes all prior or

contemporaneous negotiations and agreements whether oral or written relating to the

subject matter hereof

If any one or more of the covenants agreements provisions or terms of this

Agreement shall be held invalid for any reason whatsoever then such covenants

4

17535196 05129267

CONFIDENTIAL


agreements provisionsor terms shall be deemed severable from the remaining

covenants agreements provisions or terms of this Agreement and shall in no way affect

the validity or enforceability of the other provisionsof this Agreement If the invalidity of

any part provision representation or warranty of this Agreement shall deprive any party

of the economic benefit intended to be conferred by this Agreement the parties shall

negotiate in good faith to develop a structure the economic effect of which is nearly as

possible the same as the economic effect of this Agreement without regard to such

inability

Section 505 Execution Successors and Assicros

This Agreement may be executed in one or more counterparts and by the

different parties hereto on separate counterparts each of which when so executed

shall be deemed to be an original such counterparts together shall constitute one and

the same agreement This Agreement shall inure to the benefit of and be binding upon

Assignor and Assignee and their respective successors and assigns

Signatures on Following Page

5

17535196 05129267

CONFIDENTIAL


IN WITNESS WHEREOF the parties have caused this Agreement to be

executed by their respective duly authorized officers on the dates shown below to be

effective as of the effective date first set forth above

WASHINGTON MUTUAL BANK

By$

Name zht irTitlet jA

r1WASHINGTONMUTUAL INC

ByName1tTitle VVj f vol

s

17535196 05129267

CONFIDENTIAL


EXHIBITA

SECURITIES

I Washington Mutual Preferred Cayman I Ltd 725 Perpetual Noncumulative

Preferred Securities Series A1

ii Washington Mutual Preferred Cayman I Ltd 725 Perpetual Noncumulative

Preferred Securities Series A2iii Washington Mutual Preferred Funding Trust FixedtoFloating Rate Perpetual

Noncumulative Trust Securities

iv Washington Mutual Preferred Funding Trust II FixedtoFloating Rate Perpetual


v Washington Mutual Preferred Funding Trust Ill FixedtoFloating Rate Perpetual


vi Washington Mutual Preferred Funding Trust IV FixedtoFloating Rate Perpetual


vii Washington Mutual Preferred Funding LLC FixedtoFloating Rate Perpetual

Noncumulative Preferred Securities Series 2006A

viii Washington Mutual Preferred Funding LLC 725 Perpetual Noncumulative

Preferred Securities Series 2006B

ix Washington Mutual Preferred Funding LLC FixedtoFloating Rate Perpetual

Noncumulative Preferred Securities Series 2006C

x Washington Mutual Preferred Funding LLC FixedtoFloating Rate Perpetual

Noncumulative Preferred Securities Series 2007A

xi Washington Mutual Preferred Funding LLC FixedtoFloating Rate Perpetual

Noncumulative Preferred Securities Series 2007B

ii Any and all right title and interest of the Washington Mutual Inc in and to

Washington Mutual Preferred Cayman I Ltd WaMu Cayman Washington

Mutual Preferred Funding Trust WaMu Delaware I Washington Mutual

Preferred Funding Trust II WaMu Delaware Iln Washington Mutual Preferred

Funding Trust

III WaMu Delaware Ill and Washington Mutual Preferred

Funding Trust IV WaMu Delaware IV and together with WaMu Cayman

VJaMu Delaware I WaMu Delaware 11 and WaMu Delaware III the Trusts

including any interests of the Trusts in any of the Securities

17535196 05129267

CONFIDENTIAL


Washington Mutual

CONFIDENTIAL TREATMENT QUESTEDSohn F Robinson


Corporate RiiskManagement

February 23 2006

Darrel Dochow


Office ofThrift Supervision

101 Stewart Street Suite 10 10



confirmation of capital treatment of two classes ofpreferred stock

Dear Mr Dochow

fin behalf of Washington Mutual Inc I I I am writing with reference to the notice

filed January 30 2006 by Washington Mutual Bank WMB to establish a new

subsidiary Washington Mutual Preferred Funding LLC VilMPF for the purpose of

issuingtwo classes of preferred securities to be eligible far inclusion in core capital of

WMB the Notice You provided notice of the nonobjection of the Office of Thrift

Supervision OTS to the establishment of WMPP by your letter dated February 9 2006

As you are aware in the Notice WMB requested the OTS confirm that the sale of the


Notice to outside investors constitutes the sale of the LLCPreferred Securities as defined

in the Notice to outside investors and that the LLC Preferred Securities qualify for

inclusion in core capital ofWMB In connection wit=h thatrequest WM1 hereby undertakes

that if as a result of Supervisory Event as defined inthe Notice WMI exchanges its

Holding Company Shares as defined in the Notice for Cayman Co Preferred Securities

and the l ielaware Issuer Securities or if WTI subsequent to such exchange a quires the

LLC Preferred Securities W IIWill contribute to VMB the Cayman Co Preferred

Securities and the Delaware IssuerSecurities or as appropriate the LLC Preferred

Securities

If you have any questions regarding this letter please call RobertMonheit at

212 3266104 or me at 206 4906100

SiereI

oho F Robinson



12111 Third Avenue

Seattle WA 981

2064906€3Ephone

fax 206 3 5I8

CONFIDENTIAL


By:Name: Steve RotellaTitle: President and Chief Operating Officer

CONFIDENTIAL

WaMue

Mailstop: WMC 33011301 Second AvenueSeattle, WA 98101

206-500-8302 direct [email protected]

Via Electronic Mall

September 25, 2008

Office of Thrift SupervisionExaininationsAttn: John BissetAttn: Benjamin Franklin

WMI will Issue a press release on September 26, 2008 announcing that each Conditional Exchange willoccur at 8:00 am. New York time on September 26, 2008. Pursuant to Section 2 of each ExchangeAgreement, the Conditional Exchange will then occur automatically at that time, and WMI will becomethe owner of all the Delaware issuer trust securities, and all the Preferred Securities issued byWashington Preferred Funding (Cayman) I Ltd. (the "Cayco Preferred Seciiritles") The occurrence of theConditional Exchange has the effect of dissolving each of the Delaware issuer trusts, so that the WMPFPreferred Securities held by the trusts will be owned by WMI as a result of such dissolution. In any event,effective September 25, 2008, WMI has assigned to WMB all of its right, title and interest to the Delawatrust securities, the Cayco Preferred Securities and the WMPF Preferred Securities, and upon receiptthe Delaware trust securities, the Cayco Preferred Securities and the WMPF Preferred Securities,will immediately contribute and transfer same to WMB, and such contribution and transfer will occurregardless of any events which may occur prior to such contribution and transfer.

Sincerely,

WASHINGTON MUTUAL, INC.


Ilia Electronic Mall

Se,,!en,h.r 25, 2008

Office of Thrift Supervision Examinations Attn: John Bisset Attn: Benjamin Franklin

CONFIDENTIAL

Mailstop: WMC 3301 1301 Second Avenue Seatile, WA 98101

206-500-8302 direct phone [email protected]

WMf wm Issue a press release on 2008 announcing that each Conditional will

occur at 8:00 am. New York time on 2008 .. Pul'Su.ntto Section 2 of each Exc;hal1Qe

Agr.emen~ lhe Conditional then occur at that time, and WMI will become

the owner of all the Delaware and all the Securities Issued by

Washington Preferred Funding (Cayman) I Ltd; (lhe Preferred Securities"). The occurrence afth.

Condmonal has the effecl of dissolving each Delaware Issuer trusts, so that the WMPF

Preferred Securities by the trusts WIll be owned by WMI .s a re5uft of such dl .. ". lulion. In .ny~ven~

effeclive September 25, 2008, WMI has to WMB all of its right, titie and interest to the Delawa 1I.JlJ.\ trust securitie., the Cayco Preferred and the WMPF Preferred Securities, end recelp!

the Delaware trust securlH.s, the Cayco Preferred Securities and the WMPF Preferred Se"uritle.,

will contribute and transfer .ame to WMB, and such contribution and !ransfer WIll occur

regardless of any events which may occur plior to such contrtbull"n and transfer. '

Sincerely,


Title: President and Chief 'Op,''''!ing Officer I I I I I I I I I

I For Use in Connection with Plan Confirmation Only WMIPC_ 500002025.00004

CONFIDENTIAL


between

WASHINGTON MUTUAL BANK,as Assignee

and

WASHINGTON MUTUAL, INC.,as Assignor

Effective as of September 25, 2008


17535196 05129267


175351% 05129267

between

WASHINGTON MUTUAL as A$.,ign,~e

and

WASHINGTON as As"lallor

Effective as

in r:"nn,,,dion with Plan Confirmation Only

2008

~ L

I

j I

WM I PC _ 500002025, 00005

CONFIDENTIAL


THIS ASSIGNMENT AGREEMENT (as amended, modified or supplementedfrom time to time after the date hereof, the "Agreement') is effective as of September 25,2008, and is made by and between WASHINGTON MUTUAL BANK, a federally-chartered savings association, as Assignee (the "Assignee), and WASHINGTONMUTUAL, INC., a Washington corporation, as Assignor (the 4Assignor').

RECITALS

(A) Assignor wishes to assign to Assignee certain securities, and Assigneewishes to accept such assignment, which Securities shalt be assigned upon theexecution of this Agreement.

AGREEMENT

In consideration of the premises and the mutual agreements hereinafter set forth,and for other good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Assignee and Assignor agree as follows:

ARTICLE I

DEFINITIONS: GENERAL INTERPRETIVE PRINCIPLES

Section 1.01 Definitions.

Whenever used in this Agreement, the following words and phrases, unless thecontext otherwise requires, shall have the following meanings:

Agreement: This Assignment Agreement, including all exhibits hereto, and all,amendments hereof and supplements hereto.

Certificate: Any instrument constituting evidence of ownership of a Security.

Effective Date: September 25, 2008.

Code: The Internal Revenue Code of 1986, as amended, and the reguiationspromulgated thereunder and rulings issued thereunder. Section references to the Codeare to the Code, as in effect as the date of this Agreement and any subsequentprovisions of the Code, amendatory thereof, supplemental thereto or substitutedtherefore.

Assignment The assignment to Assignee by Assignor of Securities pursuant tothis Agreement

Delivery: Is deemed to occur as of September 25, 2008.

WMIIIINMI Mester SecuritiesAssignment Agreement

Restricted For Use in Connection with Plan Confirmation Only WMIPC...500002025.00006

17535196 05129267

CONFIDENTIAL

. THIS ASSIGNMENT AGREEMENT (as modified or supplemented

from time 10 time Ihe dale hereof, the "Agreemenf') is as of September

2008, and is made and between WASHINGTON MUTUAL BANK, a federally-

chartered savings as Assignee and WASHINGTON

MUTUAL, INC., a corporation, as Assignor

RECITALS

(Al wishes 10 execution

10 assign to Assignee certain s:,~~:;~~,s~ and A.,,10;1ee

such assignment, which Securities shall be a upon the

Agreement.

AGREEMENT

In consideralion of the premises and the mutual hereinafter sel forth,

and for other good and valuable the and suffiCiency of which are

aclmc1wlildgled, the and Assignor agree as follows:

ARTICLE I

Section 1,01.

Whenever Ilsed in this Acree,mlmt.the follOWing words and ohlrases. unless the

context otherwise the foll"wi"9 m,,,arlinos:

ame'nd;~~~~~ This Assignment Agreement including all exhibits supplements hereto.

"ndall

!&!!i!i!;;l!!J,,: Any instrument constituting evidence of ownership of a Security.

2008.

The Internal Revenue Code of 1986, as amoencled, and the regulations

prctmLllgalted !.hereLlndler and rulings issued thereunder. Section references to the Cod"

are to as in effect as the date of this and any subsequent

amendatory thereof, thereto or substituted

Agr~::~Jl: The "J>."innm"nt to A.,.i"""" by Assignor of SecurHies pun~ua'n!to

this

Is deemed to occur as of $e'JIs,nb<" 25, 2008.

WMSMMI Master Sooulitl .. Asslgnment Agreement

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Person: Any individual, corporation, limited liability company, partnership, jointVenture, association, joint-stock company, trust, unincorporated organization orgovernment or any agency or political subdivision thereof.

Assignee: Washington Mutual Bank, a federally-chartered savings association,and its successors and assigns.

Securities: The securities listed in Exhibit A that are the subject of thisAgreement. The term 'Securities" includes, without limitation, such securities, anyCertificates corresponding to such securities, and all other rights, benefits,-proceeds andobligations of the owner of such securities arising from or in connection with suchsecurities, whether now owned or hereafter acquired.

Assignor. Washington Mutual, Inc, a Washington corporation, and its successorsand assigns.

Section 1.02. General Interpretive Principles.

For purposes of this Agreement, except as otherwise expressly provided orunless the context otherwise requires:

a) the terms defined in this Agreement have the meanings assigned to themin this Agreement and include the plural as well as the singular, and theuse of any gender herein shall be deemed to include the other gender;

b) accounting terms not otherwise defined herein have the meaningsassigned to them In accordance with generally accepted accountingprinciples;

c) references herein to "Articles," "Sections," 'Subsections,' "Paragraphs,"and other subdivisions without reference to a document are to designatedArticles, Sections, Subsections, Paragraphs and other subdivisions of thisAgreement;

d) a reference to a Subsection without further reference to a Section Is areference to such Subsection as contained in the same Section in whichthe reference appears, and this rule shall also apply to Paragraphs andother subdivisions;

e) the words "herein," hereof," °hereunder,' and other words of similarimport refer to this Agreement as a whole and not to any particularprovision; and

f) the term 'include or "including" shall mean without limitation by reason ofenumeration.


217535196 05129267

e:,:~~~A~'n~:Y~,iindiVidual, corporation, limifed li~biJity cnrnDa,nv partnership, joint Venture, joint-stock company, trust: organization or

. govemment or any agency or political subdivision "'"""".

&;;illl!!~: Washington Mutual and Hs successors and assigns.

a federally"chartered saviinos aSll'ociation,

The securities listed in Exhibit A that are the of this 'Securiti",,' includes. without limitation, such sacurfties. any

to such and all other rights. benefits. proceeds and of the owner such securities from or in connection with such

whelher now owned or hereafter ar .. ,ui!-ed .

• ;~~!Q.[: Washington Mutual. Inc:. a Washington corporation, and its successors and a,

Section 1.02.

For "l!!'nn, .. ,~ of this Agreement, as othelWise expressly prc,vidied or unless the otherwise requires:

al

b)

0)

d)

e)

the lenns defined in this have Ihe meanings assigned to them In this Agreement and the plural as well as Ihe singular, and the use of any gender herein shall be deemed to include the other gender;

"~;~~~:;:;:~ terms not otherwise defined herein have the meanings a them in accordance WITh generally accounting

references herein 10 'Articles," • 'SllbseotJon,s, 'f:~~a3~::~~;;ed and other subdivisions without reference to II document are to Articles, and other subdivisions of Ihls Agreement;

a reference to a Subsection without further reference to a Section Is a reference to such Subsection as oontained in the same Section in which the reference appears, and Ihis rule shall also apply to and other subdivisions;

words " 'hereof," 'hereunder," and other words ofsimilar refer to this Agreement as a whole and not to any particular

prc.vlsllon; and

l) the tSI111 "include" or "including' shall mean vAthoutlimilaiion by reason of enumeration,

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ARTICLE II

ASSIGNMENT OF SECURITIES

Section 2.01. Assignment of Securities.

With respect to the Securities listed on Exhibit A attached hereto, Assignor• hereby contributes, transfers, assigns, sets over and conveys to Assignee, withoutrecourse, but subject to the terms of this Agreement, all of Assignor's right, title andinterest, whether now owned or hereafter acquired, In and to the Securities.

Upon execution and delivery of this.Agreement by Assignor and Assignee, allrights and benefits arising out of the Securities which come into the possession ofAssignor, including but not limited to funds which may be received by Assignor on or inconnection with the Securities, and the ownership of all records and documents withrespect to the Securities which are prepared by or which come into the possession ofAssignor, shall immediately vest in Assignee,

Assignee acknowledges that the assignment by Assignor to Assignee under thisAgreement are intended to qualify as tax-free transactions under Section 351 of theCode.

ARTICLE III

REPRESENTAT!QNS AND WARRANTIES

Section 3.01. Mutual Representations and Warranties,. Each party herebyrepresents and warrants to the other that it has all requisite power and authority to enterinto and perform its obligations under this Agreement.

It is understood and agreed that the representations and warranties set forth Inthis Article V shall survive delivery of the respective Securities to the Assignee, and shallcontinue throughout the term of this Agreement.

ARTICLE IV

COSTS

Section 4.01. Costs.

Each party shall bear its own costs and expenses. All other costs and expensesincurred in connection with the transfer and delivery of the Securities, Including withoutlimitation recording and filing fees, shall be paid by Assignee.

Each remittance or distribution made pursuant to this Agreement shall be madein the manner agreed to by the parties. To the extent that the amount of a remittance ordistribution made pursuant to this Agreement is greater than the amount that wassupposed to be made, each party agrees to give prompt written notice thereof to theother party after discovery thereof, including the amount of such remittance ordistribution that was paid in error, and to refund such overpayment immediately.

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ARTICLE II

With respect to the Securilies listed on Exhibft A a!!ached hereto, Assignor

contributes, assigns, over and conveys to Assignee, without .

recourse, but to the terms of this all of Assigl1o~s right,ltlle and

interest, whether now owned or hereafter acquired, and to the Securities,

execution and delivery of this Agreement by As,siol'Of

rights out of the Securities which rome ;nt" t"A

Assignor, including but limited to funds which may be

connection with the Securities, and the ownership of all records

re!lpect to the Secumies which are or which come inlo the

Assigrlor, shall immediately vest in As,sigrlee.

all of on orin with

of

Aor,,~rr~:i~::~ acknowledges that the a::~~~~~~~~~~ are intended to qualify as tax-free

Asl;;grlee underthis oflhe

ARTICLE III

enter

It is understood and that the representations and warranties set forth In

this Article V shall survive del'iverv of the respective Securi!ies to the and shall

continue throughout the term

ARTICLE IV

Section 4.01.

Each shall bear fts own costs and expens .. s. All other costs and exp,emsoo

Incurred In with the transfer and delivery of the Including

limitation recording and filing shall be by Assignee.

Eaoh remillance or distribution made pursuant to this shall be made

in the To the extent that Ihe amount of a remittance or

distrtbution Agreement the amount that was

SUI)P~sed to be nro,mo" wriit"n noliee thereof to

after discoII'ery Ihe",,,,f, 1I10,a{""" the of such remittance or

distribution that was such overpayment imlllediately.

115351960:$129267

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ARTICLE V

MISCELLANEOUS PROVISIONS

Section 5.01. Amendment.

This Agreement may be amended from time to time only by written agreementsigned by Assignor and Assignee.

Section 5.02. Governing Law. ..

This Agreement shall be construed In accordance with the internal laws of theState of Washington, except to the extent preempted by federal law and withoutreference to the choice of law doctrine of such state, and the obligations, rights andremedies of the parties hereunder shall be determined in accordance with such laws.

Section 5.03. Notices.

All demands, notices and communications hereunder shall be in writing and shallbe deemed to have been duly given if personally delivered at or mailed by registered orcertified mail, postage prepaid, to (a) in the case of Assignor,

Washington Mutual, Inc.1301 Second Avenue, WMC 1411Seattle, Washington 98101Attention: Corporate Secretary

or such other address as may hereafter be furnished by Assignor to Assignee in writing;and

b) in the case of Assignee,

Washington Mutual Bank1301 Second Avenue, WMC 1411Seattle, Washington 98101Attention: Corporate Secretary

or such other address as may hereafter be furnished by Assignee to Assignor in writing.

Section 5.04. Merger: Severability of Provisions.

This Agreement, and the documents and instruments referred to herein,constitute the entire agreement of and is the final and complete expression of the partiesrelating to the subject matter of this Agreement, and supersedes all prior orcontemporaneous negotiations and agreements, whether oral or written, relating to thesubject matter hereof.

If any one or more of the covenants, agreements, provisions or terms of thisAgreement shall be held invalid for any reason whatsoever, then such covenants,


4I7535196 05129261

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ARTICLE V

SectionS.01. llmruJf!l!:!lE!l1

This Aoreement be amended from time to time only written agreement

signed As"lgn,orand

Section 5.02 . .\2Q'l§LolDJaklM,·.

This Agreemenl shall be In the intemallaws of the

Slate of Washington, 10 the eldent by federal law and without

reference to the choice of doctrine of such and the and

remedies of the hereunder shall be determined In accordance such laws.

Section 5.03. Nolices.

All notices and communications hereunder shall be in writing and shall

be deemed to have been if personally delivered at or mailed by registered or

certified (a) in the case of Assignor.

W"shing'lon Mutual. Inc. 1301 Second Avenue. WMC 1411 "",,:me. Washington 98101 Attention: Corporate Se,orelary

or such oth"r address as may hereafter be furnished by Assignor to ASJ<im1M in writing;

and

b) in the Case

Washington MlJlual Bank 1301 Second WMC 1411 ",",ame. Washington Atten!ion: COlJXlI·ate Se,eret:ary

or such other address asmay hereafter be furnished by As"ig"ss!" Assignor in writing.

Section 5.04.

This and the documents and instruments referred 10 herein,

constitu1e entire agreement of and is the and expression of the

rel,alir,,, to the subject malter and all plior or

contemporaneous agreements. oral or written, rab,tinlg to the

subject malle,

one or more of the provisions or terms of this

be held invalid for any reason whatsoever, then such co,'en,.nbs.

4 17535196 ()Sl29261

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agreements, provisions or terms shall be deemed severable from the remainingcovenants; agreements, provisions or terms of this Agreement and shall in no way affectthe validity or enforceability of the other provisions of this Agreement. If the invalidity ofany part, provision, representation or warranty of this Agreement shall deprive any partyof the economic benefit intended to be conferred by this Agreement, the parties shallnegotiate in good faith to develop a structure the economic effect of which is nearly aspossible the same as the economic effect of this Agreement without regard to suchinability.

Section 5,05. Execution; Successors and Assigns.

This Agreement may be executed in one or more counterparts and by thedifferent parties hereto on separate counterparts, each of which, when so executed,shall be deemed to be an original; such counterparts, together, shall constitute one andthe same agreement. This Agreement shall inure to the benefit of and be binding uponAssignor and Assignee and their respective successors and assigns.

[Signatures on Following Page]


17535196 05/232675

CONFIDENTIAL

provisions·orterms shall be deemed severable from the ren1ai"ino

covenants, or ielTllS cif this Agreement and shall in no way affect

the validity Or of the other provisions of this If the Invalidity of .

any part, provision, or warranty althis Agreementshail deprive any party

of the economic Intended to be conferred Ihls Agreement, Ihe parties shall

negoliale in good faith to develop a structure Ihe economic effect of which is Meany as

fn~~~i~~ the same as Ihe economic effect of this Agreement without regard 19 such

Aareement may be executed In one Of more counterparts and by the

different hereto on counterparts, each afwhlch, when so "x"cU""U,

shall bede"m.,d to be an such together, shall constitute one and

the same This shall inure 10 the benefit of and be binding upon

Assignee respective successors and a .. ,ians.

[Signatures on Following

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IN WITNESS WHEREOF, the parties have caused this Agreement to beexecuted by their respective duly authorized officers on the dates shown below, to beeffective as of the effective date first set forth above.

By.Name: ,•.,414,4—A

5e6CONre Fre*trfril--


esti/Alp Name.Title: Ice.cA.Arkii.c vict- F(rWeti1-


.4:gokilit,.


17535196 05729267

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-.",.:

IN WITNESS WHEREOF, the parties have caused Ihis Agreement to be executed by their respective duly authorized officers on the dates shollln below, to be effective as of the effective date first set forth above.


6 1753519605129261

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EXHIBIT A

SECURITIES

(i) Washington Mutual Preferred (Cayman)] Ltd. 7.25% Perpetual Non-cumulativePreferred Securities, Series A-1

(ii) Washington Mutual Preferred (Cayman) I Ltd. 7.25% Perpetual Non-cumulativePreferred Secirrities, Series A-2

(iii) Washington Mutual Preferred Funding Trust Fixed-to-Floating Rate PerpetualNon-cumulative Trust Securities

(iv) Washington Mutual Preferred Funding Trust II Fixed-to-Floating Rate PerpetualNon-cumulative Trust Securities

(v) Washington Mutual Preferred Funding Trust III Fixed-to-Floating Rate PerpetualNon-cumulative Trust Securities

(vi) Washington Mutual Preferred Funding Trust IV Fixed-to-Floating Rate PerpetualNon-cumulative Trust Securities

(vii) Washington Mutual Preferred Funding LLC Fixed-to-Floating Rate PerpetualNon-cumulative Preferred Securities, Series 2006-A

(viii) Washington Mutual Preferred Funding LLC 7.25% Perpetual Non-cumulativePreferred Securities, Series 2005-B

(ix) Washington Mutual Preferred Funding LLC Fixed-to-Floating Rate PerpetualNon-cumulative Preferred Securities, Series 2006-C

(x) Washington Mutual Preferred Funding LLC Fixed-to-Floating Rate PerpetualNon-cumulative Preferred Securities, Series 2007-A

(xi) Washington Mutual Preferred Funding LLC Fixed-to-Floating Rate PerpetualNon-cumulative Preferred Securities, Series 2007-B

(xii) Any and all right, title and interest of the Washington Mutual, Inc. in and toWashington Mutual Preferred (Cayman) I Ltd. ("WaMu Cayman"), WashingtonMutual Preferred Funding Trust ("WaMu Delaware Washington MutualPreferred Funding Trust II ("WaMu Delaware 111, Washington Mutual PreferredFunding Trust ill ("WaMu Delaware III") and Washington Mutual PreferredFunding Trust IV ("WaMu Delaware IV' and, together with WaMu Cayman,WaMu Delaware I, WaMu Delaware II and WaMu Delaware Ill, the 'Trusts"),including any interests of the Trusts In any of the Securities


17535196 05129267

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EXHIBIT A

SECURITIES

(i) Washington Mutual Preferred (Cayman) I Ltd. 7.25% Perpetual Non-cumulative Preferred Securities, Series A-l

Iii) Washington Mulual Preferred (Cayman) I Ltd. 7.25% Perpetual Non-cumulative Preferred Series A-2

(Iii) Mutual Funding Trust Fixed-to-FloatingRate Perpetual Non-cumulalive Trust Securities

(iv) MlIlual Preferred FUlndi"n Truslll Rate Perpetual Non-cumula!iveTrust Securities

(v) Washington Mutual Preferred F'lf1dir,n Trust III Rate Perpetual Non-cumulative Trust Securities

(vi) Washington Mutual Preferred Trust IV Rale Perpetual Non-cumulalive Trust Securities

(vii) Washington Mutual Preferred F'ul,di"n Rate peillel:ual Non-cumulalive Preferred 2006-A

(viii) Washington Mutual Preferred Funding LLC 7.25% PA,mel:ual Non-cumulative Preferred Series 2006-8

Ox) Washington Mutual Non-cumulative Preferred !,:,,,,,, "III".

(x) Washington Millu,,1 Preferred Funding lLC Rate Perpe:lual . Non-cumulative Preferred Securities, Series 2007-A Washington Mutual Preferred Funding LLC Fixed-to-Floating Rale Perpetual Non-cumulative Preferred Securities, Series 2007-8

(xli) and all right, tille and Inlerest oflhe Washington Mutual, Inc. in and to Washington Mutual Preferred (Cayman) I ltd. ("WaMu Cayman"), Washington Mutual Preferred Funding Trust (WaMu Delaware Washington Mutual Preferred Funding Trust II rwaMu Delaware 11"), Mutual Preferred

Trusllll (WaMu Delaware III') and Washington Preferred ",,,,,.H,,~ Trust IV (WaMu Delaware IV' and, togetharwith WaMu Cayman, WaMu I, WaMu Delaware II and WaMu Delaware III, the "Trusts"), including any interests of the Trusts In any of the Securtties

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Office of Thrift SupervisionDepartment of the Treasury West Region

Seattle Office • (206) 829-2600 • Fax: (206) 829-2620101 Stewart Street, Suite 1010Seattle, WA 98101

September 25, 2008

Board of DirectorsMr. Steve Frank, ChairmanMr. Alan Fishman, Chief Executive OfficerWashington Mutual, Inc.1301 Second AvenueSeattle, WA 98101

Members of the Board or their Representative:

The deposit outflows from Washington Mutual Bank over the past two weeks and reduction in availability ofalternative funding sources have created significant liquidity pressures for the institution. The September 7,2008 OTS Memoranda of Understanding ("MOU") the bank entered into with OTS requires WaMu to provideOTS with an analysis of the earnings, profitability and stability of all existing and projected business lines. Inaddition, the MOU places limitations on the ability of the bank to pay dividends.

Pursuant to the conditional exchange provision in the prospectus of the REIT preferred offerings of the bank,OTS concludes an "Exchange Event" has occurred and therefore directs an exchange of WaMu REITPreferred Securities to a like amount of preferred stock in Washington Mutual Incorporated.

Please let me know if you have any questions,

Sincerely,

\ Cus.#4Darrel W. DochowRegional Director

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Board of Directors

CONFIDENTIAL

Thrift SUlpervision the

Senttle Ofnce l1li (206) 829·2600 I!II Fax: (206) 829-2620 ! 0 I Stew.lIt Street, Suite 1 D! 0 SeaUle. WA 98LOI

Me. Steve Frank, Chairman Me. Alan Fishman, Chief Executive Officer Washington ~1utt.lal~ Inc. 1301 Second Avenue SeaUle, W A 98 I 0 I

Members of the Board or their Representative:

WeSf

The deposit outflows from Washington Mutual Bank over thep.st two weeks and reduction ill availability of altemative funding sources have created significant liquidity pressures for the institution, The 7, 2008 OTS Memoranda of Understanding ("MOU") the bank entered into with OTS requires WaM" to pre.Y,,!" OTS with an analysis of the e!IInings, profitability and stability of all existing and projected business lincs. In addition, ,he MOU places limitations on the ability of the bank 10 pay dividends.

Pursuant to the conditional exchange provision ill the prospectus of ,he REIT of the bank, OTS concludes all "Exchange Event" has occurred and therefore directs an of WaMu REIT Preferred Securities to a like amount of stock in Washington Mutual Incorporated.

Please let me know if you have any qUl"tioll".

Sincerely,

Darrel W, Dochow Regional Director

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CONFIDENTIAL

Washington

Mutual$750,000,000

Washington Mutual Preferred Funding Cayman) I Ltd.

7.25% Perpetual Non-cumulative Preferred Securities

Automatically Exchangeable in Specified Circumstances into

Depositary Shares representing Preferred Stock of

Washington Mutual, Inc.

Washington Mutual Preferred Funding Cayman) I Ltd., a Cayman Islands exempted company limited by shares WaMu

Cayman"), will invest the proceeds of

its 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1, liquidation

preference $100,000 per security the Series A-1 WaMu Cayman Preferred Securities"), and

its 7.25% Perpetual Non-

cumulative Preferred Securities, Series A-2, liquidation preference $10,000 per security the Series A-2 WaMu Cayman

Preferred Securities" and, together with the Series A-1 WaMu Cayman Preferred Securities, the WaMu Cayman Preferred

Securities") offered hereby

in

a like amount

of 7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference

$1,000 per security the Fixed Rate Company Preferred Securities"), of Washington Mutual Preferred Funding LLC, a Delaware

limited liability company the Company"). The terms of

the Series A-1 WaMu Cayman Preferred Securities and the Series A-2

WaMu Cayman Preferred Securities are identical except for their per security liquidation preference. WaMu Cayman will have

no material assets other than the Fixed Rate Company Preferred Securities. The financial entitlements of

each WaMu Cayman

Preferred Security will be substantially the same as

the financial entitlements of

a like amount of

Fixed Rate Company Preferred

Securities, with the consequence that dividends and the redemption price

on the WaMu Cayman Preferred Securities will

be

payable on the same dates and in the same amounts as

the corresponding dividends and redemption price, as

applicable, on a

like amount

of

Fixed Rate Company Preferred Securities. The Company's initial material assets will consist

of

indirect interests

in mortgages and mortgage-related assets originated by Washington Mutual Bank as

described herein.

Dividends on the Fixed Rate Company Preferred Securities will be payable

if, when and as

declared by

the Company's

Board of

Managers out of

legally available funds, on a non-cumulative basis at

an annual rate of

7.25% on the liquidation

preference per security, quarterly

in

arrears

on March 15, June 15, September

15 and December

15

of each year,

commencing

on June 15, 2006 each, a Dividend Payment Date"),

or

the next Business Day

if

any such day

is

not a

Business Day.

If the Office

of

Thrift Supervision together with any successor regulator, the OTS") so directs following the

occurrence of

an Exchange Event as

described herein, each WaMu Cayman Preferred Security will be automatically

exchanged for depositary shares representing a like amount

of Washington Mutual, Inc.'s Series J Perpetual Non-

cumulative Fixed Rate Preferred Stock.

See Risk Factors" beginning on page for a description of

the risk factors you should consider before you invest in the

securities offered hereby.Continued o

n next page)

Offering price: $100,000.00 per Series A-1 WaMu Cayman Preferred Security

$ 10,000.00 per Series A-2 WaMu Cayman Preferred Security

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES

ACT OF 1933, AS AMENDED THE SECURITIES ACT"). THE SERIES A-1 WAMU CAYMAN PREFERRED SECURITIES AREBEING OFFERED AND SOLD ONLY

IN

THE UNITED STATES AND ONLY TO U.S. PERSONS THAT ARE BOTH QUALIFIED

INSTITUTIONAL BUYERS" WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND QUALIFIED

PURCHASERS" WITHIN THE MEANING OF SECTION 2(a)(51) OF THE U.S. INVESTMENT COMPANY ACT OF 1940, AS

AMENDED THE INVESTMENTCOMPANY ACT"» IN RELIANCE ON AN EXEMPTION FROM REGISTRATION PURSUANT TORULE 144A. THE SERIES A-2 WAMU CAYMAN PREFERRED SECURITIES ARE BEING OFFERED AND SOLD ONLY TONON-U.S. PERSONS

IN

TRANSACTIONS OUTSIDE THE UNITED STATES

IN

RELIANCE ON AN EXEMPTION FROMREGISTRATION PURSUANT TO REGULATION S UNDER THE SECURITIES ACT. PROSPECTIVE PURCHASERS OF SERIES A-1

WAMU CAYMAN PREFERRED SECURITIES ARE HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE

RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A.

THE SECURITIES ARE NOT TRANSFERABLE EXCEPT

IN

ACCORDANCE WITH THE RESTRICTIONS DESCRIBED UNDER

NOTICE TO INVESTORS."

The Initial Purchasers expect to deliver the Series A-1 WaMu Cayman Preferred Securities through the facilities of

The

Depository Trust Company and the Series A-2 WaMu Cayman Preferred Securities through the facilities

of

Clearstream

Banking, societe anonyme, and Euroclear Bank S.A./N.V.,

as operator

of

the Euroclear System,

as participants

in

The

Depository Trust Company, in each case, against payment in New York, New York on

or

about March 7,

2006.

Goldman, Sachs Co.

Senior Co-Manager

Offering Circular dated February 24, 2006.

CONFIDENTIAL


Continued from previous page)

The Fixed Rate Company Preferred Securities will not

be redeemable

at

the option

of

the Company prior

to

the

Dividend Payment Date in March 2011, except upon the occurrence of

a Tax Event, an Investment Company Act Event

or a Regulatory Capital Event each

as described herein). Upon the occurrence

of a Tax Event,

an Investment

Company Act Event or

a Regulatory Capital Event, the Company may redeem the Fixed Rate Company Preferred

Securities in whole but not in part. On or

after the Dividend Payment Date in March 2011, the Company may redeem

the Fixed Rate Company Preferred Securities

in

whole

or

in

part. Any redemption will

be subject

to

the prior approval

of

the OTS and will

be

at a redemption price equal

to

the liquidation preference per Fixed Rate Company Preferred

Security, plus declared but unpaid dividends, if any, plus a U.S. Treasury-based make whole" amount if the

redemption occurs prior

to

the Dividend Payment Date

in

March 2011.

The WaMu Cayman Preferred Securities will be issued only in book-entry form. Each individual purchaser or

group of

affiliated purchasers that acquires Series A-1 WaMu Cayman Preferred Securities in the initial offering must

acquire at

least three Series A-1 WaMu Cayman Preferred Securities having an aggregate liquidation preference of

$300,000.

The Initial Purchasers are offering the Series A-2 WaMu Preferred Securities, which are being offered outside the

United States to non-U.S. persons in reliance upon Regulation S under the Securities Act, through their respective

selling agents.

Application will

be made

to

list the Series A-2 WaMu Cayman Preferred Securities

on the Euro MTF market

of

the

Luxembourg Stock Exchange. The Series A-1 WaMu Cayman Preferred Securities will not

be listed

on any securities

exchange or

automated dealer quotation system.

The securities offered hereby are not insured

or

guaranteed

by the U.S. Federal Deposit Insurance

Corporation.

CONFIDENTIAL


This offering circular is confidential. You are authorized to use this offering circular solely for

the purpose of

considering the purchase of

the securities described in the offering circular. WMI,

Washington Mutual Bank WMB"), University Street, Inc. University Street"), the Company,

WaMu Cayman, Washington Mutual Home Equity Trust I the Asset Trust"), Washington Mutual

Preferred Funding Trust I WaMu Delaware") and other sources identified herein have provided

the information contained in this offering circular. The Initial Purchasers named herein make no

representation or

warranty, express or

implied, as

to the accuracy or completeness of such

information, and nothing contained in this offering circular is,

or

shall be

relied upon as, a promise

or

representation by the Initial Purchasers. You may not reproduce or

distribute this offering

circular, in whole or

in part, and you may not disclose any of

the contents of

this offering circular

or use any information herein for any purpose other than considering the purchase of

the notes.

You agree to the foregoing by accepting delivery of

this offering circular.

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY UNITED

STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.

FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY ORDETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE.

The distribution of

this offering circular and the offering and sale of

the securities offered

hereby in certain jurisdictions may be restricted by law. WMI, WMB, University Street, the

Company, WaMu Cayman, the Asset Trust, WaMu Delaware and the Initial Purchasers require

persons in whose possession this offering circular comes to inform themselves about and to

observe any such restrictions. This offering circular does not constitute an

offer of,

or

an

invitation to purchase, any of

the securities offered hereby in any jurisdiction in which such offer

or

invitation would be unlawful.

Notwithstanding anything herein to the contrary, each investor and each employee,

representative, or

agent of

any investor) may disclose to any and all persons, without limitation

of any kind, the tax treatment and tax structure of

the transactions contemplated herein and

all

materials of any kind including opinions or

other tax analyses) that are provided to the

investors relating to such tax treatment and tax structure. However, any information relating tothe United States Federal income tax treatment o

r

tax structure will remain confidential and the

foregoing sentence will not apply) to the extent reasonably necessary to enable any person to

comply with applicable securities laws. For this purpose, tax treatment" means United States

Federal or

state income tax treatment, and tax structure" means any facts relevant to the

United States Federal or

state income tax treatment of

the transactions contemplated herein but

does not include information relating to the identity of

the issuer of

the securities, the issuer of

any assets underlying the securities, or

any of

their respective affiliates that are offering the

securities.

No person has been authorized to give any information or

to make any representations

other than those contained in this offering circular, and, if given or

made, such information or

representations must not be relied upon as having been authorized by any of WMI, WMB,

University Street, the Company, WaMu Cayman or

the Asset Trust. Neither the delivery of

this

offering circular nor any sale hereunder will create, under any circumstances, any implication that

there has been no change in the affairs of WMI, WMB, the Company, WaMu Cayman, University

Street or

the Asset Trust since the date hereof or

that the information contained herein is correct

as

of any time subsequent to its date.

CONFIDENTIAL


NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A

LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED

STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS

EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE

CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY

DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER

ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A

SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN

ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN

APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR

CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY

REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NO INVITATION TO SUBSCRIBE FOR WAMU CAYMAN PREFERRED SECURITIES IS

BEING MADE TO THE PUBLIC IN THE CAYMAN ISLANDS.

IN CONNECTION WITH THIS OFFERING, GOLDMAN, SACHS CO. AND ITS AFFILIATES,

ON BEHALF OF THE INITIAL PURCHASERS, MAY OVER-ALLOT OR EFFECT TRANSACTIONS

WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY

AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED

PERIOD OF TIME AFTER THE ISSUE DATE. HOWEVER, THERE MAY BE NO OBLIGATION ONGOLDMAN, SACHS CO. TO DO THIS. SUCH STABILIZING, IF COMMENCED, MAY BE

DISCONTINUED AT ANY TIME, AND MUST BE BROUGHT TO AN END AFTER A LIMITEDPERIOD.

CONFIDENTIAL


NOTICE TO INVESTORS

the following restrictions, purchasers are advised to consult legal counsel prior to

making any offer, purchase, resale, pledge or

other transfer the securities offered hereby.

Series A-1 WaMu Cayman Preferred Securities

qualified institutional buyer"

qualified purchaser"

employee benefit plan"

ERISA"),

plan"

Code"),

plan

Benefit Plan

Investor"),

CONFIDENTIAL


F) the certificates evidencing the Series A-1 WaMu Cayman Preferred Securities will

bear a legend to the following effect:

THIS SECURITY IS ONE OF THE 7.25% PERPETUAL NON-CUMULATIVE PREFERRED

SECURITIES, SERIES A-1 SERIES A-1 WAMU CAYMAN PREFERRED SECURITIES")

ISSUED BY WASHINGTON MUTUAL PREFERRED FUNDING CAYMAN) I LTD. WAMUCAYMAN"). THE ISSUER OF THIS SECURITY HAS NOT BEEN REGISTERED AS ANINVESTMENT COMPANY UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS

AMENDED THE INVESTMENT COMPANY ACT"), AND THIS SECURITY HAS NOT BEEN

REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED THESECURITIES ACT"), AND NEITHER THIS SECURITY NOR ANY BENEFICIAL INTERESTS

HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT

TO A PERSON WHO IS BOTH A QUALIFIED INSTITUTIONAL BUYER" WITHIN THE

MEANING OF RULE 144A UNDER THE SECURITIES ACT QUALIFIED INSTITUTIONAL

BUYER") AND A QUALIFIED PURCHASER" WITHIN THE MEANING OF SECTION 2(a)(51)

OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUN-

DER QUALIFIED PURCHASER") ACQUIRING FOR ITS OWN ACCOUNT OR THE

ACCOUNT OF A PERSON WHO IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A

QUALIFIED PURCHASER AN ELIGIBLE PURCHASER") AND EACH SUCH PERSON AND

ACCOUNT FOR WHICH SUCH PERSON IS PURCHASING A) IS NOT A BROKER-DEALER

THAT OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS THAN US$25 MILLION IN

SECURITIES OF ISSUERS THAT ARE NOT ITS AFFILIATED PERSONS, B) IS NOT A PLAN

REFERRED TO IN PARAGRAPH a) 1) i) D) OR a) 1) i) E) OF RULE 144A, OR A

TRUST FUND REFERRED TO IN PARAGRAPH a) 1) F) OF RULE 144A THAT HOLDSTHE ASSETS OF SUCH A PLAN, IF INVESTMENT DECISIONS WITH RESPECT TO THE

PLAN ARE MADE BY THE BENEFICIARIES OF SUCH PLAN, C) WAS NOT FORMED FOR

THE PURPOSE OF INVESTING IN WAMU CAYMAN, D) WILL HOLD AND TRANSFER AT

LEAST $100,000 LIQUIDATION PREFERENCE OF SERIES A-1 WAMU CAYMAN PRE-

FERRED SECURITIES AT LEAST ONE SERIES A-1 WAMU CAYMAN PREFERRED

SECURITY), AND E) UNDERSTANDS THAT WAMU CAYMAN MAY RECEIVE A LIST OFPARTICIPANTS HOLDING POSITIONS IN THIS SECURITY FROM ONE OR MORE BOOK-

ENTRY DEPOSITARIES. EACH PURCHASER OF THIS SECURITY OR ANY BENEFICIAL

INTERESTS HEREIN WILL BE DEEMED TO REPRESENT THAT IT AGREES TO COMPLY

WITH THE TRANSFER RESTRICTIONS SET FORTH HEREIN AND IN THE MEMORANDUM

AND ARTICLES OF ASSOCIATION OF WAMU CAYMAN AS AMENDED, THE ARTICLES

OF ASSOCIATION"), AND WILL NOT TRANSFER THIS SECURITY OR ANY BENEFICIAL

INTERESTS HEREIN EXCEPT TO AN ELIGIBLE PURCHASER WHO CAN MAKE THE SAME

REPRESENTATIONS AND AGREEMENTS ON BEHALF OF ITSELF AND EACH ACCOUNT

FOR WHICH IT IS PURCHASING. ANY PURPORTED TRANSFER OF THIS SECURITY ORANY BENEFICIAL INTERESTS HEREIN THAT IS IN BREACH, AT THE TIME MADE, OF ANY

TRANSFER RESTRICTIONS SET FORTH HEREIN OR IN THE ARTICLES OF ASSOCIATION

WILL BE VOID AB INITIO. IF AT ANY TIME WAMU CAYMAN DETERMINES IN GOOD FAITH

THAT A HOLDER OR BENEFICIAL OWNER OF THIS SECURITY OR BENEFICIAL

INTERESTS HEREIN IS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE TRANSFER

RESTRICTIONS SET FORTH HEREIN, WAMU CAYMAN SHALL CONSIDER THE ACQUISI-

TION OF THIS SECURITY OR SUCH BENEFICIAL INTERESTS VOID, OF NO FORCE AND

EFFECT AND WILL NOT, AT THE DISCRETION OF WAMU CAYMAN, OPERATE TO

TRANSFER ANY RIGHTS TO THE TRANSFEREE NOTWITHSTANDING ANY INSTRUCTIONS

TO THE CONTRARY TO WAMU CAYMAN, ITS AGENT FOR REGISTRATION OF TRANS-

FER, EXCHANGE OR PAYMENT THE TRANSFER AGENT"), OR ANY OTHER INTERME-

DIARY. IN ADDITION, WAMU CAYMAN OR ITS TRANSFER AGENT MAY REQUIRE SUCH

ACQUIRER OR BENEFICIAL OWNER TO SELL THIS SECURITY OR SUCH BENEFICIAL

INTERESTS TO AN ELIGIBLE PURCHASER.

iv

CONFIDENTIAL


NO SECURITY MAY BE PURCHASED OR TRANSFERRED TO: I) AN EMPLOYEE

BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT

INCOME SECURITY ACT OF 1974, AS AMENDED WHETHER OR NOT

SUBJECT TO ERISA AND INCLUDING, WITHOUT LIMITATION, FOREIGN OR GOVERN-

MENTAL PLANS, II) A PLAN" WITHIN THE MEANING OF SECTION 4975 OF THE

INTERNAL REVENUE CODE OF 1986, AS AMENDED THE OR III) ANY

ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS" OF ANY OF THE

FOREGOING BY REASON OF INVESTMENT BY AN EMPLOYEE BENEFIT PLAN OR

OTHER PLAN IN SUCH ENTITY EACH OF THE FOREGOING, A BENEFIT PLAN

INVESTOR"), EXCEPT FOR AN INSURANCE COMPANY GENERAL ACCOUNT THAT

REPRESENTS, WARRANTS AND COVENANTS THAT, AT THE TIME OF ACQUISITION

AND THROUGHOUT THE PERIOD IT HOLDS THE SECURITIES, I)

IT IS ELIGIBLE FOR

AND MEETS THE REQUIREMENTS OF THE DEPARTMENT OF LABOR PROHIBITED

TRANSACTION CLASS EXEMPTION 95-60, II) LESS THAN 25% OF THE ASSETS OF

SUCH GENERAL ACCOUNT ARE OR REPRESENT) ASSETS OF A BENEFIT PLAN

INVESTOR AND III) IT IS NOT A PERSON WHO HAS DISCRETIONARY AUTHORITY OR

CONTROL WITH RESPECT TO THE ASSETS OF WAMU CAYMAN OR ANY PERSON WHOPROVIDES INVESTMENT ADVICE FOR A FEE DIRECT OR INDIRECT) WITH RESPECT

TO SUCH ASSETS, OR ANY AFFILIATE OF SUCH A PERSON AND WOULD NOTOTHERWISE BE EXCLUDED UNDER 29 C.F.R. 2510.3-101 F) 1).

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OFTHE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION DTC"), TO

WAMU CAYMAN OR THE TRANSFER AGENT, 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 USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFULINASMUCH AS THE REGISTERED OWNER HEREOF, CEDE CO., HAS AN INTEREST

HEREIN.

G) the purchaser and each account for which it is purchasing:

i) is not a broker-dealer that owns and invests on a discretionary basis less

than $25 million in securities of

unaffiliated issuers;

is not a participant-directed employee plan, such as a 401(k) plan, as

referred to in paragraph a) 1) i) D) or

a) 1) i) E) of

Rule 144A, or

a trust fund

referred to in paragraph a) 1) i) F) of

Rule 144A that holds the assets of such a

plan;

was not formed for the purpose of

investing in WaMu Cayman;

iv) will hold at

least $300,000 liquidation preference of

Series A-1 WaMu

Cayman Preferred Securities i.e., at

least three Series A-1 WaMu Cayman Preferred

Securities) in the case of each initial investor, and will hold and transfer $100,000

liquidation preference of

Series A-1 WaMu Cayman Preferred Securities i.e., at

least

one Series A-1 WaMu Cayman Preferred Security) in the case of

each subsequent

investor;

v)

will provide notice of

the transfer restrictions described in this Notice to

Investors" to any subsequent transferees;

vi) acknowledges that WaMu Cayman may receive a list of

participants holding

positions in the Series A-1 WaMu Cayman Preferred Securities from one or more

book-entry depositaries; and

v

CONFIDENTIAL


vii) may not transfer the Series A-1 WaMu Cayman Preferred Securities or

beneficial interests therein except to a transferee who can make the same representa-

tions and agreements as set forth in this Notice to Investors" and vyaMu Cayman's

Memorandum and Articles of

Association as

in effect on the issue date of

the WaMuCayman Preferred Securities together, a

s amended,

on behalf of

itself and each account for which it is purchasing.

The purchaser acknowledges that the Series A-1 WaMu Cayman Preferred Securities are

being offered only in a transaction not involving any public offering within the meaning of

the

Securities Act. The Series A-1 WaMu Cayman Preferred Securities have not been and will not be

registered under the Securities Act and WaMu Cayman has not been and will not be registered

under the Investment Company Act, and, if in the future the purchaser decides to offer, resell,

pledge or

otherwise transfer the Series A-1 WaMu Cayman Preferred Securities, such Series A-1

WaMu Cayman Preferred Securities may be offered, resold, pledged or

otherwise transferred

only in accordance with the legend on such Series A-1 WaMu Cayman Preferred Securities

described above. The purchaser acknowledges that no representation is made by WaMu

Cayman, the Company or

the Initial Purchasers as

to the availability of

any exemption under the

Securities Act or any state securities laws for resale of

the Series A-1 WaMu Cayman Preferred

Securities.

Reminder Notices

Whenever WaMu Cayman sends an annual report or

other periodic report to holders of

the

Series A-1 WaMu Cayman Preferred Securities, it will also send a reminder notice each, a

to the holders of

the Series A-1 WaMu Cayman Preferred Securities. Each

Reminder Notice will state that i) each holder of a Series A-1 WaMu Cayman Preferred Security

or an interest in a Series A-1 WaMu Cayman Preferred Security) that is a U.S. person must be

able to make the representations set forth above in paragraphs B) and G) iv) under

Series A-1 WaMu Cayman Preferred Securities Representations of

Purchasers" the

7) ii) the Series A-1 WaMu Cayman Preferred Securities or

interests in the Series A-1 WaMu Cayman Preferred Securities) are transferable only to

purchasers deemed to have made the 3(c) 7) Representations and to have satisfied the other

transfer restrictions applicable to the securities, iii) if any prospective transferee of

the

Series A-1 WaMu Cayman Preferred Securities or an interest in the Series A-1 WaMu Cayman

Preferred Securities) that is a U.S. person is determined not to be a qualified purchaser, then

WaMu Cayman will have the right exercisable in its sole discretion) to refuse to honor such

transaction, and iv) if any security holder or any holder of

an

interest in a security) that is a

U.S. person is determined not to be a qualified purchaser, then WaMu Cayman will have the right

exercisable in its sole discretion) to treat the transfer to such purchaser as null and void and

require such purchaser to sell all

of

its securities and all

interests therein) to a transferee

designated by WaMu Cayman at

the then current market price therefor. WaMu Cayman will send

a copy of each annual or

other periodic reports and each Reminder Notice) to DTC with a

request that participating organizations in DTC forward them to the security

holders or

holders of

an interest in Series A-1 WaMu Cayman Preferred Securities.

CUSIP

WaMu Cayman will cause each CUSIP" obtained for a 144A Global Security to have an

attached fixed field" that contains GRLS" and 144A" indicators.

Series A-2 WaMu Cayman Preferred Securities

Each purchaser of

Series A-2 WaMu Cayman Preferred Securities including the registered

holders and beneficial owners of

the Series A-2 WaMu Cayman Preferred Securities, as

they

vi

CONFIDENTIAL


exist from time to time, including as a result of

transfers, in each case as

of

the time of

purchase) will be deemed to have represented and agreed as follows:

A) the purchaser is i) a non-U.S. person within the meaning of

Rule 902 of

the

Securities Act purchasing the Series A-2 WaMu Cayman Preferred Securities in an offshore

transaction in accordance with Regulation S under the Securities Act and

ii) aware that the

sale of

the Series A-2 WaMu Cayman Preferred Securities to it is being made in reliance on

Regulation S or

another exemption from the registration requirements of

the Securities Act;

B) either i) the purchaser is not a Benefit Plan Investor or

ii) the purchaser is an

insurance company general account that represents, warrants and covenants that, at

the

time of

acquisition and throughout the period it holds the securities, x)

it is eligible for and

meets the requirements of

the Department of

Labor Prohibited Transaction Class

Exemption 95-60, less than 25% of

the assets of such general account are or

represent) assets of

a Benefit Plan Investor and z) it is not a person who has

discretionary authority or

control with respect to the assets of WaMu Cayman or any person

who provides investment advice for a fee direct or

indirect) with respect to such assets, or

any affiliate of such a person and would not otherwise be excluded under

29 C.F.R. 2510.3-101 f)(1).

C) the purchaser is not purchasing the Series A-2 WaMu Cayman Preferred

Securities with a view to the resale, distribution or

other disposition thereof in violation of

the Securities Act;

D) neither the purchaser nor any account for which the purchaser is acquiring the

Series A-2 WaMu Cayman Preferred Securities will hold such Series A-2 WaMu Cayman

Preferred Securities for the benefit of any other person and the purchaser and each such

account will be the sole beneficial owners thereof for all purposes and will not sell

participation interests in the Series A-2 WaMu Cayman Preferred Securities or

enter into

any other arrangement pursuant to which any other person will be entitled to an interest in

the distributions on the Series A-2 WaMu Cayman Preferred Securities;

E) the certificates evidencing the Series A-2 WaMu Cayman Preferred Securities will

bear a legend to the following effect:

THIS SECURITY IS ONE OF THE 7.25% PERPETUAL NON-CUMULATIVE PREFERREDSECURITIES, SERIES A-2 SERIES A-2 WAMU CAYMAN PREFERRED SECURITIES")

ISSUED BY WASHINGTON MUTUAL PREFERRED FUNDING CAYMAN) I LTD. WAMUCAYMAN"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE

U.S. SECURITIES ACT OF 1933, AS AMENDED THE SECURITIES ACT"), AND NEITHER

THIS SECURITY NOR ANY BENEFICIAL INTERESTS HEREIN MAY BE OFFERED, SOLD,

PLEDGED OR OTHERWISE TRANSFERRED EXCEPT 1) IN AN OFFSHORE TRANSAC-

TION MEETINGTHE REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT

TO A PERSON OTHER THAN A U.S. PERSON, OR 2) IN RELIANCE UPON RULE 144A

UNDER THE SECURITIES ACT IN A TRANSACTION INVOLVING AN EXCHANGE OF THIS

SECURITY FOR A LIKE AMOUNT OF 7.25% PERPETUAL NON-CUMULATIVE PREFERRED

SECURITIES, SERIES A-1, OF WAMU CAYMAN, WHICH IS ALSO THE ISSUER OF THIS

SECURITY, BUT ONLY UPON RECEIPT BY WAMU CAYMAN'S TRANSFER AGENT OF A

WRITTEN CERTIFICATE ON BEHALF OF THE TRANSFEROR TO THE EFFECT THAT

SUCH TRANSFER IS BEING MADE TO A PERSON WHO THE TRANSFEROR REASONA-

BLY BELIEVES IS BOTH A QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING

OF RULE 144A UNDER THE SECURITIES ACT QUALIFIED INSTITUTIONAL BUYER")

AND A QUALIFIED PURCHASER" WITHIN THE MEANING OF SECTION 2(a) 51) OF

THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED QUALIFIED PUR-

CHASER"), ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED

INSTITUTIONAL BUYER WHO IS ALSO A QUALIFIED PURCHASER AN ELIGIBLE

vii

CONFIDENTIAL


PURCHASER") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A

UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE LAWS OF

THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. EACH PURCHASEROF THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN WILL BE DEEMED TO

REPRESENT THAT IT AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET

FORTH HEREIN AND IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF

WAMU CAYMAN AS AMENDED, THE ARTICLES OF ASSOCIATION"), AND WILL NOTTRANSFER THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN EXCEPT TO A

PURCHASER WHO CAN MAKE THE SAME REPRESENTATIONS AND AGREEMENTS ON

BEHALF OF ITSELF AND EACH ACCOUNT FOR WHICH IT IS PURCHASING. ANY

PURPORTED TRANSFER OF THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN

THAT IS IN BREACH, AT THE TIME MADE, OF ANY TRANSFER RESTRICTIONS SET

FORTH HEREIN OR IN THE ARTICLES OF ASSOCIATION WILL BE VOID AB INITIO. IF AT

ANY TIME WAMU CAYMAN DETERMINES IN GOOD FAITH THAT A HOLDER ORBENEFICIAL OWNER OF THIS SECURITY OR BENEFICIAL INTERESTS HEREIN IS IN

BREACH, AT THE TIME GIVEN, OF ANY OF THE TRANSFER RESTRICTIONS SET FORTH

HEREIN, WAMU CAYMAN SHALL CONSIDER THE ACQUISITION OF THIS SECURITY ORSUCH BENEFICIAL INTERESTS VOID, OF NO FORCE AND EFFECT AND WILL NOT, AT

THE DISCRETION OF WAMU CAYMAN, OPERATE TO TRANSFER ANY RIGHTS TO THE

TRANSFEREE NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO WAMUCAYMAN, ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT

THE TRANSFER AGENT"), OR ANY OTHER INTERMEDIARY. IN ADDITION, WAMUCAYMAN OR ITS TRANSFER AGENT MAY REQUIRE SUCH ACQUIRER OR BENEFICIAL

OWNER TO SELL THIS SECURITY OR SUCH BENEFICIAL INTERESTS TO AN ELIGIBLE

PURCHASER.

NO SECURITY MAY BE PURCHASED OR TRANSFERRED TO: I) AN EMPLOYEE

BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT

INCOME SECURITY ACT OF 1974, AS AMENDED ERISA"), WHETHER OR NOTSUBJECT TO ERISA AND INCLUDING, WITHOUT LIMITATION, FOREIGN OR GOVERN-

MENTAL PLANS, II) A PLAN" WITHIN THE MEANING OF SECTION 4975 OF THE

INTERNAL REVENUE CODE OF 1986, AS AMENDED THE CODE"), OR III) ANY

ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS" OF ANY OF THE


OTHER PLAN IN SUCH ENTITY EACH OF THE FOREGOING, A BENEFIT PLAN



AND THROUGHOUT THE PERIOD IT HOLDS THE SECURITIES, I)

IT IS ELIGIBLE FOR


TRANSACTION CLASS EXEMPTION 95-60, II) LESS THAN 25% OF THE ASSETS OFSUCH GENERAL ACCOUNT ARE OR REPRESENT) ASSETS OF A BENEFIT PLAN

INVESTOR AND III) IT IS NOT A PERSON WHO HAS DISCRETIONARY AUTHORITY ORCONTROL WITH RESPECT TO THE ASSETS OF WAMU CAYMAN OR ANY PERSON WHOPROVIDES INVESTMENT ADVICE FOR A FEE DIRECT OR INDIRECT) WITH RESPECT

TO SUCH ASSETS, OR ANY AFFILIATE OF SUCH PERSON AND WOULD NOT

OTHERWISE BE EXCLUDED UNDER 29 C.F.R. 2510.3-101 F) 1).

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF

THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION DTC"), TOWAMU CAYMAN OR THE TRANSFER AGENT, 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

viii

CONFIDENTIAL


Forced Sale of

Securities

Investment Company Act

CONFIDENTIAL


e.g.,

DTC Actions with respect to the WaMu Cayman Preferred Securities

Bloomberg Screens, etc.

CONFIDENTIAL


CONFIDENTIAL


Purchasers will request that Bloomberg, L.P. include the following on each Bloomberg screen containing information about the securities as applicable:

• the bottom of the "Security Display" page describing the Series A-1 WaMu Cayman Preferred Securities should state: "Iss'd under 144A/3c7" and "GRLS";

• the "Security Display" page should have a flashing red indicator stating "Additional Note Pg";

• such indicator for the WaMu Cayman Preferred Securities should link to an "Additional Security Information" page, which should state that the Series A-1 WaMu Cayman Preferred Securities are being offered in reliance on the exception from registration under Rule 144A of the Securities Act of 1933, as amended (the "Securities Act") to persons that are (i) "qualified institutional buyers" as defined in Rule 144A under the Securities Act, and (ii) with respect to U.S. Persons, "qualified purchasers" as defined under Section 2(a) (51) of the Investment Company Act of 1940, as amended; and

• the "Disclaimer" pages for the WaMu Cayman Preferred Securities should state that the securities have not been and will not be registered under the Securities Act of 1933, as amended, and Washington Mutual Preferred Funding (Cayman) I Ltd. has not been registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and the WaMu Cayman Preferred Securities may not be offered or sold in the United States absent an applicable exemption from registration requirements and any such offer and sale of these securities must be in accordance with Section 3 (c) (7) of the Investment Company Act.

Legends

WaMu Cayman will not remove the legend set forth in "- Series A-1 WaMu Cayman Preferred Securities" or "- Series A-2 WaMu Cayman Preferred Securities" at any time.

Exchanges Between Rule 144A Global Security Evidencing Series A-1 WaMu Cayman Preferred Securities and Regulation S Global Security Evidencing Series A-2 WaMu Cayman Preferred Securities

The Series A-1 WaMu Cayman Preferred Securities will be evidenced by the Rule 144A Global Security and the Series A-2 WaMu Cayman Preferred Securities will be evidenced by the Regulation S Global Security, in each case, as described under "Book-Entry Issuance." An investor (including a beneficial owner) in Series A-1 WaMu Cayman Preferred Securities may sell such securities to a non-U.S. person who takes delivery in the form of an interest in the Regulation S Global Security only if the certifications described under "Book-Entry Issuance" are made and, in connection with such sale, the transferor's interest in the Series A-1 WaMu Cayman Preferred Securities evidenced by the Rule 144A Global Security is exchanged by the transferee for Series A-2 WaMu Cayman Preferred Securities evidenced by the Regulation S Global Security. Similarly, an investor (including a beneficial owner) in Series A-2 WaMu Cayman Preferred Securities may sell such securities in the United States or to a U.S. person who takes delivery in the form of an interest in the Rule 144A Global Security only if the certifications described under "Book-Entry Issuance" are made and, in connection with such sale, the transferor's interest in the Series A-2 WaMu Cayman Preferred Securities evidenced by the Regulation S Global Security is exchanged by the transferee for Series A-1 WaMu Cayman Preferred Securities evidenced by the Rule 144A Global Security.

xi

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

CONFIDENTIAL


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This offering circular and the documents incorporated herein by reference contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, and other matters. Statements in this offering circular, including those incorporated herein by reference, that are not historical facts are "forward-looking statements" for the purpose of the safe harbor provided by Section 21 E of the Exchange Act and Section 27 A of the Securities Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words, such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or words of similar meaning, or future or conditional verbs, such as "will", "should", "could" or "may".

Forward-looking statements provide WMl's or WMB's (as applicable) expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature forward-looking statements are subject to risks and uncertainties. These statements speak only as of the date they are made. WMI and WMB do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made. There are a number of factors, many of which are beyond WMl's or WMB's (as applicable) control, that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The factors are generally described in WMl's or WMB's (as applicable) most recent Form 10-K and Form 10-0 under the caption "Risk Factors."

xii

WHERE YOU CAN FIND MORE INFORMATION

http://www.wamu.com

CONFIDENTIAL


document that was filed later. WMB incorporates herein by reference the documents listed below

and any documents it files with the OTS in the future under Sections 13(a), 13(c), 14 or

15(d)

of

the Exchange Act or

regulations of

the OTS to substantially similar effect untjl the Offering is

completed:

Annual Report on Form 10-K for the year ended December 31, 2004; and

Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2005,

June 30,2005 and September 30, 2005.

This offering circular also incorporates herein by reference certain other information that

WMB submits to the OTS. WMB submits to the OTS quarterly reports regarding WMB's financial

condition and operations on OTS Form 1313 entitled Thrift Financial Report" each, a Thrift

Financial Report" and collectively, the Thrift Financial Reports"). Each Thrift Financial Report

consists of a Consolidated Statement of

Condition, Consolidated Statement of

Operations,

Consolidated Cash Flow Information, Consolidated Capital Requirements and other supporting

schedules as

of

the end of

the period to which the report relates. The Thrift Financial Reports

are prepared in accordance with regulatory instructions issued by

the OTS. These regulatory

instructions in most, but not all, cases follow generally accepted accounting principles in the

United States GAAP") or

the opinions and statements of

the Accounting Principles Board or

the Financial Accounting Standards Board. While the Thrift Financial Reports are supervisory and

regulatory documents, not previously accounting documents, and do not provide a complete

range of

financial disclosure about WMB, the reports nevertheless provide important information

concerning WMB's financial condition and operating results. In addition, WMB's Thrift Financial

Reports are not audited. The non-confidential portions of

Thrift Financial Reports filed by WMB

are on file with, and are publicly available upon written request to the Office of

Thrift Supervision,

FOIA, 1700 G Street, N.W., Washington, D.C. 20552, Attention: Dissemination Branch and are

also available at

the U.S. Federal Deposit Insurance Corporation's the web site at

http://www.fdic.gov.

You may request a copy of

these filings, other than an exhibit to a filing unless that exhibit

is specifically incorporated by reference into that filing, at no cost, by writing to or

telephoning

WMI

at:

1201 Third Avenue

Seattle, Washington 98101

206) 461-3187

ENFORCEMENT OF CIVIL LIABILITIES

WaMu Cayman has been advised by Maples and Calder,

its Cayman Island counsel, that the

courts of

the Cayman Islands should not be expected to i) enforce judgments of

U.S. courts

obtained in actions against WaMu Cayman's directors who are non-residents of

the United

States predicated upon the civil liability provisions of

the U.S. federal securities laws or

ii) entertain original actions brought in the Cayman Islands against such persons or WaMu

Cayman predicated solely upon U.S. federal securities laws. There is no treaty in effect between

the United States and the Cayman Islands providing for such enforcement, and there are grounds

upon which the Cayman Islands courts may not enforce judgments of

U.S. courts.

INDEX OF TERMS

An index of

terms used in this offering circular with specific meanings appears on the inside

back cover of


xiv

CONFIDENTIAL


OFFERING CIRCULAR SUMMARY

The fol/owing summary is qualified in its entirety by the detailed information appearing

elsewhere in this offering circular, in particular, the information under the headings. Description of

the WaMu Cayman Preferred Securities" and Description of

the Fixed Rate Company Preferred

Securities," which describe the terms and conditions of

the securities offered hereby.

Introduction

The 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1, liquidation preference

$100,000 per security the Series A-1 WaMu Cayman Preferred Securities"), and the

7.25% Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference $10,000

per security the Series A-2 WaMu Cayman Preferred Securities" and, together with the

Series A-1 WaMu Cayman Preferred Securities, the WaMu Cayman Preferred Securities"), are

being issued by Washington Mutual Preferred Funding Cayman) I Ltd. WaMu Cayman") in a

financing transaction that raises capital for Washington Mutual Bank WMB"). WMB is a

subsidiary of Washington Mutual, Inc. WMI"). WMI and

its affiliates are referred to herein as

the WMI Group".

WaMu Cayman will invest the proceeds of

the WaMu Cayman Preferred Securities in a like

amount of

7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference

$1,000 per security the Fixed Rate Company Preferred Securities"), of Washington Mutual

Preferred Funding LLC, a Delaware limited liability company the Company"). WaMu Cayman

will have no material assets other than the Fixed Rate Company Preferred Securities. The

financial entitlements of

each WaMu Cayman Preferred Security will be

substantially the same as

the financial entitlements of a like amount of

Fixed Rate Company Preferred Securities, with the

consequence that dividends and the redemption price on each WaMu Cayman Preferred Security

will be payable on the same dates and in the same amounts as the corresponding dividends and

redemption price, as applicable, on a like amount of

Fixed Rate Company Preferred Securities.

The Company's initial material assets will consist of

direct or

indirect interests in mortgages or

mortgage-related assets originated by WMB as

described under The Company Business of

the Company Assets of

the Company" and The Asset Trust."

The terms of

the Series A-1 WaMu Cayman Preferred Securities and the Series A-2 WaMu

Cayman Preferred Securities are identical except for their per security liquidation preference. The

Series A-1 WaMu Cayman Preferred Securities are being offered in reliance upon Rule 144A

under the U.S. Securities Act of

1933, as amended the Securities Act") only in the United

States and to persons who are qualified institutional buyers" within the meaning of 144A and

qualified purchasers" within the meaning of

Section 2(a) 51) of

the U.S. Investment Company

Act of

1940, as amended the Investment Company Act"). The Series A-2 WaMu Cayman

Preferred Securities are being offered and sold in reliance upon Regulation S under the

Securities Act only to non-U.S. persons in transactions outside the United States. Resales of

Series A-l WaMu Cayman Preferred Securities to non-U.S. persons and of

Series A-2 WaMuCayman Preferred Securities in the United States o

r

to U.S. persons are subject to restrictions as

described under Notice to Investors Exchanges Between Rule 144A Global Security

Evidencing Series A-1 WaMu Cayman Preferred Securities and Regulation S Global Security

Evidencing Series A-2 WaMu Cayman Preferred Securities," in each case subject to the

certification requirements described under Book-Entry Issuance."

By a separate offering circular dated the same date as

this offering circular, Washington

Mutual Preferred Funding Trust I, a Delaware statutory trust established by the Company as

grantor WaMu Delaware"), is offering $1,250,000,000 of

its Perpetual Exchangeable Non-

cumulative Trust Securities the Trust Securities"). WaMu Delaware will invest the proceeds of

the Trust Securities in a like amount of

the Company's Perpetual Non-cumulative Fixed-to-

Floating Rate Preferred Securities the Fixed-to-Floating Rate Company Preferred Securities"

CONFIDENTIAL


and, together with the Fixed Rate Company Preferred Securities, the Company Preferred

Securities"). The terms of

the Fixed-to-Floating Rate Company Preferred Securities are

substantially identical to the Fixed Rate Company Preferred Securities except for the dividend

rate. The Trust Securities are being offered and sold only in the United States and only to

U.S. persons that are both qualified institutional buyers and qualified purchasers in reliance on

the exemption from registration under the Securities Act pursuant to Rule 144A. They are not

being offered by this offering circular. The WaMu Cayman Preferred Securities are not

exchangeable for Trust Securities, or

vice versa.

WMB has asked for confirmation from the Office of

Thrift Supervision together with any

successor regulator, the that the Company Preferred Securities constitute core capital of

WMB under the OTS' applicable regulatory capital regulations and, upon receipt of such

confirmation, intends to treat the Company Preferred Securities accordingly.

If the OTS so directs following the occurrence of

an Exchange Event, each WaMu Cayman

Preferred Security will be automatically exchanged for a like amount of

Fixed Rate Depositary

Shares each representing 111000th of a share of WMl's Series Perpetual Non-cumulative Fixed

Rate Preferred Stock, no par value and liquidation preference $1,000,000 per share Fixed Rate

WMI Preferred Stock"), as described below in this Summary under" The Offering

Conditional Exchange." Upon a Conditional Exchange, the Trust Securities will also be

automatically exchanged, but for depositary shares representing a different series of WMl's

preferred stock, having substantially equivalent terms with certain exceptions) as

to dividends,

liquidation preference and redemption preference as the Fixed-to-Floating Rate Company

Preferred Securities.

This offering circular uses the term like amount" in describing the financial entitlements and

voting rights, as applicable, of

the WaMu Cayman Preferred Securities as compared to the Fixed

Rate Company Preferred Securities and in describing the amount of


Shares, each representing a 1 OOOthinterest in one share of

Fixed Rate WMI Preferred Stock

for which the WaMu Cayman Preferred Securities will be exchanged upon the occurrence of

a

Conditional Exchange. The term like amount" means:

when describing the financial entitlements or

voting rights, as applicable, of WaMu

Cayman Preferred Securities as compared to Fixed Rate Company Preferred Securities, a

number of

Fixed Rate Company Preferred Securities that have the same aggregate

liquidation preference as the WaMu Cayman Preferred Securities to which the reference

is being made e.g., 1,000 Fixed Rate Company Preferred Securities with an aggregate


$1,000,000 are a like amount" for ten Series A-1 WaMu

Cayman Preferred Securities or

100 Series A-2 WaMu Cayman Preferred Securities, each

having an aggregate liquidation preference of

$1,000,000); and

when describing the number of

depositary shares for Fixed Rate WMI Preferred Stock

with which WaMu Cayman Preferred Securities will be exchanged upon a Conditional

Exchange, a number of

Fixed Rate Depositary Shares, each representing a 1 OOOthin-

terest in one share of

Fixed Rate WMI Preferred Stock, having a liquidation preference

equal to the liquidation preference of

the WaMu Cayman Preferred Securities that are

being exchanged e.g., 10,000 Fixed Rate Depositary Shares representing Fixed Rate

WMI Preferred Stock with an aggregate liquidation preference of

$10,000,000 are a like

amount" for 100 Series A-1 WaMu Cayman Preferred Securities or

1,000 Series A-2

WaMu Cayman Preferred Securities, each having an aggregate liquidation preference of

$10,000,000)

The offering of

the WaMu Cayman Preferred Securities and the related issuance of

the

Fixed Rate Company Preferred Securities are referred to herein as

the Offering".

2

CONFIDENTIAL


The following diagram outlines the relationship among WMI, WMB, University Street, the

Company, the Asset Trust, WaMu Cayman, WaMu Delaware, purchasers of

the WaMu Cayman

Preferred Securities and purchasers of

the Trust Securities:

University Street<")

Assets

Proceeds

Assets

ConditionalConditional

ExchangeExchange

Rxed-to-FloatingFixed Rate Company

Rate CompanyPreferred Securities(3)

Preferred Securities(4)

WaMu

Delaware

TrustProceeds:

Securities

CONFIDENTIAL


WaMu Cayman

Washington Mutual Preferred Funding Cayman) I Ltd. is a Cayman Islands exempted

company limited by

shares, incorporated on February 23, 2006 for the purposes set forth below

in WaMu Cayman."

All

of WaMu Cayman's ordinary shares the WaMu Cayman Ordinary

Shares") will be held in trust for the benefit of

a Cayman Islands charity. WaMu Cayman will not

issue any securities other than the WaMu Cayman Ordinary Shares, and the WaMu Cayman

Preferred Securities offered hereby. WaMu Cayman will be prohibited from issuing other equity

securities or any debt securities. The Fixed Rate Company Preferred Securities will be the only

material assets of WaMu Cayman. WaMu Cayman will be managed by a Board of

Directors

consisting of

five directors, three of

whom will be appointed by such Cayman Islands charitable

trust and two of

whom will be persons who are also members of

the Company's Board of

Managers. Of

the two WaMu Cayman directors who are also members of

the Company's Board

of

Managers, one will be the same individual who is the Company's Independent Manager.

Subject to the limitations and assumptions described under Certain Tax Considerations

United States Federal Income Tax Consequences," for United States Federal income tax

purposes, WaMu Cayman intends to be treated as a corporation, and for the holders of

the

WaMu Cayman Preferred Securities to be treated as holders of

stock in such corporation.

The Company

Washington Mutual Preferred Funding LLC is a Delaware limited liability company formed on

February 3,

2006 for the purpose of

i) issuing the Fixed Rate Company Preferred Securities to

WaMu Cayman, the Fixed-to-Floating Rate Company Preferred Securities to WaMu Delaware, the

common securities of

the Company the Company Common Securities") to University Street,

Inc., an indirect subsidiary of WMB University Street"), and additional Parity Equity Securities

or

Junior Equity Securities subject to certain limitations described in this offering circular

ii) acquiring and holding Eligible Investments and iii) performing functions necessary or

incidental thereto.

The Fixed-to-Floating Rate Company Preferred Securities rank pari passu with the Fixed

Rate Company Preferred Securities as

to dividends and upon liquidation of

the Company. The

terms of

the Fixed-to-Floating Rate Company Preferred Securities are substantially identical to

the terms of

the Fixed Rate Company Preferred Securities other than with respect to the rate

applicable to dividends thereon. The Fixed-to-Floating Rate Company Preferred Securities will,

if,

when and as

declared by


Managers, pay dividends at

an annual rate of

6.534% until the Dividend Payment Date on March 15, 2011 and an annual rate equal to three-

month UBOR plus 1.4825% for the Dividend Period starting on such Dividend Payment Date and

each Dividend Period thereafter.

University Street will own all

of

the Company Common Securities. The Eligible Investments

owned by the Company from time to time will generate net income for payment by the Company

to WaMu Cayman as dividends on the Fixed Rate Company Preferred Securities and

consequently for payment as

dividends by WaMu Cayman to holders of

the WaMu Cayman

Preferred Securities), to WaMu Delaware as dividends on the Fixed-to-Floating Rate Company

Preferred Securities and consequently for pass through by WaMu Delaware to the holders of

the Trust Securities) and to University Street as

dividends on the Company Common Securities.

Subject to the limitations and assumptions described under Certain Tax Considerations

United States Federal Income Tax Consequences," the Company intends to be treated as a

partnership other than a publicly traded partnership taxable as a corporation) for United States

Federal income tax purposes and will receive the opinion of

Mayer, Brown, Rowe Maw LLP to

the effect that, for United States Federal income tax purposes, the Company will not be treated

as

an association taxable as a corporation or

as a publicly traded partnership taxable as a

corporation.

CONFIDENTIAL


The Company will be managed by a Board of

Managers. The Company's Board of

Managers will have three members, one of whom is not, and has not been during the preceding

five years, an officer or employee of WMI or any affiliate of WMI, other than a financing

subsidiary the

Initial Conveyances

In connection with the Offering, WMB will convey a portfolio of

first lien, closed-end, fixed

rate home equity loans to the Company in exchange for 100% of

the Company

Preferred Securities. Concurrently with such transfer by WMB, University Street will convey a

portfolio of HELs to the Company in exchange for 100% of

the Company Common Securities.

The portfolios conveyed by WMB and University Street to the Company will consist of

approximately $5,389,459,150 of HELs in the aggregate. The Company will convey 100% of

the

HELs that it owns to the Asset Trust in exchange for the Class A Trust Certificate of

the Asset

Trust. WMB will then sell the Fixed Rate Company Preferred Securities and the Fixed-to-Floating

Rate Company Preferred Securities for cash to WaMu Cayman and WaMu Delaware,

respectively.

University Street

University Street, Inc. is a Washington corporation. It has elected to be treated as a real

estate investment trust for United States Federal income tax purposes. University Street will hold

100% of

the Company Common Securities which represent 100% of

the voting rights in the

Company subject to the limited rights of

holders of

the Company Preferred Securities described

herein)

The Asset Trust

Washington Mutual Home Equity Trust I is a Delaware statutory trust formed pursuant to a

trust agreement, to be entered into on or

before the closing date, between the Company, as

depositor, and Deutsche Bank Trust Company Delaware, as Delaware trustee the

The Pooling and Servicing Agreement among the Company, as depositor, WMB, as

Servicer, Deutsche Bank Trust Company Delaware, as Delaware Trustee, and Deutsche Bank

National Trust Company, as Trustee the will restate the

trust agreement and will be the governing instrument of

the Asset Trust. The Asset Trust will

make an

election to be treated as a real estate mortgage investment conduit for

United States Federal income tax purposes.

The initial assets of

the Asset Trust will consist of

the portfolio of

HELs to be conveyed by

the Company to the Asset Trust in connection with the Offering. The HELs were originated by

WMB primarily through its

retail branches between September 2001 and September 2005. As of

January 31, 2006, the HELs to be transferred into the Asset Trust had an aggregate unpaid

principal balance of

approximately $5,389,459,150.

WMI

With a history dating back to 1889, Washington Mutual, Inc., a Washington corporation, is a

retailer of

financial services to consumers and small businesses. Based on its consolidated

assets at

September 30, 2005, WMI was the largest thrift holding company in the United States

and the seventh largest among all U.S.-based bank and thrift holding companies. As of

September 30, 2005, WMI, together with

its subsidiaries, had total assets of

approximately

$333.6 billion, total liabilities of

approximately $311.0 billion and total stockholders' equity of

approximately $22.6 billion. As of September 30, 2005, WMI and

its subsidiaries also had total

deposits of

approximately $190.4 billion. WMI's common stock is listed on the New York Stock

CONFIDENTIAL


Exchange under the symbol WM". The principal business offices of WMI are located at

1201 Third Avenue, Seattle, Washington 98101 and

its telephone number is 206-461-2000.

WMB

Washington Mutual Bank formerly known as Washington Mutual Bank, FA) is a federally

chartered savings association, chartered and operating under the United States Home Owners'

Loan Act of

1933, as amended. WMB engages in mortgage banking, consumer banking and

small business banking. WMB, as a federally chartered association, has the authority to make

various types of

loans, including loans secured by homes and commercial real estate, secured

and unsecured consumer loans, and secured and unsecured commercial loans. As a federal

savings association, WMB is subject to regulation and examination by the OTS,

its primary

regulator. WMB is an indirect wholly-owned subsidiary of WMI.

Prior to 2004, WMB had two sister depository institutions which were both owned directly

by WMI. WMB has since acquired both of

these sister institutions. One of

these institutions,

Washington Mutual Bank fsb, a federal savings bank, became a wholly-owned subsidiary of

WMB on February 1,

2004. The other institution, Washington Mutual Bank, a savings bank

chartered under the laws of

the state of

Washington, converted into a federally chartered savings

bank and then was merged into WMB on January 1,

2005.

6

CONFIDENTIAL


The Offering

Issuer As to the WaMu Cayman Preferred Securities, Washington

Mutual Preferred Funding Cayman) I Ltd., a Cayman

Islands exempted company limited by shares.

As to the Fixed Rate Company Preferred Securities,

Washington Mutual Preferred Funding LLC, a Delaware

limited liability company.

As to the Fixed Rate WMI Preferred Stock which will be

represented by the Fixed Rate Depositary Shares) for

which the WaMu Cayman Preferred Securities will be

exchanged upon the occurrence of

a Conditional Ex-

change, Washington Mutual, Inc., a Washington

corporation.

Offered Securities 7.25% Perpetual Non-cumulative Preferred Securities, Se-

ries A-1, liquidation preference $100,000 per security and

$302,300,000 in the aggregate, and 7.25% Perpetual Non-

cumulative Preferred Securities, Series A-2, liquidation

preference $10,000 per security and $447,700,000 in the

aggregate, both issued by WaMu Cayman. The terms of

the Series A-1 WaMu Cayman Preferred Securities and the

Series A-2 WaMu Cayman Preferred Securities are identi-

cal except for their per security liquidation preference. The

financial entitlements of each WaMu Cayman Preferred

Security will be substantially the same as the financial

entitlements of a like amount of

Fixed Rate Company

Preferred Securities, with the consequence that dividends

and the redemption price on the WaMu Cayman Preferred

Securities will be payable on the same dates and in the

same amounts as the corresponding dividends and re-

demption price, as

applicable, on a like amount of

Fixed

Rate Company Preferred Securities.

Dividends. Dividends on the WaMu Cayman Preferred Securities will

become payable on a non-cumulative basis except in the

limited circumstances set out under Description of

the

WaMu Cayman Preferred Securities Dividends"), on

each date on which the Company pays to WaMu Cayman

dividends on the Fixed Rate Company Preferred Securities,

in an amount per WaMu Cayman Preferred Security equal

to the amount of

dividends received by WaMu Cayman on

a like amount of

Fixed Rate Company Preferred Securities

including with respect to Additional Taxes, if any). WaMuCayman's Board o

f

Directors is not required to declare the

payment of

dividends in order for dividends to be paid.

However, payment of

dividends may be blocked by WaMu

Cayman's Board of

Directors, but only by their unanimous

action including consent of

the Independent Director).

For purposes of

this offering circular, we refer to distribu-

tions payable by the Company on

its securities as divi-

CONFIDENTIAL


dends." Dividends on the Fixed Rate Company Preferred

Securities are payable as follows:

Dividend Rate. Dividends on the Fixed Rate Company

Preferred Securities will accrue at a fixed rate per annum

equal to 7.25% applied to the liquidation preference of

$1,000 per Fixed Rate Company Preferred Security.

Dividend Payment Dates. If declared by

the Company's

Board of

Managers, the Dividend Payment Dates for the

Fixed Rate Company Preferred Securities are the 15th day

of

March, June, September and December of each year,

commencing on June 15, 2006. If any Dividend Payment

Date is not a Business Day, then dividends will be payable

on the first Business Day following such Dividend Payment

Date with the same force and effect as

if payment were

made on the date such payment was originally payable.

Declaration of

Dividends, etc. Dividends on the Fixed

Rate Company Preferred Securities when, as and if

declared by the Company's Board of Managers out of

legally available funds, will be payable at

the applicable

dividend rate applied to the liquidation preference per

Fixed Rate Company Preferred Security accruing on a non-

cumulative basis on each such security as follows: i) from

March 7,

2006 in the case of

the Fixed Rate Company

Preferred Securities offered hereby and if additional

Fixed Rate Company Preferred Securities are issued at a

future date, from A) March 7, 2006 if such date is before

June 15, 2006, B) the date of

issue if such date is a

Dividend Payment Date and C) either the immediately

preceding Dividend Payment Date or

the date of

issue as

determined by the Company if the date of

issue is other

than a Dividend Payment Date and is after June 15, 2006.

Any such dividends will be distributed to holders of

Fixed

Rate Company Preferred Securities in the manner de-

scribed under Description of


Preferred Securities Dividends."

Non-cumulative Dividends. Dividends on the Fixed Rate

Company Preferred Securities are not cumulative. Accord-

ingly, in the event dividends are not declared on the Fixed

Rate Company Preferred Securities for payment on any

Dividend Payment Date, then any accrued dividends will

cease to accrue and be payable. If the Company's Board

of Managers has not declared a dividend before the

Dividend Payment Date for any Dividend Period, the

Company will have no obligation to pay dividends accrued

for such Dividend Period after the Dividend Payment Date

for that Dividend Period, whether or

not dividends on the

Fixed Rate Company Preferred Securities are declared for

any future Dividend Period.

CONFIDENTIAL


Redemption IReplacement Capital

Covenant General. On each day on which the Compflny redeems

Fixed Rate Company Preferred Securities, WaMu Cayman

will redeem a like amount of WaMu Cayman Preferred

Securities. If the redemption of


Preferred Securities is in part instead of

in whole, then

WaMu Cayman will allocate the partial redemption between


Series A-2 WaMu Cayman Preferred Securities in propor-

tion to their aggregate liquidation preferences. The re-

demption provisions of


Securities are described below.

Subject to a covenant in favor of

certain of

WMl's

debtholders limiting WMl's and

its subsidiaries' right to

repurchase or

redeem the Fixed Rate Company Preferred

Securities or

the WaMu Cayman Preferred Securities

among others) as

described in the next paragraph, and

subject to the Company having received the prior approval

of

the OTS for any proposed redemption of

Fixed Rate

Company Preferred Securities, the Company may, at

its

option, redeem the Fixed Rate Company Preferred

Securities:

in whole but not in part, prior to the Dividend Payment

Date in March, 2011, if a Tax Event, an Investment

Company Act Event or a Regulatory Capital Event

occurs. The cash redemption price will be the greater of

i) $1,000 per Fixed Rate Company Preferred Security

or

the sum of

present values of

$1,000 per Fixed

Rate Company Preferred Security and all undeclared

dividends for the Dividend Period from the redemption

date to and including the Dividend Payment Date in

March 2011, discounted to the redemption date on a

quarterly basis assuming a 360-day year consisting of

twelve 30-day months) at

the Treasury Rate, as calcu-

lated by

an Independent Investment Banker, plus 0.40%,

plus any declared and unpaid dividends to the redemp-

tion date, or

in.whole or

in part, on or

after the Dividend Payment

Date in March 2011, at

a cash redemption price of

$1,000 per Fixed Rate Company Preferred Security, plus

any declared and unpaid dividends to the redemption

date, without accumulation of any undeclared dividends.

See Description of


Securities Redemption."

Restriction on Redemption or

Repurchases. At

or

prior to

initial issuance of

the WaMu Cayman Preferred Securities,

WMI will enter into a Replacement Capital Covenant" as

described under Description of

the WaMu Cayman Pre-

ferred Securities Restriction on Redemption or

Repur-

chases." In the Replacement Capital Covenant, WMI will

CONFIDENTIAL


covenant in favor of

certain of

its debtholders that, if WMI

or a subsidiary repurchases or redeems any WaMu Cay-

man Preferred Securities, Trust Securities or

Company

Preferred Securities or, after a Conditional Exchange,

Fixed Rate Depositary Shares or related Fixed Rate WMIPreferred Stock), WMI o

r

its subsidiaries will do so only if

and to the extent that the total redemption or

purchase

price is equal to or

less than designated percentages of

the net cash proceeds that WMI or

its subsidiaries have

received during the 180 days prior to such redemption or

repurchase from the issuance of

securities having the

characteristics described under Description of

the WaMu

Cayman Preferred Securities Restriction on Redemption

or

Repurchases."

Ranking. WaMu Cayman Preferred Securities. The WaMu Cayman

Preferred Securities will rank senior to the WaMu Cayman

Ordinary Shares in terms of

dividends and liquidation

payments. The Series A-1 WaMu Cayman Preferred Secu-

rities and the Series A-2 WaMu Cayman Preferred Securi-

ties will rank pari passu with each other in terms of

dividends and liquidation payments and otherwise have

identical terms other than as

to their respective per

security liquidation preference.

WaMu Cayman's Memorandum and Articles of

Association

together, as amended, the WaMu Cayman's Articles of

Association") will provide that WaMu Cayman will not,

without the consent of

the holder of each outstanding

WaMu Cayman Preferred Security, issue equity securities

ranking pari passu or

senior to the WaMu Cayman

Preferred Securities in terms of

dividends or

redemption or

liquidation payments or

incur any indebtedness.

Fixed Rate Company Preferred Securities. The Fixed

Rate Company Preferred Securities will rank pari passu

with the Fixed-to-Floating Rate Company Preferred Securi-

ties and senior to the Company Common Securities in

terms of

dividends and liquidation payments.

During a Dividend Period, the Company may not declare or

pay any. dividends on any of

its Junior Equity Securities,

other than dividends payable in Junior Equity Securities, or

repurchase, redeem or

otherwise acquire for consideration,

directly or

indirectly, any Junior Equity Securities other

than as a result of

reclassification of

Junior Equity

Securities for or

into other Junior Equity Securities, or

the

exchange or

conversion of

Junior Equity Securities for or

into other Junior Equity Securities), unless dividends for

such Dividend Period on all outstanding Company Pre-

ferred Securities have been declared and paid in full, or

declared and set aside for payment, as the case may be.

The Company may from time to time issue additional Parity

Equity Securities without the consent of

the holders of

the

CONFIDENTIAL


provided

pro forma

pro forma

Fixed Rate Depositary Shares").

Exchange Event"

CONFIDENTIAL


pari passu

CONFIDENTIAL


Voting Rights and Certain Covenants ...................... .

that limits the payment of dividends, as applicable, by WMB, and in connection therewith, directs such exchange.

The Fixed Rate WMI Preferred Stock will have substantially equivalent terms as to dividends, redemption and liquidation preference as the Fixed Rate Company Preferred Securities, except that the Fixed Rate WMI Preferred Stock: (i) will not have the benefit of the covenants described under "Description of the Fixed Rate Company Preferred Securities - Voting Rights and Covenants;" (ii) will not be listed on any securities exchange or automated dealer quotation system; (iii) will be redeemable prior to the Dividend Payment Date occurring on March 15, 2011 only upon the occurrence of a Regulatory Capital Event (as described herein); (iv) Additional Amounts will not be payable with respect to the Fixed Rate WMI Preferred Stock; and (v) if WMI fails to pay, or declare and set aside for payment, full dividends on the Fixed Rate WMI Preferred Stock for six Dividend Periods, the authorized number of WMl's directors will increase by two, and the holders of Fixed Rate WMI Preferred Stock, voting together with the holders of any other equity capital securities of WMI having similar voting rights, including the Fixed-to-Floating Rate WMI Preferred Stock, will have the right to elect two directors in addition to the directors then in office at the next annual meeting of shareholders. The Fixed Rate WMI Preferred Stock will be subject to the Replacement Capital Covenant described under "- Redemption I Replacement Capital Covenant" above.

WMI will covenant in the Exchange Agreement in favor of the holders of the WaMu Cayman Preferred Securities that it will not issue any preferred stock that would rank senior to the Fixed Rate WMI Preferred Stock upon its issuance. Each share of Fixed Rate WMI Preferred Stock will, upon issuance, rank at least pari passu with the most senior preferred stock of WMI, if any, then outstanding.

Except as otherwise set forth below, the holders of the Fixed Rate Company Preferred Securities will not have voting rights.

However, the LLC Agreement will provide that, except with the consent or affirmative vote of the holders of at least two-thirds of the Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Company Preferred Securities, voting together as a single class, the Company will not:

• effect a consolidation, merger or share exchange with or into another entity other than an entity controlled by, or under common control with, WMI;

• issue any securities of the Company ranking senior to the Company Preferred Securities in respect of pay-

12

CONFIDENTIAL


ments of dividends or on liquidation to the Company Preferred Securities ("Senior Equity Securities") ;

• incur any indebtedness for borrowed money;

• pay dividends on the Company's Junior Equity Securities unless the Company's FFO, for the four prior fiscal quarters equals or exceeds 150% of the amount that would be required to pay full annual dividends on all outstanding Company Preferred Securities, as well as any other Parity Equity Securities;

• amend or otherwise change the requirement that the Company make investments and distributions with the proceeds of the Company's assets such that the Company's FFO over any period of four fiscal quarters will equal or exceed 150% of the amount that would be required to pay full annual dividends on all outstanding Company Preferred Securities, as well as any other Parity Equity Securities;

• issue any additional Company Common Securities to any person, other than University Street or another affiliate ofWMI;

• amend or otherwise change the terms of any Asset Documentation in a manner which is materially adverse to WaMu Cayman or the holders of the WaMu Cayman Preferred Securities;

• remove or cause to be removed, as applicable, "Washington Mutual" from the Company's, WaMu Cayman's or WaMu Delaware's name unless the name of WMI changes and the Company makes a change to the Company's, WaMu Cayman's and WaMu Delaware's name to be consistent with the new group name;

• take any action or fail to take any action that would cause the Company to fail to be treated as a partnership (other than a publicly traded partnership taxable as a corporation) for United States Federal income tax purposes;

• amend or otherwise change the requirement that the Company not engage in a U.S. trade or business for United States Federal income tax purposes;

• amend or otherwise change the requirement that the Company hold only assets that qualify for the portfolio interest exemption under the Code and are exempt from gross basis United States withholding taxes;

• amend or otherwise change the requirement that the Company manage its affairs such that income with respect to the WaMu Cayman Preferred Securities does not constitute "unrelated business taxable income" for United States Federal income tax purposes; or

13

CONFIDENTIAL


• amend its Certificate of Formation or LLC Agreement in a manner that materially and adversely affects the terms of the Company Preferred Securities; provided, however, that, if such amendment affects only one class of Company Preferred Securities, such amendment will require only the class vote of the holders of at least twothirds of the applicable Company Preferred Securities of such class (voting separately and not as a single class with the other class) and, if such amendment affects both classes but affects them differently, then such amendment will require a class vote of each class of Company Preferred Securities, each voting separately.

In addition, the LLC Agreement will provide that, without the consent of all of the Managers, including the Independent Manager, the Company will not:

• terminate, amend, or otherwise change any Asset Documentation; or

• effect a consolidation, merger or share exchange (excluding the Conditional Exchange) that is not tax-free to the holders of the Fixed Rate Company Preferred Securities, and the related WaMu Cayman Preferred Securities, unless such transaction was approved by the consent or affirmative vote of the holders of at least twothirds of the Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Preferred Securities, voting together as a single class.

In addition, the LLC Agreement will provide that if (i) the Company fails to pay full dividends on the Company Preferred Securities on any Dividend Payment Date, (ii) WaMu Cayman fails to pay full dividends on the WaMu Cayman Preferred Securities on any Dividend Payment Date or (iii) a Bankruptcy Event occurs, the holders of the Fixed Rate Company Preferred Securities and the Fixed-toFloating Rate Company Preferred Securities, voting together as a single class, by majority vote, are entitled to remove the initial or any succeeding Independent Manager and to fill the vacancy created by such removal or any other vacancy existing in the office of the Independent Manager.

The voting rights described above with respect to the Fixed Rate Company Preferred Securities will be passed on to the holders of the related WaMu Cayman Preferred Securities and with respect to the Fixed-to-Floating Rate Company Preferred Securities will be passed through to the holders of the related Trust Securities of WaMu Delaware. See "Description of the WaMu Cayman Preferred Securities - Voting Rights."

Additional Amounts. . . . . . . . . . . . . . . If the Company or WaMu Cayman is required to pay any additional taxes, duties or other governmental charges as a result of an Additional Tax Event, the Company will pay as

14

additional amounts on the Fixed Rate Company Preferred

Securities such amounts as

will be required so that

dividends on the Fixed Rate Company Preferred Securities,

and accordingly on the WaMu Cayman Preferred Securi-

ties, will not be reduced as a result of

any such Additional

Taxes. See Description of


Preferred Securities Additional Amounts." If investors

exchange their Fixed Rate Company Preferred Securities

for Fixed Rate WMI Preferred Stock upon a Conditional

Exchange, WMI will not be obligated to pay Additional

Amounts on the Fixed Rate WMI Preferred Stock.

Assets and the Asset Trust. The initial assets of

the Company will consist of

the

Class A Asset Trust Certificate representing its interest in

the Asset Trust. The Asset Trust is a Delaware statutory

trust formed pursuant to a trust agreement between the

Company, as depositor, and Deutsche Bank Trust Com-

pany Delaware, as Delaware Trustee. The Pooling and

Servicing Agreement among the Company, as depositor,

WMB, as

Servicer, Deutsche Bank Trust Company Dela-

ware, as Delaware Trustee, and Deutsche Bank National

Trust Company, as

Trustee, will restate the trust agree-

ment and will thereafter be the governing instrument of

the

Asset Trust. The Asset Trust will make a REMIC election

for federal tax purposes.



a

portfolio including payments thereon received from and

after February 1,

2006) of

HELs and certain related assets

originated by WMB primarily through

its retail branches

between September 1,

2001 and September 30, 2005. As

of

January 31, 2006, the 56,090 HELs had an aggregate

unpaid principal balance of


These loans typically are made for reasons such as home

purchases, home improvements, furniture and fixtures

purchases, purchases of

automobiles and debt consolida-

tion. These HELs are first lien, closed-end fixed rate home

equity loans and are generally repaid on a self-amortizing

basis.

From time to time, the Company may acquire Additional

Assets. All

Additional Assets acquired by

the Company will

be

Eligible Assets.

Listing Application will be made to list the Series A-2 WaMu

Cayman Preferred Securities on the Euro MTF market of

the Luxembourg Stock Exchange. The Series A-1 WaMuCayman Preferred Securities will not b

e listed on any

securities exchange or


Use of

Proceeds. WaMu Cayman will use the proceeds of

the sale of

the

WaMu Cayman Preferred Securities to purchase a like

amount of

Fixed Rate Company Preferred Securities from

WMB, which the Company will issue to WMB in exchange

for the conveyance of a portfolio of HELs to the Company.

CONFIDENTIAL


CONFIDENTIAL


The WMI Group will use the proceeds from the sale of the Fixed Rate Company Preferred Securities to WaMu Cayman and the Fixed-to-Floating Rate Preferred Securities to WaMu Delaware for general corporate purposes, which may include the repurchase of WMl's common stock.

Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . The WaMu Cayman Preferred Securities are expected to be assigned upon issuance ratings of "BBB" by Standard & Poor's Rating Services, a division of The McGraw Hill Companies, Inc., "Baa2" by Moody's Investors Services, Inc. and "A-" by Fitch, Inc. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organization.

Tax Consequences ............... It is anticipated that WaMu Cayman will be a passive foreign investment company ("PFIC") for United States Federal income tax purposes and that the WaMu Cayman Preferred Securities will be treated as equity interests therein.

The Company intends to qualify as a partnership (other than a publicly traded partnership taxable as a corporation) for United States Federal income tax purposes, and thus, the Company Preferred Securities held by WaMu Cayman are intended to constitute equity interests in such partnership.

WaMu Cayman and the Company intend to operate so as not to be engaged in a U.S. trade or business. Accordingly, WaMu Cayman intends that it will not be subject to United States Federal income taxes on its net income.

See "Certain Tax Considerations - United States Federal Income Tax Consequences."

ERISA Considerations. . . . . . . . . . . . . No WaMu Cayman Preferred Security may be purchased by or transferred to any Benefit Plan Investor, except for an insurance company general account that represents, warrants and covenants that, at the time of acquisition and throughout the period it holds the securities, (A) it is eligible for and meets the requirements of the Department of Labor Prohibited Transaction Class Exemption 95-60, ( B) less than 25% of the assets of such general account are (or represent) assets of a Benefit Plan Investor and ( C) it is not a person who has discretionary authority or control with respect to the assets of WaMu Cayman or any person who provides investment advice for a fee (direct or indirect) with respect to such assets, or any affiliate of such a person and would not otherwise be excluded under 29 C.F.R. 2510.3-101 (f) (1).

Governing Law... . . .. . . . . .. . .. ... WaMu Cayman's Articles of Association and the WaMu Cayman Preferred Securities will be governed by, and construed in accordance with, the laws of the Cayman Islands. The LLC Agreement and the Fixed Rate Company

16

Preferred Securities will be governed by, and construed in

accordance with, the laws of

the State of

Delaware. The

Fixed Rate WMI Preferred Stock will be governed by and

construed in accordance with the laws of

the State of

Washington. The Fixed Rate Depositary Shares will be

governed by, and construed in accordance with, the laws

of

the State of

New York.

CUSIP ISIN The CUSIP number for the Series A-1 WaMu Cayman

Preferred Securities is 93934V AA 5.

The ISIN number for the Series A-1 WaMu Cayman

Preferred Securities is US93934VAA52.

The CUSIP number for the Series A-2 WaMu Cayman

Preferred Securities is G9463G AA 6.

The ISIN number for the Series A-2 WaMu Cayman

Preferred Securities is USG9463GAA60.

CONFIDENTIAL


RISK FACTORS

Purchasers should carefully consider the following risk factors in conjunction with the other

information contained in this offering circular, as well as information that is incorporated by

reference in this offering circular, before purchasing any WaMu Cayman Preferred Securities, the

financial entitlements of

which will be

substantially similar to those of

a like amount of

Fixed Rate

Company Preferred Securities and which are conditionally exchangeable into Fixed Rate Depositary

Shares representing interests in Fixed Rate WMI Preferred Stock.

Risks Relating to the Terms of

the WaMu Cayman Preferred Securities and the Fixed Rate

Company Preferred Securities

WaMu Cayman's ability pay dividends the WaMu Preferred Securities depends

whether the Company will pay dividends on the Fixed Rate Company Preferred Securities.

The only material assets of WaMu Cayman will be the Fixed Rate Company Preferred

Securities. Consequently, WaMu Cayman's ability to pay dividends on the WaMu Cayman

Preferred Securities depends entirely on whether the Company pays dividends on the Fixed Rate

Company Preferred Securities held by WaMu Cayman. If the Company does not declare and pay

dividends on the Fixed Rate Company Preferred Securities, WaMu Cayman will not pay dividends

on the WaMu Cayman Preferred Securities.

Even if the Company pays dividends on the Fixed Rate Company Preferred Securities held

WaMu Cayman, it is possible that WaMu Cayman's Board of

Directors prevent

payment of

dividends on the WaMu Cayman Preferred Securities.

Even though WaMu Cayman's Articles of

Association provide that dividends on the WaMu

Cayman Preferred Securities will be automatically payable on each date on which the Company

pays to WaMu Cayman dividends on the Fixed Rate Company Preferred Securities owned by

WaMu Cayman, WaMu Cayman's Articles of

Association also provide that WaMu Cayman's

Board of

Directors, acting unanimously including the two directors who are also members of

the

Company's Board of

Managers one of

whom is the Independent Manager) may prevent the

payment of such dividends on the WaMu Cayman Preferred Securities. However, if full dividends

on the WaMu Cayman Preferred Securities for any Dividend Period have not been declared and

paid, then, as described under Description of

the Fixed Rate Company Preferred Securities-

Restrictions on Dividends by WMI," WMI will not declare or pay dividends with respect to any of

its equity capital securities during the next succeeding Dividend Period, except dividends in

connection with a shareholder's rights plan, if any, or

dividends in connection with benefits plans.

The level of

the Company's relative the aggregate liquidation preference of

the

Company Preferred Securities could shrink over time other things, dividends

paid the Company the Common Securities or

other Junior Equity Securities if

are issued future date.

The LLC Agreement includes provisions that limit the Company's ability to pay dividends on

the Company's Junior Equity Securities but, subject to satisfaction of

those limitations, does not

prohibit dividends that could cause the level of

the Company's assets relative to the aggregate


the Company Preferred Securities to shrink. These limitations are


the Fixed Rate Company Preferred Securities Ranking,"

Restrictions on Dividends" and Voting Rights and Covenants." They include the following:

during a Dividend Period, the Company may not pay dividends on Junior Equity

Securities, or


otherwise acquire for consideration directly or

indirectly with limited exceptions) Junior Equity Securities, unless dividends for such

Dividend Period on all outstanding Company Preferred Securities have been declared and

paid in full, or

set aside for payment, as the case may be; and

CONFIDENTIAL


without the consent or

affirmative vote the holders of

at

least two-thirds of

the Fixed Rate

Company Preferred Securities and the Fixed-to-Floating Rate Company Securities, voting

together as a single class, the Company may not:

pay dividends on Junior Equity Securities unless the Company's FFO for the four

prior fiscal quarters equals or exceeds 150% of

the amount that would be

required to pay full dividends on the outstanding Company Preferred Securities,

as well as any other Parity Equity Securities; or

amend or

otherwise change the requirement that the Company make investments

and distributions with the proceeds of

the Company's assets such that the

Company's FFO for any period of

four fiscal quarters will equal or

exceed 150%

of

the amount that would be required to pay full annual dividends on

all

outstanding Company Preferred Securities, as

well as any other Parity Equity

Securities.

As HELs in the Asset Trust prepay or

repay principal and distributions with respect to such

principal payments are made by the Asset Trust to the Company on the Class A Asset Trust

Certificate, subject to the limitations referenced above, the Company may choose to apply such

amounts to pay dividends on the Company Common Securities or

reinvest such amounts in

additional Eligible Assets. Additionally, subject to the limitations referenced above, the Company

could distribute a portion of

the Class A Asset Trust Certificate as a dividend on the Company

Common Securities. The Company has no current intention to pay an extraordinary dividend, and

WMI has no current intention to cause or

permit the Company to pay such an extraordinary

dividend. Nevertheless, dividends paid by

the Company on the Company Common Securities could

result in a reduction in the Company's assets that could have the consequence, notwithstanding

its

compliance with the limitations referred to above, of

the Company not having funds available to

pay full dividends on the Company Preferred Securities in future periods or

loss by investors of

some or

all

of

the amount of

their investment were the Company to be liquidated.

The WaMu Cayman Preferred Securities may not be redeemed at

the option of

the holder

thereof under any circumstances, are perpetual and have no maturity date. While the WaMu

Cayman Preferred Securities may be redeemed at

the option of

the Company under certain

circumstances described herein, any such redemption is subject to the approval of

the OTS and

may be constrained by

operation of

the Replacement Capital Covenant. Investors in the WaMuCayman Preferred Securities will have no right to reclaim their initial investment from WaMuCayman and there can b

e no guarantee that the WaMu Cayman Preferred Securities will ever be

redeemed. If investors in the WaMu Cayman Preferred Securities choose to sell their WaMu

Cayman Preferred Securities in order to reclaim all

or

part of

their initial investment in the

absence of any redemption, there can be no guarantee that such investors would be able to sell

their securities in the secondary market, or

that if such sale occurred the sale price would at

or

above the initial price.

on

on

Dividends on the Fixed Rate Company Preferred Securities are not cumulative. Conse-

quently, if the Company's Board of

Managers does not declare a dividend on the Fixed Rate

CONFIDENTIAL


Company Preferred Securities for any quarter, WaMu Cayman will not be entitled to receive

dividends for such quarter, and consequently holders of


will not receive dividends with respect to their securities for that quarter. In addition, the

Company's Board of Managers may determine that it would be

in the Company's best interests

to pay less than the full amount of

the stated dividends on the Fixed Rate Company Preferred

Securities or no dividends for any quarter even though funds are available. Factors that would

generally be considered by the Company's Board of Managers in making this determination are

the amount of

available funds, the Company's financial condition and capital needs, the impact of

current and pending legislation and regulations, economic conditions, and tax considerations.

to on

itEven if the Company pays dividends on Fixed Rate Company Preferred Securities held b

y

WaMu Cayman, it is possible that WaMu Cayman may not be able to pay dividends because

WaMu Cayman may only pay dividends on the WaMu Cayman Preferred Securities out of

funds

legally available therefor. Although WaMu Cayman's Articles of

Association restrict its activities

as described under WaMu Cayman" and WaMu Cayman is otherwise precluded from incurring

any indebtedness for borrowed money and does not anticipate having any material liabilities, it is

possible that WaMu Cayman may incur involuntary liabilities that may, in turn, preclude it from

paying dividends on the WaMu Cayman Preferred Securities even if the Company has paid

dividends on the Fixed Rate Company Preferred Securities owned by WaMu Cayman.

a a

The returns from an investment in the WaMu Cayman Preferred Securities will be dependent

to a significant extent on the performance and capital of WMB due to the potential for a

Conditional Exchange. A decline in the performance and capital levels of WMB or

the placement

by

the OTS of WMB into conservatorship or

receivership could result in a Conditional Exchange

of

the WaMu Cayman Preferred Securities for Fixed Rate Depositary Shares representing Fixed

Rate WMI Preferred Stock. The Fixed Rate WMI Preferred Stock would represent an investment

in WMI and not in the Company or WaMu Cayman. Under these circumstances:

the WaMu Cayman Preferred Securities would be exchanged for a preferred equity

interest in WMI at a time when WMB's and, ultimately, WMl's financial condition has

deteriorated or

when WMB may have been placed into conservatorship or

receivership

and, accordingly, it is unlikely that WMI would be

in a financial position to make any

dividend payment on the amount of

Fixed Rate WMI Preferred Stock;

in the event of a liquidation of WMI, the claims of

creditors of WMI would be entitled to

priority in payment over the claims of

holders of

equity interests such as the Fixed Rate

Depositary Shares, and, therefore, the former holders of

the WaMu Cayman Preferred

Securities who would then hold the Fixed Rate Depositary Shares representing Fixed

Rate WMI Preferred Stock because of

the occurrence of

the Conditional Exchange may

receive substantially less than such holders would receive had the.WaMu Cayman

Preferred Securities not been exchanged for the Fixed Rate Depositary Shares. See

Risk Factors Applicable to Fixed Rate Depositary Shares Issued in a Conditional

Exchange The Fixed Rate WMI Preferred Stock will rank subordinate to the direct

indebtedness of WMI;"

for United States Federal income tax purposes, a Conditional Exchange would most likely

be a taxable event to holders of

the WaMu Cayman Preferred Securities, and in that

20

CONFIDENTIAL


event such holders generally would incur a gain or

loss, as the case may be, measured

by

the difference between their adjusted tax basis in the WaMu Cayman Preferred

Securities and the fair market value of

the Fixed Rate Depositary Shares. In addition,

dividends, if any, paid to Foreign Holders of

Fixed Rate Depositary Shares received upon

a Conditional Exchange generally will be subject to a 30% United States withholding tax

unless the holder qualifies for a reduction from withholding tax under an applicable United

States income tax treaty; and

although the terms of

Fixed Rate Depositary Shares are substantially similar to the terms

of

the Fixed Rate Company Preferred Securities, there are differences that holders of

WaMu Cayman Preferred Securities might deem to be important, such as

the fact that

holders of

Fixed Rate Depositary Shares will not generally have voting rights, except as

required by

law or

in connection with the right to elect directors if dividends are missed

see Description of

the Fixed Rate WMI Preferred Stock Voting Rights"), or

benefit

from any protective covenants. In addition, neither the Fixed Rate WMI Preferred Stock

nor the Fixed Rate Depositary Shares will be listed on any securities exchange or

automated dealer quotation system, and the Initial Purchasers are under no obligation to

and do not intend to make a market in the Fixed Rate Depositary Shares.

Except as specified in WaMu Cayman's Articles of

Association or

in relation to the right to

direct the manner in which WaMu Cayman exercises its voting rights with respect to the Fixed

Rate Company Preferred Securities, holders of WaMu Cayman Preferred Securities are not

entitled to voting rights. Except as

specified in the LLC Agreement, WaMu Cayman, as

holder of

Fixed Rate Company Preferred Securities, is not entitled to voting rights. However, the Company

is prohibited by

the LLC Agreement from taking certain actions without the consent or

vote of

at

least two-thirds of

either the Fixed Rate Company Preferred Securities voting separately or

the

Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Company Preferred

Securities, voting together as a single class, as applicable. For a description of

the matters on

which the holders of

Fixed Rate Company Preferred Securities have a right to vote, see

Description of

the Fixed Rate Company Preferred Securities Voting Rights and Covenants."

no

of

a an

Subject to the Replacement Capital Covenant and the prior approval of

the OTS, the

Company may redeem the Fixed Rate Company Preferred Securities i) in whole but not in part

upon the occurrence of a Tax Event, an Investment Company Act Event or a Regulatory Capital

Event prior to March 15, 2011 and in whole or

in part, at any time on or

after March 15, 2011.

The redemption by the Company of

the Fixed Rate Company Preferred Securities will automatically

cause a redemption of

the WaMu Cayman Preferred Securities for which the redemption price will

be paid from the proceeds WaMu Cayman receives from the Company as a consequence of

the

redemption of

the Fixed Rate Company Preferred Securities. The occurrence of

a Tax Event, an

Investment Company Act Event or a Regulatory Capital Event will not, however, give a holder of

the WaMu Cayman Preferred Securities any right to request that the Fixed Rate Company

Preferred Securities or

the WaMu Cayman Preferred Securities be redeemed.

If the Company redeems the Fixed Rate Company Preferred Securities, the WaMu Cayman

Preferred Securities will be automatically redeemed, and the former holders of

the WaMu

21

CONFIDENTIAL


Cayman Preferred Securities may not be able to invest their redemption proceeds in securities

with a dividend yield and other terms comparable to that of


Securities. A Treasury based make whole" amount will be payable only in connection with a

redemption prior to March 15, 2011.

The WaMu Cayman Preferred Securities will rank subordinate to claims of WaMu Cayman's

creditors.

Although WaMu Cayman is a special purpose vehicle and its activities will be

limited by

WaMu Cayman's Articles of

Association, the WaMu Cayman Preferred Securities will rank

subordinate to claims of WaMu Cayman's creditors, if any. Accordingly, if

WaMu Cayman does not have funds legally available to pay full dividends on the WaMuCayman Preferred Securities; o

r

in the event of WaMu Cayman's liquidation, dissolution or

winding up, WaMu Cayman

does not have funds legally available to pay the full liquidation value of

the WaMuCayman Preferred Securities,

in each case, because of

claims of

any such creditors, any funds that are legally available to pay

such amounts will be paid pro rata to the WaMu Cayman Preferred Securities.

The Fixed Rate Company Preferred Securities will rank subordinate to claims of

the Company's

creditors and on a parity with other series of

preferred securities issued the Company.

The Fixed Rate Company Preferred Securities will rank subordinate to all claims of

the

Company's creditors. The Fixed Rate Company Preferred Securities will rank pari passu as

to

dividends and upon liquidation with the Fixed-to-Floating Rate Company Preferred Securities and

other Parity Equity Securities that the Company may issue. The Company will issue the Fixed-to-

Floating Rate Company Preferred Securities to WaMu Delaware at

a time substantially

contemporaneous with this Offering and may issue additional Parity Equity Securities at any time

in the future, subject to certain conditions at

the time of

issuance, without the consent or

approval of

the holders of

the WaMu Cayman Preferred Securities. Accordingly, if

the Company does not have funds legally available to pay full dividends on the Fixed Rate

Company Preferred Securities and any Parity Equity Securities; or

in the event of

the Company's liquidation, dissolution or

winding up, the Company does

not have funds legally available to pay the full liquidation value of

the Fixed R"ate

Company Preferred Securities and any Parity Equity Securities,

any funds that are legally available to pay such amounts will be paid pro rata to the Fixed Rate

Company Preferred Securities and any other Parity Equity Securities then outstanding. See

Description of

Other Company Securities Fixed-to-Floating Rate Company Preferred

Securities."

There has never been a market for the WaMu Cayman Preferred Securities.

Prior to this Offering, there was no market for the WaMu Cayman Preferred Securities.

Although the Initial Purchasers intend to make a market in the WaMu Cayman Preferred

Securities, they are under no obligation to do so and, to the extent that such market making is

commenced, it may be discontinued at

any time. The Series A-1 WaMu Cayman Preferred

Securities will not be listed on any securities exchange or automated dealer quotation system,

and although WaMu Cayman will apply to list the Series A-2 WaMu Cayman Preferred Securities

on the Euro MTF market of

the Luxembourg Stock Exchange, there can be no assurance that an

active and liquid trading market for the WaMu Cayman Preferred Securities will develop or

be

sustained. If such a market were to develop, the prices at

which the WaMu Cayman Preferred

CONFIDENTIAL


Securities trade would depend on many factors, including prevailing interest rates, the operating

results of

the Company, WMB and WMI, and the market for similar securities. Hqlders of WaMu

Cayman Preferred Securities may not be able to resell their WaMu Cayman Preferred Securities

at

or above the initial price. Furthermore, the WaMu Cayman Preferred Securities are not and will

not be registered under the Securities Act, will be deemed to be

restricted securities within the

meaning of

Rule 144 under the Securities Act and are subject to significant transfer restrictions

as

described in Notice to Investors." These restrictions on transfer may inhibit the development

of

an

active and liquid trading market for the WaMu Cayman Preferred Securities and may

adversely impact the market price of

the WaMu Cayman Preferred Securities.

of,

The WaMu Cayman Preferred Securities do not constitute obligations or

equity securities of

WMI, WMB, the Company, Marion Holdings Inc., an intermediate holding company between WMB

and University Street University Street, the Asset Trust, WaMu Delaware or

any

other entity, nor are WaMu Cayman's obligations with respect to the WaMu Cayman Preferred

Securities guaranteed by any other entity. In particular, neither WMI, WMB, the Company,

University Street, Marion, the Asset Trust, WaMu Delaware nor any other entity guarantees that

WaMu Cayman will declare or

pay any dividends, nor are they obligated to provide additional

capital or

other support to WaMu Cayman to enable WaMu Cayman to pay dividends in the event

the Company fails to pay dividends on the Fixed Rate Company Preferred Securities and WaMuCayman is thus unable to pay dividends on the WaMu Cayman Preferred Securities. The WaMu

Cayman Preferred Securities are not exchangeable for Fixed Rate Depositary Shares or

Fixed

Rate WMI Preferred Stock except upon a Conditional Exchange. No holder of WaMu Cayman

Preferred Securities will have the right to require WaMu Cayman to exchange the WaMu Cayman

Preferred Securities for Fixed Rate Depositary Shares.

of,

The Fixed Rate Company Preferred Securities do not constitute obligations or

equity

securities of

any entity other than the Company, including WMI, WMB, Marion, University Street,

WaMu Cayman, the Asset Trust and WaMu Delaware, nor are the Company's obligations with

respect to the Fixed Rate Company Preferred Securities guaranteed by any other entity. In

particular, neither WMI, WMB, Marion, University Street, WaMu Cayman, the Asset Trust, WaMu

Delaware nor any other entity, guarantees that the Company will declare or

pay any dividends to

WaMu Cayman, nor are they obligated to provide additional capital or

other support to the

Company to enable the Company to pay dividends on the Fixed Rate Company Preferred

Securities to WaMu Cayman in the event the Company's assets and results from operations are

insufficient for such purpose.

All

of

the Company's officers and certain of

the Company's managers are also officers of

WMI or WMB or

their affiliates. After this Offering, WMI, WMB and University Street will continue

to control

all

of

the Company's outstanding voting securities. WMI, WMB, and University Street

will have the right to elect

all

of

the Company's managers, including the Independent Manager.

WMB and University Street may have interests that are not identical to the Company's

interests. WMI, through

its subsidiary, New American Capital, Inc., is the ultimate owner of

WMB's and University Street's common stock, and may have investment goals and strategies

CONFIDENTIAL


The Company is dependent on the officers and employees of WMI and WMB for the selection,

structuring and monitoring of

the loans in the Asset Trust and the Company's relationship with

WMI and/or WMB may create potential conflicts of

interest.

The Company is dependent on the officers and employees of WMB for the servicing of

the loans

in the Asset Trust and the Company's relationship with WMB may create potential conflicts

interest.

per annum

per annum.

Regulators may limit the Company's ability to implement the Company's business plan and mayrestrict the Company's ability to pay dividends.

24

CONFIDENTIAL


a on

25

CONFIDENTIAL


which it conducts

its operations to avoid being required to register as

an investment company, or

to register as

an investment company, either of

which could have a material adverse effect

on the Company or

the Asset Trust, as the case may be, the Company's ability to make

payments in respect of

the Fixed Rate Company Preferred Securities and, accordingly, the

trading price of

the WaMu Cayman Preferred Securities. Further, in order to ensure that the

Company and the Asset Trust at

all times continues to qualify for the above exemption from the

Investment Company Act, the Company and the Asset Trust may be required at

times to adopt

less efficient methods of

financing certain of

the Company's and the Asset Trust's assets than

would otherwise be the case and may be precluded from acquiring certain types of

assets whose

yield is higher than the yield on assets that could be purchased in a manner consistent with the

exemption. The net effect of

these factors may be

to lower at

times the Company's net interest

income. Finally, if the Company or

the Asset Trust were an unregistered investment company,

there would be a risk that the Company or

the Asset Trust, as

the case may be, would be

subject to monetary penalties and injunctive relief in an action brought by the SEC, that the

Company or

the Asset Trust, as the case may be, would be unable to enforce contracts with

third parties and that third parties could seek to obtain rescission of

transactions undertaken

during the period the Company or

the Asset Trust was determined to be

an unregistered

investment company.

In addition, an

issuer that is organized outside the United States, such as WaMu Cayman, is

not permitted to register under the Investment Company Act without first obtaining an order from

the SEC permitting it to register as

an investment company under the Investment Company Act.

WaMu Cayman does not intend to seek such an order and could not satisfy some of

the

requirements of

the Investment Company Act e.g., limitations on the ratio of

preferred equity to

common equity) that would have to be satisfied for WaMu Cayman to obtain such an order.

Accordingly, WaMu Cayman has not and does not intend to register under the Investment

Company Act in reliance on the exemption from registration set forth in Section 3(c) thereof.

Were such an exemption no longer available, potential ramifications of

a failure by WaMu Cayman

to obtain an order permitting it to register, if such registration were in fact required, include, but are

not limited to,

an

injunctive or

administrative proceeding by

the SEC for disgorgement and/or

monetary penalties and an order prohibiting WaMu Cayman from committing or

causing future

violations of

the federal securities laws. In the event the Company, the Asset Trust or WaMu

Cayman is ever considered an investment company under the Investment Company Act as a result

of

an Investment Company Act Event, the Company would likely redeem the Fixed Rate Company

Preferred Securities. See above under Risks Relating to the Terms of

the WaMu Cayman

Preferred Securities and the Fixed Rate Company Preferred Securities Holders of WaMu

Cayman Preferred Securities and Fixed Rate Company Preferred Securities have no redemption

rights; however, the Company may but is not required to) redeem the Fixed Rate Company

Preferred Securities upon the occurrence of a Tax Event, an Investment Company Act Event or a

Regulatory Capital Event prior to March 15, 2011, and at

any time thereafter and such redemption

will cause an automatic redemption of

the WaMu Cayman Preferred Securities."

Additionally, the Company may from time to time have Asset Subsidiaries other than the

Asset Trust. The Company may not establish an Asset Subsidiary unless the establishment and

operation of

such Asset Subsidiary will not cause the Company to be

an investment company

which is required to register under the Investment Company Act and such Asset Subsidiary is not

itself an investment company which is required to register under the Investment Company Act. If

any such Asset Subsidiary were to be required to register as

an investment company, the results

would be similar to those described above in respect to the Asset Trust being required to register

as

an investment company.

Adverse Effect of

Determination of Company's Partnership Status

Prior to the issuance of

the Company Preferred Securities, the Company will receive an

opinion from Mayer, Brown, Rowe Maw LLP to the effect that, for United States Federal

CONFIDENTIAL


income tax purposes, i) the Company will not be treated as

an association taxable as a

corporation and

ii) although no activities closely comparable to that contemplated by the

Company have been the subject of any U.S. Treasury regulation, revenue ruling or

judicial

decision, the Company will not be treated as a publicly traded partnership taxable as a

corporation. The opinions are based on certain assumptions and on certain representations and

agreements regarding restrictions on the future conduct of

the activities of

the Company.

Although the Company intends to conduct

its activities in accordance with such assumptions,

representations and agreements, if it were nonetheless determined that the Company was

taxable as a corporation for United States Federal income tax purposes, then the Company

would be subject under the Code to the regular corporate income tax. Such taxes would reduce

the amounts available to make payments on the Company Preferred Securities.

Adverse Effect of

Determination of

U.S. Trade or

Business Status


the WaMu Cayman Preferred Securities, WaMu Cayman will receive

an opinion from Mayer, Brown, Rowe Maw LLP to the effect that, for United States Federal

income tax purposes, although no activities closely comparable to that contemplated by WaMu

Cayman have been the subject of

any U.S. Treasury regulation, revenue ruling or

judicial

decision, WaMu Cayman will not be treated as engaged in the conduct of

a trade or

business

within the United States and, consequently, WaMu Cayman's profits will not be subject to United

States Federal income tax on a net income basis including the branch profits tax). The opinion

is based on certain assumptions and on certain representations and agreements regarding

restrictions on the future conduct of

the activities of WaMu Cayman and the Company. Although

WaMu Cayman intends to conduct its activities in accordance with such assumptions,

representations and agreements, if it were nonetheless determined that WaMu Cayman was

engaged in a United States trade or

business and had taxable income that is effectively

connected with such United States trade or

business, then WaMu Cayman would be subject

under the Code to the regular corporate income tax on such effectively connected taxable

income and possibly to the 30% branch profits tax as

well. Such taxes would reduce the amounts

available to make payments on the WaMu Cayman Preferred Securities.

The Company has control over changes in interest rates and such changes could negatively

impact the Company's financial condition, results of

operations, and ability to pay dividends.

Initially, the Company's income consists primarily of payments received on the HELs which

are the underlying assets supporting the Class A Asset Trust Certificate such underlying assets,

together with any collateral with respect to any Additional Assets, the Company's Portfolio"). At

January 31, 2006, 100% of

the HELs to be included in the Company's Portfolio bear interest at

fixed rates; however, in the future, the Company could acquire Additional Assets which include or

are secured by

adjustable rate loans. Adjustable-rate loans decrease the risks to a lender

associated with changes in interest rates but involve other risks. As interest rates rise, the

payment by

the borrower rises to the extent permitted by

the terms of

the loan, and the

increased payment increases the potential for default. At

the same time, the marketability of

the

underlying property may be adversely affected by higher interest rates. In a declining interest rate

environment, there may be

an increase in prepayments on the HELs or

other assets in the

Company's Portfolio as

the borrowers refinance their mortgages at

lower interest rates. Under

these circumstances, the Company may find it more difficult to acquire Additional Assets with

rates sufficient to support the payment of

the dividends on the Fixed Rate Company Preferred

Securities. A declining interest rate environment would adversely affect the Company's ability to

pay full, or even partial, dividends on the Fixed Rate Company Preferred Securities.

CONFIDENTIAL


The value of

the collateral underlying the Company's Portfolio and

lor

the results of

the

Company's operations could be affected by various conditions in the economy, such as:

local and other economic conditions affecting real estate and other collateral values;

sudden or

unexpected changes in economic conditions, including changes that might

result from terrorist attacks and the United States' response to such attaCks;

the continued financial stability of a borrower and the borrower's ability to make loan

principal and interest payments, which may be adversely affected by job loss, recession,

divorce, illness or

personal bankruptcy; and

interest rate levels and the availability of

credit to refinance loans at

or

prior to maturity.

At

January 31, 2006, more than 79% as a percentage of

loan principal balances) of

the

assets in the Company's Portfolio were located in Texas and California. Because of

the

concentration of

the Company's interest in those states, in the event of

adverse economic

conditions in those states, the Company would likely experience higher rates of

loss and

delinquency on the Company's Portfolio than if the underlying HELs were more geographically

diversified. Additionally, the HELs in the Company's Portfolio may be subject to a greater risk of

default than other comparable loans in the event of

adverse economic, political, or

business

developments or

natural hazards that may affect Texas and California, and the ability of

property

owners or

commercial borrowers in those states to make payments ofprincipal and interest on

the underlying loans. In the event of

any adverse development or

natural disaster in those states,

the Company's ability to pay dividends on the Fixed Rate Company Preferred Securities could be

adversely affected.

The Company has adopted policies with a view to ensuring that

all financial dealings

between WMB, University Street and the Company will be fair to each party and consistent with

market terms. However, there has been no third party valuation of

all

of

the Company's assets.

In addition, it is not anticipated that third party valuations will be obtained in connection with

future acquisitions or

dispositions of

assets even in circumstances where an affiliate of

the

Company.is selling the assets to the Company, or

purchasing the assets from the Company.

Accordingly, the Company cannot assure purchasers that the purchase price the Company paid

for all

of

the Company's assets was equal to the fair market value of

those assets. Nor can the

Company assure purchasers that the consideration to be paid by the Company

to,

or

received by

the Company from, WMB, University Street or any of

the Company's affiliates in connection with


dispositions of

assets will be equal to the fair market value of

such assets.

The Asset Trust or any other Asset Subsidiary may be forced to foreclose on an underlying

HEL or

other assets where the borrower has defaulted on

its obligation to repay the applicable

CONFIDENTIAL


loan. It

is possible that the Asset Trust or

any other Asset Subsidiary, and therefore, the Company,

may be subject to environmental liabilities with respect to foreclosed property. The discovery of

these liabilities and any associated costs for removal of

hazardous substances, wastes,

contaminants or

pollutants, could have a material adverse effect on the fair value of such assets.

Substantial delays could be encountered in connection with the liquidation of

the collateral

securing defaulted loans in the Company's Portfolio, with corresponding delays in the Company's

receipt of

related proceeds. An action to foreclose on a mortgaged property or

repossess and

sell other collateral securing a loan is regulated by state statutes and rules. Any such action is

subject to many of

the delays and expenses of

lawsuits, which may impede the Company's ability

to foreclose on or

sell the collateral or

to obtain proceeds sufficient to repay

all amounts due on

the related loan in the Company's Portfolio.

Although the Company's Portfolio currently consists primarily of HELs held through the

Asset Trust, to the extent it acquires Additional Assets in the future, the Company is not required

to limit

its investments to assets of

the types currently in the Company's Portfolio. See TheCompany Business o

f


the Company." Assets such as second lien

closed end home equity loans, first or second lien home equity lines of

credit, mortgage loans on

single family or

multi-family residences, commercial mortgage loans or

other real estate assets

may involve different risks not described in this offering circular. Moreover, while the LLC

Agreement will call for maintaining specified levels of FFO coverage as

to expected dividends,

the Company is not required to maintain the levels of

asset coverage that currently exist.

The dependency of

the Company on WMI, University Street and WMB and the Company's

close relationship with WMI, University Street and WMB may create potential conflicts of

interest in

connection with the Company's acquisition of

Additional Assets. The Company will be dependent on

WMI, University Street and WMB to identify Additional Assets which it may acquire, but WMI,

University Street and WMB are not required to contribute or

sell Additional Assets to the Company. If

WMI, University Street and WMB are unable to identify, or

are unwilling to contribute or

sell, suitable

Additional Assets, then over time the Company's level of

FFO coverage as

to expected dividends will

decline. Moreover, conflicts of

interest may arise because the employees of WMI, University Street

and WMB Will, subject to.certain ~estrictions, make decisions on the amount, type and to the extent

the Company purchases Additional Assets) price of

future acquisitions by the Company of

Additional

Assets from University Street, WMB or

other members of

the WMI Group as well as future

dispositions of

assets to WMB, University Street or

third parties.

For United States Federal income tax purposes, a Conditional Exchange would most likely

be a taxable event to holders of WaMu Cayman Preferred Securities under the Code, and they

generally would incur a gain or

loss, as

the case may be, measured by

the difference between

their adjusted tax basis in the WaMu Cayman Preferred Securities and the fair market value of

the Fixed Rate Depositary Shares. In addition, dividends, if any, paid to Foreign Holders of

Fixed

CONFIDENTIAL


to

30

CONFIDENTIAL


Upon the occurrence of

a Conditional Exchange, the holders of

the Fixed Rate Depositary

Shares will not benefit from the same favorable covenants as


Securities.

Dividends on the Fixed Rate WMI Preferred Stock are not cumulative. Consequently, if the

board of

directors of WMI of does not declare dividends on the Fixed

Rate WMI Preferred Stock for any quarterly period, the holders of

the Fixed Rate Depositary

Shares would not be

entitled to any such dividend whether or

not funds are or

subsequently

become available.

WMl's Board of

Directors may determine that it would be

in WMl's best interest to pay less

than the full amount of

the stated dividends on the Fixed Rate WMI Preferred Stock or no

dividends for any quarter even if funds are available. Factors that would be considered by WMl's

Board of

Directors in making this determination are WMl's financial condition and capital needs,

the impact of

current and pending legislation and regulations, economic conditions, tax

considerations, and such other factors as WMI's Board of

Directors may deem relevant.

The Fixed Rate WMI Preferred Stock and the Fixed Rate Depositary Shares will be new

issues of

securities. WMI does not intend to cause the listing or

quotation of

the Fixed Rate WMI

Preferred Stock or

the Fixed Rate Depositary Shares on any securities exchange or

automated

dealer quotation system, including any such securities exchange or automated dealer quotation

system on which the Series A-2 WaMu Cayman Preferred Securities are listed or

quoted. The

Initial Purchasers are under no obligation to and do not intend to make a market in the Fixed

Rate Depositary Shares. Consequently, it is unlikely that an

active and liquid trading public

market for the Fixed Rate Depositary Shares or

the underlying Fixed Rate WMI Preferred Stock

will develop or

be maintained. The lack of

liquidity and an active trading market could adversely

affect ability of

the holders of

Fixed Rate Depositary Shares to dispose of such shares.

In addition, neither the Fixed Rate Depositary Shares nor the Fixed Rate WMI Preferred

Stock represented by such shares have or

will be registered under the Securities Act and will be

deemed to be restricted securities within the meaning of

Rule 144 of

the Securities Act. Holders

of

Fixed Rate Depositary Shares will not be able to offer, sell, pledge or

otherwise transfer the

Fixed Rate Depositary Shares other than:

to a qualified institutional buyer within the meaning of

Rule 144A of

the Securities Act in a

transaction complying with Rule 144A;

to a non-U.S. person within the meaning of

Rule 902 of

Regulation S in a transaction

complying with Regulation S;

otherwise in accordance with an applicable exemption from the registration requirements

of

the Securities Act; or

to WMI or

one of

WMl's affiliates, and in any case, in accordance with exemptions from

any applicable state securities or

blue sky laws.

These restrictions on transfer may inhibit the development of

an

active and liquid trading market

for the Fixed Rate Depositary Shares and may adversely impact the market price of

such shares.

31

CONFIDENTIAL


CERTAIN INFORMATION CONCERNING WMB

WMB") savings

various

savings

savings

savings

converted

Event:

corrective

conservatorship

dividends

quantitative

have

have leverage

savings

savings

exclusive servicing

servicing

32

CONFIDENTIAL


lated gains losses) on certain available-for-sale securities and cash flow hedges. For purposes

of

determining risk-weighted assets for the risk-based capital ratios, the book value of each of

the savings association's on-balance sheet assets, and a portion of

certain off-bcl.lance sheet

items and exposures, are weighted from 0% to 100% based on broad categories. For instance,

U.S. government debt obligations are generally risk-weighted at

0%; certain qualifying residential

mortgage loans on one-to-four family dwellings are generally risk weighted at

50%; and

commercial loans and most other assets are generally risk-weighted at 100%. Off-balance sheet

items including letters of

credit, loan commitments, swaps and other derivatives) are converted

into on-balance sheet equivalent" amounts for risk-based capital purposes, then assigned a risk

weight like other assets. The capital risk weighting assigned to certain asset-backed securities

may vary from 20% to 200% depending on credit rating. Subordinated residual interests retained

in asset securitizations, credit enhancement and forms of

recourse" can result in higher capital

charges or

deductions from capital.

For purposes of

the OTS regulations, is defined as the sum of

core capital

and supplementary capital. generally includes: common shareholders' equity

which includes related surplus); non-cumulative perpetual preferred stock which includes

related surplus); and qualifying minority interests in the equity accounts of

consolidated

subsidiaries which may include such instruments as qualifying REIT preferred stock and the

Company Preferred Securities). generally includes subject to certain

limits and sub-limits): cumulative perpetual preferred stock; maturing capital instruments; Dutch

auction and money market preferred stock; hybrid capital instruments including certain

mandatory convertible notes); term subordinated debt; the savings association's allowance for

loan and lease losses up to a maximum of

1.25% of

total risk-weighted assets); and up to 45%

of

the pretax net unrealized gains of

available-for-sale equity securities investments. Supplemen-

tary capital is permitted to count towards only one-half of

total capital. Both core capital and

tangible capital are subject to various deductions. Some of

these deductions are more stringent

for tangible capital than core capital, including goodwill, certain other intangible assets, and

certain servicing assets in excess of

certain limits.

Federal law and regulations also establish five capital categories for savings associations:

well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and criti-

cally undercapitalized. A savings association is treated as well-capitalized if its ratio of

total

capital to risk-weighted assets is 10.00% or

more, its ratio of

core capital to risk-weighted assets

is 6.00% or

more,

its leverage ratio is 5.00% or

more, and it is not subject to any federal

supervisory agreement order or

directive to meet a specific capital level. In order to be

adequately capitalized, any savings association must have a ratio of

total capital to risk-weighted

assets of

not less than 8.00%, a ratio of

core capital to risk-weighted assets of

not less than

4.00%, and unless it is in the most highly-rated category) a leverage ratio of

not less than

4.00%. Any savings association that is neither well-capitalized nor adequately capitalized will be

considered undercapitalized. Any savings association with a tangible equity ratio of 2.00% or

less

will be considered critically undercapitalized.

Undercapitalized savings associations are subject to certain prompt corrective action

requirements, regulatory controls and restrictions, which become more extensive as

an

association becomes more severely undercapitalized. Failure by WMB to comply with applicable

capital requirements, if unremedied, would result in restrictions on its activities and lead to

regulatory enforcement actions against WMB including, but not limited

to,

the issuance of a

capital directive to ensure the maintenance of

required capital levels. The Federal Deposit

Insurance Corporation Improvement Act of 1991 requires the federal banking regulators to take

prompt corrective action with respect to depository institutions that do not meet minimum capital

requirements. Additionally, FDIC or OTS approval of any regulatory application filed for

its review

may be dependent on compliance with capital requirements.

CONFIDENTIAL


In addition, the OTS from time to time may impose higher specific capital requirements on

any savings association that is perceived to have risks, exposures, credit concentration, rapid

growth or

other circumstances warranting special attention. Failure to satisfy such a capital

directive could subject an association to civil money penalties, judicial enforcement and

administrative remedies available to the OTS, as well as a finding that a savings association is

undercapitalized"

Whether WMB would ever be determined by the OTS to be undercapitalized", or

at

risk of

becoming undercapitalized" in the near term thereby triggering the exchange of

the WaMu

Cayman Preferred Securities for Fixed Rate Depositary Shares could be influenced not only by

the OTS' capital adequacy regulations, but also by the regulator's interpretations and judgment

on other matters. For example, the OTS' views on asset credit quality potentially could affect a

thrift or

savings association's capital status. Among other things, the OTS typically evaluates

asset quality, loan loss reserves and procedures during periodic regulatory examinations of each

federal savings association. If,

following such an examination or

otherwise, the OTS in its

discretion were to require WMB to significantly increase

its reserves against credit losses

the allowance for loan and lease losses), this could potentially reduce WMB's retained earnings

and regulatory capital. As noted above, a savings association's allowance for loan and lease

losses is includable within supplementary capital only up to a limit, and is not includable at

all

in

core capital.

A savings association's regulatory capital status, and the risk of

being deemed undercapi-

talized" could also be affected by

other developments or

by

future changes in regulatory capital

and other standards. WMB and WMI continue to actively follow the progress of

the U.S. banking

agencies and the Basel Committee on Banking Supervision in developing a new set of

regulatory

risk-based capital requirements. The Basel Committee on Banking Supervision is a committee

established by

the central bank governors of

certain industrialized nations, including the United

States. The new requirements are commonly referred to as Basel II

or The New Basel Capital

Accord; however, final requirements have not been adopted. WMB and WMI are assessing the

potential impacts of

Basel

II.

The regulatory capital ratios calculated for WMB, along with the capital amounts and ratios

for the minimum regulatory requirement and the minimum amounts and ratios required to be

categorized as

well-capitalized under the regulatory framework for prompt corrective action were

as follows:

Total capital to total risk-weighted

assets $26,530 11.62% $18,260 8.00% $22,825 10.00%Core capital to total risk-weighted

assets 19,661 8.61 9,130 4.00 13,695 6.00

Core capital to adjusted total assets

leverage) 21,098 6.56 12,860 4.00(1) 16,075 5.00Tangible capital to tangible assets

tangible equity) 20,642 6.43 4,816 1.50

34

CONFIDENTIAL



assets $20,698 11.68% $14,174 8.00% $17,718 10.00%

Core capital to total risk-weighted

assets 14,392 8.12 7,087 4.00 10,631 6.00


leverage) 14,530 5.46 10,635 4.00(1) 13,294 5.00

Tangible capital to tangible assets

tangible equity) 14,530 5.46 3,988 1.50 nfa nfa


assets $15,444 10.80% $11,441 8.00% $14,302 10.00%

Core capital to total risk-weighted

assets 12,472 8.72 5,721 4.00 8,581 6.00


leverage) 12,531 5.50 9,116 4.00(1) 11,395 5.00


tangible equity) 12,531 5.50 3,419 1.50 nfa nfa

WMB has requested confirmation from the OTS that the Company Preferred Securities

constitute core capital of WMB under the OTS's applicable regulatory capital regulations and,

upon receipt of such confirmation, intends to treat the Company Preferred Securities accordingly.

CONFIDENTIAL


USE OF PROCEEDS

CONFIDENTIAL


USE OF PROCEEDS

WaMu Cayman will use the proceeds of the sale of the WaMu Cayman Preferred Securities in this Offering, expected to be approximately $735,000,000, net of underwriting commissions, to purchase from WMB a like amount of Fixed Rate Company Preferred Securities, which the Company will issue to WMB in exchange for the conveyance from WMB of a portfolio of HELs. The WMI Group will use the proceeds from the sale of the Fixed Rate Company Preferred Securities to WaMu Cayman and the Fixed-to-Floating Rate Preferred Securities to WaMu Delaware for general corporate purposes, which may include the repurchase of WMl's common stock.

36

Washington Mutual Preferred Funding Cayman) I Ltd. WaMu Cayman") is a Cayman

Islands exempted company limited by

shares incorporated on February 23, 2006 under the

Companies Law 2004 Revision) of

the Cayman Islands the Companies Law") and

its


Association together, as amended, WaMu Cayman's Articles of

Association")


Association limit

its activities to i) holding the 7.25% Perpetual

Non-Cumulative Preferred Securities, liquidation preference $1,000 per security the Fixed Rate

Company Preferred Securities"), ii) issuing the 7.25% Perpetual Non-cumulative Preferred

Securities, Series A-1, liquidation preference $100,000 per security and $302,300,000 in the

aggregate the Series A-1 WaMu Cayman Preferred Securities") and 7.25% Perpetual Non-

cumulative Preferred Securities, Series A-2, liquidation preference $10,000 per security and

$447,700,000 in the aggregate the Series A-2 WaMu Cayman Preferred Securities" and,

together with the Series A-1 WaMu Cayman Preferred Securities, the WaMu Cayman Preferred

Securities"), issuing the WaMu Cayman Ordinary Shares to the Cayman Trust and

iv) performing functions necessary or

incidental thereto. WaMu Cayman is prohibited from

issuing other equity or

any debt securities or

engaging in any other activities. Subject to the

limitations and assumptions described under Certain Tax Considerations," WaMu Cayman will

be treated as a corporation for United States Federal income tax purposes. The Fixed Rate

Company Preferred Securities will be the only assets of WaMu Cayman, other than the sum of

$1,000 representing the issued and paid-up share capital. The registered office of WaMu Cayman

is at PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman,

Cayman Islands. Copies of WaMu Cayman's Articles of

Association will be

available upon

request to WMI or

free of

charge at

the specified office of

the co-paying agent in Luxembourg

maintained by WaMu Cayman the Paying Agent in Luxembourg").

Capitalization

The authorized share capital of WaMu Cayman consists of

i) 3,023 Series A-1 WaMuCayman Preferred Securities par value $1.00 and liquidation preference $100,000 each,

all

of

which will be issued in connection with this Offering,

ii) 44,770 Series A-2 WaMu Cayman

Preferred Securities par value $1.00 and liquidation preference $10,000 each,

all

of

which will be

issued in connection with this Offering and iii) 1,000 ordinary shares, par value $1.00 each the

WaMu Cayman Ordinary Shares"),

all

of

which have been issued.

The WaMu Cayman Preferred Securities are described under Description of WaMu

Cayman Preferred Securities."

All

of

the issued WaMu Cayman Ordinary Shares are paid-up and

are held by Maples Finance Limited, as

share trustee in such capacity, the Share Trustee") of

a trust the Cayman Trust") established under the terms of a declaration of

trust the

Declaration of

Trust") dated February 23, 2006 under which the Share Trustee holds the WaMuCayman Ordinary Shares in trust until the termination o

f

the Cayman Trust. The Cayman Trust

will not terminate for so long as any WaMu Cayman Preferred Securities are outstanding. The

Cayman Trust may not dispose of

or

otherwise deal with the WaMu Cayman Ordinary Shares for

so long as

the WaMu Cayman Preferred Securities are outstanding. Prior to the termination of

the Cayman Trust, the Cayman Trust is an accumulation trust, and no distributions will be made

while any WaMu Cayman Preferred Security is outstanding. Following the termination of

the

Cayman Trust, the Share Trustee will wind up the Cayman Trust and make a final distribution to

charity. The Share Trustee has no beneficial interest in,

and derives no benefit other than its fee

for acting as Share Trustee) from, its holding of

the WaMu Cayman Ordinary Shares.

CONFIDENTIAL


The following table illustrates the expected capitalization of WaMu Cayman as

of

the closingof

this Offering, after giving effect to the issuance of

the WaMu Cayman Preferred Securities on

the closing date:

As of

the Closing Date

Unaudited)

Series A-1 WaMu Cayman Preferred Securities$302,300,000

Series A-2 WaMu Cayman Preferred Securities$447,700,000

WaMu Cayman Ordinary Shares$ 1,000

Total Capitalization$750,001,000

Business of WaMu Cayman

Assets of WaMu Cayman

WaMu Cayman's sole assets will be the Fixed Rate Company Preferred Securities and

$1,000 from the issuance of

the WaMu Cayman Ordinary Shares to the Cayman Trust.

Administration

Maples Finance Limited, a licensed trust company incorporated under the laws of

the

Cayman Islands, acts as

the administrator of WaMu Cayman the under the

Administration Agreement to be entered into on or

before the closing date the

between WaMu Cayman and Maples Finance Limited. The office of

the

Administrator serves as

the general business office of WaMu Cayman. Through this office and

pursuant to the terms of

the Administration Agreement, the Administrator performs various

management functions on behalf of WaMu Cayman, including the provision of

clerical,

administrative and other services.

The Administrator will serve until it resigns, is dissolved or

is removed by WaMu Cayman.

The Administrator may delegate

its duties under the Administration Agreement to other parties,

but doing so will not release the Administrator from any of

its obligations under the

Administration Agreement.

Under the Administration Agreement, WaMu Cayman may remove the Administrator at any

time, without paying any penalty, by giving at

least 30 days' written notice to the Administrator.

However, if the Administrator is dissolved or

commits an act of

bankruptcy, or

if it breaches the

Administration Agreement and the breach, if capable of

being cured, remains uncured for

30 days after receiving notice of

such breach from WaMu Cayman or

WMI), WaMu Cayman mayremove the Administrator on 14 days' notice to the Administrator.

The Administrator may resign at any time by giving at

least 30 days' written notice to WaMuCayman. Noresignation o

r

removal of

the Administrator will become effective while any WaMu

Cayman Preferred Securities are outstanding until a successor administrator has been appointed

and has accepted and assumed its duties. The Administration Agreement may be amended by

the Administrator and WaMu Cayman; that such amendment may not have a

material adverse affect on the rights and interests of

the holders of


Securities.

Under the Expenses Agreement, to be entered into on or

before the closing date the

among WaMu Cayman and WMB, all charges or

expenses of WaMu

Cayman other than payments required under the terms of


Securities, including the fees, charges and expenses of

the Administrator, the Registrar, the

Transfer Agent or any Paying Agent, will be paid or caused to be paid by WMB, that if

the Administrator incurs fees, charges or

expenses, for which they are not otherwise liable under

CONFIDENTIAL


the Administration Agreement, at

the request of a holder of WaMu Cayman Preferred Securities

or

other person, such holder or

other person will be

liable for such fees, charges and expenses.

Management of

WaMu Cayman

Directors

WaMu Cayman will be managed by a Board of

Directors. WaMu Cayman's Articles of

Association will provide that WaMu Cayman's Board of

Directors will be composed of

five

members. Pursuant to WaMu Cayman's Articles of

Association, two of

the five directors will

automatically and at

all times consist of two of

the persons who are then currently serving as

members of


Managers the as

designated by the Company in a notice to WaMu Cayman. One of

the Company Designated

Directors will at

all times be the person who is the Company's Independent Manager, as

designated by the Company in a notice to WaMu Cayman. The person who is the Company's

Independent Manager will also be designated as WaMu Cayman's Independent Director the

The other three directors of WaMu Cayman will be appointed by the Share Trustee as

holder of

100% of

the WaMu Cayman Ordinary Shares. These persons will not be

or

have been

directors or employees of WMI or any affiliate of WMI. The directors of WaMu Cayman will serve

until their successors are duly appointed by

the Share Trustee as

holder of

100% of

the WaMuCayman Ordinary Shares, o

r

the Company in the case of

the Company Designated Directors

including the Independent Director), as applicable. Except in certain circumstances described

under Independent Director" below or

in connection with the prevention of

the dividend on

the WaMu Company Preferred Securities in circumstances where the Company has paid

dividends on the Fixed Rate Company Preferred Securities held by WaMu Cayman, action by the

WaMu Cayman's Board of

Directors will be

by majority vote.

The persons who will be the directors of

the Company upon completion of

this Offering are

as follows:

Wendy Ebanks Director

Carlos Fallajah Director

Guy Major Director

Robert Williams Director

Kenneth Uva Independent Director

Independent Director

As a consequence of

the WaMu Cayman's Independent Director being the same person as

the Company's Independent Manager, WaMu Cayman's Independent Director will be a person

who must not during the preceding five years have been a director or employee of WMI or any

affiliate of

WMI, other than a direct or

indirect financing subsidiary of

WMI. In addition, the

holders of

the WaMu Cayman Preferred Securities and the holders of

the Trust Securities, by

exercise of

their right to direct the manner in which WaMu Cayman and WaMu Delaware exercise

their voting rights with respect to the Fixed Rate Company Preferred Securities and Fixed-to-

Floating Rate Company Preferred Securities, respectively, voting together as a single class, will

be entitled to remove the initial or any succeeding Independent Manager of

the Company, and

consequently WaMu Cayman's Independent Director, and to fill the vacancies so created by such

removals or

any other vacancy existing in the office of WaMu Cayman's Independent Director

and Independent Manager of

the Company if i) the Company fails to pay full dividends on the

Fixed Rate Company Preferred Securities on any Dividend Payment Date, ii) WaMu Cayman

fails to pay full dividends on the WaMu Cayman Preferred Securities on any Dividend Payment

CONFIDENTIAL


Compensation

of Directors

Additional Information

40

CONFIDENTIAL


THE COMPANY

Washington Mutual Preferred Funding LLC the is a Delaware;limited liability

company formed on February 3, 2006 under the Delaware Limited Liability Company Act, as

amended the pursuant to an

initial limited liability company agreement and a

certificate of

formation filed with the Secretary of

State of

the State of

Delaware. The limited

liability company agreement will be amended and restated in its entirety on or

about March 7,

2006 as so amended and restated, the

The LLC Agreement generally limits the Company's activities to i) issuing the Fixed Rate

Company Preferred Securities, the Perpetual Non-cumulative Fixed-to-Floating Rate Preferred

Securities the and together with the

Fixed Rate Company Preferred Securities, the the common

securities of

the Company the and additional Parity Equity

Securities of

the Company acquiring and holding Eligible Investments, including the Class A

Asset Trust Certificate which will be the sole initial Eligible Investments of

the Company) in

accordance with the investment policy as described in Business of


the Company" and iii) performing functions necessary or

incidental thereto. Subject to the

limitations and assumptions described under Certain Tax Considerations United States

Federal Income Tax Consequences", the Company intends to be treated as a partnership for

United States Federal income tax purposes other than a publicly traded partnership taxable as a

corporation) and may not take any action, or

permit any action to be taken, that would cause the

Company to fail to be treated as a partnership for United States Federal income tax purposes for

so long as any Company Preferred Securities are outstanding, except with the consent or

affirmative vote of

the holders of

at

least two-thirds of


Securities and the Fixed-to-Floating Rate Company Preferred Securities, voting together as a

single class. The principal executive office of

the Company is 1201 Third Avenue, Seattle,

Washington 98101. Copies of

the LLC Agreement will be

available upon request to WMI or

free

of

charge at


the Paying Agent in Luxembourg.

The Company will receive the opinion of

Mayer, Brown, Rowe Maw LLP to the effect that,

for United States Federal income tax purposes, the Company will not be treated as

an

association taxable as a corporation or

as a publicly traded partnership taxable as a corporation.

Capitalization

Upon completion of

this Offering, University Street, Inc., an indirect subsidiary of WMB

will hold

all

of

the Company Common Securities, representing 100% of

the

voting rights in the Company subject to the limited voting rights of

holders of

the Company

Preferred Securities described under Description of

Fixed Rate Company Preferred Securi-

ties"). Upon completion of

this Offering, WaMu Cayman will hold all

of


Preferred Securities and WaMu Delaware will hold

all

of

the Fixed-to-Floating Rate Company


41

CONFIDENTIAL


As of

the Closing

Date

Unaudited)

Business of

the Company

Assets of

the Company

42

CONFIDENTIAL


Additional Assets")

Eligible Assets"

provided, however,

CONFIDENTIAL


Asset Documentation"

provided

Asset Subsidiary"

44

CONFIDENTIAL


Asset Tax Opinion"

Asset Portfolio"

Eligible Investments"

Permitted Investments"

provided,

provided further,

provided,

provided,

provided.

CONFIDENTIAL


provided, however,

Rating Agencies"

Rating Agency Condition"

Administrative Services Agreement")

de minimis

Managers and Officers

Independent Manager").

46

CONFIDENTIAL


Company's Board of Managers will be

by majority vote. The Company will have five officers upon

issuance of

the Fixed Rate Preferred Securities.

The persons who will be the managers and executive officers of

the Company upon

completion of

the Offering will include:

Name

Robert Williams. Manager and Senior Vice President

Peter Freilinger Manager and Senior Vice President

Kenneth Uva Independent Manager

Doreen Logan First Vice President and Assistant Secretary

Paul Phillips. Vice President

Chad Smith First Vice President and Secretary

Each of

the initial managers other than the Independent Manager) and officers of

the

Company are individuals who are officers or

employees of WMI or

one of

its

affiliates. The initial

Independent Manager is Kenneth Uva, who is an employee of

CT Corporation.

The Company will designate two of

the persons then currently serving as members of

the

Company's Board of

Managers to serve as members of WaMu Cayman's Board of

Directors in a

notice to WaMu Cayman. One of

the Company Designated Directors will at

all times be the

person who is the Company's Independent Manager, as

designated by

the Company in a notice

to WaMu Cayman. The person who is the Company's Independent Manager will also be

designated as WaMu Cayman's Independent Director. The Company Designated Directors will

serve as directors of WaMu Cayman until their successors are duly elected and qualified.

Independent Manager

Under the LLC Agreement, in order to be considered independent", a manager must not,

during the preceding five years, have been a director or employee of WMI or any affiliate of WMI,

other than a direct or


WMI.

The LLC Agreement will require that, in assessing the benefits to the Company of any

proposed action requiring his or

her consent, the Company's Independent Manager take into

account the interests of

holders of

both Company Common Securities and the Company

Preferred Securities. The LLC Agreement provides that in considering the interests of

the holders

of

the Company Preferred Securities, the Company's Independent Manager owes such holders

the same duties which the Independent Manager owes to the holders of Company Common

Securities.

The LLC Agreement will provide that, for so long as any Company Preferred Securities are

outstanding, certain actions by

the Company are subject to prior approval of

all Managers

including the Independent Manager. The Company will not be able, without the approval of

the

Independent Manager, to i) terminate, amend or

otherwise change any Asset Documentation or

ii) effect a consolidation, merger or

share exchange that is not tax-free to the holders of

the

Company Preferred Securities unless such consolidation, merger or

share exchange was

approved by the consent or

affirmative vote of

the holders of

at

least two-thirds of

the Fixed

Rate Company Preferred Securities and the Fixed-to-Floating Rate Company Preferred Securi-

ties, voting together as a single class. In addition, in the event that the Asset Trust fails to make

a payment to the Company or

any payments are not received with regard to any Additional Asset

in violation of

the terms of

the related Asset Documentation on any scheduled payment date, the

Independent Manager will have the authority to cause the Company, as the holder of

the

Series A Asset Trust Certificate or any Additional Asset, as applicable, to enforce

its rights in

such capacity until payments have been resumed and a year has passed since the date of

the

latest scheduled payment date with respect to which the Asset Trust or

the Additional Asset

failed to make a payment.

47

CONFIDENTIAL


Bankruptcy Event"

de minimis.

provided, however,

48

CONFIDENTIAL



49

CONFIDENTIAL


CONFIDENTIAL


THE ASSET TRUST

General

Washington Mutual Home Equity Trust I (the "Asset Trust") is a statutory trust formed under the laws of the State of Delaware pursuant to a trust agreement between the Company, as depositor, and Deutsche Bank Trust Company Delaware, as Delaware trustee. The Pooling and Servicing Agreement among the Company, as depositor, WMB, as servicer (the "Servicer") , Deutsche Bank Trust Company Delaware, as Delaware trustee (the "Delaware Trustee") and Deutsche Bank National Trust Company, as trustee (the "Trustee"), will restate the trust agreement and will be the governing instrument of the Asset Trust.

The Asset Trust will not own any assets other than the HELs and the other assets described below. The Asset Trust will not have any liabilities other than those incurred in connection with the Pooling and Servicing Agreement and any related agreement. The Asset Trust will not have any directors, officers or other employees. No equity contribution will be made to the Asset Trust by WMB, the depositor or any other party, except for a de minimis contribution made by the depositor pursuant to the initial trust agreement, and the Asset Trust will not have any other capital. The fiscal year end of the Asset Trust will be December 31. The Asset Trust will act through the Trustee and the Delaware Trustee, whose fees and reasonable expenses will be paid or reimbursed by the Servicer.

For purposes of this offering circular with respect to the underwriting, origination and servicing of the HELs in the Asset Trust, references to WMB include WMB, originators acquired by WMB and WMB's subsidiaries.

General Description of Assets

The assets of the Asset Trust will consist of HELs having, as of the Cut-Off Date, a value of approximately $5,389,459,150, payments received thereon and certain other investments. The HELs were originated by WMB primarily through its retail branches between September 1,2001 and September 30, 2005. As of January 31, 2006, the HELs transferred into the Asset Trust had an aggregate unpaid principal balance of approximately $5,389,459,150.

The assets of the Asset Trust will consist of 56,090 HELs that had an aggregate unpaid principal balance as of the Cut-Off Date, of approximately $5,389,459,150. The HELs have a weighted average gross interest rate of 6.076% and range from a gross interest rate of 4.00% to 11.315%. The weighted average current, unpaid principal balance of the HELs is $96,086 with a minimum current, unpaid principal balance of $25,002 and a maximum current, unpaid principal balance of $965,000. Assets in the Asset Trust have various original maturities ranging from 5 years to 40 years and were, on average, originated within the last 25.46 months. The current average loan-to-value ratio is 53.48% and the average loan-to-value ratio at origination was 57.51%. The HELs have a weighted average Credit Score (as defined below) of 757. Most of the properties underlying the HELs are owner occupied with 3.86% of the properties non-owner occupied. The HELs are geographically concentrated in Texas (49.01%), California (30.59%), Florida (7.17%), and New York (5.08%). HELs are typically made for reasons such as home purchases, home improvements, furniture and fixtures purchases, purchases of automobiles and debt consolidation. The HELs are generally repaid on a fully-amortizing basis.

Acquisition of the Portfolio and Related Transactions

In anticipation of the transactions described in this offering circular, WMB contributed a pool of HELs to the Company in exchange for a corresponding amount of the Company's Fixed Rate Company Preferred Securities and Fixed-to-Floating Rate Company Preferred Securities. In addition, University Street contributed a pool of HELs to the Company in exchange for all of the

50

A Trust Certificate")

R Trust Certificate").

Cut-Off Date").

Description of

the Portfolio

General

51

CONFIDENTIAL


The following tables represent information as

of

January 31, 2006 with respect to the HELs

included in the portfolio of

the Asset Trust:

$0-$49,999 11,198 $ 432,387,414 8.02%

$50,000-$74,999 13,561 853,233,512 15.83

$75,000-$99,999 11,231 976,769,683 18.12

$100,000-$199,999 17,073 2,313,001,283 42.92

$200,000-$299,999 2,322 539,701,841 10.01

$300,000-$499,999 644 236,692,050 4.39

Greater than $500,000 61 37,673,368 0.70

56,090 $5,389,459,150 100.00%

4.00-4.99% $ 1,977,067 0.04%

5.00-5.99 26,026 2,624,484,236 48.70

6.00-6.99 27,509 2,571,843,320

7.00-7.99 2,277 173,421,367 3.22

8.00-8.99 209 14,243,687 0.26

9.00-9.99 1,654,510 0.03

10.00-10.99 1,658,731 0.03

11.00-11 99 176,232 0.00

56,090 $5,389,459,150 100.00%

Single Family 51,667 $4,958,055,897 92.00%

Townhouse 2,071 253,335,974 4.70

Condominium 2,269 171,618,855 3.18

Manufactured Housing 6,448,424 0.12

56,090 $5,389,459,150 100.00%

CONFIDENTIAL


Texas 28,652 $2,641,385,492 49.01%

California 15,288 1,648,481,206 30.59

Florida 4,943 386,598,404 7.17

New York 2,486 273,920,738 5.08

Washington 1,181 110,746,674 2.05

New Jersey 694 76,275,944

Oregon 788 74,128,630 1.38

Georgia 446 38,773,740 0.72

Idaho334 27,517,454 0.51

Arizona 305 26,256,800 0.49

Other973 85,374,067 1.58

56,090 $5,389,459,150 100.00%

Less than 600 900 $ 80,943,626 1.50%

600-649 1,786 169,408,159 3.14

650-699 5,866 566,608,998 10.51

700-749 11,759 1,160,863,350 21.54

750-799 21,633 2,144,571,619 39.79

800-849 14,146 1,267,063,398 23.51

56,090 $5,389,459,150 100.00%

53

CONFIDENTIAL


Distribution by Current Loan-to-Value Ratio

Percent of

Number of

Current Principal Overall Portfolio

Current Loan-to-Value Ratio(1) Balance Balance

Total

Distribution by Remaining Months to Maturity

Percent of

Number of


Remaining Months to Maturity Loans Balance Balance

Total

Distribution by Year of

Origination

Percent of

Number of


Year of

Origination Loans Balance Balance

Total

CONFIDENTIAL


General

Evaluation the Borrower's Credit Standing

Evaluation the Borrower's Repayment Ability

Evaluation the Adequacy the Collateral

CONFIDENTIAL


lor

lor

alternative services".

Documentation Programs

Exceptions Program Parameters

Automated Underwriting System

CONFIDENTIAL


conditions, which may include the receipt of

additional documentation, ii) refers the loan

application to an underwriter for manual underwriting, or

declines the file based on

predetermined eligibility criteria. In making the underwriting decision, SUCCESS distinguishes

among different levels of

credit standing, based on a proprietary custom score model, the

borrower's Credit Score, and specific policies, application and loan characteristics. WMB has

developed these credit standing levels based on a statistical analysis of

the past performance of

its portfolio of

home equity loans. WMB has used analysis of


its

portfolio of home equity loans. WMB has used SUCCESS to underwrite HELs since May 2001.

WMB regularly evaluates and validates SUCCESS and to date has completed all required

compliance and fair lending evaluations in a satisfactory manner. WMB periodically upgrades

its

proprietary automated underwriting system. SUCCESS was last upgraded in November 2004.

Quality Control Review

WMB's credit risk oversight department conducts quality control reviews of

statistical

samplings of

previously originated HELs on a regular basis.

Credit Risk Management Policies

Credit risk within the WMI Group is managed by means of a broad set of

policies and

principles contained in its credit policy. The Chief Credit Officer is responsible for overseeing the

work of a credit policy committee, monitoring the quality of

the WMI Group's credit portfolio,

determining the reasonableness of

the WMI Group's allowance for loan losses, reviewing and

approving large credit exposures and setting underwriting criteria for credit-related products and

programs. Credit risk management is based on analyzing the creditworthiness of

the borrower,

the adequacy of

the underlying collateral given current events and conditions and the existence

and strength of any guarantor support.

Credit risk assessment is a process that requires the evaluation of

numerous factors, many

of

which are qualitative. Process integrity relies on the ability of

the WMI Group's lending

personnel to analyze all

risk elements. It also depends on maintaining risk rating accuracy by

recognizing changing elements of

credit risk and promptly initiating risk rating changes.

Conflicts of

Interest Policies

Pursuant to WMB's code of

ethics the Code of

Ethics"), WMB extends credit to

borrowers only when such extension of

credit is financially reasonable for both WMB and the

borrower in question. Pursuant to the Code of

Ethics, lending personnel cannot permit personal

relationships or

other considerations to influence lending decisions, and cannot approve

extensions of

credit to,

or

be involved in the funding or

auditing of

any loans made to family or

friends.

Servicing and the Servicers

General

All

of

the HELs owned by the Asset Trust will be serviced by WMB, as the Servicer,

pursuant to the Pooling and Servicing Agreement. WMB will have possession of

the mortgage

files Le., the credit reports, servicing documents, etc.) in its capacity as Servicer and the Loan

Documents as defined below) in its capacity as Custodian for the Asset Trust.

The Pooling and Servicing Agreement will provide that WMB may not resign from its

obligations and duties thereunder as Servicer except upon a determination that

its duties

thereunder are no longer permissible under applicable law. No such resignation will become

effective until a successor Servicer has assumed WMB's servicing obligations and duties under

CONFIDENTIAL


the Pooling and Servicing Agreement. In the event of a Servicer resignation, the Company,

subject to the terms of

the Pooling and Servicing Agreement, shall appoint a successor Servicer.

The Servicer will receive a fee for

its services as Servicer under the Pooling and Servicing

Agreement. The servicing fee will be calculated as a per annum percentage for each HEL based

on the principal balance for such HEL. The servicing fee with respect to each such HEL will equal

0.125% per annum and will be paid monthly. This Servicer will be entitled to retain certain

ancillary fees and charges, including, but not limited

to,

any prepayment fees, insufficient funds

fees, modification fees, payoff statement fees and late charges with respect to the HELs as

additional servicing compensation and will also be entitled to certain income generated by

permitted investments made with collections on the HELs. The Servicer generally will pay all

expenses incurred in connection with

its responsibilities as Servicer under the Pooling and

Servicing Agreement subject to reimbursement for certain expenses and advances, including

those incurred by

it in connection with the liquidation of

defaulted HELs, the restoration of

damaged mortgaged properties, and payments by

the Servicer for taxes and insurance premiums

with respect to mortgaged properties).

Any person into which the Servicer may be merged, converted or

consolidated, or any

person resulting from any merger, conversion or

consolidation to which the Servicer is a party

will be the successor Servicer under the Pooling and Servicing Agreement.

The Servicer will outsource to third party vendors some servicing functions, as described

under The Servicer Servicing Procedures The Servicer's Third Party Vendors and

Service Providers" below.

The Servicer's Servicing Experience

WMB, including

its predecessors in interest, has been servicing loans secured by real estate

or

other property for over 115 years. The home equity loans serviced by WMB include closed-

end fixed and adjustable rate home equity loans and open-end home equity lines of

credit. The

HELs in WMB's portfolio have been originated by WMB.

The following table shows the number and aggregate unpaid principal balance of HELs

serviced by the Servicer as

of December 31 for each of

the most recent three years:

Closed-end Home Equity Loans Serviced by the Servicer

December 31,

Dollars in Thousands)

Number of Closed-End Home Equity Loans Serviced

by WMB 150,450 131,105 126,547

Aggregate Unpaid Principal Balance $9,851,722 $7,918,281 $6,364,840

Servicing Procedures

The functions to be performed by the Servicer under the Pooling and

Servicing Agreement will include, among other servicing functions, payment collection, payment

application, and default management. The Servicer will perform its servicing functions at

loan

servicing centers located in Melbourne, Florida; Houston, Texas; San Antonio, Texas; Stockton,

California; Chatsworth, California; Seattle, Washington; and Canyon Park, Washington.

Pursuant to the Pooling and Servicing

Agreement, the Servicer will be required to service the HELs owned by the Asset Trust,

CONFIDENTIAL


Loan Servicing System.

Advanced Gonsumer Lending System" AGLS").

GAGS")

Collections and Distributions.

CONFIDENTIAL


Servicing of

Delinquent HELs; Foreclosure.

Insurance.

Limitations on the Servicer's Liability

60

CONFIDENTIAL


Servicer Termination, Servicer Replacement.

The Servicer's Third Party Vendors and Service Providers.

The Servicer's Quality Control Procedures

61

CONFIDENTIAL


62

CONFIDENTIAL


reviewed and updated periodically. The Servicer is obligated to return to full system functionality within 48 hours of a reported system outage. The Servicer performs annual disaster recovery tests in which it reroutes data and servicing system operations to the designated back-up site, and then processes sample transactions from all servicing locations to ensure the functionality of such back-up site.

It is the Servicer's policy to require its other third party vendors to implement measures similar to those described above to ensure the accuracy and integrity of servicing records.

The Custodian

Washington Mutual Bank will act as custodian (the "Custodian") for the Asset Trust pursuant to a Custody Agreement to be entered into on or before the closing date (the "Custody Agreement"), among the Trustee, the Servicer and the Custodian. The Custodian will hold the notes, mortgages and other legal documents related to the HELs (collectively, the "Loan Documents") for the benefit of the Trustee. The Custodian will maintain the Loan Documents in secure and fire resistant facilities. The mortgage files held by the Servicer will not be physically segregated from Loan Documents in the Custodian's custody but will be kept in shared facilities. The Custodian will review the Loan Documents related to each HEL and deliver to the Trustee a certification to the effect that, except as noted in the certification, all required documents have been executed and received.

In the event of the termination of the Custody Agreement, the Custodian will be required to deliver the Loan Documents in the Custodian's custody to the Trustee or any successor Custodian appointed by the Company.

The Servicer may pay the Custodian a fee for its services under the Custody Agreement from time to time. Payment of this fee will not affect dividends to the Company.

62

General

WMI is a Washington corporation. It owns two federal savings associations as well as

numerous nonbank subsidiaries. WMI is a multiple savings and loan holding company. As a

savings and loan holding company, WMI is subject to regulation by the OTS.

WMI's federal savings associations are subject to extensive regulation and examination by

the OTS, their primary federal regulator, as well as the U.S. Federal Deposit Insurance

Corporation Prior to 2004, WMB had two sister depository institutions which were

both owned directly by WMI. WMB has since acquired both of


these institutions, Washington Mutual Bank fsb, a federal savings bank, became a wholly-owned

subsidiary of WMB on February 1,

2004. The other institution, Washington Mutual Bank, a

savings bank chartered under the laws of

the state of

Washington, converted into a federally

chartered savings bank and then was merged into WMB on January 1,

2005. Consequently, WMIno longer owns a state savings bank that is subject to regulation and supervision b

y the Director

of

Financial Institutions of

the State of Washington or

by the FDIC. WMl's nonbank financial

subsidiaries are also subject to various federal and state laws and regulations.

All

of WMl's banking subsidiaries are under the common control of WMI and are insured by

the FDIC. If

an insured institution fails, claims for administrative expenses of

the receiver and for

deposits in U.S. branches including claims of

the FDIC as subrogee ofthe failed institution)

have priority over the claims of

general unsecured creditors. In addition, the FDIC has authority

to require any of WMl's banking subsidiaries to reimburse it for losses it incurs in connection

either with the failure of

another of

WMI's banking subsidiaries or

with the FDIC's provision of

assistance to one of

WMl's banking subsidiaries that is in danger of

failure.

Holding Company Status and Acquisitions

WMI is a multiple savings and loan holding company, as defined by federal law, because it

owns more than one savings association. WMI is regulated as a unitary savings and loan holding

company, however, because the OTS deems WMl's federal savings associations to have been

acquired in supervisory transactions. Therefore, WMI is exempt from certain restrictions that

would otherwise apply under federal law to the activities and investments of a multiple savings

and loan holding company. These restrictions will apply to WMI if any of WMI's banking

institutions fails to meet a qualified thrift lender test established by

federal law. As of

December 31, 2004, WMI's banking subsidiaries were in compliance with qualified thrift lender

standards.

WMI may not acquire control of

another savings association without the prior approval of

the OTS. WMI may not be acquired by a company, other than a bank holding company, unless

the OTS approves such an acquisition, or

by

an individual unless the OTS does not object after

receiving notice. WMI may not be acquired by a bank holding company unless the Board of

Governors of

the Federal Reserve System the Federal Reserve") approves. In any case, the

public must have an opportunity to comment on the proposed acquisition, and the OTS or

Federal Reserve must complete an application review. Without prior approval from the OTS, WMI

may not acquire more than 5% of

the voting stock of

any savings institution that is not one of

WMI's subsidiaries.

The Gramm-Leach-Bliley Act generally restricts any non-financial entity from acquiring WMI

unless such non-financial entity was, or

had submitted an

application to become, a savings and

loan holding company as

of May 4,

1999. Because WMI was treated as a unitary savings and

loan holding company prior to that date, WMI may engage in non-financial activities and acquire

non-financial subsidiaries.

CONFIDENTIAL


CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

de minimis.

64

CONFIDENTIAL


DESCRIPTION OF THE WAMU CAYMAN PREFERRED SECURITIES

The following summary describes the materia! terms and provisions of

the WaMu Cayman

Preferred Securities. This description is qualified in its entirety by

reference to the terms and

provisions of WaMu Cayman's Articles of

Association. A copy of WaMu Cayman's Articles of

Association may be obtained upon request to WM! or

free of

charge at


the

Paying Agent in Luxembourg.

General

The WaMu Cayman Preferred Securities are preferred shares issued by WaMu Cayman, the

terms of

which are set forth in WaMu Cayman's Articles of

Association. When issued, the WaMu

Cayman Preferred Securities will be paid-up and non-assessable. The WaMu Cayman Preferred

Securities are perpetual and will not be

convertible into the WaMu Cayman Ordinary Shares and

will not be subject to any sinking fund or

other obligation of WaMu Cayman for their repurchase

or

retirement.

The WaMu Cayman Preferred Securities consist of

3,023 of

the 7.25% Perpetual Non-

cumulative Preferred Securities, Series A-1, liquidation preference $100,000 per security and

$302,300,000 in the aggregate the Series A-1 WaMu Cayman Preferred Securities"), and 44,770

of

the 7.25% Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference

$10,000 per security and $447,700,000 in the aggregate the Series A-2 WaMu Cayman

Preferred Securities"). The terms of


Series A-2 WaMu Cayman Preferred Securities are identical except for their per security

liquidation preference. The aggregate liquidation preference of


Securities is $750,000,000.

WaMu Cayman will invest the proceeds of

the WaMu Cayman Preferred Securities offered

hereby in a like amount of

Fixed Rate Company Preferred Securities, liquidation preference

$1,000 per security and $750,000,000 in the aggregate.

The financial entitlements of each WaMu Cayman Preferred Security will be substantially the

same as

the financial entitlements of

a like amount of

Fixed Rate Company Preferred Securities,

with the consequence that dividends and the redemption price on each WaMu Cayman Preferred

Security will be payable on the same dates and in the same amounts as the corresponding

dividends and redemption price, as applicable, that are paid by the Company to WaMu Cayman

on a like amount of

Fixed Rate Company Preferred Securities; provided that if any such payment

of

dividends or

redemption price is received by WaMu Cayman after 2:00 P.M. New York time,

the related payment will instead by made by WaMu Cayman to the holders of

the WaMu Cayman

Preferred Securities on the next day that is a Business Day. The Dividend Payment Dates and

related Dividend Periods are the same for the WaMuCayman Preferred Securities and the Fixed

Rate Company Preferred Securities, and, accordingly, the terms Dividend Payment Date",

Dividend Period" and Business Day" have the same meanings as

applied to each of

those

securities.

The WaMu Cayman Preferred Securities are automatically exchangeable under certain

circumstances into a like amount of

Fixed Rate Depositary Shares. See Conditional

Exchange."

Under WaMu Cayman's Articles of

Association, WaMu Cayman is prohibited from issuing

any securities other than the WaMu Cayman Preferred Securities and the WaMu Cayman

Ordinary Shares without the consent of

the holders of 100% of


Securities. Accordingly, WaMu Cayman may not issue any additional securities ranking senior or

pari passu with the WaMu Cayman Preferred Securities as

to dividends or upon liquidation

without the consent of

the holders of 100% of

the WaMu Cayman Preferred Securities. The

holders of

the WaMu Cayman Preferred Securities will have no pre-emptive rights.

CONFIDENTIAL


The WaMu Cayman Preferred Securities are not obligations of,

or

guaranteed by, WMI,

WMB, Marion, the Company, University Street, WaMu Delaware or any of

their respective

affiliates or

any other entity. The WaMu Cayman Preferred Securities represent equity interests

solely in WaMu Cayman and do not represent an interest in any of

the foregoing entities.

Ranking

The WaMu Cayman Preferred Securities will rank senior to the WaMu Cayman Ordinary

Shares as

to dividends and upon liquidation.

Dividends

Dividends on the WaMu Cayman Preferred Securities will become payable on a non-

cumulative basis except in the limited circumstances described below), on each date on which

the Company pays dividends to WaMu Cayman on the Fixed Rate Company Preferred Securities

owned by WaMu Cayman, in an amount per WaMu Cayman Preferred Security equal to the

amount of

dividends received by WaMu Cayman on such date on a like amount of

Fixed Rate

Company Preferred Securities including with respect to Additional Taxes, if any), in each case

subject to WaMu Cayman having legally available funds for such purpose; provided that if any

such payment of

dividends is received by WaMu Cayman after 2:00 P.M. New York time, the

related payment will instead be made by WaMu Cayman to holders of

the WaMu Cayman

Preferred Securities on the next day that is a Business Day. Accordingly:

if the Company pays full dividends on a Dividend Payment Date for the Fixed Rate

Company Preferred Securities, WaMu Cayman will pay corresponding full dividends on

the WaMu Cayman Preferred Securities on such Dividend Payment Date;

if the Company pays partial dividends on a Dividend Payment Date for the Fixed Rate

Company Preferred Securities, WaMu Cayman will pay partial dividends in the same

proportionate amount on the WaMu Cayman Preferred Securities on such Dividend

Payment Date; and

if the Company pays no dividends on a Dividend Payment Date for the Fixed Rate

Company Preferred Securities, WaMu Cayman will pay no dividends on the WaMu

Cayman Preferred Securities on such Dividend Payment Date.

See Description of

the Fixed Rate Company Preferred Securities Dividends."

Under WaMu Cayman's Articles of

Association, WaMu Cayman's Board of

Directors is not

required to declare the payment of

dividends in order for dividends to be

paid. However, payment

of

dividends may be blocked by WaMu Cayman's Board of

Directors, but only by their unanimous

action including consent of

the Independent Director).

The record date for the payment of

dividends on the WaMu Cayman Preferred Securities

will be the first day of

the month in which the relevant Dividend Payment Date occurs or, if any

such day is not a Business Day, the next day that is a Business Day.

Dividends on the Fixed Rate Company Preferred Securities are non-cumulative. Dividends

on the WaMu Cayman Preferred Securities are non-cumulative, except to the extent that on a

Dividend Payment Date WaMu Cayman has received from the Company a payment of

dividends

on the Fixed Rate Company Preferred Securities but fails to pay the corresponding dividend on


If:

WaMu Cayman pays no dividends or

less than full dividends on the WaMu Cayman

Preferred Securities on a Dividend Payment Date because it received no dividend or

less

than full dividends on the Fixed Rate Company Preferred Securities, then holders of

WaMu Cayman Preferred Securities will have no right to receive, and WaMu Cayman will

have no obligation to pay, such unpaid dividends at a future date, whether or

not

66

CONFIDENTIAL


dividends are paid on a future Dividend Payment Date on the WaMu Cayman Preferred

Securities or

the Ordinary Shares; and

WaMu Cayman pays no dividends or

less than full dividends on the WaMu Cayman

Preferred Securities on a Dividend Payment Date where the preceding clause does not

apply, but rather the directors have unanimously determined not to pay dividends or

to

pay less than full dividends on the WaMu Cayman Preferred Securities pursuant to their

authority to block dividends as described above, then holders of

the WaMu Cayman

Preferred Securities will have a cumulative right to receive such unpaid dividends and no

further dividends may be paid on WaMu Cayman Ordinary Shares until such unpaid

dividends have been paid on the WaMu Cayman Preferred Securities.

Restrictions on Dividends

During a Dividend Period, no dividends will be paid on any WaMu Cayman Ordinary Shares,

other than dividends payable in WaMu Cayman Ordinary Shares, and no WaMu Cayman Ordinary

Shares will be repurchased, redeemed or

otherwise acquired for consideration, directly or

indirectly, unless dividends for such Dividend Period on

all outstanding WaMu Cayman Preferred

Securities have been declared and paid in full, or

set aside for payment, as

the case may be.

Under certain circumstances, if the OTS determines that WMB is operating with an

insufficient level of

capital or

is engaged

in,

or

its relationship with the Company results

in,

an

unsafe and unsound banking practice, the OTS could restrict payment of

dividends by

the

Company on the Fixed Rate Company Preferred Securities, resulting in a corresponding

restriction in WaMu Cayman's payment of

dividends on the WaMu Cayman Preferred Securities.

Restrictions on Dividends by WMI

In the Exchange Agreement, WMI will covenant in favor of

the holders of

the WaMu Cayman

Preferred Securities and the Trust Securities, that if full dividends on i) the Company Preferred

Securities,

ii) the WaMu Cayman Preferred Securities or

the Trust Securities for any

Dividend Period have not been declared and paid, then, as


the

Fixed Rate Company Preferred Securities Restrictions on Dividends by WMI", WMI will not

declare or pay dividends with respect

to,

or

redeem, purchase or

acquire any of

its equity capital

securities during the next succeeding Dividend Period, except dividends in connection with a

shareholders' rights plan, if any, or


Redemption

The WaMu Cayman Preferred Securities will not be redeemable at

the option of

the holders

thereof. On each day on which the Company redeems Fixed Rate Company Preferred Securities,

WaMu Cayman will redeem a like amount of WaMu Cayman Preferred Securities for a

redemption price in the same amount as the corresponding redemption price on a like amount of

Fixed Rate Company Preferred Securities; provided that if any such payment of

redemption price

is received by WaMu Cayman after 2:00 p.m. New York time, the related payment will instead be

made by WaMu Cayman to holders of

the WaMu Cayman Preferred Securities on the next day

that is a Business Day. See Description of


Redemption."

If the redemption of

the Fixed Rate Company Preferred Securities is in part instead of

in

whole on any redemption date, then WaMu Cayman will allocate the partial redemption between

the Series A-1 WaMu Cayman Preferred Securities and the Series A-2 WaMu Cayman Preferred

Securities in proportion to their aggregate liquidation preferences, rounded by WaMu Cayman's

directors, if necessary, so that no WaMu Cayman Preferred Securities are redeemed in part and

not in whole no fractional shares). The particular WaMu Cayman Preferred Securities to be

redeemed will be selected not more than 60 days prior to the redemption date by WaMu

67

CONFIDENTIAL


Cayman's Board of

Directors, from the outstanding WaMu Cayman Preferred Securities not

previously called for redemption, by such method as WaMu Cayman's Board of

Directors deems

fair and appropriate.

A notice of

redemption of

the WaMu Cayman Preferred Securities will be mailed by

first

class mail, postage prepaid, addressed to the holders of

record of

the securities to be redeemed

at

their respective last addresses appearing on the books and records of WaMu Cayman. Such

mailing will be

at

least 30 days but not more than 60 days before the date fixed for redemption.


Repurchases

At

or

prior to the initial issuance of

the WaMu Cayman Preferred Securities, WMI will enter

into a Replacement Capital Covenant" relating to the WaMu Cayman Preferred Securities, the

Trust Securities, the Fixed Rate Company Preferred Securities, the Fixed Rate Depositary Shares

and related Fixed Rate WMI Preferred Stock), the Fixed-to-Floating Rate Company Preferred

Securities and the Fixed-to-Floating Depositary Shares and related Fixed-to-Floating Rate WMI

Preferred Stock) that may be issued upon a Conditional Exchange collectively, the Replace-

ment Covenant Covered Securities WMl's covenants in the Replacement Capital Covenant run

only to the benefit of

holders of

Covered Debt as defined below), and are not enforceable by

holders of WaMu Cayman Preferred Securities or

of any other Replacement Covenant Covered

Securities. However, those covenants could preclude WMI from redeeming or

repurchasing

Replacement Covenant Covered Securities at a time WMI might otherwise wish to do so.

In the Replacement Capital Covenant, WMI covenants to redeem or

repurchase Replace-

ment Covenant Covered Securities only if and to the extent that the total redemption or

repurchase price is equal to or

less than the sum, as

of

the date of

redemption or

repurchase, of

i) 133.33% of

the aggregate net cash proceeds WMI or

its subsidiaries have received during the

180 days prior to such date from the issuance and sale of

common stock of WMI plus ii

) 100%

of


its subsidiaries have received during the 180 days

prior to such date from the issuance of

securities that, among other things:

are, with limited exceptions including for certain hybrid securities that are in the form of

debt), pari passu with or

junior to the Fixed Rate WMI Preferred Stock upon WMl's

liquidation, dissolution or

winding up;

are perpetual, or have a mandatory redemption or

maturity date that is not less than forty

years after the date of

initial issuance of such securities; and

provide for dividends or

other distributions that are either non-cumulative or, if cumulative,

are subject to certain optional or

mandatory deferral provisions and certain explicit

replacement provisions.

WMl's ability to raise proceeds from qualifying securities during the 180 days prior to a

proposed redemption or

repurchase sufficient to allow such redemption or

repurchase to

proceed without violating the Replacement Capital Covenant will depend on, among other things,

market conditions at such times as well as the acceptability to prospective purchasers of

the

terms of

such qualifying securities.

WMl's covenants in the Replacement Capital Covenant will run in favor of

persons that buy,

hold or

sell WMl's indebtedness during the period that such indebtedness is Covered Debt",

which is currently comprised of

WMl's 4.625% Subordinated Notes due 2014, which have CUSIP

No. 939322AN3. Other debt will replace WMI Covered Debt under the Replacement Capital

Covenant on the earlier to occur of

i) the date two years prior to the maturity of such existing

Covered Debt, or

ii) the date WMI gives notice of

a redemption of

such existing Covered Debt

such that the date such existing Covered Debt is repurchased in such an amount that, the

outstanding principal amount of

such existing Covered Debt is or

will become less than

$100 million.

68

CONFIDENTIAL


The Replacement Capital Covenant is subject to various additional terms and conditions and

this description is qualified in its entirety by reference to the Replacement Capital Covenant, a

copy of

the form of

which is available upon request from WMI. The ReplacementCapital

Covenant may be terminated if the holders of

at

least 51% by principal amount of each of

the

Covered Debt so agree, or

if WMI no longer has outstanding any long-term indebtedness that

qualifies as Covered Debt, without regard to whether such indebtedness is rated by a nationally

recognized statistical rating organization.

Subject to the Replacement Capital Covenant and the terms of any outstanding debt

instruments, WMI or

its affiliates may from time to time purchase any outstanding WaMu Cayman

Preferred Securities by tender, in the open market or

by private agreement.

Rights Upon Liquidation

In the event WaMu Cayman voluntarily or

involuntarily liquidates, dissolves or

winds up, the

holders of WaMu Cayman Preferred Securities at

the time outstanding will be

entitled to receive

liquidating dividends in the amount of $100,000 per security and $302,300,000 in the aggregate,

in the case of

the Series A-1 WaMu Cayman Preferred Securities, and $10,000 per security and

$447,700,000 in the aggregate, in the case of

the Series A-2 WaMu Cayman Preferred Securities,

in each case, plus the amount of

any dividends theretofore received by WaMu Cayman on a like

amount of

Fixed Rate Company Preferred Securities but not yet distributed as a dividend on the

WaMu Cayman Preferred Securities plus the amount of

dividends on a like amount of

Fixed Rate

Company Preferred Securities that WaMu Cayman is entitled to receive from the Company but

has not yet received because for example, the Company's Board of

Managers has declared but

not yet paid such dividends) before any distribution of

assets is made to holders of WaMu

Cayman Ordinary Shares and subject to the rights of

general creditors.

After payment of

the full amount of

the liquidating distributions to which they are entitled,

the holders of WaMu Cayman Preferred Securities will have no right or

claim to any of WaMu

Cayman's remaining assets. In the event that, upon any such voluntary or

involuntary liquidation,

dissolution, or

winding up, the available assets are insufficient to pay the amount of

the

liquidation distributions on all outstanding WaMu Cayman Preferred Securities, then the holders

of WaMu Cayman Preferred Securities will share ratably in any such distribution of

assets in

proportion to the full liquidating distributions to which they would otherwise be respectively

entitled.

Voting Rights

Except as

expressly required by

applicable law and as

set forth below, the holders of WaMu

Cayman Preferred Securities will have no voting rights. In the event holders of WaMu Cayman

Preferred Securities are entitled to vote on a matter together as a single class or

together with

the holders of

the WaMu Cayman Ordinary Shares, the holders of

the Series A-1 WaMu Cayman

Preferred Securities will be entitled to ten votes per security and the holders of

the Series A-2

WaMu Cayman Preferred Securities will be entitled to one vote per security.

In the event that WaMu Cayman is entitled to exercise its voting rights with respect to the

Fixed Rate Company Preferred Securities, each holder of WaMu Cayman Preferred Securities will

have the right to direct the manner in which WaMu Cayman exercises such voting rights with

respect to a like amount of

Fixed Rate Company Preferred Securities on a proportionate basis. If

WaMu Cayman receives notice from the Company that WaMu Cayman as holder of

Fixed Rate

Company Preferred Securities is entitled to vote on any matter, promptly after learning of such

entitlement WaMu Cayman shall cause to be mailed to each holder of WaMu Cayman Preferred

Securities, by

first class mail, postage prepaid, notice of

such vote including a description of

the

subject matter of

the vote and related circumstances to the extent known to WaMu Cayman),

along with a copy of

any notice or

other written communication received by WaMu Cayman from

CONFIDENTIAL


the Company with respect to such vote and related matters. In each such notice WaMu Cayman

shall request direction from each holder of WaMu Cayman Preferred Securities as

to how WaMuCayman a

s a holder of

Fixed Rate Company Preferred Securities shall vote on the matter at

issue a like amount of

Fixed Rate Company Preferred Securities that correspond to such holder's

WaMu Cayman Preferred Securities. Each holder of WaMu Cayman Preferred Securities shall

have the right to direct the manner in which WaMu Cayman exercises such voting rights with

respect to a like amount of

Fixed Rate Company Preferred Securities.

So long as any WaMu Cayman Preferred Securities are outstanding, WaMu Cayman will

not, without the consent or

vote of

the holders of WaMu Cayman Preferred Securities entitled to

at

least two-thirds of

the total voting rights of

all outstanding WaMu Cayman Preferred Securities,

voting together as a single class, i) amend, alter or

repeal or

otherwise change any provision of


Association including the terms of


Securities) if such amendment, alteration, repeal or

change would materially and adversely affect

the rights, preferences, powers or

privileges of

the WaMu Cayman Preferred Securities, or

merge, convert, consolidate, reorganize or

effect any other business combination involving

WaMu Cayman. WaMu Cayman's Articles of

Association will also provide that so long as any

WaMu Cayman Preferred Securities are outstanding, WaMu Cayman will not, without the consent

of

the holder of

each outstanding WaMu Cayman Preferred Security, authorize, create or

increase the authorized amount of

or

issue any class or

series of

any equity shares of WaMu

Cayman, or any warrants, options or

other rights convertible or

exchangeable into any class or

series of any equity shares of WaMu Cayman, ranking pari passu or

senior to the WaMu Cayman

Preferred Securities, either as

to dividend rights, redemption rights or

rights on dissolution,

liquidation or

winding up of WaMu Cayman.

Independent Director Approval


Association will require that, for as long as any WaMu Cayman

Preferred Securities are outstanding, certain actions by WaMu Cayman are subject to prior

approval by the Independent Director as well as

by a majority of

the entire Board of

Directors of

WaMu Cayman. See WaMu Cayman Management of WaMu Cayman Independent Direc-

tor." In order to be considered independent", a director must not during the preceding five

years have been a director or

employee of WMI or

any affiliate of

WMI, other than a direct or


WMI.

The actions that require approval of

the Independent Director include i) redemption or

repurchase of any WaMu Cayman Ordinary Shares and

ii)

to the extent within the power of

the

directors, any action to convert or

approve the conversion of WaMu Cayman into any other type

of

entity or

the consolidation or merger of WaMu Cayman with or

into any other entity, the

consolidation or

merger of

any other entity with or

into WaMu Cayman, or

the sale by WaMu

Cayman of any of

its assets. Additionally, the Independent Director, acting alone and without the

vote or

consent of

the other members of

the Board of

Directors, has the right on behalf of WaMu

Cayman to enforce WaMu Cayman's rights as a holder of


Securities, including related rights under the LLC Agreement.

Conditional Exchange

Each WaMu Cayman Preferred Security will be exchanged automatically for a like amount of

newly issued Fixed Rate Depositary Shares, each representing a 1/1 OOOthinterest in one share

of

Fixed Rate WMI Preferred Stock, if the OTS so directs in writing upon or

after the occurrence

of

an Exchange Event. An Exchange Event" will occur when:

WMB becomes undercapitalized" under the OTS' prompt corrective action" regulations;

WMB is placed into conservatorship or

receivership; or

70

CONFIDENTIAL


the OTS, in its sole discretion, anticipates WMB becoming undercapitalized" in the near

term or

takes a supervisory action that limits the payment of

dividends by WMB and in

connection therewith, directs an exchange.

For purposes of

this offering circular, this exchange is referred to as

the Conditional

Exchange"

If the OTS so

directs following the occurrence of

an Exchange Event, each holder of WaMu

Cayman Preferred Securities will be unconditionally obligated to surrender to WMI or

its agent

any certificates representing the WaMu Cayman Preferred Securities owned by such holder, and

WMI will be unconditionally obligated to issue to such holder in exchange for each such WaMu

Cayman Preferred Security a depositary receipt representing a like amount of

Fixed Rate

Depositary Shares for Fixed Rate WMI Preferred Stock. Any WaMu Cayman Preferred Securities

purchased or redeemed by WMI or any of

its affiliates prior to the time of exchange will not be

deemed outstanding and will not be subject to Conditional Exchange.

The Conditional Exchange will occur as

of

8:00 A.M., New York time, on the date for such

exchange set forth in the applicable OTS directive, or, if such date is not set forth in the directive,

as

of

8:00 A.M., New York time, on the earliest possible date such exchange could occur

consistent with the directive, as

evidenced by

the issuance by WMI of

a press release prior to

such time. As of

the time of

exchange,

all

of

the WaMu Cayman Preferred Securities will be

transferred to WMI without any further action by WaMu Cayman,

all rights of

the holders of

WaMu Cayman Preferred Securities as WaMu Cayman's shareholders will cease, and such

persons will be, for all purposes, the holders of

Fixed Rate Depositary Shares.

WMI will mail notice of

the issuance of

an OTS directive after the occurrence of

an

Exchange Event to each holder of WaMu Cayman Preferred Securities within 30 days, and WMI

will deliver or cause to be delivered) to each such holder, depositary receipts for Fixed Rate

Depositary Shares upon surrender of

the WaMu Cayman Preferred Securities. Until such

depositary receipts are delivered or

in the event such depositary receipts are not delivered, any

certificates previously representing WaMu Cayman Preferred Securities will be deemed for

all

purposes to represent Fixed Rate Depositary Shares. All

corporate authorization necessary for

WMI to issue the Fixed Rate Depositary Shares and the Fixed Rate WMI Preferred Stock as

of

the time of exchange will be completed prior to or upon completion of

this Offering. Accordingly,

once the OTS directs a Conditional Exchange after the occurrence of

an Exchange Event, no

action will be required to be taken by

holders of WaMu Cayman Preferred Securities, by WMI, by

WMB other than to inform the OTS), by the Company, or

by WaMu Cayman in order to effect

the automatic exchange as

of

the time of

exchange. After the occurrence of

the Conditional

Exchange, the WaMu Cayman Preferred Securities will be owned by WMI.

Holders of WaMu Cayman Preferred Securities, by purchasing such securities, whether in

this Offering or

in the secondary market after this Offering, will be deemed to have agreed to be

bound by the unconditional obligation to exchange such WaMu Cayman Preferred Securities for

Fixed Rate Depositary Shares if the OTS so


an Exchange

Event. WaMu Cayman's Articles of

Association provide that the holders of WaMu Cayman

Preferred Securities will be unconditionally obligated to surrender such preferred securities. Prior

to issuance of

the WaMu Cayman Preferred Securities, WMI will enter into an Exchange

Agreement on or

before the closing date the Exchange Agreement"), among WMI, WaMuCayman, WaMu Delaware and Mellon Investor Services LLC, a

s depositary the Depositary"),

to implement the Conditional Exchange.

Holders of WaMu Cayman Preferred Securities cannot exchange their WaMu Cayman

Preferred Securities for Fixed Rate Depositary Shares voluntarily. Absent an OTS directive after

the occurrence of

an Exchange Event, no exchange of


for Fixed Rate Depositary Shares will occur. Upon the issuance of

an OTS directive on or

following the occurrence of

an Exchange Event, the Fixed Rate WMI Preferred Stock and related

71

CONFIDENTIAL


pari passu

Form, Transfer and Book-Entry Procedures

Payments and Paying Agents

Nominee")

Principal Paying Agent")

CONFIDENTIAL


WTCCayman")

Paying Agents")

event

Series A-2 WaMu Cayman Preferred Securities, Paying Agent in Luxembourg

Paying Agent

in Luxembourg"),

Registrar") Transfer

Agent")

cover

have

lor

Luxemburger Wort).

73

CONFIDENTIAL


Governing Law

Restrictions on Transfer

CONFIDENTIAL


Governing Law

WaMu Cayman's Articles of Association and the WaMu Cayman Preferred Securities will be governed by and construed in accordance with the laws of the Cayman Islands.

Restrictions on Transfer

For information regarding restrictions on ownership of the WaMu Cayman Preferred Securities, see "Notice to Investors."

74

DESCRIPTION OF THE FIXED RATE COMPANY PREFERRED SECURITIES

The following summary describes the material terms and provisions of

the Fixed Rate

Company Preferred Securities. This description qualified in entirety by reference to the terms

and provisions of

the LLC Agreement. A copy of

the LLC Agreement may be obtained upon request

to WMI or

free of

charge at



General

The 7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference $1,000 per

security and $750,000,000 in the aggregate the Fixed Rate Company Preferred Securities"), are

limited liability company interests in the Company, the terms of

which are set forth in the LLC

Agreement. When issued, the Fixed Rate Company Preferred Securities will be validly issued,

and no additional payments will be required pursuant to the LLC Act for such securities to

represent limited liability company interests in the Company. The holders of

the Fixed Rate

Company Preferred Securities will have no pre-emptive rights with respect to any limited liability

company interests in the Company or any other securities of

the Company convertible into or

carrying rights or

options to purchase any such securities. The Fixed Rate Company Preferred

Securities are perpetual and will not be

convertible into Company Common Securities or

any

other class or

series of

limited liability company interests in the Company and will not be subject

to any sinking fund or

other obligation of

the Company for their repurchase or

retirement.

The Fixed Rate Company Preferred Securities will be issued in certificated form only.

The Fixed Rate Company Preferred Securities are not obligations

of,

or

guaranteed by,

WMI, WMB, Marion, University Street, or

any of

their respective affiliates or

any other entity. The

Fixed Rate Company Preferred Securities solely represent an interest in the Company and do not

represent an

interest in any of


The Fixed Rate Company Preferred Securities are not insured or

guaranteed by the FDIC.

Ranking

The Fixed Rate Company Preferred Securities will rank senior to the Company Common

Securities and will rank pari passu with the Company's other preferred securities, including the

Fixed-to-Floating Rate Preferred Company Securities, in terms of payment of

dividends and on

liquidation.

The Company's Board of Managers has the power to create and issue Junior Equity

Securities and additional equity securities ranking pari passu with the Fixed Rate Company

Preferred Securities in terms of payment of

dividends or on liquidation or

redemption any such

securities, together with the Fixed-to-Floating Rate Company Preferred Securities, the Parity

Equity Securities") without the consent of

the holders of

the Company Preferred Securities,

provided, that i) after giving effect to the issuance of

any Parity Equity Securities, the pro forma

net book value of

the Company's assets after giving effect to any assets acquired by the

Company in connection with the issuance of

such Parity Equity Securities Assets") will

equal or exceed 1.5 times the sum of

the aggregate liquidation preference of

the preferred

securities of

the Company then outstanding and any such Parity Equity Securities that the

Company proposes to issue,

ii) after giving effect to such issuance, the Company's pro forma

FFO for the four fiscal quarters beginning with the fiscal quarter in which such Parity Equity

Securities are proposed to be issued calculated A) assuming that such proposed Parity Equity

Securities are issued and that, if outstanding or proposed new Parity Equity Securities bear

dividends based on a floating rate, the applicable dividend rate will not change during such four

fiscal quarters from the rate in effect on the applicable date of

determination and B) as

adjusted to reflect any New Assets) equals or exceeds 150% of


required to pay full annual dividends on

all preferred securities of

the Company then outstanding

75

CONFIDENTIAL


plus

Dividends

CONFIDENTIAL


and any such Parity Equity Securities that the Company proposes to issue, and (iii) the Company is not otherwise in breach of any of its covenants set forth in the LLC Agreement. Funds from operations, or "FFO", means net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.

The LLC Agreement provides that, so long as any Fixed Rate Company Preferred Securities remain outstanding, the Company may not except with the consent of at least two-thirds of the Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Company Preferred Securities, voting together as a single class, issue Senior Equity Securities.

Dividends

For purposes of this offering circular, we refer to distributions payable by the Company on its securities as "dividends". Dividends on the Fixed Rate Company Preferred Securities will be payable if, when and as declared by the Company's Board of Managers out of its legally available funds, on a non-cumulative basis at an annual rate of • % on the liquidation preference thereof, which is $1,000 per security. Dividends on the Fixed Rate Company Preferred Securities, if, when and as declared by the Company's Board of Managers, will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year (the "Dividend Payment Date"), commencing on June 15, 2006. If any Dividend Payment Date is not a Business Day, then dividends will be payable on the first Business Day following such Dividend Payment Date with the same force and effect as if payment were made on the date such payment was originally payable. Each period from and including a Dividend Payment Date (or the date of issuance of the Fixed Rate Company Preferred Securities) to but excluding the following Dividend Payment Date is referred to herein as a "Dividend Period". Dividends on the Fixed Rate Company Preferred Securities will accrue as follows: (i) from March 7, 2006 in the case of the Fixed Rate Company Preferred Securities offered hereby, and (ii) if additional Fixed Rate Company Preferred Securities are issued at a future date, from (A) March 7, 2006 if such date is before June 15, 2006, (B) the date of issue if such date is a Dividend Payment Date and (C) the immediately preceding Dividend Payment Date or the date of issue (as determined by the Company) if the date of issue is other than a Dividend Payment Date and is after June 15, 2006. The record date for the payment of dividends, if declared, will be the first day of the month in which the relevant dividend payment occurs or, if any such day is not a Business Day, the next day that is a Business Day. Dividends payable on the Fixed Rate Company Preferred Securities for any period greater or less than a full Dividend Period will be computed on the basis of twelve 30-day months, a 360-day year, and the actual number of days elapsed in the period. No interest will be paid on any dividend payment of Fixed Rate Company Preferred Securities, WaMu Cayman Preferred Securities or Fixed Rate Depositary Shares.

"Business Day" means any day other than a Saturday, Sunday or any other day on which banks in New York, New York, Seattle, Washington or Georgetown, Grand Cayman are generally required or authorized by law to be closed.

Dividends on the Fixed Rate Company Preferred Securities are non-cumulative. If the Company's Board of Managers does not declare a dividend on the Fixed Rate Company Preferred Securities or declares less than a full dividend in respect of any Dividend Period, holders of the Fixed Rate Company Preferred Securities will have no right to receive any dividend or a full dividend, as the case may be, for that Dividend Period, and the Company will have no obligation to pay any dividends or full dividends on the Fixed Rate Company Preferred Securities for that Dividend Period, whether or not dividends are declared and paid for any future Dividend Period with respect to any of the Fixed Rate Company Preferred Securities, the Fixed-to-Floating

76

Rate Company Preferred Securities, any other series of

Parity Equity Securities, any Junior

Equity Securities or



During a Dividend Period, no dividends will be declared or

paid on any securities of

the

Company ranking junior to the Company Preferred Securities in respect of payments of

dividends

or

on liquidation Junior Equity Securities"), other than dividends payable in Junior Equity

Securities, and no Junior Equity Securities will be repurchased, redeemed or

otherwise acquired

for consideration, directly or

indirectly other than as a result of

reclassification of

Junior Equity

Securities for or


the exchange or

conversion of

Junior

Equity Securities for or

into other Junior Equity Securities), unless dividends for such Dividend

Period on

all outstanding Company Preferred Securities have been declared and paid in full, or

declared and set aside for payment, as the case may be.

When dividends are not paid in full on, or a sum sufficient for such full payment is not set

apart for, the Fixed Rate Company Preferred Securities, the Fixed-to-Floating Rate Company

Preferred Securities and any other Parity Equity Securities, if any,

all dividends declared upon the

Fixed Rate Company Preferred Securities, the Fixed-to-Floating Rate Company Preferred

Securities and any other Parity Equity Securities, if any, will be declared pro rata. Thus, the

amount of

dividends declared per Fixed Rate Company Preferred Security, the Fixed-to-Floating

Rate Company Preferred Securities and such other Parity Equity Securities, if any, will in all

cases bear to each other the same ratio that i) full dividends per Fixed Rate Company

Preferred Security for the then-current Dividend Period, which will not include any accumulation

in respect of

unpaid dividends for prior Dividend Periods, and ii) full dividends, which will not

include any accumulation in respect of

unpaid dividends for prior Dividend Periods, on such other

capital securities, bear to each other.



capital or

is engaged in,

or

its relationship with the Company results in,

an

unsafe and unsound banking practice, the OTS could restrict the Company's ability to pay

dividends, including dividends to the holders of

the Fixed Rate Company Preferred Securities.

See The Company Business of

the Company."

Restrictions on Dividends by

WMI will covenant in the Exchange Agreement for the benefit of

the holders of

the WaMu

Cayman Preferred Securities and the Trust Securities that if full dividends on i) the Company

Preferred Securities,

ii) the WaMu Cayman Preferred Securities or

the Trust Securities for

any Dividend Period have not been declared and paid, WMI will not declare or

pay dividends with

respect

to,

or

redeem, purchase or

acquire, any of

its equity capital securities during the next

succeeding Dividend Period, except dividends in connection with a shareholders' rights plan, if

any, or


Redemption

The Fixed Rate Company Preferred Securities will not be redeemable at

the option of

the

holders thereof. Subject to a covenant in favor of

certain of WMl's debtholders limiting WMl's

and its subsidiaries' right to repurchase or

redeem the Fixed Rate Company Preferred Securities

or

the WaMu Cayman Preferred Securities among others) as described under Description of

the WaMu Cayman Preferred Securities Restriction on Redemption or

Repurchases," and

subject to the Company having received the prior approval of

the OTS for any proposed

CONFIDENTIAL


redemption of

Fixed Rate Company Preferred Securities, the Company may, at

its option redeem

the Fixed Rate Company Preferred Securities:

in whole but not in part, prior to the Dividend Payment Date in March 2011, upon the

occurrence of a Tax Event, an Investment Company Act Event or a Regulatory Capital

Event, at

a cash redemption price equal to the greater of:

i) $1,000 per Fixed Rate Company Preferred Security, or

ii) the sum of

present values of

$1,000 per Fixed Rate Company Preferred Security

and

all undeclared dividends for the Dividend Period from the redemption date to

and including the Dividend Payment Date in March 2011, discounted to the

redemption date on a quarterly basis assuming a 360-day year consisting of

twelve 3D-day months) at

the Treasury Rate, as calculated by

an Independent

Investment Banker, plus 0.40%,

plus any declared but unpaid dividends to the redemption date; or

in whole or

in part, on or

after the Dividend Payment Date in March 2011, at

a cash

redemption price of

$1,000 per Fixed Rate Company Preferred Security, plus any declared

and unpaid dividends to the redemption date, without accumulation of any undeclared

dividends.

The Fixed-to-Floating Rate Company Preferred Securities will be separately redeemable on

similar terms and conditions.

Comparable Treasury Issue" means the United States Treasury security selected by the

Independent Investment Banker as having a maturity comparable to the term remaining to the

Dividend Payment Date on March 15, 2011 that would be

utilized, at

the time of

selection and in

accordance with customary financial practice, in pricing new issues of

perpetual preferred

securities having similar terms as

the Fixed Rate Company Preferred Securities with respect to

the payment of

dividends and distributions of

assets upon liquidation, dissolution or

winding-up

of

the issuer of such preferred stock.

Comparable Treasury Price" means with respect to any redemption date for the Fixed Rate

Company Preferred Securities the average of

the Reference Treasury Dealer Quotations for such

redemption date, after excluding the highest and lowest of

such Reference Treasury Dealer

Quotations, or

if the Independent Investment Banker obtains fewer than five such Reference

Treasury Dealer Quotations, the average of

all such quotations.

Independent Investment Banker" means an independent investment banking institution of

national standing appointed by

the Company.

An Investment Company Act Event" occurs when the Company determines, based upon

receipt of

an opinion of

counsel, that there is a significant risk that the Company, the Asset Trust

or

any other Asset Subsidiary, WaMu Cayman or WaMu Delaware is or

will be considered an

investment company" that is required to be registered under the Investment Company Act, as a

result of

a change in applicable laws, regulations or

related interpretations.

Reference Treasury Dealer" means each of

three primary U.S. government securities

dealers each a Primary Treasury Dealer"), as

specified by

the Company; provided that if any

Primary Treasury Dealer as specified by the Company ceases to be a Primary Treasury Dealer,

the Company will substitute for such Primary Treasury Dealer another Primary Treasury Dealer

and if the Company fails to select a substitute within a reasonable period of

time, then the

substitute will be a Primary Treasury Dealer selected by the Independent Investment Banker after

consultation with the Company.

Reference Treasury Dealer Quotations" means, with respect to the Reference Treasury

Dealer and any redemption date, the average, as

determined by

the Independent Investment

78

CONFIDENTIAL


Regulatory Capital Event"

Tax Event"

Hi)

Treasury Rate"

Restrictions on Redemption or

Repurchases

CONFIDENTIAL


Rights upon Liquidation

plus

Voting Rights and Covenants

80

CONFIDENTIAL


amend or

otherwise change the terms of any Asset Documentation in a manner which is

materially adverse to WaMu Cayman, WaMu Delaware or

the holders of

the WaMu

Cayman Preferred Securities or

Trust Securities;

remove or cause to be removed, as applicable, Washington Mutual" from the

Company's, WaMu Cayman's or WaMu Delaware's name unless the name of WMI

changes and the Company makes a change to the Company's, WaMu Cayman's and

WaMu Delaware's name to be consistent with the new group name;

take or

fail to take any action that would cause the Company to fail to be treated as a

partnership other than a publicly traded partnership taxable as a corporation) for United

States Federal income tax purposes;

amend or

otherwise change the requirement that the Company not engage in a U.S. trade

or

business for United States Federal income tax purposes;

amend or

otherwise change the requirement that the Company hold only assets that

qualify for the portfolio interest exemption under the Code and are exempt from United

States Federal withholding taxes;

amend or

otherwise change the requirement that the Company manage

its affairs such

that its income does not constitute unrelated business taxable income" within the

meaning of

Section 512 of

the Code; or

amend its Certificate of

Formation or

LLC Agreement in a manner that materially and

adversely affects the terms of

the Company Preferred Securities provided, however, that,

if such amendment affects only one class of

Company Preferred Securities, such

amendment will require only the class vote of such class voting separately and not as a

single class with the other class) and, if such amendment affects both classes but affects

them differently, then such amendment will require a class vote of each class of Company

Preferred Securities, each voting separately.

In addition, the LLC Agreement provides that, except with the consent of

all

of

the

Company's managers, including its Independent Manager, the Company will not:

terminate, amend or

otherwise change any Asset Documentation; or

effect a consolidation, merger or

share exchange excluding the Conditional Exchange)

that is not tax-free to the holders of

the Fixed Rate Company Preferred Securities, and

the related WaMu Cayman Preferred Securities, unless such transaction was approved by

the consent or

affirmative vote of

the holders of

at

least two-thirds of

the Fixed Rate

Company Preferred Securities and Fixed-to-Floating Rate Company Preferred Securities,

voting together as

a.single class.

In addition, the LLC Agreement will provide that if i) the Company fails to pay full

dividends on the Company Preferred Securities on any Dividend Payment Date,

ii) WaMu

Cayman fails to pay full dividends on the WaMu Cayman Preferred Securities on any Dividend

Payment Date, or Hi) a Bankruptcy Event occurs, the holders of


Preferred Securities and the Fixed-to-Floating Rate Company Preferred Securities, voting

together as a single class, by majority vote, are entitled to remove the initial or any succeeding

Independent Manager and to fill the vacancy created by such removal or any other vacancy

existing in the office of

the Independent Manager.

The LLC Agreement requires that, in assessing the benefits to the Company of any




holders of



the holders

of

the Company Preferred Securities, the Company's Independent Manager owes the same

81

CONFIDENTIAL


duties to such holders which the Independent Manager owes to the holders of Company

Common Securities.

As a condition to effecting any consolidation, merger or

share exchange described above,

the Company will mail to the holders of

record of

the Fixed Rate Company Preferred Securities a

notice of such consolidation, merger or

share exchange. The notice will be mailed at

least

15 days prior to such transaction becoming effective and will contain a description of such

transaction together with a certificate of one of

the Company's officers stating that such

transaction complies with the requirements set forth in the LLC Agreement and that

all conditions

precedent provided therein relating to such transaction have been fulfilled.

As described under Description of

the WaMu Cayman Preferred Securities Voting

Rights," each holder of WaMu Cayman Preferred Securities will have the right to direct the

manner in which WaMu Cayman exercises

its voting rights as

to a like amount of

Fixed Rate

Company Preferred Securities held by WaMu Cayman with respect to any of

the matters on

which a holder of

Fixed Rate Company Preferred Securities is entitled to vote.

WMl's articles of

incorporation do not contain similar covenants regarding the Fixed Rate

WMI Preferred Stock following an exchange of


Therefore, following a Conditional Exchange, holders of

the Fixed Rate Depositary Shares would

no longer have any voting rights, except as provided by Washington law or

in connection with the

right to elect directors if dividends are skipped or

not paid in full. See below under Description

of

the Fixed Rate WMI Preferred Stock Voting Rights."

Additional Amounts

If the Company or WaMu Cayman is required to pay any Additional Taxes as a result of

an

Additional Tax Event, the Company will pay as

additional amounts on the Fixed Rate Company

Preferred Securities such amounts as

will be required so that dividends on the Fixed Rate

Company Preferred Securities or

the WaMu Cayman Preferred Securities, as

applicable, will not

be reduced as a result of

any such Additional Taxes

means the sum of any additional taxes, duties and other governmental

charges to which a WaMu Cayman has become subject from time to time as a result of

an

Additional Tax Event.

An means the determination by

the Company, based upon receipt of

an opinion of

counsel, rendered by a law firm experienced in such matters, in form and

substance reasonably satisfactory to the Company and WMI, to the effect that, as a result of any

amendment to,

or

change including any announced proposed change) in,

the laws or any

regulations thereunder) of

the United States or

the Cayman Islands or

of any political subdivision

or

taxing. authority thereof or

therein, or

as a result of any official administrative pronouncement

or

judicial decision interpreting or

applying such laws or

regulations, which amendment or change

is effective or

which proposed change, pronouncement or

decision is announced on or

after the

date of

issuance of

the WaMu Cayman Preferred Securities, there is a significant risk that i) the

Company or WaMu Cayman

is,

or

will be within 90 days of

the date of such opinion of

counsel,

required by a relevant jurisdiction to withhold amounts from payments to the holders of

the Fixed

Rate Company Preferred Securities or WaMu Cayman Preferred Securities, respectively, for any

taxes, duties and other governmental charges, WaMu Cayman is,

or

will be

within 90 days of

the date of

such opinion of

counsel, subject to United States Federal income tax with respect to

income received or

accrued on the like amount of

Fixed Rate Company Preferred Securities held

by

it,

or WaMu Cayman is,

or

will be

within 90 days of

the date of

such opinion of

counsel,

subject to more than a amount of

other taxes, duties or

other governmental charges.

CONFIDENTIAL


Amendments and Termination of

the LLC Agreement

provided,

provided

Governing Law

CONFIDENTIAL


Amendments and Termination of the LLC Agreement

University Street may, at any time and from time to time, without the consent of the holders of the Fixed Rate Company Preferred Securities, amend the LLC Agreement: (i) (A) to correct or supplement any provision in the LLC Agreement that may be defective or inconsistent with any other provision therein, or (B) to make any other provisions with respect to matters or questions arising under the LLC Agreement, provided, that any such action taken under this clause (i) will not materially adversely affect the interests of the holders of Fixed Rate Company Preferred Securities, as set forth in an officer's certificate; or (ii) to cure any ambiguity or inconsistency or correct any manifest error. Any other amendment of the LLC Agreement must be approved by vote of holders of two-thirds (by aggregate liquidation preference) of the Fixed Rate Company Preferred Securities and Fixed-to-Floating Rate Company Preferred Securities, voting together as a single class (see "-Voting Rights and Covenants"); provided that, for the purpose of such approval, a like amount of Company Preferred Securities as any WaMu Cayman Preferred Securities or Trust Securities that are directly or indirectly held or beneficially owned by any member of WMI Group will be treated as if they were not outstahding. The Company will notify the Paying Agents and the holders of the WaMu Cayman Preferred Securities of any such amendment of the LLC Agreement within a reasonable period of time.

The LLC Agreement will terminate upon the termination of the Company under the LLC Act.

Governing Law

The LLC Agreement and the Fixed Rate Company Preferred Securities will be governed by, and construed in accordance with, the laws of the State of Delaware.

83

DESCRIPTION OF OTHER COMPANY SECURITIES

The following summary of

the terms of

the other Company securities does not purport to be

complete and is subject in all respects to the applicable provisions of

the LLC Act and the LLC

Agreement. A copy of

the LLC Agreement may be obtained upon request to WMI and free of

charge

at



General

Voting

Dividends

84

CONFIDENTIAL



well as on all

Parity Equity Securities, if any;

provided, that, for the purpose of such approval, a like amount of


Securities as any WaMu Cayman Preferred Securities that are directly or

indirectly held or

beneficially owned by any member of WMI Group will be treated as

if they were not outstanding.

Liquidation Rights

The Company Common Securities will rank junior to the Company Preferred Securities upon

liquidation. In the event of any voluntary or

involuntary dissolution of

the Company, after

all

of

the

Company's debts and liabilities have been satisfied and there have been paid or

set aside for the

holders of

the Company Preferred Securities the full preferential amounts to which such holders

are entitled, the holders of

Company Common Securities will be

entitled to share equally and

ratably in any assets remaining.

Fixed-to-Floating Rate Company Preferred Securities

The Fixed-to-Floating Rate Company Preferred Securities rank pari passu with the Fixed

Rate Company Preferred Securities offered hereby as


the

Company. The terms of

the Fixed-to-Floating Rate Company Preferred Securities are substan-

tially identical to the Fixed Rate Company Preferred Securities other than with respect to the rate

applicable to dividends thereon. The Fixed-to-Floating Rate Company Preferred Securities will,

if,

when and as

declared by



an annual rate of

6.534% until the Dividend Payment Date in March 2011 and an annual rate equal to three-month

L1BOR plus 1.4825% for the Dividend Period starting on such Dividend Payment Date and each

Dividend Period thereafter. The Fixed-to-Floating Rate Company Preferred Securities will be held

by WaMu Delaware, which will issue a like amount of

Trust Securities to investors in a separate

offering contemporaneous to the Offering. The Fixed-to-Floating Rate Company Preferred

Securities will not be

listed on any securities exchange or


Ability to Issue Additional Preferred Securities

Pursuant to the LLC Agreement, the Company may not issue any Senior Equity Securities

or

incur indebtedness except with the consent or

affirmative vote of

holders of

at

least two-thirds

of

the Fixed Rate Company Preferred Securities and the Fixed-to-Floating Rate Company

Preferred Securities, voting together as a single class, as


the

Fixed Rate Company Preferred Securities Voting Rights and Covenants." The Company may

issue additional Parity Equity Securities without the consent of

the holders of Company Preferred

Securities only if the tests described under Description of


Securities Ranking" are satisfied.

CONFIDENTIAL


DESCRIPTION OF THE FIXED RATE WMI PREFERRED STOCK


the Fixed Rate WMI

Preferred Stock. The description is qualified in its entirety by

reference to the terms and provisions

of WMl's Articles of

Incorporation and Articles of Amendment establishing the Fixed Rate WMI

Preferred Stock. A copy of

WMl's Articles of

Incorporation and such articles of

amendment may be

obtained free of

charge at



General

Fixed Rate WMI Preferred Stock").

Fixed Rate Depositary Shares"),

1/1000th

WMI Parity Stock"

Dividend Payment Date" Dividend Period"

Business Day",

86

CONFIDENTIAL


Ranking

WMI will covenant in the Exchange Agreement in favor of

the holders of thewaMu Cayman

Preferred Securities and the Trust Securities, as applicable, that prior to the issuance of

the

Fixed Rate WMI Preferred Stock upon a Conditional Exchange, WMI will not issue any preferred

stock that would rank senior to the Fixed Rate WMI Preferred Stock or

the Fixed-to-Floating

Rate WMI Preferred Stock upon

its issuance.

The Fixed Rate WMI Preferred Stock will, upon issuance, rank senior to WMl's common

stock and at

least pari passu with the most senior preferred stock of WMI, if any, then

outstanding, and to any other preferred stock that WMI may issue in the future. WMI may

authorize and issue additional shares of

preferred stock that may rank junior to or

pari passu

with the Fixed Rate WMI Preferred Stock as

to dividends and upon liquidation, winding up, or

dissolution without the consent of

the holders of

the Fixed Rate WMI Preferred Stock.

Dividends

Dividends on the Fixed Rate WMI Preferred Stock will be payable

if, when and as declared

by WMI's Board of

Directors out of

its legally available funds, on a non-cumulative basis at

an

annual rate of 7.25% on the liquidation preference thereof, which is $1,000,000 per share.

Dividends on the Fixed Rate WMI Preferred Stock, if, when and as

declared by WMI's Board of

Directors, will be payable quarterly in arrears on March 15, June 15, September 15, and

December 15 of

each year, commencing on the first such day after issuance of

the Fixed Rate

WMI Preferred Stock. If any Dividend Payment Date is not a Business Day, then dividends will be

payable on the first Business Day following such Dividend Payment Date with the same force and

effect as

if payment were made on the date such payment was originally payable. The record

date for the payment of

dividends, if declared, will be the first day of

the month in which the

relevant Dividend Payment Date occurs or, if any such day is not a Business Day, the next day

that is a Business Day. Dividends payable on the Fixed Rate WMI Preferred Stock for any period

greater or

less than a full Dividend Period will be computed on the basis of

twelve 30-day

months, a 360-day year, and the actual number of

days elapsed in the period. No interest will be

paid on any dividend payment of

Fixed Rate WMI Preferred Stock or


Shares. Holders of

Fixed Rate Depositary Shares will receive 1/1OOOthof any such dividend

payment on the Fixed Rate WMI Preferred Stock.

Dividends on the Fixed Rate WMI Preferred Stock are non-cumulative. If WMI's Board of

Directors does not declare a dividend on the Fixed Rate WMI Preferred Stock or

declares less

than a full dividend in respect of any Dividend Period, the holders of

the Fixed Rate WMIPreferred Stock will have no right to receive any dividend o

r a full dividend, as the case may be,

for the Dividend Period, and WMI will have no obligation to pay a dividend or

to pay full dividends

for that Dividend Period, whether or

not dividends are declared and paid for any future Dividend

Period with respect to the Fixed Rate WMI Preferred Stock, WMl's common stock or any other

class or

series of WM s preferred stock.

Redemption

The Fixed Rate WMI Preferred Stock will not be redeemable at

the option of

the holders

thereof. Subject to a covenant in favor of

certain of WMI's debtholders limiting WMl's and

its

subsidiaries' right to repurchase or

redeem the Fixed Rate WMI Preferred Stock among others)

as described under Description of

the WaMu Cayman Preferred Securities Restriction on

CONFIDENTIAL


plus 0.40%,

plus

plus

Replacement


CONFIDENTIAL


Voting Rights

Voting Parity

Stock")

CONFIDENTIAL


90

CONFIDENTIAL


shares of a class or series are entitled to vote as a separate voting group if shareholder voting is otherwise required by Washington law and if the amendment would:

• increase the aggregate number of authorized shares of the class or series;

• effect an exchange or reclassification of all or part of the issued and outstanding shares of the class or series into shares of another class or series, thereby adversely affecting the holders of the shares so exchanged or reclassified;

• change the rights, preferences, or limitations of all or part of the issued and outstanding shares of the class or series, thereby adversely affecting the holders of shares of the class or series;

• change all or part of the issued and outstanding shares of the class or series into a different number of shares of the same class or series, thereby adversely affecting the holders of shares of the class or series;

• create a new class or series of shares having rights or preferences with respect to dividends or other distributions or to dissolution that are, or upon designation by the board of directors may be, prior, superior, or substantially equal to the shares of the class or series;

• increase the rights or preferences with respect to distributions, or on liquidations or dissolution, or the number of authorized shares of any class or series that, after giving effect to the amendment, has rights or preferences with respect to distributions, or on liquidations or dissolution that are, or upon designation by the board of directors may be, prior, superior, or substantially equal to the shares of the class or series;

• limit or deny an existing pre-emptive right of all or part of the shares of the class or series;

• cancel or otherwise adversely affect rights to distributions that have accumulated but not yet been declared on all or part of the shares of the class or series; or

• effect a redemption or cancellation of all or part of the shares of the class or series in exchange for cash or any other form of consideration other than shares of the corporation.

WMI will covenant in the Exchange Agreement that in the event WMI, prior to the Conditional Exchange, effects, or is, the subject of a merger, consolidation, statutory share exchange, sale of all or substantially all of its assets or other form of business combination, (i) in which WMI is not the surviving, resulting or receiving corporation thereof or (ii) if WMI is the surviving or resulting corporation, shares representing a majority of WMl's total voting power are either converted or exchanged into securities of another person or into cash or other property (any such transaction in either (i) or (ii) being a "Business Combination"), then WMI (i) shall not enter into such Business Combination unless the Successor Entity agrees, effective upon the consummation of such Business Combination, to abide by all of WMl's obligations under the provisions of the Exchange Agreement restricting the payment of dividends by WMI in the event dividends are not paid with respect to the Company Preferred Securities and (ii) may, at the election of the Board of Directors of WMI prior to the effectiveness of such Business Combination, assign, effective upon the consummation of such Business Combination, all of its other obligations under the Exchange Agreement to a Successor Entity that has both Fixed Rate Substitute Preferred Stock and Fixed-to-Floating Rate Substitute Preferred Stock and, as a result of such assignment, all references to WMI, Fixed Rate WMI Preferred Stock, Fixed-to-Floating Rate WMI Preferred Stock, Fixed Rate Depositary Share and Fixed-to-Floating Rate Depositary Share shall become and be deemed to be references to such Successor Entity, to such Fixed Rate Substitute Preferred Stock, to such Fixed-to-Floating Rate Substitute Preferred Stock, to a Fixed Rate Successor Depositary Share and to a Fixed-to-Floating Rate Successor Depositary Share, respectively.

90

Successor Entity"

Fixed Rate Substitute Preferred Stock"

Fixed-to-Floating Rate Substitute Preferred Stock"

Fixed Rate Successor Depositary Share"

Fixed-to-Floating Rate Successor Depositary Share"

Exchange

CONFIDENTIAL


DESCRIPTION OF THE FIXED RATE DEPOSITARY SHARES


the Fixed Rate

Depositary Shares. This description is qualified in its entirety by reference to the terms and

provisions of

the Deposit Agreement, the form of

depositary receipts, which contain the terms and

provisions of

the Fixed Rate Depositary Shares, and WM/'s articles of

incorporation and articles of

amendment. Copies of

each of

the foregoing documents may be obtained upon request to WMI or

free of

charge at


the Paying Agent in Luxemburg.

1/1000th

Fixed Rate Depositary Shares").

Deposit Agreement"),

CONFIDENTIAL


Dividends and Other Distributions

The Depositary will distribute

all cash dividends, dividends paid in Fixed Rate Depositary

Shares representing paid-up and non-assessable shares of

Fixed Rate WMI Preferred Stock or

other cash distributions received in respect of

the Fixed Rate WMI Preferred Stock to the record

holders of

Fixed Rate Depositary Shares in proportion to the numbers of such Fixed Rate

Depositary Shares owned by such holders on the relevant record date. In the event of

a

distribution other than in cash, the Depositary will distribute property received by

it to the record

holders of

Fixed Rate Depositary Shares entitled thereto, unless the Depositary determines that it

is not feasible to make such distribution, in which case the Depositary may, after consultation

with WMI, sell such property and distribute the net proceeds from such sale to such holders.

Redemption of

Fixed Rate Depositary Shares

If the Fixed Rate WMI Preferred Stock underlying the Fixed Rate Depositary Shares are

redeemed, the Fixed Rate Depositary Shares will be redeemed with the proceeds received by the

Depositary resulting from the redemption, in whole or

in part, of such Fixed Rate WMI Preferred

Stock held by the Depositary. The redemption price per Fixed Rate Depositary Share will be

equal to the applicable redemption price per share payable with respect to such Fixed Rate WMI

Preferred Stock. If less than

all the Fixed Rate Depositary Shares are to be redeemed, the Fixed

Rate Depositary Shares to be redeemed will be selected by

lot

or

in WMl's sole

discretion.

After the date fixed for redemption which will be the same date as the redemption date, if

any, for the Fixed Rate WMI Preferred Stock), the Fixed Rate Depositary Shares so

called for

redemption will no longer be deemed to be outstanding and

all rights of

the holders of

the Fixed

Rate Depositary Shares will cease, except the right to receive the moneys payable upon such

redemption and any money or

other property to which the holders of such Fixed Rate Depositary

Shares were entitled upon such redemption upon surrender to the Depositary of

the depositary

receipts evidencing such Fixed Rate Depositary Shares.

Amendment of

Deposit Agreement

The form of

depositary receipt evidencing the Fixed Rate Depositary Shares and any

provision of

the Deposit Agreement may at

any time be amended by agreement between WMI

and the Depositary. However, any amendment which materially and adversely alters the rights of

the holders of

depositary receipts will not be effective unless such amendment has been

approved by

the holders of

at

least a majority of

the Fixed Rate Depositary Shares then

outstanding. Every holder of

an outstanding depositary receipt at

the time any amendment

becomes effective will be deemed, by

continuing to hold such depositary receipt, to consent and

agree to such amendment and to be bound by the Deposit Agreement as amended thereby.

Charges of

Depositary

WMI will pay the charges of

the Depositary in connection with the initial deposit of

the Fixed

Rate WMI Preferred Stock and the initial issuance of

the Fixed Rate Depositary Shares upon the

occurrence of

a Conditional Exchange, and any redemption of

the Fixed Rate WMI Preferred

Stock. Holders of

Fixed Rate Depositary Shares will pay

all other transfer and other taxes and

governmental charges and, in addition, such other charges as are expressly provided in the

Deposit Agreement to be

for their accounts. All

other charges and expenses of

the Depositary

and of any registrar incident to the performance of

their respective obligations arising from the

depositary arrangements will be paid by WMI only after prior consultation and agreement

between the Depositary and WMI and consent by WMI to the incurrence of such expenses, which

consent will not be unreasonably withheld.

93

CONFIDENTIAL


Miscellaneous

Resignation and Removal of

Depositary; Termination of

Deposit Agreement

94

CONFIDENTIAL


DESCRIPTION OF THE OTHER WMI CAPITAL STOCK

As of

the date hereof, the authorized capital stock of WMI consists of1 600)000,000 shares

of WMI common stock and 10,000,000 shares of

preferred stock, no par value. As of

the close of

business on February 15, 2006, there were 994,380,908 shares of WMI common stock

outstanding and no shares of

preferred stock of WMI outstanding. As of

the close of

business on

February 15, 2006, 700,000 shares of

preferred stock of WMI were authorized, but unissued, as

contemplated by WMl's Rights Agreement, dated as

of

December 20, 2000, entered into by and

between WMI and Mellon Investor Services LLC The shares of WMI preferred stock to be issued

upon the occurrence of

a Conditional Exchange have been duly authorized and when and if

issued will be validly issued, fully paid, nonassessable and free of

preemptive rights, with no

personal liability attaching to the ownership thereof.

WMI has authorized for issuance in connection with the offering of

the Trust Securities and

the related issuance by the Company of

its Fixed-to-Floating Rate Company Preferred Securities

up to 1,250 shares of

its Series I Perpetual Non-cumulative Fixed-to-Floating Rate Preferred

Stock, no par value, and liquidation preference of

$1,000,000 per share the Fixed-to-Floating

Rate WMI Preferred Stock"). The shares of

Fixed-to-Floating WMI Preferred Stock will be issued

by WMI solely upon the occurrence of

a Conditional Exchange. The shares of

Fixed-to-Floating

Rate WMI Preferred Stock, if and when issued upon the occurrence of

a Conditional Exchange,

will be represented by

Fixed-to-Floating Rate Depositary Shares of WMI the Fixed-to-Floating

Rate Depositary Shares"), each of

which will represent a 1/1 OOOthof a share of

Fixed-to-Floating

Rate WMI Preferred Stock.

The Fixed-to-Floating Rate WMI Preferred Stock will rank pari passu with the Fixed Rate

WMI Preferred Stock as

to dividends and upon liquidation of WMI. The terms of

the Fixed-to-

Floating Rate WMI Preferred Stock are substantially identical to the Fixed Rate WMI Preferred

Stock other than with respect to the rate applicable to dividends thereon. The Fixed-to-Floating

Rate WMI Preferred Stock will, if, when and as

declared by WMl's Board of

Directors, pay

dividends at

an annual rate of 6.534% until March 15, 2011 and at

an annual rate equal to three-

month L1BOR plus 1.4825% for the Dividend Period starting on such Dividend Payment Date and

each Dividend Period thereafter. The Fixed-to-Floating Rate WMI Preferred Stock will not be



CONFIDENTIAL


BOOK-ENTRY ISSUANCE

Form, Denomination, Transfer and Book-Entry Procedures

General

96

CONFIDENTIAL


BOOK-ENTRY ISSUANCE

Form, Denomination, Transfer and Book-Entry Procedures

General

The Series A-1 WaMu Cayman Preferred Securities are being offered and sold only in the United States and only to U.S. persons who are both qualified institutional buyers within the meaning of Rule 144A under the Securities Act and qualified purchasers within the meaning of Section 2 (a) (51) of the Investment Company Act in reliance on an exemption from registration pursuant to Rule 144A under the Securities Act (the "Rule 144A Offering").

The Series A-1 WaMu Cayman Preferred Securities will be issued only in fully registered form. Each initial purchaser in the Offering and each account for which it is purchasing will hold at least $300,000 liquidation preference of Series A-1 WaMu Cayman Preferred Securities (i.e., at least three Series A-1 WaMu Cayman Preferred Securities) and each subsequent purchaser and each account for which it is purchasing will hold and transfer at least $100,000 liquidation preference of Series A-1 WaMu Cayman Preferred Securities (i.e., at least one Series A-1 WaMu Cayman Preferred Security). Any transfer, sale or other disposition of Series A-1 WaMu Cayman Preferred Securities having a liquidation preference of less than $100,000 or which result in a beneficial owner holding Series A-1 WaMu Cayman Preferred Securities having an aggregate liquidation preference of less than $100,000, will be deemed to be null and void ab initio and of no legal effect whatsoever. Any such transferee will be deemed not to be the beneficial owner of such Series A-1 WaMu Cayman Preferred Securities for any purpose, including, but not limited to, the receipt of dividends on such Series A-1 WaMu Cayman Preferred Securities, and such transferee will be deemed to have no interest whatsoever in such Series A-1 WaMu Cayman Preferred Securities.

Each purchaser of Series A-1 WaMu Cayman Preferred Securities pursuant to the Rule 144A Offering, and each purchaser who holds a beneficial interest in the Rule 144A Global Security at any time, will be deemed to have represented to WaMu Cayman that it is both a qualified institutional buyer within the meaning of Rule 144A under the Securities Act and a qualified purchaser within the meaning of Section 2 (a) (51) under the Investment Company Act. If a beneficial owner of Series A-1 WaMu Cayman Preferred Securities who is required to be a "qualified purchaser" within the meaning of Section 2(a) (51) under the Investment Company Act is at any time not a qualified purchaser, WaMu Cayman may (i) require such beneficial owner to sell its Series A-1 WaMu Cayman Preferred Securities to a person who is a non-U.S. person within the meaning of Rule 902 of Regulation S under the Securities Act or who is a U.S. person that is also a qualified purchaser within the meaning of Section 2 (a) (51) under the Investment Company Act and who is otherwise qualified to purchase such Series A-1 WaMu Cayman Preferred Securities in a transaction exempt from registration under the Securities Act or (ii) require the beneficial owner to sell such Series A-1 WaMu Cayman Preferred Securities to WaMu Cayman or an affiliate thereof at a price equal to the least of (A) the purchase price paid by the holder for such Series A-1 WaMu Cayman Preferred Securities, (B) 100% of the liquidation preference thereof or (C) the fair market value thereof.

The Series A-2 WaMu Cayman Preferred Securities are being offered and sold only to non-U.S. persons within the meaning of Rule 902 of Regulation S under the Securities Act in transactions outside the United States in reliance on an exemption from registration pursuant to Regulation S under the Securities Act (the "Regulation S Offering").

Each purchaser of Series A-2 WaMu Cayman Preferred Securities pursuant to the Regulation S Offering will be deemed to have represented to WaMu Cayman that it is a non-U.S. person within the meaning of Rule 902 of Regulation S under the Securities Act and is not acquiring WaMu Cayman Preferred Securities for the account or benefit of such a U.S. person.

96

The Series A-1 WaMu Cayman Preferred Securities initially will be represented by one or

more securities in registered, global form the The Series A-2

WaMu Cayman Preferred Securities initially will be represented by one or

more securities in

registered, global form the S and together with the Rule 144A

Global Security, the The Global Securities will be deposited upon issuance

with the Registrar as custodian for The Depository Trust Company in New York, New

York, and registered in the name of DTC or

its nominee the in each case for credit

to an account of a DTC Participant, as described below. Through and including the 40th day after

the latter of

the commencement of

the offering and the original issue date of

the Series A-2

WaMu Cayman Preferred Securities such period through and including the 40th day, the

beneficial interests in the Regulation S Global Security may be held only

through the Euroclear System or

Clearstream as indirect participants in DTC), unless

transferred to a person that takes delivery through the Rule 144A Global Security in accordance

with the certification requirements described below. Beneficial interests in the Rule 144A Global

Security may not be exchanged for beneficial interest in the Regulation S Global Security or

vice

versa at

any time except in accordance with the transfer and certification requirements described

below. See Exchanges between Regulation S Global Securities and Rule 144A Global

Securities."

As an

indirect holder, a purchaser's rights relating to a Global Security will be governed by

the account rules of

the purchaser's financial institution and of

DTC, as

well as

the general laws

relating to securities transfers. WaMu Cayman will not recognize the purchaser as a holder of

WaMu Cayman Preferred Securities and instead will deal only with DTC or

its nominee. See

The DTC System."

Purchasers should be aware that because WaMu Cayman Preferred Securities are issued

only in the form of

Global Securities:

they cannot get WaMu Cayman Preferred Securities registered in their name;

they cannot receive physical certificates for their interest in the WaMu Cayman Preferred

Securities;

they will be Street Name" holders and must look to their own bank or

broker for

payments on the WaMu Cayman Preferred Securities and the protection of

their legal

rights relating to the WaMu Cayman Preferred Securities;

they may not be able to sell interests in the WaMu Cayman Preferred Securities to some

insurance companies and other institutions that are required by law to own securities in

the form of

physical certificates; and

DTC's policies will govern payments, transfers, exchanges and other matters relating to

the purchaser's interest in the Global Security. See The DTC System." WaMuCayman, the Company and the Registrar have no responsibility for any aspect o

f DTC's

actions or

for

its records of

ownership interests in the Global Security. WaMu Cayman,

the Company and the Registrar also do not supervise DTC in any way.

In a few special situations, the Global Securities will terminate and interests in them will be

exchanged for physical certificates representing WaMu Cayman Preferred Securities. After that

exchange, the choice of

whether to hold WaMu Cayman Preferred Securities directly or

in Street

Name" will be up to the beneficial owner. Purchasers must consult their own bank or

broker to

97

CONFIDENTIAL


The DTG

98

CONFIDENTIAL


interests, as

is the case with the WaMu Cayman Preferred Securities held for the account of

customers registered in Street Name". However, payments will be the responsibility of

the OTC

Participants and not of

OTC, the Securities Registrar, WaMu Cayman or

the Company.

Except for trades involving only Euroclear and Clearstream Participants, interests in the

WaMu Cayman Preferred Securities will trade in OTC's settlement system, and secondary market

trading activity in such interests will therefore settle in immediately available funds, subject in all

cases to the rules and procedures of OTC and

its participants. Transfers between participants in

OTC will be effected in accordance with OTC's procedures, and will be settled in same-day

funds. Transfers between participants in Euroclear and Clearstream will be effected in the

ordinary way in accordance with their respective rules and operating procedures.

Subject to compliance with the transfer and exchange provisions applicable to the WaMuCayman Preferred Securities described elsewhere in this offering circular, cross-market transfers

between OTC Participants, on the one hand, and Euroclear or

Clearstream Participants, on the

other hand, will be effected by OTC in accordance with OTC's rules on behalf of

Euroclear or

Clearstream, as the case may be, by

its respective depositary; however, such cross-market

transfers will require delivery of

instructions to Euroclear or

Clearstream, as

the case may be, by

the counter-party in such system in accordance with the rules and procedures and within the

established deadlines Brussels time) of

such system. Euroclear or

Clearstream, as

the case

may be, will, if the transaction meets

its settlement requirements, deliver instructions to its

respective depositary to take action to elect final settlement on its behalf by

delivering or

receiving interests in the relevant Global Security in OTC, and making or

receiving payment in

accordance with normal procedures for same-day funds settlement applicable to OTC. Euroclear

Participants and Clearstream Participants may not deliver instructions directly to the depositaries

for Euroclear or

Clearstream.

Because of

time zone differences, the securities account of a Euroclear or

Clearstream

participant purchasing an

interest in a Global Security from a OTC Participant will be

credited,

and any such crediting will be reported to the relevant Euroclear or

Clearstream Participant,

during the securities settlement processing day which must be a business day for Euroclear and

Clearstream) immediately following the OTC settlement date. Cash received in Euroclear or

Clearstream as a result of

sales of

interests in a Global Security by

or

through a Euroclear or

Clearstream Participant to a OTC Participant will be received with value on the OTC settlement

date but will be

available in the relevant Euroclear or

Clearstream cash account only as

of

the

business day for Euroclear or

Clearstream following the OTC settlement date.

OTC has advised WaMu Cayman that it will take any action permitted to be taken by a

holder of

the WaMu Cayman Preferred Securities including the presentation of

the WaMu

Cayman Preferred Securities for exchange as described below) only at

the direction of one or

more OTC Participants to whose account in the Global Securities are credited and only in respect

of

such portion of

the aggregate principal amount of

the WaMu Cayman Preferred Securities as

to which such participant or

participants has or have given such direction.

Although OTC, Euroclear and Clearstream have agreed to the foregoing procedures in order

to facilitate transfers of

beneficial ownership interests in the Global Security among OTCParticipants, Euroclear Participants and Clearstream Participants, they are under no obligation to

perform or

continue to perform such procedures, and such procedures may be discontinued at

any time. Neither the Company, WaMu Cayman, the Securities Registrar, or any of

their

representative agents will have any responsibility for the performance by OTC, Euroclear,

Clearstream or

their participants or

indirect participants, of

their respective obligations under the

rules and procedures governing their operations, including maintaining, supervising or

reviewing

the records relating to,

or

payments made on account of,

beneficial ownership interests in the

Global Security.

CONFIDENTIAL


Euroc/ear and Clearstream

Clearstream Banking societe anonyme, 42 Avenue JF Kennedy, L-1855, Luxembourg

is a subsidiary of

Clearstream International a

Luxembourg limited liability company formed in January 2000 through the merger of

Cedel

International and Deutsche Boerse Clearing, a subsidiary of

Deutsche Boerse AG. In July 2002,

Deutsche Boerse AG acquired Cedel International and

its 50% ownership of

Clearstream

International.

Clearstream is registered as a bank in Luxembourg, and as such is subject to supervision

by

the Luxembourg Financial Sector Supervisory Commission, which supervises Luxembourg

banks.

Clearstream holds securities for its customers and facilitates

the clearance and settlement of

securities transactions by electronic book-entry transfers

between their accounts. Clearstream provides various services, including safekeeping, adminis-

tration, clearance and settlement of

internationally traded securities and securities lending and

borrowing. Clearstream also deals with domestic securities markets in several countries through

established depository and custodial relationships. Clearstream has established an electronic

bridge with Euroclear Bank as the Euroclear Operator in Brussels to facilitate

settlement of

trades between systems. Clearstream currently accepts over 200,000 securities for

clearance.

Clearstream International's customers are world-wide financial institutions including under-

writers, securities brokers and dealers, banks, trust companies and clearing corporations.

Clearstream International's United States customers are limited to securities brokers and dealers

and banks. Currently, Clearstream International has over 2,500 customers located in over 94

countries, including

all major European countries, Canada and the United States. Indirect access

to Clearstream is available to other institutions which clear through or

maintain custodial

relationship with an account holder of

Clearstream.

The Euroclear System was created in 1968 to hold securities for

its

participants and to clear and settle transactions between Euroclear

Participants through simultaneous electronic book-entry delivery against payment, thereby

eliminating the need for physical movement of

certificates and any risk from lack of

simultaneous

transfers of

securities and cash. Transactions may be settled in a variety of

currencies, including

United States dollars. Euroclear includes various other securities, including securities lending and

borrowing and interfaces with domestic markets in several countries generally similar to the

arrangements for cross-market transfers with DTC described above. Euroclear is operated by

Euroclear Bank the

All operations are conducted by the

Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts

are accounts with the Euroclear Operator. Euroclear pic establishes policy for Euroclear on

behalf of

Euroclear Participants. Euroclear Participants include banks including central banks),

securities brokers and dealers and other professional financial intermediaries. Indirect access to

Euroclear is also available to other firms that clear through or

maintain a custodial relationship

with a Euroclear Participant, either directly or

indirectly.

Securities clearance accounts and cash accounts with the Euroclear Operator are governed

by the Terms and Conditions Governing Use of

Euroclear and the related Operating Procedures

of

the Euroclear System and applicable Belgian law collectively, the

The Euroclear Terms and Conditions govern transfers of

securities and cash within

Euroclear, withdrawals of

securities and cash from Euroclear, and receipts of payments with

respect to securities in Euroclear. All

securities in Euroclear are held on a fungible basis without

attribution of

specific certificates to specific securities clearance accounts. The Euroclear

Operator acts under the Euroclear Terms and Conditions only on behalf of

Euroclear Participants,

and has no record

of,

or

relationship with, persons holding through Euroclear Participants.

100

CONFIDENTIAL


CONFIDENTIAL


Exchanges between Regulation S Global Securities and Rule 144A Global Securities

Transfers of WaMu Cayman Preferred Securities

A purchaser (including a beneficial owner) of Series A-1 WaMu Cayman Preferred Securities may sell such securities to a non-U.S. person only if the certifications described below are made and, in connection with such sale, the transferor's interest in the Series A-1 WaMu Cayman Preferred Securities evidenced by the Rule 144A Global Security is exchanged by the transferee for Series A-2 WaMu Cayman Preferred Securities evidenced by the Regulation S Global Security.

Similarly, a purchaser (including a beneficial owner) of Series A-2 WaMu Cayman Preferred Securities may sell such securities in the United States or to a U.S. person only if the certifications described below are made and, in connection with such sale, the transferor's interest in the Series A-2 WaMu Cayman Preferred Securities evidenced by the Regulation S Global Security is exchanged by the transferee for Series A-1 WaMu Cayman Preferred Securities evidenced by the Rule 144A Global Security.

Exchanges between Global Securities

Beneficial interests in the Rule 144A Global Security may be exchanged for beneficial interests in the Regulation S Global Security only in connection with a transfer of such interests or an exchange by the beneficial owner who makes the certifications described below. Beneficial interests in the Regulation S Global Security may be exchanged for beneficial interests in the Rule 144A Global Security only in connection with a transfer of such interests or an exchange by the beneficial owner who makes the certifications described below. Such transfers and exchanges are subject to compliance with the certification requirements described below.

A beneficial interest in the Rule 144A Global Security may be transferred to a person who takes delivery in the form of an interest in the Regulation S Global Security, whether before or after the expiration of the Restricted Period, only upon receipt by the Securities Registrar of a written certificate on behalf of the transferor to the effect that the transferee is a non-U .S. person within the meaning of Rule 902 of Regulation S under the Securities Act, such transfer is being made in accordance with Rule 904 of Regulation S under the Securities Act and that, if such transfer occurs prior to the expiration of the Restricted Period, the interest transferred will be held immediately thereafter through Euroclear or Clearstream.

A beneficial interest in the Regulation S Global Security may be transferred in the United States or to a U.S. person who takes delivery in the form of an interest in the Rule 144A Global Security, whether before or after the expiration of the Restricted Period, only upon receipt by the Securities Registrar of a written certificate on behalf of the transferor to the effect that such transfer is being made to a person who the transferor reasonably believes is both a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and a "qualified purchaser" within the meaning of Section 2 (a) (51) of the Investment Company Act, purchasing for its own account or the account of a "qualified institutional buyer" who is also a "qualified purchaser" in a transaction meeting the requirements of Rule 144A under the Securities Act and in accordance with all applicable securities laws of the states of the United States and other jurisdictions.

Any beneficial interest in one of the Global Securities that is exchanged for an interest in the other Global Security will cease to be an interest in such Global Security and will become an interest in the other Global Security. Accordingly, such interest will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Security for as long as it remains such an interest.

Any exchange of a beneficial interest in the Regulation S Global Security for a beneficial interest in the Rule 144A Global Security or vice versa will be effected in DTC by means of an

101

CONFIDENTIAL


instruction originated by the Securities Registrar through the DTC Deposit/Withdraw at Custodian ("DWAC") system. Accordingly, in connection with any such exchange, appropriate adjustments will be made in the records of the Securities Registrar to reflect a decrease in the liquidation preference of such Regulation S Global Security and a corresponding increase in the liquidation preference of such Rule 144A Global Security or vice versa, as applicable.

102

CERTAIN TAX CONSIDERATIONS

United States Internal Revenue Service Circular 230 Notice: To ensure compliance with

Internal Revenue Service Circular 230, prospective investors are hereby notified that: i) any

discussion of

U.S. Federal tax issues contained or

referred to in this offering circular or any

document referred to herein is not intended or

written to be used, and cannot be used, by

prospective investors for the purpose of

avoiding penalties that may be imposed on them under the

U.S. Internal Revenue Code; such discussion is written for use in connection with the

promotion or

marketing of

the transactions or

matters addressed herein; and prospective

investors should seek advice based on their particular circumstances from an independent tax

advisor.

General

The following discussion summarizes the United States Federal income taxation of WaMu

Cayman and the principal United States Federal income tax and Cayman Islands tax

consequences to holders of WaMu Cayman Preferred Securities. This discussion is of a general

nature and is not intended to be, nor should it be construed as, tax advice to any holder.

Purchasers should consult their own tax advisor regarding the tax consequences of

acquiring,

owning and disposing of WaMu Cayman Preferred Securities.

The discussion addresses only purchasers that hold WaMu Cayman Preferred Securities as

capital assets and does not purport to be a comprehensive description of

all the tax

considerations that may be relevant to particular holders in light of a purchaser's personal

circumstances. In addition, the discussion is not addressed to any U.S. Holder that beneficially

owns actually or

constructively, within the meaning of Code Section 958) 10% or more the

WaMu Cayman Preferred Securities. The discussion also does not describe

all aspects of

taxation that may be

relevant to certain types of

purchasers to which special provisions of

United

States Federal income tax law may apply, including:

dealers in securities and currencies;

regulated investment companies

traders in securities;

tax-exempt organizations;

banks and insurance companies;

persons that hold WaMu Cayman Preferred Securities as

part of

a hedge, straddle or

conversion transaction;

persons whose functional currency is not the United. States dollar; and

U.S. expatriates.

The summary is based on United States Federal and Cayman Islands tax law, including the

Code, existing and proposed U.S. Treasury regulations, administrative rulings and judicial

decisions

all

as currently in effect. These legal sources are subject to change or

differing

interpretations at

any time, which change or

interpretation could apply retroactively and could

affect the validity of

the discussion below. There can be no assurance that the Internal Revenue

Service IRS") will take the same view of

the United States Federal income tax consequences

of

an investment in the Preferred Securities as described herein.

Each purchaser is urged to consult its own tax advisor as

to the tax consequences of

acquiring, owning and disposing of WaMu Cayman Preferred Securities, including the United

States Federal, state, local, Cayman Islands and any other tax consequences of

acquiring,

owning and disposing of

the WaMu Cayman Preferred Securities and the Fixed Rate WMI

Preferred Stock.

103

CONFIDENTIAL


As used in this discussion, the term means a beneficial owner of

a WaMuCayman Preferred Security that

is,

for United States Federal income tax purposes, a citizen or

resident of

the United States, a corporation or

partnership created or

organized in or

under the

laws of

the United States or any State, an estate the income of

which is includible in gross

income for United States Federal income tax purposes regardless of

its source, or

a trust if a

court within the United States is able to exercise primary supervision over

its administration and

one or more United States persons have authority to control

all substantial decisions of

the trust.

The term means a beneficial owner of a WaMu Cayman Preferred Security that

is not a U.S. Holder.

United States Federal Income Tax Consequences

Tax Treatment of WaMu Cayman and its Investment in Company Preferred Securities

Classification of WaMu Cayman and the Company. WaMu Cayman will be treated as a

foreign corporation for Federal income tax purposes.

All

of

its material assets are expected to

consist of

Fixed Rate Company Preferred Securities. The Company intends to be

classified as a

U.S. domestic partnership for United States Federal income tax purposes, and the Fixed Rate

Company Preferred Securities acquired by WaMu Cayman are expected to constitute equity

interests in such partnership.

An entity that is classified as a partnership for United States Federal income tax purposes

generally is not a taxable entity and incurs no United States Federal income tax liability. Instead,

each partner is required to take into account

its allocable share of

income, gains, losses,

deductions and credits of

the partnership in computing its United States Federal income tax

liability, if any, even if no cash distributions are made by the partnership to the partner. An entity

that is classified as a partnership for United States Federal income tax purposes nevertheless

will be taxable as a corporation if it is a publicly traded partnership" and fails to satisfy a

90% qualifying income" test, within the meaning of

Code Section 7704.

On the date of

the initial issuance of

the WaMu Cayman Preferred Securities, the Company

will receive an opinion from Mayer, Brown, Rowe Maw LLP to the effect that, for United States

Federal income tax purposes, although no activities closely comparable to that contemplated by

the Company have been the subject of

any U.S. Treasury regulation, revenue ruling or

judicial

decision, the Company will not be treated as

an association or

publicly traded partnership taxable

as a corporation. The opinions are based on certain assumptions and on certain representations

and agreements regarding restrictions on the future conduct of

the activities of

the Company.

Although the Company intends to conduct its activities in accordance with such assumptions,


taxable as a corporation for United States Federal income tax purposes, then cash available for

distribution to WaMu Cayman in respect of

the Company Preferred Securities would be reduced

on account of

taxes payable by

the Company. A determination by

the Company, based on receipt

of

an opinion of

counsel, that there is a significant risk that the Company is or

will be subject to

federal income tax would constitute a Tax Event see Description of

Fixed Rate Company

Preferred Securities." The remainder of

this discussion assumes that the Company is treated as

a partnership, and not as

an association or

publicly traded partnership taxable as a corporation,

for United States Federal income tax purposes, and that the Fixed Rate Company Preferred

Securities owned by WaMu Cayman will constitute equity interests in such partnership.

U.S. Trade or Business Status. WaMu Cayman intends to conduct

its affairs so

as

to not

be engaged in a trade or

business in the United States or

be subject to taxation on a net income

basis in the United States. On the date of



Securities, WaMu Cayman will receive an opinion from Mayer, Brown, Rowe Maw LLP to the

effect that, for United States Federal income tax purposes, although no activities closely

comparable to that contemplated by WaMu Cayman have been the subject of any U.S. Treasury

CONFIDENTIAL


regulation, revenue ruling or

judicial decision, it will not be treated as engaged in the conduct of

a

trade or

business within the United States and, consequently, WaMu Cayman's income will not

be subject to United States Federal income tax on a net income basis including the U.S. branch

profits tax). Mayer, Brown, Rowe Maw LLP's opinion is not binding on the IRS or

the courts,

and no ruling will be sought from the IRS regarding this, or

any other, aspect of WaMu Cayman's

United States Federal income tax treatment. Accordingly, no assurance can be given that the IRS

will not assert positions contrary to those stated in Mayer, Brown, Rowe Maw LLP's opinion or

that a court would not entertain any such assertions.

Mayer, Brown, Rowe Maw LLP's opinion is based on certain assumptions and on certain

representations and agreements regarding restrictions on the future conduct of WaMu Cayman's

activities. Although WaMu Cayman intends to conduct

its activities in accordance with such

assumptions, representations and agreements, if it were nonetheless determined to be engaged

in a trade or

business in the United States and had taxable income that was effectively


business including as a result of a determination

that

its distributive share of income derived from the Company in respect of

the Fixed Rate

Company Preferred Securities constituted taxable income effectively connected with a trade or

business carried on in the United States by the Company), then WaMu Cayman would be subject

to United States Federal income tax on such income at

regular United States corporate income

tax rates and possibly to a 30% United States branch profits tax as well. Moreover, in the event

WaMu Cayman were to derive effectively connected income in respect of

its ownership of

the

Fixed Rate Company Preferred Securities the United States corporate income tax imposed

thereon would be required to be

collected in the first instance through a withholding by

the

Company of such tax at a rate of 35% on WaMu Cayman's distributive share of

the income. A

determination by WaMu Cayman, based on receipt of

an opinion of

counsel, that there is a

significant risk that it is or

will be treated as engaged in a trade or

business within the United

States, would constitute a Tax Event see Description of


Securities." The remainder of

this discussion assumes that WaMu Cayman will not be considered

to be engaged in a trade or

business within the United States.

United States Withholding Tax. Interest that constitutes portfolio interest" within the

meaning of

the Code is generally exempt from United States withholding tax. As a partner in the

Company, WaMu Cayman will be treated as earning directly

its share of

the income earned by

the Company. Company's material assets will initially consist of

the regular interest" the

Class A Asset Trust Certificate) issued in registered form by the Asset Trust, which will be

treated as a real estate mortgage investment conduit" under the Code a REMIC"). REMIC

regular interests are generally treated as indebtedness for United States Federal income tax

purposes that qualifies for the portfolio interest exemption. Accordingly, WaMu Cayman expects

that

its distributive share of

interest paid on the Asset Trust regular interest will constitute

portfolio interest" under the Code, and thus, will not be subject to United States withholding tax.

In addition, during the term of

the transaction, Company expects, pursuant to its investment

guidelines, to invest cash on hand from time to time in short term debt instruments and other

debt securities that qualify for the portfolio interest exemption.

Tax Consequences U.S. Holders WaMu Cayman Preferred Securities

WaMu Cayman will treat the WaMu Cayman Preferred Securities as equity for United States

Federal income tax purposes. In general, the characterization as

of

the time of

issuance of

an

instrument by

an

issuer as

debt or

equity is binding for United States Federal income tax

purposes on

all holders but not the IRS), unless a holder discloses on

its tax return that it is

treating the instrument in a manner inconsistent with the issuer's characterization. In addition,

because WaMu Cayman is a foreign corporation, special rules described below apply to certain

U.S. Holders of

the Preferred Securities.

CONFIDENTIAL


a WaMu Cayman will constitute a

passive foreign investment company" under the Code Except as

provided below,

U.S. Holders of

the WaMu Cayman Preferred Securities will be considered U.S. Holders in a PFIC. In

general, U.S. Holders in a PFIC may desire to make an

election to treat WaMu Cayman as a

qualified electing fund" Generally, a QEF election should be made on or

before the due

date for tiling a U.S. Holder's Federal income tax return for the first taxable year for which it held

Preferred Securities. If a timely QEF election is made for WaMu Cayman, a U.S. Holder will be

required to include in gross income

its pro rata share of WaMu Cayman's ordinary earnings and to

include as long-term capital gain

its pro rata share of

our net capital gain as defined in applicable

Treasury regulations), if any, whether or

not any cash is distributed. In certain cases in which a QEFdoes not distribute

all

of

its earnings in a taxable year, U.S. Holders may also be permitted to elect

to defer payment of some or

all

of

the taxes on the QEF's income subject to an interest charge on

the deferred amount. WaMu Cayman will provide, upon request, all information that a U.S. Holder

making a QEF election is required to obtain for Federal income tax purposes the U.S. Holder's

pro rata share of

ordinary income and net capital gain, if any), and will provide, upon request, a

PFIC Annual Information Statement" as described in Treasury regulation Section 1.1295-1 or in

any successor Treasury regulation), including all representations and statements required by such

statement, and will take any other reasonable steps to facilitate such election.

If a U.S. Holder does not make a timely QEF election, it will be subject to a special United

States Federal tax on so-called excess distributions", which includes both certain distributions

on the Preferred Securities and gain on any disposition of

the Preferred Securities. The amount

of

United States Federal tax on excess distributions will be increased by

an interest charge

reflecting the deemed amount of

tax deferral that the taxpayer has experienced. In many cases,

the application of

the tax on excess distributions will be substantially more onerous than the

treatment applicable if a timely QEF election is made. U.S. Holders should consult with their tax

counsel regarding the United States Federal income tax consequences of

investing in a PFIC and

the desirability of making a QEF election.

U.S. HOLDERS OF WAMU CAYMAN PREFERRED SECURITIES SHOULD CONSIDER

CAREFULLY WHETHER TO MAKE A QEF ELECTION AND THE CONSEQUENCES OF NOTMAKING SUCH AN ELECTION.

on to U.S. The treatment of

actual distributions

of cash on the Preferred Securities, in very general terms, will vary depending on whether a

U.S. Holder has made a timely QEF election as

described above. See Tax Consequences to

U.S. Holders of WaMu Cayman Preferred Securities Investment in a Passive Foreign

Investment Company." If a timely QEF election has been made, distributions should be allocated

first to amounts previously taxed pursuant to the QEF election and to this extent would not be

taxable to U.S. Holders. Distributions in excess of

such previously taxed amounts will be taxable

to such U.S. Holders as ordinary income upon receipt, to the extent of any remaining amounts of

WaMu Cayman's current and accumulated earnings and profits. Distributions in excess of

previously taxed amounts and any remaining current and accumulated earnings and profits will

be treated by such U.S. Holders first as a nontaxable return of

capital and then as

capital gain.

In the event that a U.S. Holder does not make a timely QEF election some or

all

of any

dividends distributed with respect to its Preferred Securities may constitute excess distributions,

taxable as previously described. See Tax Consequences to U.S. Holders of WaMu Cayman

Preferred Securities Investment in a Passive Foreign Investment Company."

of

In general, a U.S. Holder of

a WaMu Cayman Preferred Security will recognize gain or

loss upon the sale or exchange of

the

Preference Share equal to the difference between the amount realized and such holder's

adjusted tax basis in the Preference Share. Initially, the tax basis of a U.S. Holder should equal

the amount paid for a WaMu Cayman Preferred Security. Such basis will be increased by

106

CONFIDENTIAL


Tax Treatment of

Tax-Exempt U.S. Holders of

Preferred Securities

Tax-Exempt U.S. Holder"

Tax Treatment of

Foreign Holders of


Certain Reporting Requirements to U.S. Holders

CONFIDENTIAL


Information Reporting and Backup Withholding

Tax Return Disclosure Requirements

CONFIDENTIAL


Foreign, State, and Local Taxes

CONFIDENTIAL


ERISA CONSIDERATIONS

CONFIDENTIAL



Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA "J and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") prohibit pension, profit-sharing or other retirement plans and accounts subject to ERISA or Section 4975 of the Code and entities that are deemed to hold "plan assets" of any of the foregoing (each, a "Plan") from engaging in certain transactions with persons that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to such Plan. A violation of these "prohibited transaction" rules may result in an excise tax or other penalties and liabilities under ERISA and the Code for such persons or the fiduciaries of the Plan. In addition, Title I of ERISA also requires fiduciaries of a Plan subject to ERISA to make investments that are prudent, diversified and in accordance with the governing plan documents.

Certain transactions involving WaMu Cayman might be deemed to constitute prohibited transactions under ERISA and the Code with respect to a Plan that purchased WaMu Cayman Preferred Securities or Fixed Rate Company Preferred Securities if assets of WaMu Cayman were deemed to be assets of the Plan. Under a regulation issued by the United States Department of Labor (the "Regulation"), the assets of WaMu Cayman would be treated as plan assets of a Plan for the purposes of ERISA and the Code only if the Plan acquired an "equity interest" in WaMu Cayman and none of the exceptions to plan assets contained in the Regulation was applicable. An equity interest is defined under the Regulation as an interest other than an instrument that is treated as indebtedness under applicable local law and that has no substantial equity features. The WaMu Cayman Preferred Securities and the Fixed Rate Company Preferred Securities are not likely to be treated as indebtedness for purposes of the Regulation. As such, WaMu Cayman intends to prohibit the acquisition and holding of any WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security or any interest in a WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security by or on behalf of a Benefit Plan Investor (as defined below).

For the purposes of the Regulation, the term "Benefit Plan Investor" includes all employee benefit plans, regardless of whether or not they are subject to ERISA (such as, for example, governmental plans), individual retirement accounts, Keogh Plans and other plans subject to Section 4975 of the Code, and entities whose underlying assets are deemed to include plan assets by reason of the investment in that entity by Benefit Plan Investors, such as group trusts, bank collective investment trusts, insurance company separate accounts, and certain insurance company general accounts.

By acquiring a WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security (or any interest therein), each purchaser and transferee will be deemed to represent, warrant and covenant that, from the date of acquisition throughout the period of holding such WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security (or interest therein), it is not, and it is not acquiring such WaMu Cayman Preferred Security or Fixed Rate Company Preferred Security (or interest therein) with the assets of a Benefit Plan Investor, except for an insurance company general account that represents, warrants and covenants that, at the time of acquisition and throughout the period it holds the securities, (i) it is eligible for and meets the requirements of the Department of Labor Prohibited Transaction Class Exemption 95-60, (ii) less than 25% of the assets of such general account are (or represent) assets of a Benefit Plan Investor and (iii) it is not a person who has discretionary authority or control with respect to the assets of WaMu Cayman or any person who provides investment advice for a fee (direct or indirect) with respect to such assets, or any affiliate of such a person and would not otherwise be excluded under 29 C.F.R. 2510.3-101 (f) (1).

110

RATINGSIt

CONFIDENTIAL


RATINGS

It is expected that the WaMu Cayman Preferred Securities will be rated "Baa2" by Moody's Investor Services, Inc. ("Moody's"), "BBB" by Standard & Poors Rating Services, a division of the McGraw Hill Companies, Inc. ("S&P"), and "A-" by Fitch, Inc. ("Fitch"). The ratings of the WaMu Cayman Preferred Securities are not recommendations to purchase, hold or sell shares of Preferred Stock, inasmuch as the ratings do not comment as to the market price or suitability for a particular purchaser. Nor do the ratings described above address the likelihood that a holder of WaMu Cayman Preferred Securities will be able to sell such securities. The ratings are based on current information furnished to S&P, Moody's and Fitch by WMI, WMB, the Company and WaMu Cayman and information obtained from other sources. The ratings may be changed, suspended or withdrawn at any time as a result of changes in, or the unavailability of, such information.

111

PLAN OF DISTRIBUTION

The Company, WaMu Cayman, WMI and the Initial Purchasers have enterEld into a purchase

agreement with respect to the WaMu Cayman Preferred Securities. Subject to certain conditions,

each Initial Purchaser has severally agreed to purchase the amount by liquidation preference)

of WaMu Cayman Preferred Securities indicated in the following tables.

Liquidation Preference

of

Series A-1

WaMu CaymanInitial Purchasers Preferred Securities

Goldman, Sachs Co $302,300,000

Total $302,300,000

Liquidation Preference

of

Series A-2

WaMu CaymanInitial Purchasers Preferred Securities

Goldman, Sachs Co $267,700,000

Morgan Stanley Co. Incorporated $ 90,000,000

Citigroup Global Markets Limited $ 22,500,000

Credit Suisse Securities USA) LLC $ 22,500,000

HSBC Bank pic $ 22,500,000

UBS Securities LLC $ 22,500,000

Total $447,700,000

The Initial Purchasers are committed to take and pay for

all

of

the securities being offered

hereby, if any are taken. The initial offering price is set forth on the cover page of

this offering

circular. After the securities are released for sale, the Initial Purchasers may change the offering

price and other selling terms. The Initial Purchasers have agreed to reimburse WMI and its

affiliates for certain expenses incurred in connection with this Offering.

The securities offered hereby have not been and will not be registered under the Securities

Act. The Initial Purchasers have agreed that they will only offer or

sell i) the Series A-1 WaMu

Cayman Preferred Securities in the United States and only to U.S. persons who are both qualified

institutional buyers" within the meaning of

Rule 144A under the Securities Act and qualified

purchasers" within the meaning of

Section 2(a) 51) under the Investment Company Act in

transactions meeting the requirements of

Rule 144A and the Series A-2 WaMu Cayman

Preferred Securities outside the United States to non-U.S. persons" within the meaning of

Regulation S under the Securities Act) in offshore transactions in reliance on Regulation S.

In connection with sales of

the Series A-2 WaMu Cayman Preferred Securities outside the

United States, the Initial Purchasers have agreed that they will not offer, sell or

deliver the

securities

to,

or

for the account or

benefit

of, U.S. persons" within the meaning of

Rule 902 of

Regulation S under the Securities Act i) as

part of

the Initial Purchasers' distribution at

any time

or

ii) otherwise until 40 days after the later of

the commencement of

the Offering or

the date

the securities were originally issued. The Initial Purchasers will send to each dealer to whom they

112

CONFIDENTIAL


sell such Series A-2 WaMu Cayman Preferred Securities during such 40-day period a

confirmation or

other notice setting forth the restrictions on offers and sales of

the securities

within the United States or

to,

or

for the account or

benefit

of, U.S. persons.

In addition, with respect to Series A-2 WaMu Cayman Preferred Securities initially sold

pursuant to Regulation S,

until 40 days after the period referred to above, an offer or

sale of

such securities within the United States by a dealer that is not participating in the Offering may

violate the registration requirements of

the Securities Act.

In connection with the Offering, the Initial Purchasers may purchase and sell securities in

the open market. These transactions may include short sales, stabilizing transactions and

purchases to cover positions created by short sales. Short sales involve the sale by the Initial

Purchasers of

a greater number of

securities than they are required to purchase in the Offering.

Stabilizing transactions consist of

certain bids or

purchases made for the purpose of

preventing

or

retarding a decline in the market price of

the securities while the Offering is in progress.

These activities by

the Initial Purchasers may stabilize, maintain or

otherwise affect the

market price of

the securities. As a result, the price of

the securities may be higher than the price

that otherwise might exist in the open market. If these activities are commenced, they may be

discontinued by the Initial Purchasers at any time. These transactions may be effected in the

over-the-counter market or

otherwise.

Each of

the underwriters has represented and agreed that:

It has not made or

will not make an offer of

the securities being offered hereby to the

public in the United Kingdom within the meaning of

section 1026 of

the Financial Services

and Markets Act 2000 as amended) except to legal entities which are

authorized or

regulated to operate in the financial markets or, if not so authorized or

regulated, whose corporate purpose is solely to invest in securities or

otherwise in

circumstances which do not require the publication by the company of a prospectus

pursuant to the Prospectus Rules of

the Financial Services Authority

It has only communicated or caused to be communicated and will only communicate or

cause to be communicated an invitation or

inducement to engage in investment activity

within the meaning of

section 21 of FSMA) to persons who have professional

experience in matters relating to investments falling within Article 19(5) of

the Financial

Services and Markets Act 2000 Financial Promotion) Order 2005 or

in circumstances in

which section 21 of FSMA does not apply to the company; and

It has complied with, and will comply with

all applicable provisions of FSMA with respect

to anything done by

it in relation to the shares in,

from or

otherwise involving the United

Kingdom.

In relation to each Member State of

the European Economic Area which has implemented

the. Prospectus Directive each, a each Initial Purchaser has

represented and agreed that with effect from and including the date on which the Prospectus

Directive is implemented in that Relevant Member State the it

has not made and will not make an offer of

the securities being offered hereby to the public in

that Relevant Member State prior to the publication of a prospectus in relation to the securities

which has been approved by

the competent authority in that Relevant Member State or, where

appropriate, approved in another Relevant Member State and notified to the competent authority

in that Relevant Member State, all

in accordance with the Prospectus Directive, except that it

may, with effect from and including the Relevant Implementation Date, make an offer of

securities

to the public in that Relevant Member State at any time:

to legal entities which are authorized or

regulated to operate in the financial markets or, if

not so authorized or

regulated, whose corporate purpose is solely to invest in securities;

113

CONFIDENTIAL


CONFIDENTIAL


• to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000; and (iii) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

• in any other circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer of securities to the public" in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

The securities offered hereby may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571 ) of Hong Kong and any rules made thereunder.

This offering circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or, (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the securities offered hereby are subscribed or purchased under Section 275 by a relevant person which is: (i) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the Trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust will not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (A) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275 (1 A), and in accordance with the conditions, specified in Section 275 of the SFA; (B) where no consideration is given for the transfer; or (C) by operation of law.

The securities offered hereby have not been and will not be registered under the Securities and Exchange Law of Japan (the "Japan Securities and Exchange Law") and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant

114

to an exemption from the registration requirements

of, and otherwise in compliance with, the

Securities and Exchange Law and any other applicable laws, regulations and ministerial

guidelines of

Japan.

WMI and the Company have agreed in the purchase agreement, subject to certain

exceptions, that for a period of 180 days after the date of

this offering circular, neither they, nor

any of

their subsidiaries or

other affiliates over which they exercise management or

voting

control, nor any person acting on their behalf will, without the prior written consent of Goldman,

Sachs Co., offer, sell, contract to sell or

otherwise dispose of any securities that are

substantially similar to the securities.

WMl, the Company and WaMu Cayman have agreed to indemnify the Initial Purchasers

against certain liabilities, including liabilities under the Securities Act.

Certain of

the Initial Purchasers and their respective affiliates have, from time to time,

performed, and may in the future perform, various financial advisory and investment banking

services for the company, for which they received or

will receive customary fees and expenses.

CONFIDENTIAL


VALIDITY OF SECURITIES

The validity of

the WaMu Cayman Preferred Securities will be passed upon for WMI and the

Initial Purchasers by Maples and Calder, George Town, Grand Cayman. The validity of

the Fixed

Rate Company Preferred Securities will be passed upon for the Company by

Richards, Layton

Finger, P.A., special Delaware counsel for the Company, for WMI by Mayer, Brown, Rowe Maw

LLP, New York, New York, and for the Initial Purchasers by

Sullivan Cromwell LLP, New York,

New York. The validity of

the Fixed Rate Depositary Shares and of

the Fixed Rate WMI Preferred

Stock will be passed upon for WMI by

Heller Ehrman LLP, Seattle, Washington, and by

Mayer,

Brown, Rowe Maw LLP, and for the Initial Purchasers by Sullivan Cromwell LLP. Mayer,

Brown, Rowe Maw LLP and Sullivan Cromwell LLP will rely upon the opinion of

Richards,

Layton Finger, P.A., as

to matters of

Delaware law, and upon the opinion of

Heller Ehrman LLP

as

to matters of Washington law.

CONFIDENTIAL


GENERAL INFORMATION

Listing

Application will be made to list the Series A-2 WaMu Cayman Preferred Securities offered

hereby to non-U.S. persons in reliance on an exemption from registration pursuant to

Regulation S,

on the Euro MTF market of

the Luxembourg Stock Exchange, in accordance with

the rules thereof. The Series A-1 WaMu Cayman Preferred Securities will not be

listed on any

securities exchange or automated dealer quotation system. Prior to such listing, a legal notice

relating to the issue of

the Series A-2 WaMu Cayman Preferred Securities will be

filed with the

Chief Registrar of

the District Court of

Luxembourg Greffier en Chef du Tribunal

d'Arrondissement de

et Luxembourg) where such legal notice will be available for inspection

free of

charge and where copies of

such documents will be obtainable upon request.

Upon such listing, the Series A-2 WaMu Cayman Preferred Securities will be

freely

transferable on the Euro MTF Market of

the Luxembourg Stock Exchange. Once executed,

transactions carried out on the Euro MTF Market may not be cancelled.

Authorization

The issuance of

the Series A-2 WaMu Cayman Preferred Securities was authorized by

WaMu Cayman's Board of

Directors on February 23, 2006. The issuance of

the Fixed Rate

Company Preferred Securities was authorized by the Company's Board of Managers on

February 23, 2006. The issuance of

the Fixed Rate WMI Preferred Stock was authorized by

WMl's Board of

Directors on January 17, 2006 and February 21,2006.

Independent Accountants

The independent registered public accountants of

the Company will be

Deloitte Touche

LLP. WaMu Cayman will engage a nationally recognized accounting firm to act as

its independent

registered public accountant. Deloitte Touche LLP are also the independent registered public

accountants for WMI and WMB.

Documents

Copies of

the LLC Agreement and WaMu Cayman's Articles of

Association will, so long as

any Series A-2 WaMu Cayman Preferred Securities are outstanding, be

available free of

charge

for inspection during usual business hours at


the Paying Agent in

Luxembourg.

For so long as

the Series A-2 WaMu Cayman Preferred Securities are listed on the Euro

MTF Market of

the Luxembourg Stock Exchange, a copy of WMl's Restated Articles of

Incorporation, as amended, and Restated Bylaws, as amended, will be available for inspection at



For so long as the Series A-2 WaMu Cayman Preferred Securities are listed on the Euro

MTF Market of

the Luxembourg Stock Exchange, copies of

the audited annual consolidated

financial statements and the unaudited consolidated interim financial statements for the quarters

ending March 31, June 30 and September 30 of WMI, of WaMu Cayman and the Company will

be available, free of

charge, at



No Material Adverse Change

Except as disclosed in this offering circular, there has been no adverse change in the

financial position of

the Company, WaMu Cayman, WMB or WMI since December 31,2005, or

their respective dates of

establishment which was February 3, 2006 in the case of

the Company

CONFIDENTIAL


and February 23, 2006 in the case of WaMu Cayman), that would be deemed material in the

context of

the issue and sale of

the WaMu Cayman Preferred Securities in this Offering.

Legal Proceedings

Neither the Company nor WaMu Cayman are involved in any litigation, arbitration or

administrative proceeding relating to claims or amounts that are material in the context of

the

issue and sale of

the WaMu Cayman Preferred Securities or


Securities to which the Company or WaMu Cayman are a party, nor to the best of

the

Company's or WaMu Cayman's knowledge, is there any threatened litigation, arbitration or

administrative proceedings relating to claims or amounts that are material in the context of

the

issue and sale of



Securities that would in either case jeopardize the Company's or WaMu Cayman's ability to

discharge the Company's or WaMu Cayman's respective obligations in respect of

the issue and

sale of



Neither the Company nor the Asset Trust is the subject of

any litigation. None of

the

Company, WMI or WMB is currently involved in or, to WMB's knowledge, currently threatened

with, any material litigation with respect to the assets included in the Asset Trust's portfolio,

other than routine litigation arising in the ordinary course of

business. Based on information

currently available, advice of

counsel, available insurance coverage and established reserves,

WMB believes that the eventual outcome of

the actions with respect to the assets included in the

Asset Trust's portfolio will not, in the aggregate, have a material adverse effect on the

Company's consolidated financial position or

results of

operations. However, in the event of

unexpected future developments, it is possible that the ultimate resolution of

those matters, if

unfavorable, may be material to the Company's results of

operations for any particular period.

WMB, the Company, the Asset Trust, WaMu Cayman and WaMu Delaware have not been

named as defendants in any of

the following lawsuits and, on that basis they do not expect such

lawsuits to materially affect their respective operations or

financial results.

South Ferry L.P. v.

Killinger et

a/., No. CV04-1599C W.D. Wa., Filed Jul. 19,2004) the

Securities Action"). This class action lawsuit is currently pending against WMI and certain of

its

senior executives in the U.S. District Court, Western Division of

Washington. On behalf of

a

putative class of

purchasers of WMI securities from April 15, 2003 through June 28, 2004, lead

plaintiffs allege that in various public statements the defendants purportedly made misrepresenta-

tions and failed to disclose material facts concerning, among other things, alleged internal

systems problems and hedging issues.

The defendants moved to dismiss the Securities Action on May 17, 2005. After briefing, but

without oral argument, the Court on November 17, 2005 denied the motion in principal part;

however, the Court dismissed the claims against certain of

the individual defendants, dismissed

claims pleaded on behalf of

sellers of

put options on WMI stock, and concluded that the plaintiffs

could not rely on supposed violations of

generally accepted accounting principles to support their

claims. The remaining defendants subsequently moved for reconsideration or, in the alternative,

certification of

the opinion for interlocutory appeal to the United States Court of

Appeals for the

Ninth Circuit. The District Court denied the motion for reconsideration, but the motion for

certification remains pending.

Lee Family Investments, by and through

its Trustee W.B. Lee, Derivatively and on behalf of

Nominal Defendant Washington Mutual, Inc. v.

Killinger et

aI, No. CV05-2121C W.o. Wa., Filed

Nov. 29, 2005) the Derivative Action"). On November 29,2005,12 days after the Court denied

the motion to dismiss the Securities Action, a separate plaintiff filed in Washington State Superior

Court a derivative shareholder lawsuit purportedly asserting claims for the benefit of WMI. The

defendants include those individuals remaining as

defendants in the Securities Action, as

well as

those of WMl's current independent directors who were directors at any time from April 15, 2003

118

CONFIDENTIAL


through June 2004. The allegations in the Derivative Action mirror those in the Securities Action,

but seek relief based on claims that the independent director defendants failed to take action to

respond to the misrepresentations alleged in the Securities Action and that the filing of

that

action has caused WMI to expend sums to defend itself and the individual defendants and to

conduct internal investigations related to the underlying claims. The defendants have not yet

responded to the complaint in the Derivative Action.

Governing Law

The LLC Agreement and the Fixed Rate Company Preferred Securities will be governed by,

and construed in accordance with, the laws of

the State of

Delaware. WaMu Cayman's Articles of

Association and the WaMu Cayman Preferred Securities will be governed by, and construed in

accordance with, the laws of

the Cayman Islands. The Rxed Rate WMI Preferred Stock will be

governed by and construed in accordance with the laws of

tile State of

Washington. The Fixed

Rate Depositary Shares will be governed by, and construed in accordance with, the laws of

the

State of New York.

CONFIDENTIAL


This page intentionally left blank)

CONFIDENTIAL



1201 Third Avenue

Seattle, WA 98101

WMB WAMUCAYMAN THE COMPANYWashington Mutual Bank Washington Mutual Preferred Washington Mutual Preferred

1201 Third Avenue Funding Cayman) I Ltd. Funding LLCSeattle, WA 98101 c10 M&C Corporate Services 1201 Third Avenue

Limited Seattle, WA 98101

P.O. Box 309GT

Ugland House, South Churcfl'>.Street

George Town, Grand Cayman,

Cayman Islands

SOLE GLOBAL COORDINATOR AND SOLE STRUCTURING COORDINATOR

Goldman, Sachs Co."

85 Broad Street

New York, NY 10004

LEGAL ADVISORS TO INITIAL PURCHASERS

As to U.S. Federal and New York law:

Sullivan Cromwell LLP

125 Broad Street

New York, NY 10004-2498

LEGAL ADVISORS TO WMI, WMB AND THE COMPANYAs

to U.S. Federal and New York law:

Mayer, Brown, Rowe Maw LLP

1675 Broadway

New York, NY 10019

As to Washington law:

Heller Ehrman LLP

701 Fifth Avenue, Suite 6100

Seattle, WA 98104-7098

SPECIAL LEGAL ADVISORS TO WASHINGTON MUTUAL PREFERRED FUNDING CAYMAN) I LTD

As to Delaware law: As

to

Cayman Islands law:

Richards, Layton Finger, P.AMaples and Calder

One Rodney Square P.O. Box 309GTWilmington, DE 19801

Ugland House, South Church Street

George Town, Grand Cayman

Cayman Islands

REGISTRAR, TRANSFER AGENT AND PAYING AGENT

Wilmington Trust Cayman), Ltd.

4 Floor, Century Yard

Cricket Square, Elgin Avenue

George Town, Grand Cayman

Cayman Islands

LUXEMBOURG LISTING AGENT AND PAYING AGENT DEPOSITORYJPMorgan Bank Luxembourg S.A.

Mellon Investor Services LLC

6,

route de Treves 480 Washington Blvd.

L-2633 SenningerbergJersey City, NJ 07310

TRUSTEE DELAWARE TRUSTEEDeutsche Bank National Trust Company

Deutsche Bank Trust Company Delaware

1761 East Saint Andrew Place1011 Centre Road, Suite 200

Santa Ana, CA 92705 Wilmington, DE 19805

CONFIDENTIAL


This page intentionally left blank)

CONFIDENTIAL


INDEX OF TERMS

3(c) 7) Representations vi

Declaration of

Trust 37

Additional Amounts 82 Delaware Trustee 5,

50

Additional Assets 43 Deposit Agreement 92

Additional Tax Event 82 Depositary 71

Additional Taxes 82 Derivative Action 118

Administration Agreement Dividend Payment Date cover, 65, 76,

86

Dividend Period 65, 76,

86

Administrative Services

DTC 97

Agreement

Administrator DTC Participants

Advanced Consumer Lending DWAC 102

System

or ACLS Eligible Assets 43

alternative services 56 Eligible Investments

Asset Documentation 44 employee benefit plan

Asset Portfolio 45 ERISA

iii, 110

Asset Subsidiary 44 Euroclear 100

Asset Tax Opinion 45 Euroclear Operator 100

Asset Trust Euroclear Participants 100

Euroclear Terms and

back-end ratioConditions 100

Bankruptcy Event 48 Exchange Agreement 71

Benefit Plan Investor iii, 110 Exchange Event 11,70

Business Combination 90 Expenses Agreement

Business Day 65, 76, 86 FDiC xiv, 63

CACS Federal Reserve

Cayman Trust FFO 11,76

Fitch 111Class A Asset Trust

Certificate 51 Fixed Rate Company

Preferred Securities cover, 1,

37, 75

Class R Asset Trust

Certificate 51 Fixed Rate Depositary

Clearstream 100 Shares 11,86,92

Clearstream International 100 Fixed Rate Substitute

Clearstream Participants 100 Preferred Stock 91

Code iii, 110 Fixed Rate Successor

Code

of

Ethics Depositary Share 91

Companies Law Fixed Rate WMI Preferred

Company cover, 1,41 Stock 2,

86

Company Common Fixed-to-Floating Rate

Securities 4,41 Company Preferred

Securities 1,41Company Designated

Directors Fixed-to-Floating Rate

Depositary SharesCompany Preferred

Securities 2,41 Fixed-to-Floating Rate

Company's Portfolio Substitute Preferred

Comparable Treasury Issue 78 Stock 91

Comparable Treasury Price 78 Fixed-to-Floating Rate

Conditional Exchange 71 Successor Depositary

core capital Share 91

Covered Debt 68 Fixed-to-Floating Rate WMI

Credit Score Preferred Stock 95

Custodian 62 Foreign Holder 104

Custody Agreement 62 FSA 113

Cut-Off Date 51 FSMA 113

debt-to-income ratioGAAP xiv, 4

0

123

CONFIDENTIAL


Global Securities REMIC

5, 105

HELsReminder Notice

vi

Independent DirectorReplacement Capital

Independent InvestmentCovenant

BankerReplacement Covenant

Independent Manager

5,

46

Covered Securities

Indirect ParticipantsRestricted Period

97

Investment Company Act cover,

xi, 1 Rule 144A Global Security

Investment Company ActRule 144A Offering

Event

78

S&P 111IRS 103 SEC

xiii

Japan Securities andSection3(c)(7) x

Exchange Law 114 Securities Act. cover,

xi, 1

Junior Equity Securities 77 Securities Action

like amountSenior Equity Securities

LLC Act

41

Series A-1 WaMu CaymanLLC Agreement

41

Preferred Securities cover,

1,

37,

65

Loan DocumentsSeries A-2 WaMu Cayman

MarionPreferred Securities cover,

1,

37,

65

Moody's 111 Servicer

New AssetsServicer Indemnified Parties

60Nominee SFA

114Offering

Share Trustee

37

OTS cover, 2,32 SUCCESSParity Equity Securities

Successor Entity

91

Paying Agent

in

Luxembourg 37,

73

supplementary capital

Paying Agent s)Tax Event

Permitted InvestmentsTax-Exempt U.S. Holder 107

PFIC 16, 106Thrift Financial Report s)

xiv

plan

iii

total capital

Plan 110 Transfer Agent

plan assetsTreasury Rate

Pooling and ServicingTrust Securities

AgreementTrustee

Primary Treasury DealerUBTI 107

Principal Paying AgentUniversity Street

i, 4,

41

QEF 106 U.S. Holder 104qualified institutional

Voting Parity Stock

buyer s)

iii, 1 WaMu Cayman cover, 1,37

qualified purchaser s) WaMu Cayman Ordinary

Qualifying InterestsShares 4,37

Rating Agencies WaMu Cayman Preferred

Rating Agency ConditionSecurities cover, 1,37

Reference Treasury Dealer WaMu Cayman's Articles

of

Reference Treasury DealerAssociation 10, 3

7

Quotations WaMu Delaware

Registrar

73 WMB

i,

1,32

Regulation 110 WMI cover, 1Regulation S Global Security WMI GroupRegulation S Offering

WMl's Board of

Directors

Regulatory Capital Event WMI Parity Stock

Relevant Implementation Date 113 WTC CaymanRelevant Member State 113

124

CONFIDENTIAL


$750,000,000

Washington Mutual

Preferred Funding

Cayman) I Ltd.

7.25% Perpetual Non-cumulative

Preferred Securities Automatically

Exchangeable Specified

Circumstances into Depositary

Shares representing Preferred

Stock of Washington Mutual, Inc.

Washington

Goldman, Sachs Co.Sole Global Coordinator and

Sole Structuring Coordinator

Citigroup

Credit Suisse

HSBC

Morgan Stanley

Senior Co-Manager

UBS Investment Bank

CONFIDENTIAL


CONFIDENTIAL

CONFIDENTIAL

WashingtonMutual

$750,000,000Washington Mutual Preferred Funding (Cayman) I Ltd.

7.25% Perpetual Non-cumulative Preferred SecuritiesAutomatically Exchangeable in Specified Circumstances into

Depositary Shares representing Preferred Stock of Washington Mutual, Inc.

Washington Mutual Preferred Funding (Cayman) I Ltd., a Cayman Islands exempted company limited by shares ("Wa MuCayman"), will invest the proceeds of its 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1, liquidationpreference $100,000 per security (the "Series A-1 WaMu Cayman Preferred Securities"), and its 7.25% Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference $10,000 per security (the "Series A-2 WaMu CaymanPreferred Securities" and, together with the Series A-1 WaMu Cayman Preferred Securities, the "WaMu Cayman PreferredSecurities") offered hereby in a like amount of 7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference$1,000 per security (the "Fixed Rate Company Preferred Securities"), of Washington Mutual Preferred Funding LLC, a Delawarelimited liability company (the "Company"). The terms of the Series A-1 WaMu Cayman Preferred Securities and the Series A-2WaMu Cayman Preferred Securities are identical except for their per security liquidation preference. WaMu Cayman will haveno material assets other than the Fixed Rate Company Preferred Securities. The financial entitlements of each WaMu CaymanPreferred Security will be substantially the same as the financial entitlements of a like amount of Fixed Rate Company PreferredSecurities, with the consequence that dividends and the redemption price on the WaMu Cayman Preferred Securities will bepayable on the same dates and in the same amounts as the corresponding dividends and redemption price, as applicable, on alike amount of Fixed Rate Company Preferred Securities. The Company's initial material assets will consist of indirect interestsin mortgages and mortgage-related assets originated by Washington Mutual Bank as described herein.

Dividends on the Fixed Rate Company Preferred Securities will be payable if, when and as declared by the Company'sBoard of Managers out of legally available funds, on a non-cumulative basis at an annual rate of 7.25% on the liquidationpreference per security, quarterly in arrears on March 15, June 15, September 15 and December 15 of each year,commencing on June 15, 2006 (each, a "Dividend Payment Date"), or the next Business Day if any such day is not aBusiness Day.

If the Office of Thrift Supervision (together with any successor regulator, the "OTS") so directs following theoccurrence of an Exchange Event as described herein, each WaMu Cayman Preferred Security will be automaticallyexchanged for depositary shares representing a like amount of Washington Mutual, Inc.'s ("WMJ") Series J Perpetual Non-cumulative Fixed Rate Preferred Stock.

See "Risk Factors" beginning on page 18 for a description of the risk factors you should consider before you invest in thesecurities offered hereby,

(Continued on next page)

Offering price: $100,000.00 per Series A-1 WaMu Cayman Preferred Security$ 10,000.00 per Series A-2 WaMu Cayman Preferred Security

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIESACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE SERIES A-1 WAMU CAYMAN PREFERRED SECURITIES AREBEING OFFERED AND SOLD ONLY IN THE UNITED STATES AND ONLY TO U.S. PERSONS THAT ARE BOTH "QUALIFIEDINSTITUTIONAL BUYERS" (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND "QUALIFIEDPURCHASERS" (WITHIN THE MEANING OF SECTION 2(a)(51) OF THE U.S. INVESTMENT COMPANY ACT OF 1940, ASAMENDED (THE "INVESTMENT COMPANY ACT")) IN RELIANCE ON AN EXEMPTION FROM REGISTRATION PURSUANT TORULE 144A. THE SERIES A-2 WAMU CAYMAN PREFERRED SECURITIES ARE BEING OFFERED AND SOLD ONLY TONON-U.S. PERSONS IN TRANSACTIONS OUTSIDE THE UNITED STATES IN RELIANCE ON AN EXEMPTION FROMREGISTRATION PURSUANT TO REGULATION S UNDER THE SECURITIES ACT. PROSPECTIVE PURCHASERS OF SERIES A-1WAMU CAYMAN PREFERRED SECURITIES ARE HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BERELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A.THE SECURITIES ARE NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS DESCRIBED UNDER"NOTICE TO INVESTORS."

The Initial Purchasers expect to deliver the Series A-1 WaMu Cayman Preferred Securities through the facilities of TheDepository Trust Company and the Series A-2 WaMu Cayman Preferred Securities through the facilities of ClearstrearnBanking, societe anonyme, and Euroclear Bank S.A./N.V., as operator of the Euroclear System, as participants in TheDepository Trust Company, in each case, against payment in New York, New York on or about March 7, 2006.

Goldman, Sachs & Co.Sole Global Coordinator and Sole Structuring Coordinator

Citigroup Credit Suisse HSBC Morgan Stanley UBS investment BankSenior Co-Manager


Restricted For Use in Connection with Plan Confirmation Only WMIPC__500002044.00001

CONFIDENTIAL

CONFIDENTIAL

$750,000,000 ( ) I

7.25% Perpetual Non-cumulative Preferred Securities Automatically Exchangeable in Specified Circumstances into

Shares representing Preferred Stock of Washington Mutual, Inc.

Washington Mutual Preferred Funding (Cayman) 1 Ltd., a Cayman lslands exempted company Hmited by shares ("WaMu Cayman"), will [nvest the proceods of Its 7.25"'/"" Perpetual Non-cumulative Preferred Securities, Series A-1, !iquldation preference $100,000 per security (the "Series A-1 WaMu Cayman Preferred Securities"), and its 7.25% Perpetual Noncumulative Preferred Securities, Series AM2, liquidation preference $10,000 per security (the "Series A-2 WaMu Cayman Preferred Securities" and, together w!th the Series A~1 WaMu Cayman Preferred Securities, the ''WaMu Cayman Preferred Securities") offered hereby in a like amount of 7.25% Perpetual Non-cumurative Preferred Securities, liquidation preference $1,000 per security (the "Fixed Rate Company Preferred Securities"), of Washington Mutua~ Preferred Funding llC, a Delaware Hmlted liability company (the "Company"). The terms of the Series A~1 WaMu Cayman Preferred Securities and the Sertes A-2 WaMu Cayman Preferred Secudtles are identical except lor theIr per security liqutdatlon preference. WaMu Cayman wi1l have no materiaJ assets other than the Fixed Rate Company Preferred Sccurittes. The financial entitlements of each WaMu Cayman Preferred Securlty will be substantially the same as the financial entitlements of a like amount of Fixed Rate Company Preferred Securities, with the consequence that dividends and the redemption prtce on the WaMu Cayman Preferred Secur!t[es wi!! be payable on the same dates and [n the same amounts as the corresponding dividends and redemption price, as appljcable, on a like amount of Fixed Rate Company Preferred Securities. The Company's initial material assets wilt consist of indlrect interests in mortgages and mortgage-related assets orlginated by Washington Mutual Bank as described herein.

Dividends on the Fixed Rate Company Preferred Securities will be payable [f, when and as declared by the Company's Board of Managers out of legaHy available funds, on a mlll-cumulative basis at an annual rate of 7.25°/¢ on the liquidation preference per security, quarterly In arrears on March 15, June i5, September i5 and 08t:ember i5 of each year, commencing on June 15,2006 (each, a "Dividend Payment Date"), or the next Business Day if any such day 1s not a Business Day,

!f the Office of Thrift Supervision (together with any successor regulator, the "OTS") so directs foHow[ng the occurrence of an Exchange Event as described herein, each WaMu Cayman Preferred Security wlli be automatically exchanged for depositary shares representing a llke amount of Washington Mutual, lnc.'s ("WM1") Series J Perpetual Noncumulative Fjxed Rate Preferred Stock.

See "Risk Factors" beginning on page 18 for a description of the n:<{k factors you should consider before yot! invest in the securities offered hereby.

(Continued on next page)

Offering price: $100,000.00 per Series A-1 WaMu Cayman Preferred Security $ 10)000.00 per Series A-2 WaMu Cayman Preferred Security

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES THE SERIES 1'-1 WAMU CAYMAN PREFERRED SECURITIES ARE BEING OFFERED AND SOLD ONLY IN THE UNITED AND ONLY TO U,S. PERSONS THAT ARE BOTH "QUALIFIED INSTITUTIONAL BUYERS" (WITHIN THE MEANING OF 144A UNDER THE SECURITIES ACT) AND "QUALIFIED PURCHASERS" (WITHIN THE MEANING OF SECTION 2(8)(51) OF THE U.S. INVESTMENT COMPANY ACT AS AMENDED (THE "INVESTMENT COMPANY ACT"» IN RELIANCE AN EXEMPTION FROM REGISTRATION TO RULE 1441\. THE SERIES A-2 WAMU CAYMAN PREFERRED ARE BEING OFfERED AND SOLD ONLY TO NON-U.S. PERSONS IN TRANSACTIONS OUTSIDE THE UNITED STATES IN REliANCE ON AN EXEMPTION fROM REGISTRATION PURSUANT TO REGULATION S UNDER THE SECURiTIES ACT. PROSPECTIVE OF SERIES A-1 WAMU PREFERRED SECURITIES ARE HEREBY THAT THE SELLER OF MAY BE RELYING THE EXEMPTION FROM THE PROVISIONS Of 5 Of THE SECURITIES ACT BY RULE 144A. THE SECURITIES ARE NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS DESCRIBED UNDER "NOTICE TO INVESTORS."

The Inltial Purchasers Bxpcct to deliver lhe Serjes A-1 WaMu Cayman Preferred Securities through the fac1!ities of The Depository Trust Company and the Series A~2 WaMu Cayman Preferred Securities through the facUlties of Clearstream Banking. societe anonyme, and Euroclear Bank S.A,IN.V" as operator of the Euroclear System, as part[cipants In The Depository Trust Company, in each case, against payment in New York, New York on or about March 7. 2006.

Sole

Credit Suisse HSBC Morgan Slalnle,y UBS Investment Bank Senior Co-Maflti'ger

---Offering Circular dated February 24. 2006.

R",,,tridpri For Use in Connection Plan ~nn'firml"tir'n Only WMIPC_500002044.00001

CONFIDENTIAL

(Continued from previous page)

The Fixed Rate Company Preferred Securities will not be redeemable at the option of the Company prior to theDividend Payment Date in March 2011, except upon the occurrence of a Tax Event, an Investment Company Act Eventor a Regulatory Capital Event (each as described herein). Upon the occurrence of a Tax Event, an InvestmentCompany Act Event or a Regulatory Capital Event, the Company may redeem the Fixed Rate Company PreferredSecurities in whole but not in part. On or after the Dividend Payment Date in March 2011, the Company may redeemthe Fixed Rate Company Preferred Securities in whole or in part. Any redemption will be subject to the prior approvalof the OTS and will be at a redemption price equal to the liquidation preference per Fixed Rate Company PreferredSecurity, plus declared but unpaid dividends, if any, plus a U.S. Treasury-based "make whole" amount if theredemption occurs prior to the Dividend Payment Dale in March 2011.

The WaMu Cayman Preferred Securities will be issued only in book-entry form. Each individual purchaser orgroup of affiliated purchasers that acquires Series A-1 WaMu Cayman Preferred Securities in the initial offering mustacquire at least three Series A-1 WaMu Cayman Preferred Securities having an aggregate liquidation preference of$300,000.

The Initial Purchasers are offering the Series A-2 WaMu Preferred Securities, which are being offered outside theUnited States to non-U.S. persons in reliance upon Regulation S under the Securities Act, through their respectiveselling agents.

Application will be made to list the Series A-2 WaMu Cayman Preferred Securities on the Euro MTF market of theLuxembourg Stock Exchange. The Series A-1 WaMu Cayman Preferred Securities will not be listed on any securitiesexchange or automated dealer quotation system.

The securities offered hereby are not insured or guaranteed by the U.S. Federal Deposit InsuranceCorporation.

Restricted For Use in Connection with Plan Confirmation Only VVM1PC 500002044.00002Restricted

CONFIDENTIAL

(Continued frorn previous page)

The Fixed Rate Company Preferred Securitles wi![ not be redeemable at the option of the Company prior to the Dlvldend Payment Date in March 2011, except upon tile occurrence of a Tax Event, an Investment Company Act Event or a Regulatory Capita! Event (each as described herern). Upon the occurrence of a Tax Event, an Investment Cornpany Act Event or a Regulatory Capltal Event, the Company may redeem the Fixed Rate Company Preferred Securities in whole but not in part. On or after the Dividend Payment Date in March 2011, the Company may rsdeem the Fixed Rate Company Preferred Securities in whole or in part. Any redemption wlll be subject to the prior approval of ihe OTS and will be at a redemptjon price equa! to the liquidation preference per Fixed Rate Company Preferred Security, plus declared but unpard dMdends, if any, plus a U.S. Treasury~based "make who!e" amount if the redemption occurs prior to the DivIdend Payment Dale in March 2011.

The WaMu Cayman Preferred Securities will be issued only in book-entry form. Each jndfvlduai purchaser or group of affiHated purchasers that acquires Series A~ 1 WaMu Cayman Preferred Securities in the inmal offering must acquire at least three Series A~ 1 WaMu Cayman Preferred Securities having an aggregate liquidation preference of $300,000.

The Initral Purchasers are offering the SerIes A~2 WaMu Preferred Securitres, whlch are being offered outside the United States to non-U.s. persons in reliance upon Regu!atlon S under the Securities Act, through thejr respective selling agents.

ApplicatIon wi!! be made to fist the Series A-2 WaMu Cayman Preferred SecuritIes on the Euro MTF market of the Luxembourg Stock Exchange, The Series A-1 WaMu Cayman Preferred Securities wlH not be listed on any securities eXChange or automated dealer quotation system.

The securlties offered hereby are not insured or guaranteed by the U.S. Federal Deposit Insurance Corporation.

in :nn,npr.tirln with :nn'firrr,,,ti()n Only WMIPC _500002044.00002

CONFIDENTIAL


The following summary is qualified in its entirety by the detailed information appearingelsewhere in this offering circular, in particular, the information under the headings' "Description ofthe WaMu Cayman Preferred Securities" and "Description of the Fixed Rate Company PreferredSecurities," which deScribe the terms and conditions of the securities offered hereby.

Introduction

The 7.25% Perpetual Non-cumulative Preferred Securities, Series A-1, liquidation preference$100,000 per security (the "Series A-1 WaMu Cayman Preferred Securities"), and the7.25% Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference $10,000per security (the "Series A-2 WaMu Cayman Preferred Securities" and, together with theSeries A-1 WaMu Cayman Preferred Securities, the "WaMu Cayman Preferred Securities"), arebeing issued by Washington Mutual Preferred Funding (Cayman) I Ltd. ("WaMu Cayman") in afinancing transaction that raises capital for Washington Mutual Bank ("WMB"). WMB is asubsidiary of Washington Mutual, Inc. ("WM/"). WMI and its affiliates are referred to herein asthe "WMI Group".

WaMu Cayman will invest the proceeds of the WaMu Cayman Preferred Securities in a likeamount of 7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference$1,000 per security (the "Fixed Rate Company Preferred Securities"), of Washington MutualPreferred Funding LLC, a Delaware limited liability company (the "Company"). WaMu Caymanwill have no material assets other than the Fixed Rate Company Preferred Securities. Thefinancial entitlements of each WaMu Cayman Preferred Security will be substantially the same asthe financial entitlements of a like amount of Fixed Rate Company Preferred Securities, with theconsequence that dividends and the redemption price on each WaMu Cayman Preferred Securitywill be payable on the same dates and in the same amounts as the corresponding dividends andredemption price, as applicable, on a like amount of Fixed Rate Company Preferred Securities.The Company's initial material assets will consist of direct or indirect interests in mortgages ormortgage-related assets originated by WMB as described under "The Company — Business ofthe Company --Assets of the Company" and "The Asset Trust."

The terms of the Series A-1 WaMu Cayman Preferred Securities and the Series A-2 WaMuCayman Preferred Securities are identical except for their per security liquidation preference. TheSeries A-1 WaMu Cayman Preferred Securities are being offered in reliance upon Rule 144Aunder the U.S. Securities Act of 1933, as amended (the "Securities Act") only in the UnitedStates and to persons who are "qualified institutional buyers" within the meaning of 144A and"qualified purchasers" within the meaning of Section 2(a) (51) of the U.S. Investment CompanyAct of 1940, as amended (the "investment Company. Act"). The Series A-2 WaMu CaymanPreferred Securities are being offered and sold in reliance upon Regulation S under theSecurities Act only to non-U.S. persons in transactions outside the. United States. Resales ofSeries A-1 WaMu Cayman Preferred. Securities to non-U.S. persons and of Series A-2 WaMuCayman Preferred Securities in the United States or to U.S. persons are subject to restrictions asdescribed under "Notice to investors — Exchanges Between Rule 144A Global SecurityEvidencing Series A-1 WaMu Cayman Preferred Securities and Regulation S Global SecurityEvidencing Series A-2 WaMu Cayman Preferred Securities," in each case subject to thecertification requirements described under "Book-Entry Issuance."

By a separate offering circular dated the same date as this offering circular, WashingtonMutual Preferred Funding Trust I, a Delaware statutory trust established by the Company asgrantor ("WaMu Delaware"), is offering $1,250,000,000 of its Perpetual Exchangeable Non-cumulative Trust Securities (the "Trust Securities"). WaMu Delaware will invest the proceeds ofthe Trust Securities in a like amount of the Company's Perpetual Non-cumulative Fixed-to-Floating Rate Preferred Securities (the "Fixed-to-Floating Rate Company Preferred Securities"

Restricted For Use in Connection with Plan Confirmation Only VVMIPC_500002044.00017

1

CONFIDENTIAL


The {o!fawing summary is qualified in its entirety by the detailed information appearing elsewhere in this offering circular, in particular, the information under the headings· "Description of the WaMu Cayman Preferred Securities" and "Description of the Fixed Rate Company Preferred Securities," which describe the ferms and conditions of the securities offered hereby.

Introduction

The 7.25°/" Perpetual Non-cumulative Preferred Securities, Series A-1, liquidation preference $100,000 per security (the "Series A-1 WaMu Cayman Preferred Securities"), and the 7.25"/<1 Perpetual Non-cumulative Preferred Securities, Series A-2, liquidation preference $10,000 per securlty (the "Series A-2 WaMu Cayman Preferred Securities" and, together with the Series A-1 WaMu Cayman Preferred Securities, tho "WaMu Cayman Preferred Securities"), are being issued by Washington Mutual Preferred Funding (Cayman) I Ltd, ("WaMu Cayman") in a financing transaction that raises capital for Washington Mutual Bank ("WMB"). WMB is a subsidiary of Washington Mutual, Inc. ("WMI"). WMI and lts affitlates are referred to herein as the "WMI Group",

Wa.Mu Cayman will invest the proceeds of the WaMu Cayman Preferred Securities in a like amount of 7.250/0 Perpetual Non-cumUlative Preferred Securitles, ]rquidation preference $1,000 per security (tl18 "FIxed Rate Company Preferred Securities"), of Wasrtington Mutual Preferred Funding LL.C, a Delaware limited liabill1y company (the "Company"), WaMu Cayman wi!! have no material assets other than the Fixed Rate Company Preferred Securities. The financial entitlements of each WaMu Cayman Preferred Security wlH be substantially the same as the flnandal entitlements of a Ilke amount of Fixed Rate Company Preferred Securities, with the consequence that dividends and the redemption price on each WaMu Cayman Preferred Security w1l! be payable on the same dates and in the same amounts as the corresponding dividends and redemption price, as app!icab!e, on a like amount of Fixed Rate Company Preferred Securities. The Company's inmal material assets will consist of direct or indirect interests in mortgages or mortgage-related assets originated by WMB as described under "The Company - Business of the Company - Assets of the Company" and "The Asset Trust,"

The terms of the Series A-1 WaMu Cayman Preferred Securities and the Series A-2 WaMu Cayman Preferred Securities are Identical except for their per security llquldation preference. The Series A-1 WaMu Cayman Preferred Securities are being offered in reliance upon Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act") only in the Unite~ States and to persons who are "quafitied institutional buyers" within the meaning of 144A and "qualifIed purchasers" within the mcan[ng of Section 2(a) (51) of the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"). The SElries A-2 WaMu Cayman Preferred Securities are being offered and sold in reliance upon Regulation S' under the Securities'Act only to non,..U .. S. persons in-transactions outside the United States. Resales of Series A-1 WaMu Cayman Preferred Securities to non-U.S. persons and of Series A-2 WaMu Cayman Preferred Securlties in the Unlted States or to U.K persons are subject to restrictions as described under "Notice to Investors - Exchanges Between Rule 144A Globa! Security Evidencing Sertes A-1 WaMu Cayman Preferred Securities and Regu!ation S Global Security EvidenCing Sories A-2 WaMu Cayman Preferred Securities," in each case subject to the certification requirements described under "Book-Entry Issuance."

By a separate offering cirCUlar dated the same date as this offering circular, Washington Mutua! Preferred Funding Trust I, a Delaware statuto!), trust established by the Company as grantor ("WaMu Delaware"), is offering $1,250,000,000 of its Perpetual Exchangeable NoncumUlative Trust Securities (the "Trust Securities"), WaMu Delaware wi!! invest the proceeds of the Trust Securities in a like amount of the Company's Perpetual Non-cumulative Fixed-toFloating Rate Preferred Securities (the "Fixed-to-Floating Rate Company Preferred Securities"

Restricted For Use in Connection with Confirmation Only WMIPC_500002044,00017

CONFIDENTIAL

and, together with the Fixed Rate Company Preferred Securities, the "Company PreferredSecurities"). The terms of the Fixed-to-Floating Rate Company Preferred Securities aresubstantially identical to the Fixed Rate Company Preferred Securities except for the dividendrate. The Trust Securities are being offered and sold only in the United States and only toU.S. persons that are both qualified institutional buyers and qualified purchasers in reliance onthe exemption from registration under the Securities Act pursuant to Rule '144A. They are notbeing offered by this offering circular. The WaMu Cayman Preferred Securities are notexchangeable for Trust Securities, or vice versa.

WMB has asked for confirmation from the Office of Thrift Supervision (together with anysuccessor regulator, the "OTS") that the Company Preferred Securities constitute core capital ofWMB under the OTS' applicable regulatory capital regulations and, upon receipt of suchconfirmation, intends to treat the Company Preferred Securities accordingly.

If the OTS so directs following the occurrence of an Exchange Event, each WaMu CaymanPreferred Security will be automatically exchanged for a like amount of Fixed Rate DepositaryShares each representing 1/1000th of a share of WMI's Series J Perpetual Non-cumulative FixedRate Preferred Stock, no par value and liquidation preference $1,000,000 per share ("Fixed RateWM1 Preferred Stock"), as described below in this Summary under "— The Offering —Conditional Exchange." Upon a Conditional Exchange, the Trust Securities will also beautomatically exchanged, but for depositary shares representing a different series of WMI'spreferred stock, having substantially equivalent terms (with certain exceptions) as to dividends,liquidation preference and redemption preference as the Fixed-to-Floating Rate CompanyPreferred Securities.

This offering circular uses the term "like amount" in describing the financial entitlements andvoting rights, as applicable, of the WaMu Cayman Preferred Securities as compared to the FixedRate Company Preferred Securities and in describing the amount of Fixed Rate DepositaryShares, each representing a 1 /1000th interest in one share of Fixed Rate WMI Preferred Stockfor which the WaMu Cayman Preferred Securities will be exchanged upon the occurrence of aConditional Exchange. The term "like amount" means:

• when describing the financial entitlements or voting rights, as applicable, of WaMuCayman Preferred Securities as compared to Fixed Rate Company Preferred Securities, anumber of Fixed Rate Company Preferred Securities that have the same aggregateliquidation preference as the WaMu Cayman Preferred Securities to which the referenceis being made (e.g., 1,000 Fixed Rate Company Preferred Securities with an aggregateliquidation preference of $1,000,000 are a "like amount" for ten Series A-1 WaMuCayman Preferred Securities or 100 Series A-2 WaMu Cayman Preferred Securities, eachhaving an aggregate liquidation preference of $1,000,000); and

• when describing the number of depositary shares for Fixed Rate WMI Preferred Stockwith which WaMu Cayman Preferred Securities will be exchanged upon a ConditionalExchange, a number of Fixed Rate Depositary Shares, each representing a 1/1000th in-terest in one share of Fixed Rate WMI Preferred Stock, having a liquidation preferenceequal to the liquidation preference of the WaMu Cayman Preferred Securities that arebeing exchanged (e.g., 10,000 Fixed Rate Depositary Shares representing Fixed RateWMI Preferred Stock with an aggregate liquidation preference of $10,000,000 are a "likeamount" for 100 Series A-1 WaMu Cayman Preferred Securities or 1,000 Series A-2WaMu Cayman Preferred Securities, each having an aggregate liquidation preference of$10,000,000).

The offering of the WaMu Cayman Preferred Securities and the related issuance of theFixed Rate Company Preferred Securities are referred to herein as the "Offering".

Restricted For Use in Connection with Plan Confirmation Only WMI PC 500002044.00018

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CONFIDENTIAL

and, together with the fixed Rate Company Preferrod Securities, the "Company Preferred Securities"). The terms of the Fixed-to-Floatlng Rate Company Preferred Securities are substantially Identical to the Fixed Rate Company Preferred Secliritres except the dividend rate. The Trust Securities are befng offered and sold only in the United States and only to UB. persons that are both qualified instItUtional buyers and quatrfied purchasers in reliance on the exemption from registration under the Securities Act pursuant to Rute 144A. They are not being offered by this offering circular. The WaMu Cayman Preferred Securities are not exchangeable for Trust Securities, or 'lice versa.

WMB has asked for confirmation from the Office of Thrift Supervision (together with any successor regulator, tho "OTS") that the Company Preferred Securities constitute core capital of WMB under the 01"8' applicable regulatory capita! regulations and, upon receipt of such confirmation, intends to treat the Company Proferred SecuritIes accordlngly.

If the 01"8 so d[rocts following the occurrence of an Exchange Event, each WaMu Cayman Preferred Security will be automatically oxchanged for a like amount of Fixed Rate Depositary Shares each mpresenHng 1 !100Oth of a share of WMI's Series J Perpetual Non-cumulative Fixod Rate Preferred Stock, no par value and liquidation preference $'1,000,000 por share ("Fixed Rate WM} Preferred Stock"), as described below in this Summary under "- The OfferjngConditional Exchange." Upon a Conditional Exchange, the Trust Securities will also be automaUcal1y exchanged, but for depOSitary shares representing a different series of WMJ's preferred stock, having substantially equivalent terms (with certain exceptions) as to d[vldends, liqUidation preference and redemption preference as the Flxed-io-Floating Rate Company Preferred Secudtles.

This offering circular uses the term "lfke amount" in describing the financial entitlements and voting rights, as applicable, of the WaMu Cayman Preferred Securities as compared to the Fixed Rate Company Preferred Securities and in descrlbing the amount of Fixed Rate Depositary Shares, each representing a 111 OOOth interest in one share of Fixed Rate WMf Preferred Stock for which tile WaMu Cayman Preferred Securities will be exchanged upon the occurrence of a Conditional Exchange. The term "lfke amount" moans:

When describing the financia! entitlements or voting rights, as appllcable, of WaMu Cayman Preferred Securitios as compared to Fixed Rate Company Preferred Securities, a number of Fixed Rate Company Preferred Securities that have the same aggregate liquIdation preference as tho WaMu Cayman Preferred Securlties to which the reference is being made (e.g., 1,000 Fixed Rate Company Preferre~ Securities with an aggregate Hqurdation preference of $1,000,000 are a "like amount" for ten Series A~1 WaMu Cayman Preferred Securities· or 100 Series A~2 WaMu Cayman Preferred Securities, each having an aggr~gate [iq~jdation pmfo:en?e of $1,000,000); and

when descrlbfng the number of depositary shares for Fixed Rate WMI Preferred Stock with whlch WaMu -,o.J "C:' Preferred Securities will be exchanged upon a Conditional Exchange, a number of Ftxed Rate Depositary Shares, each representing a '111 OOOth interest in one share of Fixed Rate WMI Preforrod Slock, having a liquidation preforence equal to the !iquidatlon preference of the WaMu Cayman Preferred Securities that are being exchanged (e.g., 10,000 Frxed Rate DepOSitary Shares representing Fixed Rato WMI Preferred Stock with an aggregate liquidation preference of $10,000,000 arc a "like amount" for 100 Series A-1 WaMu Cayman Preferred Securitios or 1,000 Series A-2 WaMu Cayman Preferred SecurIties, each having an aggregate JlquidaUon preference of $10,000,000) ,

Tho offering of the WaMu Cayman Preferred Securltles and the related issuance of the Axed Rate Company Preferred Securitlos are referred to herein as the "Offering".

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The following diagram outlines the relationship among WM1, WMB, University Street, theCompany, the Asset Trust, WaMu Cayman, WaMu Delaware, purchasers of the WaMu CaymanPreferred Securities and purchasers of the Trust Securities:

Proceeds

Fixed-to-Reeling\ Rate Company

Preferred SecuritiesM

Fixed Rate CompanyPreferred Securitiesm

111111!1111-

University Street' )

Proceeds

Company

WaMuDelaware

WaMuCayman

ProceedsWaMu CaymanPreferred Securities

Proceeds TrustSecurities

Investors

Assets

109%Common

interest

Assets

ConditionalExchange

hl New American Capital, Inc., not shown here, is WMB's direct parent.

PI Marion holdings, Inc., not shown here, is University Street's direct parent.

(3) Transferred by WMB to WaMu Cayman.

(41 Transferred by WMB to WaMu Delaware.

ConditionalExchange

CONFIDENTIAL

3

Restricted For Use in Connection with Plan Confirmation Only VVMIPC 500002044.00019Restricted For

CONFIDENTIAL

The following diagram outlines the relationship among WMI, WMB. University Street, the Company, the Asset Trust, WaMu Cayman, WaMu Delaware, purchasers of the vyaMu Cayman Preferred Securities and purchasers of the Trust SecuritIes: .

C()nd~tfonat

Exchange

, , , , , , , , , , , , , , , , , , ,

Proceeds

Fixed ROlli! Company Pref~rred Securi!1esf.J)

I ______ -!!>-

University Streetp)

Assets

(1) New American Gapili:ll. Inc., not shown here, is WMB's direct parent

--~-----I , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Pro;;ends 1 , , , , , , , , , , , , , , , , , , , ,

WaMu : Delaware I

Investors

, , , , , , , ,

..... -----j

(2) Marion Holdings, Inc., not shown here, is UI1Jversity Street's direct parent.

is) Transferred by WMB to WaMu Cayman.

(4) Transferred by WMB to WaMu Delaware.

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Cor.diticnaf Exchange

WMIPC_500002044000019

CONFIDENTIAL

WaMu Cayman

Washington Mutual Preferred Funding (Cayman) I Ltd. is a Cayman Islands exemptedcompany limited by shares, incorporated on February 23, 2006 for the purposeS set forth belowin "WaMu Cayman." All of WaMu Cayman's ordinary shares (the "WaMu Cayman OrdinaryShares") will be held in trust for the benefit of a Cayman Islands charity. WaMu Cayman will notissue any securities other than the WaMu Cayman Ordinary Shares, and the WaMu CaymanPreferred Securities offered hereby. WaMu Cayman will be prohibited from issuing other equitysecurities or any debt securities. The Fixed Rate Company Preferred Securities will be the onlymaterial assets of WaMu Cayman. WaMu Cayman will be managed by a Board of Directorsconsisting of five directors, three of whom will be appointed by such Cayman Islands charitabletrust and two of whom will be persons who are also members of the Company's Board ofManagers. Of the two WaMu Cayman directors who are also members of the Company's Boardof Managers, one will be the same individual who is the Company's Independent Manager.

Subject to the limitations and assumptions described under "Certain Tax Considerations —United States Federal Income Tax Consequences," for United States Federal income taxpurposes, WaMu Cayman intends to be treated as a corporation, and for the holders of theWaMu Cayman Preferred Securities to be treated as holders of stock in such corporation.

The Company

Washington Mutual Preferred Funding LLC is a Delaware limited liability company formed onFebruary 3, 2006 for the purpose of (i) issuing the Fixed Rate Company Preferred Securities toWaMu Cayman, the Fixed-to-Floating Rate Company Preferred Securities to WaMu Delaware, thecommon securities of the Company (the "Company Common Securities") to University Street,Inc., an indirect subsidiary of WMB ("University Street"), and additional Parity Equity Securitiesor Junior Equity Securities subject to certain limitations described in this offering circular(ii) acquiring and holding Eligible Investments and (iii) performing functions necessary orincidental thereto.

The Fixed-to-Floating Rate Company Preferred Securities rank pail passu with the FixedRate Company Preferred Securities as to dividends and upon liquidation of the Company. Theterms of the Fixed-to-Floating Rate Company Preferred Securities are substantially identical tothe terms of the Fixed Rate Company Preferred Securities other than with respect to the rateapplicable to dividends thereon. The Fixed-to-Floating Rate Company Preferred Securities will, if,when and as declared by the Company's Board of Managers, pay dividends at an annual rate of6.534% until the Dividend Payment Date on March 15, 2011 and an annual rate equal to three-month LIBOR plus 1.4825% for the Dividend Period starting on such Dividend Payment Date andeach Dividend Period thereafter.

University Street will own all of the Company Common Securities. The Eligible Investmentsowned by the Company from time to time will generate net income for payment by the Companyto WaMu Cayman as dividends on the Fixed Rate Company Preferred Securities (andconsequently for payment as dividends by WaMu Cayman to holders of the WaMu CaymanPreferred Securities), to WaMu Delaware as dividends on the Fixed-to-Floating Rate CompanyPreferred Securities (and consequently for pass through by WaMu Delaware to the holders ofthe Trust Securities) and to University Street as dividends on the Company Common Securities.

Subject to the limitations and assumptions described under "Certain Tax Considerations —United States Federal Income Tax Consequences," the Company intends to be treated as apartnership (other than a publicly traded partnership taxable as a corporation) for United StatesFederal income tax purposes and will receive the opinion of Mayer, Brown, Rowe & Maw LLP tothe effect that, for United States Federal Income tax purposes, the Company will not be treatedas an association taxable as a corporation or as a publicly traded partnership taxable as acorporation.

Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00020R",~lriirlc.rl For

WaMu Cayman

Washington Mutual Preferred Funding (Cayman) I Ud, is a Cayman exempted company IJmited by shares, Incorporated on February 23, 2006 for the set forth be10w in "WaMu Cayman." All of WaMu Cayman's ordinary shares (the "WaMu Cayman Ordinary Shares") wi![ be hel9 in trust for the benefit of a Cayman Islands charity. WaMu Cayman will not issue any securities other than the WaMu Cayman Ordinary Shares, and the WaMu Cayman Preferred SecurHlcs offered hereby. WaMu Cayman will be prohibited from issuing other equity securities or any debt securlties. The Fixed Rate Company Preferred Securitres wil! be the only material assets of WaMu Cayman. WaMu Cayman wir! be managed by a Board of Directors consisting of five directors, three of whom wW be appointod by such Cayman !slands charitable trust and two of whom will be persons who are also members of the Company's Board of Managers. Of the two WaMu Cayman directors who are also members of the Company's Board of Managers, one wlll be the same individual wtJo is the Company's Independont Managor.

Sublect to the limitations and assumptions described under "Certain Tax Considerations -United States Federa! Income Tax Consequences," for United States Federal income tax purposos, WaMu Cayman intends to be treated as a corporation, and for the holders of the WaMu Cayman Preferred Securities to be treated as holders of stock in such corporatIon.

The COlrnD,mv

Washington Mutual Preferred Funding LlC is a Delaware limited !lability company formod on February 3, 2006 for the purpose of (i) Issuing the Fixed Rate Company Preferred Securities to WaMu Cayman, the Fixed-to-Floating Rate Company Preferred Securities to WaMu Delaware, the common securities of the Company (the "Company Common Securities") to University Street, Inc., an indIrect subsidiary of WMB ("University Street"). and additional Parity Equity Securities or Junior Equity Securities subject to cenair! limitations doscribed in this offering circular (ii) acquiring and holding Eligible Investments and (1il) porforming functions necessary or incidental thereto.

The Fixed-to-Floating Rate Company Preferred Securitios rank pari passu wIth the Fixed Rate Company Preferred Securities as to dividends and upon liquidation of the Company_ The terms of tho Frxed-to-Floating Rate Company Preferred Securities arc substantially identical to the terms of the Flxed Rate Company Preferred Securities other than with respect to the rate appllcable to dividends'thereon. The Fixed-to-F!oating Rate Company Preferred Securlflos will, If, when and as declared by the Company's Board of Managers, pay dividends at an annual rate of 6,534"/0 until the D!vidend Payment Date on March 15, 2011 and an annual rate equal to threemonth LlBDH plus 1.4825% for the Dividend Period starting ,on such Dividend Payment Date and oach Dividend Period Ulereafter.

University Street will own aU of the Company Commoll,Securities. The Eligible Investments owned by the Company from time to time wiH generate not income for payment by tho Company to WaMu Cayman as divldends on the Fixed Rate Company Preferred Securities (and consequently for payment as dividends by WaMu Cayman to holders of the WaMu Cayman Preferred Securities) , to WaMu Delaware as dividends on the Fixed-to-Floating Rate Company Preferred Securities (and consequently for pass through by WaMu Delaware to the holders of the Trust Securities) and to University Stroet as dividends on the Company Common Securities,

SubJoct to the limitations and assumptions described under "Certain Tax Cons!derationsUnited States Federa! Income Tax Consequences:' tho Company intends to be treated as a partnership (uHler than a publicly traded partnership taxable as a corporation) for United States Federal Income lax purposes and will receive the opinion of Mayer, Brown, Rowe & Maw LLP to the effect that, for United States Federal income tax purposes, the Company wlll not be treated as an associatiun taxable as a corporation or as a publicly traded partners hlp taxable as a corporation,

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in Connection with Plan Confirmation Only WM I PC _500002044,00020

CONFIDENTIAL

The Company will be managed by a Board of Managers. The Company's Board ofManagers will have three members, one of whom is not, and has not been during the precedingfive years, an officer or employee of WMI or any affiliate of WMI, other than a firfancingsubsidiary (the "Independent Manager").

Initial Conveyances

In connection with the Offering, WMB will convey a portfolio of first lien, closed-end, fixedrate home equity loans ("HELs") to the Company in exchange for 100% of the CompanyPreferred Securities. Concurrently with such transfer by WMB, University Street will convey aportfolio of HELs to the Company in exchange for 100% of the Company Common Securities.The portfolios conveyed by WMB and University Street to the Company will consist ofapproximately $5,389,459,150 of HELs in the aggregate. The Company will convey 100% of theHELs that it owns to the Asset Trust in exchange for the Class A Trust Certificate of the AssetTrust. WMB will then sell the Fixed Rate Company Preferred Securities and the Fixed-to-FloatingRate Company Preferred Securities for cash to WaMu Cayman and WaMu Delaware,respectively.

University Street

University Street, Inc. is a Washington corporation. It has elected to be treated as a realestate investment trust for United States Federal income tax purposes. University Street will hold100% of the Company Common Securities which represent 100% of the voting rights in theCompany (subject to the limited rights of holders of the Company Preferred Securities describedherein).

The Asset Trust

Washington Mutual Home Equity Trust I is a Delaware statutory trust formed pursuant to atrust agreement, to be entered into on or before the closing date, between the Company, asdepositor, and Deutsche Bank Trust Company Delaware, as Delaware trustee (the "DelawareTrustee"). The Pooling and Servicing Agreement among the Company, as depositor, WMB, asServicer, Deutsche Bank Trust Company Delaware, as Delaware Trustee, and Deutsche BankNational Trust Company, as Trustee (the "Pooling and Servicing Agreement"), will restate thetrust agreement and will be the governing instrument of the Asset Trust. The Asset Trust willmake an election to be treated as a real estate mortgage investment conduit ("REMIC") forUnited States Federal income tax purposes.

The initial assets of the Asset Trust will consist of the portfolio of HELs to be conveyed bythe Company to the Asset Trust in connection with the Offering. The HELs were originated byWMB primarily through its retail branches between September 2001 and September 2005. As ofJanuary 31, 2006, the HELs to be transferred into the Asset Trust had an aggregate unpaidprincipal balance of approximately $5,389,459,150.

WMI

With a history dating back to 1889, Washington Mutual, Inc., a Washington corporation, is aretailer of financial services to consumers and small businesses. Based on its consolidatedassets at September 30, 2005, WMI was the largest thrift holding company in the United Statesand the seventh largest among all U.S.-based bank and thrift holding companies. As ofSeptember 30, 2005, WMI, together with its subsidiaries, had total assets of approximately$333.6 billion, total liabilities of approximately $311.0 billion and total stockholders' equity ofapproximately $22.6 billion. As of September 30, 2005, WMI and its subsidiaries also had totaldeposits of approximately $190.4 billion. WMI's common stock is listed on the New York Stock

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Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002044.00621Restricted

The Company wil! be managed by a Board of Managers. The Company's Board of Managers will have three members, one of whom is not, and has not been during the preceding five years, an officer or employee of WMI or any afflllate of WMI, other than a fidanclng subsidiary (the "Independent Manager").

Initial Conveyances

In connection with the Offering, WMB will convey a portfolio of first lien, closed-end, fixed rate hom'e equity loans ("HELs") to the Company in exchange for 100"/0 of the Company Preferred Securities. Concurrently with such transfer by WMB, University Street wH! convey a portfollo of HELs to U''1B Company In exchange for 1 00% of the Company Common Securrties. The portfolios conveyed by WMB and University Street to the Company will consist of approximately $5,389,459,150 01 HELs in the aggregate. The Company will convey 100% of the HELs that it owns to the Asset Trust in exchange for the Class A Trust Certificate 01 the Asset Trust WMB will then sell the Fixed Rate Company Preferred SecuritIes and the Fixed-to-Floating Rate Company Preferred Securities for cash to WaMu Cayman and WaMu Delaware, respectively.

University Street

UniversIty Street, Inc. IS a Washington corporation. It has elected to be treated as a real estate investment trust for United States Federal income tax purposes. University Street will hold 1000;,;, of the Company Common Securities whIch represent 100"/0 of the voting rights in the Company (subject to the limited rights of tl0iders of the Company Preferred Securities descrIbed herein).

The Asset Trust

Washington Mutual Home Equlty Trust I is a Delaware statutory trust formed pursuant to a trust agreement, to be entered into on or before the closing date, betvlJeen the Company, as depositor, and Deutsche Bank Trust Company Deiaware, as Delaware trustee (tile "Delaware Trustee"), The Pooling and Servicing Agreement among the Company, as depositor, WMB, as Servlcer, Deutsche Bank Trust Company Delaware, as Delaware Trustee, and Deutsche Bank National Trust Company, as Trustee (the "Pooling and Servicing Agreement"), wm restate the trust agreement and will be the governing instrument of the Asset Trust. The Asset Trust win make an election to be treated as a real estate mortgage investment conduit ("REM1C") for United States Federal [ncome tax purposes.

The Initial assets of the Asset Trust will consist of the portfolio of HEls to be conveyed by the Company to the Asset Trust in connection wah the Offering. The HELs were originated by WMB primarHy through its retal! branches between September 2001 and 2005. As of January 31,2006, the HELs to be transferred into the Asset Trust had an aggregate unpaid principal balance of approximately $5,389,459,150.

WMI

With a history dating back to 1889, Washington Mutual, Inc" a WashIngton corporat!on, is a retailer of financiai services to consumers and small businesses. Based on its consolidated assets at September 30, 2005, WMI was the largest thrift holding company in the United States and the seventh largest among al1 U.s.-based bank and thrift holding companIes. As of September 30, 2005, WMI, together wlth its subsidiarIes, had totai assets of approximately 5333.6 bHHon, totalliabilitles of approximately $311.0 billion and total stOCkholders' equity of approxlmatoly $22.6 billion, As of Septernber 30, 2005, WMI and its subsidiaries also had total deposits of approximately $190.4 billion. WMj's common stock is listed on the New York Stock

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in Connection with Plan Confirmation Only WMIPC_500002044,00021

CONFIDENTIAL

Exchange under the symbol "WM". The principal business offices of WM1 are located at1201 Third Avenue, Seattle, Washington 98101 and its telephone number is 206-461-2000.

WMB

Washington Mutual Bank (formerly known as Washington Mutual Bank, FA) is a federallychartered savings association, chartered and operating under the United States Home Owners'Loan Act of 1933, as amended. WMB engages in mortgage banking, consumer banking andsmall business banking. WMB, as a federally chartered association, has the authority to makevarious types of loans, including loans secured by homes and commercial real estate, securedand unsecured consumer loans, and secured and unsecured commercial loans. As a federalsavings association, WMB is subject to regulation and examination by the OTS, its primaryregulator. WMB is an indirect wholly-owned subsidiary of WMI.

Prior to 2004, WMB had two sister depository institutions which were both owned directlyby WMI. WMB has since acquired both of these sister institutions. One of these institutions,Washington Mutual Bank fsb, a federal savings bank, became a wholly-owned subsidiary ofWMB on February 1, 2004. The other institution, Washington Mutual Bank, a savings bankchartered under the laws of the state of Washington, converted into a federally chartered savingsbank and then was merged into WMB on January 1, 2005.


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Restricted

Exchange under the symbol "WM". The principal business offices of WMI are located at 1201 Third Avenue, Seattle, Washington 98101 and its telephone number is 206-461-2000.

WMB

Washington Mutua! Bank (formerly known as Washington Mutua! Bank, FA) is a federally chartered savings association, chartered and under tile United States Home Owners' Loan Act of 1933, as amended. WMB engages in mortgage banking, consumer banking and sma!! business banking. WMB, as a federally chartered association, has the authority to make various types of loans, including loans secured by homes and commercial real estate, secured and unsecured consumer loans, and secured and unsecured commercial loans. As a federal savings association, WMB is subject to regulation and examination by the OTS, its primary regulator. WMB is an indIrect wholly-owned subsidiary of WMI.

Prior to 2004, WMB had tv/D sister depository institutions which were both owned directly by WMI. WMB has since acquired both of these sister instftutions. One of these institutions, Washington Mutual Bank fso, a federal savings bank, became a who!!y~owned subsidiary of WMB on February 1, 2004. The other institution, Washington Mutual Bank, .a savings bank chartered under the laws of the state of Washington, converted into a federally chartered savings bank and then was merged into WMB on January 1,2005.

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CONFIDENTIAL

Company Preferred Securities, provided that (i) aftergiving effect to such issuance, the pro forma net bookvalue of the Company's assets (after giving effect to theacquisition of any New Assets in connection with theissuance of such Parity Equity Securities) will equal orexceed 1.5 times the sum of the aggregate liquidationpreference of the preferred securities of the Company thenoutstanding and any such Parity Equity Securities that theCompany proposes to issue, (ii) after giving effect to suchissuance, the Company's pro forma funds from continuingoperations, or "FFO", for the four fiscal quarters beginningwith the fiscal quarter in which such Parity Equity Securi-ties are proposed to be issued (calculated (A) assumingthat such proposed Parity Equity Securities are issued andthat, if any Parity Equity Securities (including the ParityEquity Securities that the Company proposes to issue)bear dividends based on a floating rate, the applicabledividend rate will not change during such four fiscalquarters from the rate in effect on the applicable date ofdetermination and (B) as adjusted to reflect any NewAssets) equals or exceeds 150% of the amount that wouldbe required to pay full annual dividends on all preferredsecurities of the Company then outstanding and any suchParity Equity Securities that the Company proposes toissue and (iii) the Company is not otherwise in breach ofany of its covenants set forth in the LLC Agreement. See"Description of the Fixed Rate Company Preferred Securi-ties — Ranking,"

in the Exchange Agreement, WMI will covenant in favor ofthe holders of the WaMu Cayman Preferred Securities andthe Trust Securities that, if full dividends on (i) theCompany Preferred Securities, (ii) the WaMu CaymanPreferred Securities or (iii) the Trust Securities for anyDividend Period are not paid, then WMI will not declare orpay dividends with respect to, or redeem, purchase oracquire, any of its equity capital securities during the nextsucceeding Dividend Period, except dividends in connec-tion with a shareholders' rights plan, if any, or dividends inconnection with, benefits plans.

Conditional Exchange If the OTS so directs following the occurrence of anExchange Event, each WaMu Cayman Preferred Securitywill be automatically exchanged for a like amount of FixedRate Depositary Shares representing 1/1000th of a shareof WMI's Series J Perpetual Non-cumulative Fixed RatePreferred Stock (the "Fixed Rate Depositary Shares").

"Exchange Event" means (i) WMB becoming "undercapi-talized" under the OTS' "prompt corrective action" regula-tions, (ii) WMB being placed into conservatorship orreceivership or (iii) the ()TS, in its sole discretion, directingsuch exchange in anticipation of WMB becoming "under-capitalized" in the near term or taking supervisory action

Restricted For Use in Connection with Plan Confirmation Only WMI PC 500002044.00027

11

Conditional Exchange ...... " ..

CONFIDENTIAL

Company Preferred Securities, provided that (i) after giving effect to such issuance, the pro forma net book value of the Company's assets (after givin:g effect to the acquisitIon of any New Assets in connection with the issuance of such Parity Equity Securities) wm equal or exceed 1.5 times the sum of the aggregate liqu[dation preference of preferred securities of the Company then outstanding and any such Parity Equity Securities that the Company proposes to issue, (II) after giving effect to such issuance, the Company's pro forma funds from continuing operations, Dr "FFO", for the four fiscal quarters beginning wlth the fiscal quarter in which such Parity Equity Securities are proposed to be issued (calculated (A) assuming that such proposed Parity Equlty Securities are issued and that, if any Parity Equity Securities (including the Parity Equity Securitles that the Company proposes to issue) bear dividends based on a floating rate, the applicable divjdend rate will not change during such four fiscal quarters from the rate in effect on the applicable date of determination and (B) as adjusted to reflect any New Assets) equals or exceeds 150% of the amount that would be required to pay full annual dividends on all preferred securities of the Company then outstanding and any such Parity Equity Securities that the Company proposes to issue and (Iii) the Company is not otherwise in breach of any of its covenants set forth in the LLC AgreemenL See "Description of the Fixed Rate Company Preferred Securities - Ranking,"

In the Exchange Agreement, WMI wi!! covenant rn favor of the holders of the WaMu Cayman Preferred Securities and the Trust Secur!tles that, if full dividends on (I) the Company Preferred Securities, (Ii) the WaMu Cayman Preferred Securitles or (iii) the Trust Securitfes for any Dividend Period are- not pajd, then WM! wlll not declare or pay dividends with respect to, or redeem, purchase or acquire, any of its equity capita! securities during the next succeeding Dividend Period, except dividends In connectJor). wi~h a shareholders' rights plan, jf any, or dividends in connection with, benefits plans.

If the OTS so directs following the occurrence of an Exchango Event, each WaMu Cayman Preferred Security will be automatically exchanged for a like amount of Fixed Rate DepositalY Shares representtng 1/1 OOOth of a share of WMl's Series J Perpetual Non~Gumu!atjve Fixed Rate Preferred Stock (the "Fixed Rate Depositary Shares").

"Exchange Event" means (i) WMB becoming "undercapitalized" under the OTS' "prompt corrective action" regulations, (ii) WMB being placed into conservatorship or receivership or (iii) the OTS, in Its sale discretion, directing SUGh exchange in anticipation of WMB becoming "undercapitalized" in the near term or taking supervIsory action

Restricted For Use in Connection with Plan Confirmation

CONFIDENTIAL

that limits the payment of dividends, as applicable, byWMB, and in connection therewith, directs such exchange.

The Fixed Rate WM1 Preferred Stock will'have substantiallyequivalent terms as to dividends, redemption and liquida-tion preference as the Fixed Rate Company PreferredSecurities, except that the Fixed Rate WMI PreferredStock: (i) will not have the benefit of the covenantsdescribed under "Description of the Fixed Rate CompanyPreferred Securities Voting Rights and Covenants;"(ii) will not be listed on any securities exchange orautomated dealer quotation system; (iii) will be redeem-able prior to the Dividend Payment Date occurring onMarch 15, 2011 only upon the occurrence of a RegulatoryCapital Event as described herein); (iv) AdditionalAmounts will not be payable with respect to the Fixed RateWMI Preferred Stock; and (v) if WMI fails to pay, ordeclare and set aside for payment, kill dividends on theFixed Rate WMI Preferred Stock for six Dividend Periods,the authorized number of WMI's directors will increase bytwo, and the holders of Fixed Rate WMI Preferred Stock,voting together with the holders of any other equity capitalsecurities of WMI having similar voting rights, including theFixed-to-Floating Rate WM1 Preferred Stock, will have theright to elect two directors in addition to the directors thenin office at the next annual meeting of shareholders. TheFixed Rate WM1 Preferred Stock will be subject to theReplacement Capital Covenant described under "— Re-demption/Replacement Capital Covenant" above.

WMI will covenant in the Exchange Agreement in favor ofthe holders of the WaMu Cayman Preferred Securities thatit will not issue any preferred stock that would rank seniorto the Fixed Rate WMI Preferred Stock upon its issuance.Each share of Fixed Rate WM1 Preferred Stock will, uponissuance, rank at least pad passu with the most seniorpreferred stock of WMI, if any, then outstanding.

Voting Rights and CertainCovenants Except as otherwise set forth below, the holders of the

Fixed Rate Company Preferred Securities will not havevoting rights.

However, the LLC Agreement will provide that, except withthe consent or affirmative vote of the holders of at leasttwo-thirds of the Fixed Rate Company Preferred Securitiesand the Fixed-to-Floating Rate Company Preferred Securi-ties, voting together as a single class, the Company will not:

• effect a consolidation, merger or share exchange with orinto another entity other than an entity controlled by, orunder common control with, WMI;

• issue any securities of the Company ranking senior tothe Company Preferred Securities in respect of pay-


12

Restricted For

Voting Rights and Certain Covenants ... . .. , ........ .

that limits the payment of dividends, as applicabte, by WMB, and in connection therewith, directs such exchange.

The Fixed Rate WM! Preferred Stock wilr have substantlatly equivafent terms as to dividends, redemption and lIquidation preference as the Fixed Rate Company Preferred Securities, except that the Fixed Rate WMI Preferred Stock: (l) will not have the benefit of the covenants described under "Description of the Fixed Rate Company Preferred Securities - Voting Rights and Covenants;" (il) wm not be listed on any securities exchange or automated dealer quotation system; (iii) wi!! be redeemable prior to the Dividend Payment Date occurrlng on March 15,2011 only upon the occurrence of a Regulatory Capita! Event (as described herein); (iv) Additional Amounts will not be payable with respect to the Fixed Rate WMI Preferrod Stock; and (v) If WMI fails to pay, or declare and set aside for payment, fuJi dividends on the Fixed Rate WMI Preferred Stock for six Dividend Periods, the authorjzed number of WMI's directors will increase by two, and the holders of Fixed Rate WMI Preferred Stock, voting together with the holders of any other equity capital securities of WMI having Similar voting rights, inclUding the Fixed-to-Floating Rate WMJ Preferred Stock, will have the right to elect two directors in addition to the directors then in office at the next annual meeting of shareholders. The Fixed Rate WMI Preferred Stock: will be subject to the Replacement Capital Covenant described under "- R8~ demption/Rep!acement CapitaJ Covenant" above,

WMI will covenant in the Exchange Agreement in favor of the holders of the WaMu Cayman Preferred Securities that it will not issue any preferred stock that would rank senior to the Fixed Rate WM t Preferred Stock upon its issuance. Each share of fixed Rate WMI Preferred Stock wHl, upon issuance, rank at least pari passu wlth tho most senior preferred stock of WMI, if any, then outstanding.

Except as othflrwise set forth below, the holders of the Fixed Rate Company Preferred SecurIties wHl not have voting rights.

However, the LLC Agreement will provide ttlat, except with the consent or affirmative vote of the holders of at least two-thirds of the Fixed Rate Company Preferred Securittes and the Fixed-to-Hoating Rate Company Preferred Securities, voting together as a single class, the Company wlil not

effect a consolidation, merger or share exchange with or into another entity other tban an entity controlled by, or under common control with, WMI;

issue any securitios of the Company ranking senior to the Company Preferred Securities in respect of pay-

12

in Connection with Plan Confirmation Only WMI PC _500002044,00028

CONFIDENTIAL

Washington

Mutual$1,250,000,000

Washington Mutual Preferred Funding Trust I

Fixed-

to-

Floating Rate Perpetual Non-cumulative Trust Securities

Automatically Exchangeable in Specified Circumstances into

Depositary Shares representing Preferred Stock of


The Fixed- to-

Floating Rate Perpetual Non-cumulative Trust Securities, liquidation preference $100,000 per security (the

" Trust Securities"),

of Washington Mutual Preferred Funding Trust

I, a Delaware statutory trust

(" WaMu Delaware"), offered

hereby represent undivided beneficial ownership interests in a like amount of

Fixed-

to

-

Floating Rate Perpetual Non-cumulative

Preferrecj Securities, liquidation preference $1,000 per security (the " Fixed- to-

Floating Rate Company Preferred Securities"), of

Washington Mutual Preferred Funding LLC, a Delaware limited liability company ( the

" Company"). WaMu Delaware will have no

assets other than the Fixed- to-

Floating Rate Company Preferred Securities. WaMu Delaware will pass through dividends paid and

redemption and liquidation payments made by

the Company on the Fixed-

to

-

Floating Rate Company Preferred Securities as

distributions and redemption and liquidation payments on the Trust Securities. The Company's initial material assets will consist

of

indirect interests in mortgages and mortgage- related assets originated by Washington Mutual Bank as

described herein.

Dividends on the Fixed-to-Floating Rate Company Preferred Securities will be payable

if, when and as

declared by

the

Company's Board

of Managers out

of

legally available funds,

on a non- cumulative basis

at an annual rate

of 6.534% until

March 15, 2011 and 3-

month USD UBOR plus 1.4825% thereafter on the liquidation preference per security, quarterly in arrears

on March 15, June 15, September 15 and December 15

of

each year, commencing on June 15, 2006, or

the next Business Day if

any such day is not a Business Day (each, a " Dividend Payment Date").

If

the

Office of

Thrift Supervision ( together with any successor regulator, the "OTS") so


an Exchange Event as

described herein, each Trust Security will be automatically exchanged

fo

r

depositary shares representing alike amount

of Washington Mutual, Inc.' s

(" WMI") Series I Perpetual Non-cumulative Fixed-

to

-

Floating Rate Preferred Stock.

The Fixed-

to

-

Floating Rate Company Preferred Securities will not be redeemable at

the option of

the Company prior to the

Dividend Payment Date in March 2011, except upon the occurrence of

a Tax Event, an Investment Company Act Event or

a

Regulatory Capital Event (each as described herein). Upon the occurrence of


a Regulatory Capital Event, the Company may redeem the Fixed- to-

Floating Rate Company Preferred Securities in whole but not

in part. On or

after the Dividend Payment Date in March 2011, the Company may redeem the Fixed- to-

Floating Rate Company


in

whole

or

in

part. Any redemption will

be subject

to

the prior approval

of

the OTS and will

be

at a

redemption price equal to the liquidation preference pe

r

Fixed- to-

Floating Rate Company Preferred Security, plus declared but

unpaid dividends, if any, plus a U.

S.

Treasury- based " make whole" amount if the redemption occurs prior to the Dividend

Payment Date in March 2011.

The Trust Securities will be issued only in book- entry form. Each individual purchaser or

group of

affiliated

purchasers that acquires Trust Securities

in

the initial offering must acquire

at

least three Trust Securities having

an

aggregate liquidation preference of

$300,000.

The Trust Securities will not

be listed

on any securities exchange

or automated dealer quotation system.

The securities offered hereby are not insured or

guaranteed by

the U.

S.

Federal Deposit Insurance Corporation.

See " Risk Factors" beginning

on page 17

fo

r a description of

the risk factors you should consider before you invest

inthe securities offered hereby.

Offering price: $100,000.00 per Trust Security

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.

S.

SECURITIES ACTOF 1933, AS AMENDED (THE " SECURfTlES ACT") AND ARE BEING OFFERED AND SOLD ONLY T

O PERSONS THAT ARE BOTH" QUALIFIED INSTITUTIONAL BUYERS" (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND "QUALIFIED

PURCHASERS" (WITHIN THE MEANING OF SECTION 2(

a)(

51) OF THE U.

S.

INVESTMENT COMPANY ACT OF

1940, ASAMENDED (THE " INVESTMENT COMPANY ACT" » IN RELIANCE ON AN EXEMPTION FROM REGISTRATION PURSUANT TO RULE

144A. PROSPECTIVE PURCHASERS OF TRUST SECURITIES ARE HEREBY NOTIFIED THAT THE SELLER OF THE TRUST

SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED

BY RULE 144A. THE SECURITIES ARE NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS DESCRIBED

UNDER " NOTICE TO INVESTORS."

The Initial Purchasers expect to deliver the Trust Securities through the

facilities of

The Depository Trust Company and

Euroclear Bank S.

A./ N.

V., as

operator of

the Euroclear System, and Clearstream Banking, societe anonyme, as

participants in

The Depository Trust Company, in each case, against payment in New York, New York on or

about March 7,

2006.

Goldman, Sachs & Co.Sale Global Coordinator,

Sale Structuring Coordinator and

Joint Bookrunner

Credit SuisseJoint Bookrunner


Morgan StanleyJomt Bookrunner

CONFIDENTIAL


This offering circular is confidential. You are authorized to use this offering circular solely

for

the purpose of

considering the purchase of

the securities described in the offering circular. WMI,

Washington Mutual Bank ("WMB"), University Street, Inc. ("University Street"), the Company,

WaMu Delaware, Washington Mutual Home Equity Trust I (the "Asset Trust"), Washington Mutual

Preferred Funding (Cayman) I Ltd. ("WaMu Cayman") and other sources identified herein have

provided the information contained in this offering circular. The Initial Purchasers named herein

make no representation or

warranty, express or

implied, as

to the accuracy or completeness of

such information, and nothing contained in this offering circular

is,

or

shall be relied upon as, a

promise or

representation by the Initial Purchasers. You may not reproduce or

distribute this

offering circular, in whole or

in part, and you may not disclose any of

the contents of

this offering

circular or

use any information herein

for

any purpose other than considering the purchase of

the

notes. You agree to the foregoing by

accepting delivery of


THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY UNITED

STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.

FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY ORDETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE.

The distribution of

this offering circular and the offering and sale of the securities offered

hereby in certain jurisdictions may be restricted by

law. WMI, WMB, University Street, the

Company, WaMu Delaware, the Asset Trust, WaMu Cayman and the Initial Purchasers require

persons in whose possession this offering circular comes to inform themselves about and to

observe any such restrictions. This offering circular does not constitute an

offer

of,

or

an

invitation to purchase, any of

the securities offered hereby in any jurisdiction in which such offer

or

invitation would be

unlawful.

Notwithstanding anything herein to the contrary, each investor (and each employee,

representative, or

agent of

any investor) may disclose to any and

all persons, without limitation

of

any kind, the tax treatment and tax structure of

the transactions contemplated herein and

all

materials of

any kind (including opinions or

other tax analyses) that are provided to the

investors relating to such tax treatment and tax structure. However, any information relating tothe United States Federal income tax treatment o

r

tax structure will remain confidential (and the

foregoing sentence will not apply) to the extent reasonably necessary to enable any person to

comply with applicable securities laws. For this purpose, " tax treatment" means United States

Federal or

state income tax treatment, and "tax structure" means any facts relevant to the

United States Federal or

state income tax treatment of

the transactions contemplated herein but

does not include information relating to the identity of

the issuer of

the securities, the issuer of

any assets underlying the securities, or

any of

their respective affiliates that are offering the

securities.

No person has been authorized to give any information or

to make any representations

other than those contained in this offering circular, and, if given or made, such information or

representations must not be relied upon as having been authorized by any of

WMI, WMB,

University Street, the Company, WaMu Delaware, WaMu Cayman or

the Asset Trust. Neither the

delivery of

this offering circular nor any sale hereunder will create, under any circumstances, any

implication that there has been no change in the affairs of

WMI, WMB, the Company, WaMuDelaware, University Street, o

r

the Asset Trust since the date hereof or

that the information

contained herein is correct as

of

any time subsequent to its date.

CONFIDENTIAL


NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A

LICENSE HAS BEEN FILED UNDER CHAPTER 421- B OF THE NEW HAMPSHIRE REVISED

STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS

EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE

CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY

DOCUMENT FILED UNDER RSA 421- B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER

ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A

SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN

ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN

APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, ORCAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY

REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

IN CONNECTION WITH THIS OFFERING, GOLDMAN, SACHS & CO. AND ITS AFFILIATES,

ON BEHALF OF THE INITIAL PURCHASERS, MAY OVER-ALLOT OR EFFECT TRANSACTIONS

WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY

AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED

PERIOD OF TIME AFTER THE ISSUE DATE. HOWEVER, THERE MAY BE NO OBLIGATION ON

GOLDMAN, SACHS & CO. TO DO THIS. SUCH STABILIZING, IF COMMENCED, MAY BE

DISCONTINUED AT ANY TIME, AND MUST BE BROUGHT TO AN END AFTER A LIMITED

PERIOD.

ii

CONFIDENTIAL


NOTICE TO INVESTORS

Because of

the following restrictions, purchasers are advised to consult legal counsel prior to

making any offer, purchase, resale, pledge or

other transfer of


Representations of

Purchasers

Each purchaser of

Trust Securities (including the registered holders and beneficial owners

of

the Trust Securities as

they exist from time to time, including as a result of

transfers, in each

case as

of

the time of purchase) will be deemed to have represented and agreed as follows:

( A)

the purchaser ( i) is a "qualified institutional buyer" within the meaning of

Rule 144A of

the

Securities Act, (

ii)

is aware that

the

sale of

the

Trust Securities to it is

being made in reliance on Rule 144A or

another exemption from the registration

requirements of

the Securities Act and (

iii) is acquiring such Trust Securities

for

its own

account or

the account of

one or

more qualified institutional buyers;

( B)

the purchaser ( i) is a "qualified purchaser" within the meaning of

Sec-

tion 2 ( a)

(51) of

the Investment Company Act and the rules and regulations thereunder,

(

ii)

is aware that WaMu Delaware will not be registered under the Investment Company Act

in reliance on the exemption set forth in Section 3 ( c)

( 7)

thereof and that the Trust

Securities have not been and will not be registered under the Securities Act and (

iii) is

acquiring such Trust Securities

for

its own account or

the account of

one or

more qualified

purchasers as

to which the purchaser exercises sole investment discretion, as the case may

be;

( C)

either ( i) the purchaser is not ( A)

an

"employee benefit plan" as

defined in

Section 3(

3)

of

the Employee Retirement Income Security Act of

1974, as amended

(" ERISA"), whether or

not subject to ERISA and including, without limitation, foreign or

governmental plans ( B)

a " plan" within the meaning of

Section 4975 of

the Internal

Revenue Code of

1986, as amended (the " Code"), or

( c)

any entity whose underlying

assets include "plan assets" of

any of

the foregoing by reason of

investment by

an

employee benefit plan or

other plan in such entity (each of

the foregoing, a " Benefit Plan

Investor"), or

(

ii) the purchaser is an insurance company general account that represents,

warrants and covenants that, at

the time of

acquisition and throughout the period it holds

the securities, ( A)

it is eligible

for

and meets the requirements of

the Department of

Labor

Prohibited Transaction Class Exemption 95- 60, ( B)

less than 25% of

the assets of such

general account are ( or

represent) assets of a Benefit Plan Investor and ( C)

it is not a

person who has discretionary authority or

control with respect to the assets of WaMu

Delaware or

any person who provides investment advice

for

a fee (direct or

indirect) with

respect to such assets, or

any affiliate of

such a person and would not otherwise be

excluded under 29

C.

F.

R.

2510.3- 101 ( f) (

1);

( D)

the purchaser is not purchasing the Trust Securities with a view to the resale,

distribution or

other disposition thereof in violation of

the Securities Act;

( E)

neither the purchaser nor any account

for

which the purchaser is acquiring the

Trust Securities will hold such Trust Securities

for

the benefit of

any other person and the

purchaser and each such account will be the sole beneficial owners thereof

for

all purposes

and will not sell participation interests in the Trust Securities or

enter into any other

arrangement pursuant to which any other person will be entitled to an interest in the

distributions on

the

Trust Securities;

iii

CONFIDENTIAL


( F)

the certificates evidencing the Trust Securities will bear a legend to the following

effect:

THIS SECURITY IS ONE OF THE FIXED- TO-FLOATING RATE PERPETUAL NON-

CUMULATIVE TRUST SECURITIES (" TRUST SECURITIES") ISSUED BY WASHINGTON

MUTUAL PREFERRED FUNDING TRUST I ("WAMU DELAWARE"). THE ISSUER OF THIS

SECURITY HAS NOT BEEN REGISTERED AS

AN INVESTMENT COMPANY UNDER THE

U.

S.

INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE " INVESTMENT

COMPANY ACT"), AND THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE

U.

S.

SECURITIES ACT OF 1933, AS AMENDED (THE " SECURITIES ACT"), AND NEITHER

THIS SECURITY NOR ANY BENEFICIAL INTERESTS HEREIN MAY BE OFFERED, SOLD,

PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A PERSON WHO IS BOTH A

" QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A UNDERTHE SECURITIES ACT (

"QUALIFIED INSTITUTIONAL BUYER") AND A " QUALIFIED

PURCHASER" WITHIN THE MEANING OF SECTION 2(

a)

(51) OF THE INVESTMENT

COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER ("QUALIFIED

PURCHASER") ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A PERSONWHO IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER

(AN " ELIGIBLE PURCHASER") AND EACH SUCH PERSON AND ACCOUNT FOR WHICH

SUCH PERSON IS PURCHASING ( A)

IS NOT A BROKER- DEALER THAT OWNS AND

INVESTS ON A DISCRETIONARY BASIS LESS THAN US$ 25 MILLION IN SECURITIES OF

ISSUERS THAT ARE NOT ITS AFFILIATED PERSONS, ( B)

IS NOT A PLAN REFERRED

TO IN PARAGRAPH ( a)

( 1)

( i) ( D) OR ( a)

( 1)

( i) ( E)

OF RULE 144A, OR A TRUST FUNDREFERRED TO IN PARAGRAPH ( a

)

( 1)

( i) ( F)

OF RULE 144A THAT HOLDS THE ASSETS

OF SUCH A PLAN, IF INVESTMENT DECISIONS WITH RESPECT TO THE PLAN AREMADE BY THE BENEFICIARIES OF SUCH PLAN, ( C

)

WAS NOT FORMED FOR THE

PURPOSE OF INVESTING IN WAMU DELAWARE, ( D)

WILL HOLD AT LEAST $300,000

LIQUIDATION PREFERENCE OF TRUST SECURITIES ( i. e.,

AT LEAST THREE TRUST

SECURITIES) AND TRANSFER AT LEAST $100,000 LIQUIDATION PREFERENCE OF

TRUST SECURITIES ( i. e.,

AT LEAST ONE TRUST SECURITY) IN THE CASE OF EACH

INITIAL INVESTOR, AND WILL HOLD AND TRANSFER AT LEAST $100,000 LIQUIDATION

PREFERENCE OF TRUST SECURITIES ( i. e., AT LEAST ONE TRUST SECURITY) IN THE

CASE OF EACH SUBSEQUENT INVESTOR AND ( E)

UNDERSTANDS THAT WAMUDELAWARE MAY RECEIVE A LIST OF PARTICIPANTS HOLDING POSITIONS IN THIS

SECURITY FROM ONE OR MORE BOOK-ENTRY DEPOSITARIES. EACH PURCHASER OF

THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN WILL BE DEEMED TO

REPRESENT THAT IT AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET

FORTH HEREIN AND IN THE AMENDED AND RESTATED TRUST AGREEMENT OF WAMUDELAWARE (THE "TRUST AGREEMENT"), AND WILL NOT TRANSFER THIS SECURITY

OR ANY BENEFICIAL INTERESTS HEREIN EXCEPT TO AN ELIGIBLE PURCHASER WHOCAN MAKE THE SAME REPRESENTATIONS AND AGREEMENTS ON BEHALF OF ITSELF

AND EACH ACCOUNT FOR WHICH IT IS PURCHASING. ANY PURPORTED TRANSFER OF

THIS SECURITY OR ANY BENEFICIAL INTERESTS HEREIN THAT IS IN BREACH, AT THE

TIME MADE, OF ANY TRANSFER RESTRICTIONS SET FORTH HEREIN OR IN THE

TRUST AGREEMENT WILL BE VOID AB INITIO. IF AT ANY TIME WAMU DELAWARE

DETERMINES IN GOOD FAITH THAT A HOLDER OR BENEFICIAL OWNER OF

THIS

SECURITY OR BENEFICIAL INTERESTS HEREIN IS IN BREACH, AT THE TIME GIVEN, OF

ANY OF THE TRANSFER RESTRICTIONS SET FORTH HEREIN, WAMU DELAWARESHALL CONSIDER THE ACQUISITION OF THIS SECURITY OR SUCH BENEFICIAL

INTERESTS VOID, OF NO FORCE AND EFFECT AND WILL NOT, AT THE DISCRETION OF

WAMU DELAWARE, OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE

NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO WAMU DELAWARE,

ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT (THE

iv

CONFIDENTIAL


'' TRANSFER AGENT"), OR ANY OTHER INTERMEDIARY. IN ADDITION, WAMU DELA-

WARE OR THE TRANSFER AGENT MAY REQUIRE SUCH ACQUIRER OR BENEFICIAL

OWNER TO SELL THIS SECURITY OR SUCH BENEFICIAL INTERESTS TO AN ELIGIBLE

PURCHASER.

NO SECURITY MAY BE PURCHASED OR TRANSFERRED TO: ( I) AN " EMPLOYEE

BENEFIT PLAN" AS DEFINED IN SECTION 3(

3)

OF THE EMPLOYEE RETIREMENT

INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), WHETHER OR NOT

SUBJECT TO ERISA AND INCLUDING, WITHOUT LIMITATION, FOREIGN OR GOVERN-

MENTAL PLANS, (

II) A " PLAN" WITHIN THE MEANING OF SECTION 4975 OF THE

INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE " CODE"), OR (

III) ANY

ENTITY WHOSE UNDERLYING ASSETS INCLUDE " PLAN ASSETS" OF ANY OF THE


OTHER PLAN IN SUCH ENTITY (EACH OF THE FOREGOING, A " BENEFIT PLAN



AND THROUGHOUT THE PERIOD IT HOLDS THE SECURITIES, ( I)

IT IS ELIGIBLE FOR


TRANSACTION CLASS EXEMPTION 95- 60, (

II) LESS THAN 25% OF THE ASSETS OF

SUCH GENERAL ACCOUNT ARE (OR REPRESENT) ASSETS OF A BENEFIT PLAN

INVESTOR AND (

III)

IT IS NOT A PERSON WHO HAS DISCRETIONARY AUTHORITY ORCONTROL WITH RESPECT TO THE ASSETS OF WAMU DELAWARE OR ANY PERSONWHO PROVIDES INVESTMENT ADVICE FOR A FEE (DIRECT OR INDIRECT) WITH

RESPECT TO SUCH ASSETS, OR ANY AFFILIATE OF SUCH A PERSON AND WOULD

NOT OTHERWISE BE EXCLUDED UNDER 29

C.

F.

R.

2510.3- 101 ( F)

(

1).

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OFTHE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (

"DTC"), TO

WAMU DELAWARE OR THE TRANSFER AGENT, 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 INTERESTHEREIN.

( G)

the purchaser and each account

for

which it is purchasing:

( i) is not a broker- dealer that owns and invests on a discretionary basis less

than $ 25

million in securities of

unaffiliated issuers;

(

ii)

is not a participant- directed employee plan, such as

a 401 ( k)

plan, as

referred

to in paragraph ( a)

( 1)

( i) ( D)

or

( a)

( 1)

( i) ( E)

of

Rule 144A, or

a trust fund referred to

in paragraph ( a)

(1 ) ( i) ( F)

of

Rule 144A that holds the assets of

such a plan;

(

iii) was not formed

for

the purpose of

investing in WaMu Delaware;

(

iv)

will hold at


Trust Securities ( i. e.,

at

least three Trust Securities) and transfer at



at

least one Trust Security) in the case of

each initial investor,

and will hold and transfer at


Trust Securities

( i. e.,

at

least one Trust Security) in the case of

each subsequent investor;

( v)

will provide notice of

the transfer restrictions described in this " Notice to

Investors" to any subsequent transferees;

v

CONFIDENTIAL


(

vi) acknowledges that WaMu Delaware may receive a

list

of

participants holding

positions in the Trust Securities from one or more book- entry depositaries; and

(vii) may not transfer the Trust Securities or

beneficial interests therein except to

a transferee who can make the same representations and agreements as set forth in

this " Notice to Investors" and Amended and Restated Trust Agreement of WaMu

Delaware (the " Trust Agreement") on behalf of

itself and each account

for

which it is

purchasing.

The purchaser acknowledges that the Trust Securities are being offered only in a

transaction not involving any public offering within the meaning of

the Securities Act. The Trust

Securities have not been and will not be registered under the Securities Act and WaMu Delaware

has not been and will not be

registered under the Investment Company Act, and, if in the future

the purchaser decides to offer, resell, pledge or

otherwise transfer the Trust Securities, such

Trust Securities may be offered, resold, pledged or

otherwise transferred only in accordance with

the legend on such Trust Securities described above. The purchaser acknowledges that no

representation is made by WaMu Delaware, the Company or

the Initial Purchasers as

to the

availability of

any exemption under the Securities Act or

any state securities laws

for

resale of

the Trust Securities.

Forced Sale of

Securities

Any transfer of

Trust Securities in breach of

the transfer restrictions set forth in this "Notice

to Investors" and the Trust Agreement will be

of

no force and effect, will be void ab initio, and

will not operate to transfer any rights to the transferee, notwithstanding any instructions to the

contrary to WaMu Delaware,

its Transfer Agent or

any other intermediary.

The purchaser agrees that in the event that WaMu Delaware or

its Transfer Agent

determines in good faith that a holder or

beneficial owner of

the Trust Securities is in breach, at

the time given, of

any of

the representations or

agreements set forth above, WaMu Delaware

shall consider the acquisition of

the Trust Securities or

beneficial interests therein void, of

no

force and effect and will not, at

the discretion of WaMu Delaware, operate to transfer any rights

to the transferee notwithstanding any instructions to the contrary to WaMu Delaware, the

Transfer Agent or

any other intermediary. In addition, WaMu Delaware or

the Transfer Agent may

require such acquirer or

beneficial owner to transfer such Trust Securities or

beneficial interests

therein to a transferee acceptable to WaMu Delaware who is able to and who does make

all

of

the representations and agreements set forth in this " Notice to Investors". Pending such

transfer, such holder will be deemed not to be the holder of such Trust Securities

for

any

purpose, including but not limited to receipt of

dividend and redemption payments on such Trust

Securities or

distributions upon

the

liquidation of WaMu Delaware, and such holder

will

be

deemed to have no interest whatsoever in such Trust Securities except as

otherwise required to

redeem or

sell

its interest therein as

described in this paragraph.


In reliance on Section 3(

c)

( 7)

under the Investment Company Act ("Section 3(

c)

( 7)

"),

WaMu Delaware has not registered as

an investment company pursuant to the Investment

Company Act. To

rely on Section 3(

c)

(7), WaMu Delaware must have a " reasonable belief" that

all purchasers of

the Trust Securities (including the Initial Purchasers and subsequent

transferees) are qualified purchasers at

the time of

their purchase of

such securities. WaMuDelaware will establish a reasonable belief

for

purposes of

Section 3 ( c)

( 7)

based upon the

representations deemed made by

the purchasers of

the securities as

se

t

forth under

"- Representations of

Purchasers", the covenants and undertakings of WaMu Delaware

referred to below and the agreements of

the Initial Purchasers relating to the private placement

of the securities pursuant to Rule 144A referred to under "Plan of

Distribution."

vi

CONFIDENTIAL


Reminder Notices

Whenever WaMu Delaware sends an annual report or

other periodic report to holders of

the

Trust Securities, it will also send a reminder notice (each, a "Reminder Notice") to the holders of

the Trust Securities. Each Reminder Notice will state that ( i) each holder of

a Trust Security ( or

an interest in a Trust Security) must be able to make the representations set forth above in

paragraphs ( B)

and ( G)

(

iv) under "- Representations of Purchasers" (the " 3(

c)

( 7)

Representations"), (

ii) the Trust Securities ( or

interests in the Trust Securities) are transferable

only to purchasers deemed to have made the 3 ( c)

( 7)

Representations and to have satisfied the

other transfer restrictions applicable to the securities, (

Hi)

if any prospective transferee of

the

Trust Securities ( or

an interest in the Trust Securities) is determined not to be a qualified

purchaser, then WaMu Delaware will have the right (exercisable in its sole discretion) to refuse

to honor such transaction, and (

iv)

if any security holder ( or

any holder of

an interest in a

security) is determined not to be a qualified purchaser, then WaMu Delaware will have the right

(exercisable in its sole discretion) to treat the transfer to such purchaser as

null and void and

require such purchaser to sell

all

of

its securities (and

all

interests therein) to a transferee

designated by WaMu Delaware at

the then current market price therefor. WaMu Delaware will

send a copy of

each annual or

other periodic reports (and each Reminder Notice) to DTC with a

request that participating organizations in DTC (" DTe Participants") forward them to the security

holders or

holders of

an interest in Trust Securities.

DTC Actions with respect to the Trust Securities

WaMu Delaware will direct DTC to take the following steps in connection with the Trust

Securities:

• to include the " 3cT' marker and, in lieu of

the "GABS" marker or

otherwise, the " GRLS"

marker in the DTC 20-character security descriptor, and the 48-character additional

descriptor

for

the Trust Securities in order to indicate that sales are limited to Qualified

Purchasers;

• to cause ( i) each physical DTC delivery order ticket delivered by DTC to purchasers to

contain the 20-character security descriptors and (

ii) each DTC delivery order ticket

delivered by DTC to purchasers in electronic form to contain the " 3cT' and "GRLS"

indicators and the related user manual

for

participants, which will contain a description of

relevant restrictions;

• to send, on

or

prior to the closing date of

this Offering, an

" Important Notice" to all DTC

Participants in connection with the Offering of

the securities. WaMu Delaware may

instruct DTC from time to time (but not more frequently than every six months) to

reissue the " Important Notice";

• to include WaMu Delaware in DTC's " Reference Directory" of

Section 3(

c)

( 7)

offerings;

• to include in all

" confirms" of

trades of

the Trust Securities in DTC, CUSIP numbers with

a " fixed field" attached to the CUSIP number that has the " 3cT' and "GRLS" markers;

and

• to deliver to WaMu Delaware from time to time a

list

of

all DTC Participants holding an

interest in the securities.

vii

CONFIDENTIAL


Euroclear Actions with respect to the Trust Securities

WaMu Delaware will instruct Euroclear Bank S.

A./

N.

V., as

operator of

the Euroclear System

("Euroclear"), to take the following steps in connection with the Trust Securities:

• to reference "144A 13

( c)

(

7)"

as part of

the security name in the

Euroclear securities

database;

• in each daily securities balances report and daily transactions report to Euroclear

participants holding positions in the

Trust Securities, to include "144A 13

( c)

(

7)"

in the

securities namefor

the Trust Securities;

• periodically (and at

least annually) to send to the Euroclear participants holding positions

in the Trust Securities an electronic " Important Notice" outlining

the

restrictions

applicable to 3 ( c)

( 7)

securities;

• to deliver to WaMu Delaware from time to time, upon

its request, a list of

all Euroclear

participants holding an interest in the Trust Securities; and

• to include the 3 ( c)

( 7) marker in the name of

the Trust Securities in lists distributed by

Euroclear monthly to its participants showing

all securities accepted within the Euroclear

securities' database.

Clearstream Actions with respect to the Trust Securities

WaMu Delaware will instruct Clearstream Banking, societe anonyme ("Clearstream") to

take the following steps in connection with the Trust Securities:

• to reference "144A 13

( c)

(7)" as

part of

the security name in the Clearstream securities

database;

• in each daily portfolio report and daily settlement report to Clearstream participants

holding positions in the Trust Securities, to include " 144A/ 3(

c)

(7)" in the securities

name

for


• periodically (and at

least annually) to send to the Clearstream participants holding

positions in the Trust Securities an electronic " Important Notice" outlining the restrictions

applicable to 3 (c ) ( 7)

securities;

• to deliver to WaMu Delaware from time to time, upon

its request, a

list

of

all Clearstream

participants holding an interest in the Trust Securities; and

• to include the 3(

c)

( 7)

marker in the name of

the Trust Securities in the continuously

updated

list

made available by

Clearstream to its participants showing

all

securities

accepted within the Clearstream securities' database and to include the 3 ( c)

( 7)

marker

in the name of


Bloomberg Screens, etc.

WaMu Delaware will from time to time request

all third- party vendors to include on screens

maintained by such vendors appropriate legends regarding Rule 144A and Section 3 ( c)

( 7)

restrictions on the Trust Securities. Without limiting the foregoing, the Initial Purchasers will

request that Bloomberg, L.

P.

include the following on each Bloomberg screen containing

information about the securities as

applicable:

• the bottom of

the " Security Display" page describing the Trust Securities should state:

" Iss'd under 144A/ 3cT' and " GRLS";

viii

CONFIDENTIAL


•

the

" Security Display" page should have a flashing red indicator stating " Additional Note

Pg";

• such indicator

for

the Trust Securities should link to an

"Additional Security Information"

page, which should state that the Trust Securities " are being offered in reliance on

the

exception from registration under Rule 144A of

the Securities Act of

1933, as amended

(the "Securities Act") to persons that are ( i) " qualified institutional buyers" as defined in

Rule 144A under

the

Securities Act, and (

ii) "qualified purchasers" as defined under

Section 2 ( a)

(51) of

the Investment Company Act of

1940, as amended";

• the " Disclaimer" pages

for

the Trust Securities should state that the securities " have not

been and will not be

registered under the Securities Act of

1933, as

amended, and

Washington Mutual Preferred Funding Trust I has not been registered under the

Investment Company Act of 1940, as amended (the " Investment Company Act"), and the

Fixed-

to-

Floating Rate Perpetual Non- cumulative Trust S~ curities may not be offered or

sold absent an applicable exemption from registration requirements and any such offer

and sale of

these securities must be

in accordance with Section 3 ( c)

( 7)

of

the

Investment Company Act".

CUSIP

WaMu Delaware will cause each " CUSIP" obtained

for

a Global Security to have an

attached " fixed field" that contains " 3cT', "GRLS" and "144A" indicators.

Legends

WaMu Delaware

will

no

t

remove

the

legend

se

t

forth in "- Representations of

Purchasers"

at

any time.

ix

CONFIDENTIAL


SPECIAL NOTE REGARDING FORWARD- LOOKING STATEMENTS

This offering circular and the documents incorporated herein by

reference qontain certain

" forward- looking statements" within the meaning of the Private Securities Litigation Reform Act

of 1995 with respect to financial condition, results of

operations, and other matters. Statements

in this offering circular, including those incorporated herein by reference, that are

no

t

historical

facts are " forward- looking statements" for the purpose of

the safe harbor provided by

Section 21E of

the Exchange Act and Section 27A of

the Securities Act. Forward- looking

statements can be

identified by the fact that they do not relate strictly to historical or

current

facts. They often include words, such as

" expects", "anticipates", " intends", "plans",

"believes", " seeks", "estimates" or

words of

similar meaning, or

future or

conditional verbs,

such as

"will", " should", "could" or

" may".

Forward- looking statements provide WMl's or

WMB's ( as

applicable) expectations or

predictions of

future conditions, events or

results. They are not guarantees of

future

performance. By

their nature forward- looking statements are subject to risks and uncertainties.

These statements speak only as

of

the date they are made. WMI and WMB do

not undertake to

update forward- looking statements to reflect the impact of

circumstances or

events that arise

after the date the forward- looking statements were made. There are a number of

factors, many

of

which are beyond WMl's or

WMB's ( as

applicable) control, that could cause actual

conditions, events or

results to differ significantly from those described in the forward- looking

statements. The factors are generally described in WMI's or

WMB's ( as

applicable) most recent

Form 10-K and Form 10-Q under the caption "Risk Factors."

x

CONFIDENTIAL


WHERE YOU CAN FIND MORE INFORMATION

WMI files annual, quarterly and current reports, proxy statements and other information with

the Securities and Exchange Commission (the " SEe"). You may read and copy, any document

that WMI files with the SEC at

the SEC's public reference room in Washington, D.

C.

Please call

the SEC at

1-

800-SEC- 0330

for

further information on the public reference room. In addition,

WMI's SEC filings are available to the public at

the SEC's web site at

http:// www. sec. gov. You

can also inspect reports, proxy statements and other information about WMI at

the offices of

the

New York Stock Exchange, 20 Broad Street, New York, New York.

This offering circular incorporates by reference certain information that WMI files with the

SEC. The information incorporated by reference is considered to be a part of


and should be read with the same care. When WMI updates

the

information contained in

documents that have been incorporated by

reference by making future filings with the SEC, the

information incorporated by

reference in this offering circular is considered to be

automatically

updated and superseded. In other words, in the case of

a conflict or

inconsistency between

information with respect to WMI contained in this offering circular and information incorporated

by

reference into this offering circular, you should rely on the information contained in the

document that was filed later. WMI incorporates by

reference the documents listed below and

any documents it files with the SEC in the future under Sections 13

(

a),

13(

c),

14, or

15

( d)

of

the Exchange Act until the Offering is completed:

• Annual Report on Form 10-K

for

the year ended December 31, 2004;

• Quarterly Reports on Form 10-Q

for

the quarterly periods ended March 31, 2005,

June 30, 2005 and September 30, 2005; and

• Current Reports on Form 8-

K dated January 6,

2005, January 14, 2005, January 20, 2005,

January 24, 2005, February 18, 2005, February 22, 2005, March 2,

2005, March 22, 2005,

March 23, 2005, April 19, 2005, June 7, 2005, June 9, 2005, June 24, 2005, July 6, 2005,

July 20, 2005, July 25, 2005, September 8,

2005, September 23, 2005, September 26,

2005, October 4,2005, October

19

,

2005, October 27,2005, November 2,2005,

December 23, 2005, January 18, 2006, January 23, 2006, February 7,

2006 and

February 21, 2006. The press release text of

WMI dated January 18, 2006 and the

financial supplement of

WMI, included as

Exhibits 99.1 and 99.2 to WMI's Current Report

on Form 8-

K,

dated January 18, 2006, are incorporated by

reference in this offering

circular notwithstanding that such Current Report provides that the press release and

financial statements were " furnished" but not " filed" under the Exchange Act. Please

note that the information included in the January 18, 2006 Current Report on Form 8-

K

has not been audited by

Deloitte & Touche LLP, WMI's independent registered public

accountants.

WMB files annual and quarterly reports and other information with the OTS. You may read

and copy these reports and other non-confidential information that WMB files with the OTS at

the

OTS's offices at 1700 G Street, NW., Washington, D.

C.

20552. In addition, WMB's most recent

periodic filings with the OTS are available to the investors at WMI's website at

http:// www. wamu. com

fir and then clicking the "Fixed Income" button.

This offering circular incorporates by

reference certain information that WMB files with the

OTS. The information incorporated by

reference is considered to be a part of


and should be read with the same care. When WMB updates the information contained in

documents that have been incorporated by

reference by making future filings with the OTS, the

information incorporated by

reference in this offering circular is considered to be

automatically

updated and superseded. In other words, in the case of

a conflict or

inconsistency between

information with respect to WMB contained in this offering circular and information incorporated

by

reference into this offering circular, you should rely on the information contained in the

xi

CONFIDENTIAL


document that was filed later. WMB incorporates by

reference the documents listed below and

any documents it files with the OTS in the future under Sections 13

(

a),

13

( c ), 14, or

15( d)

of

the Exchange Act or

regulations of

the OTS to substantially similar effect until the Offering is

completed:

• Annual Report on Form 10-K

for

the year ended December 31, 2004; and

• Quarterly Reports on Form 10-Q

for

the quarterly periods ended March 31, 2005,

June 30, 2005 and September 30, 2005.

This offering circular also incorporates herein by

reference certain other information that

WMB submits to the OTS. WMB submits to the OTS quarterly reports regarding WMB's financial

condition and operations on OTS Form 1313 entitled ' Thrift Financial Report" (each, a "Thrift

Financial Report" and collectively, the "Thrift Financial Reports"). Each Thrift Financial Report

consists of

a Consolidated Statement of

Condition, Consolidated Statement of

Operations,

Consolidated Cash Flow Information, Consolidated Capital Requirements and other supporting

schedules as

of

the end of

the period to which the report relates. The Thrift Financial Reports

are prepared in accordance with regulatory instructions issued by

the OTS. These regulatory

instructions in most, but not all, cases follow generally accepted accounting principles in the

United States (" GAAP") or

the opinions and statements of

the Accounting Principles Board or

the Financial Accounting Standards Board. While the Thrift Financial Reports are supervisory and

regulatory documents, not previously accounting documents, and do not provide a complete

range of

financial disclosure about WMB, the reports nevertheless provide important information

concerning WMB's financial condition and operating results. In addition, WMB's Thrift Financial

Reports are not audited. The non-confidential portions of

Thrift Financial Reports filed by WMB

are on

file with, and are publicly available upon written request to the Office of

Thrift Supervision,

FOIA, 1700 G Street, NW., Washington, D.

C.

20552, Attention: Dissemination Branch and are

also available at

the U.

S.

Federal Deposit Insurance Corporation's (the " FDIC") web site at

http:// www. fdic. gov.

You may request a copy of

these filings, other than an exhibit to a filing unless that exhibit

is specifically incorporated by reference into that filing, at

no cost, by writing to or

telephoning

WMI

at:

1201 Third Avenue


(206) 461- 3187

INDEX OF TERMS

An

index of

terms used in this offering circular with specific meanings appears on the inside

back cover of


xii

CONFIDENTIAL



The following summary is qualified in its entirety by the detailed information appearing

elsewhere in this offering circular, in particular, the information under the headings "Description of

the

Trust Securities" and "Description of

the

Fixed-

to-

Floating Rate Company Preferred Securities, "

which describe the terms and conditions of


Introduction

The Fixed-

to-

Floating Rate Perpetual Non- cumulative Trust Securities, liquidation preference

$100,000 per security (the " Trust Securities"), are being issued by

Washington Mutual Preferred

Funding Trust I ("WaMu Delaware") in a financing transaction that raises capital for Washington

Mutual Bank ("WMB"). WMB is a subsidiary of

Washington Mutual, Inc. ("WMI"). WMI and

its

affiliates are referred to herein as the " WMI Group".

WaMu Delaware will invest the proceeds of

the Trust Securities in a like amount of

Fixed-

to-

Floating Rate Perpetual Non- cumulative Preferred Securities, liquidation preference

$1,000 per security (the "Fixed-

to-

Floating Rate Company Preferred Securities"), of

Washington

Mutual Preferred Funding LLC, a Delaware limited liability company (the "Company"). WaMuDelaware will have n

o assets other than the Fixed-to

-Floating Rate Company Preferred

Securities. Dividends paid and redemption and liquidation payments made by the Company on

the Fixed-

to-

Floating Rate Company Preferred Securities will pass through WaMu Delaware as

distributions and redemption and liquidation payments on the Trust Securities. The Company's

initial material assets will consist of

direct or

indirect interests in mortgages or

mortgage- related

assets originated by WMB as described under " The Company - Business of

the Company-

Assets of

the Company" and '' The Asset Trust."

The Trust Securities are being offered in reliance upon Rule 144A under the U.

S.

Securities

Act of

1933, as amended (the " Securities Act") only to persons who are " qualified institutional

buyers" within the meaning of

144A and "qualified purchasers" within the meaning of

Section 2(

a)

(51) of

the U.

S.

Investment Company Act of

1940, as amended the (the

" Investment Company Act"). Resales of

the Trust Securities are subject to restrictions as

described under "Notice to Investors".

By a separate offering circular dated the date of

this offering circular, Washington Mutual

Preferred Funding (Cayman) I Ltd., a Cayman Islands exempted company limited by shares

("WaMu Cayman"), is offering 3,023 of

its 7.25% Perpetual Non- cumulative Preferred Securities,

Series A-

1,

liquidation preference $100,000 per security and $302,300,000 in the aggregate (the

" Series A-

1 WaMu Cayman Preferred Securities"), and 44,770 of

its 7.25% Perpetual Non-

cumulative Preferred Securities, Series A-

2,

liquidation preference $10,000 per security and

$447,700,000 in the aggregate (the "Series A-

2 WaMu Cayman Preferred Securities" and,

together with the Series A-

1 WaMu Cayman Preferred Securities, the " WaMu Cayman Preferred

Securities"). WaMu Cayman will invest the proceeds of


in a like amount of

7.25% Perpetual Non-cumulative Preferred Securities, liquidation preference

$1,000 per security and $750,000,000 in the aggregate (" Fixed Rate Company Preferred

Securities" and, together with the Fixed- to-Floating Rate Company Preferred Securities, the

" Company Preferred Securities"). The terms of


are

substantially identical to the Fixed-

to-

Floating Rate Company Preferred Securities except

for

the

dividend rate. The Series A-

1 WaMu Cayman Preferred Securities are being offered and sold only

in the United States and only to U.

S.

persons and the Series A-

2 WaMu Cayman Preferred

Securities are being offered and sold only to non- U.

S.

persons in transactions outside the United

States. They are not being offered by

this offering circular. The Trust Securities are not

exchangeable

for

the WaMu Cayman Preferred Securities, or

vice versa.

1

CONFIDENTIAL


WMB has asked

for

confirmation from the Office of

Thrift Supervision (together with any

successor regulator, the " OTS") that the Company Preferred Securities constitute core capital of

WMB under the OTS' applicable regulatory capital regulations and, upon receipt . of such

confirmation, intends to treat the Company Preferred Securities accordingly.


an Exchange Event, each Trust Security

will be automatically exchanged

for

a like amount of

Fixed-

to-

Floating Rate Depositary Shares

each representing 111000th of

a share of

WMI's Series I Perpetual Non-cumulative Fixed-

to-

Floating Rate Preferred Stock, no par value and liquidation preference $1,000,000 per share (the

"Fixed-

to-

Floating Rate WMI Preferred Stock"), as

described below in this summary under

"- The Offering - Conditional Exchange." Upon a Conditional Exchange, the WaMu Cayman

Preferred Securities will also be automatically exchanged, but

for

depositary shares representing

a different series of

WMI's preferred stock, having substantially equivalent terms (with certain

exceptions) as

to dividends, liquidation preference and redemption preference as

the Fixed Rate

Company Preferred Securities.

This offering circular uses the term " like amount" in describing the number of

Fixed-

to-

Floating Rate Company Preferred Securities in which a holder of

Trust Securities has a beneficial

interest and in describing the number of

Fixed-

to-

Floating Rate Depositary Shares, each

representing a 1/

1 OOOthof interest in one share of

Fixed-

to-

Floating Rate WMI Preferred Stock

for

which the Trust Securities will be exchanged upon a Conditional Exchange. The term " like

amount" means:

• when describing the number of

Fixed-

to-

Floating Rate Company Preferred Securities in

which a holder of

Trust Securities has a beneficial interest, the number of

Fixed-

to-

Floating Rate Company Preferred Securities that has the same aggregate

liquidation preference as

the Trust Securities to which the reference is being made ( e.

g.,

1,000 Fixed-

to-

Floating Rate Company Preferred Securities with an aggregate liquidation

preference of $1,000,000 are a " like amount"

for

10 Trust Securities having an aggregate

liquidation preference of $1,000,000); and

• when describing the number of

Fixed-

to-


for

Fixed-

to-

Floating Rate WMI Preferred Stock with which Trust Securities will be exchanged upon a

Conditional Exchange, a number of

Fixed-

to-

Floating Rate Depositary Shares each

representing 111000th of

an

interest in one share of

Fixed-

to-

Floating Rate WMIPreferred Stock having a liquidation preference equal to the liquidation preference o

f

the

Trust Securities that are being exchanged ( e.

g., 1,000 Fixed-

to-

Floating Rate Depositary

Shares representing Fixed-

to-

Floating Rate WMI Preferred Stock with an aggregate


$1,000,000 are a " like amount"

for

10 Trust Securities having an


$1,000,000).

The offering of

the Trust Securities and the related issuance of

the Fixed-

to-

Floating Rate

Company Preferred Securities a.

re referred to herein as the " Offering".

2

CONFIDENTIAL


The following diagram outlines the relationship among WMI, WMB, University Street, the

Company, the Asset Trust, WaMu Delaware, WaMu Cayman, purchasers of

the Trust Securities

and purchasers of

the WaMu Cayman Preferred Securities:

University Street!')

Conditional

1 Exchange

1

1

111

1

I

IIII

I11

1

I

II1

I11

111

..

- 1

Proceeds

Assets

Fixed Rate Company

Preferred Securities!')

Assets

100%

Common

Interest

Proceeds

11

11

1

I

: Proceeds WaMu Cayman

: Preferred Securities

11

11

'--------

Conditional

Exchange

( 1) New American Capital, Inc., not shown here, is WMB's direct parent.

( 2)

Marion Holdings, Inc., no

t

shown here, is University Street's direct parent.

(3) Transferred by WMB to WaMu Cayman.

( 4)

Transferred by WMB to WaMu Delaware.

3

CONFIDENTIAL


WaMu Delaware

Washington Mutual Preferred Funding Trust I is a statutory trust created under

the

Delaware

Statutory Trust Act on February 23, 2006

for

the purposes set forth below in " WaMu Delaware."

The Fixed-

to-

Floating Rate Company Preferred Securities will be the only assets of WaMu

Delaware. Under the Trust Agreement, WaMu Delaware is prohibited from issuing any securities

other than the Trust Securities.

Subject to the limitations and assumptions described under " Certain U.

S.

Federal Income

Tax Considerations," WaMu Delaware

will

be

treated as

a grantor trust

for

United States Federal

income tax purposes, with the result that holders of

Trust Securities will be treated as

beneficial

owners of

Fixed-

to-

Floating Rate Company Preferred Securities

for

United States Federal income

tax purposes.

The Company

Washington Mutual Preferred Funding LLC is a Delaware limited liability company formed on

February 3,

2006

for

the purpose of

( i) issuing the Fixed-

to-

Floating Rate Company Preferred

Securities to WaMu Delaware, the Fixed Rate Company Preferred Securities to WaMu Cayman,

the common securities of

the Company (the " Company Common Securities") to University

Street, Inc., an

indirect subsidiary of WMB ("University Street"), and additional Parity Equity

Securities or

Junior Equity Securities subject to certain limitations described in this offering

circular, (

ii) acquiring and holding Eligible Investments and (

Hi) performing functions necessary

or

incidental thereto.

The Fixed Rate Company Preferred Securities rank pari passu with the Fixed-

to-

Floating

Rate Company Preferred Securities as


the Company. The

terms of

the

Fixed Rate Company Preferred Securities are substantially identical to the

terms of

the Fixed-

to-

Floating Rate Company Preferred Securities other than with respect to the rate

applicable to dividends or

distributions thereon. The Fixed Rate Company Preferred Securities

will,

if, when and as

declared by



an annual

rate of

7.25%.

University Street will own

all

of

the Company Common Securities. The Eligible Investments

owned by

the Company from time to time will generate net income

for

payment by

the Company

to WaMu Delaware as

dividends on

the

Fixed-

to-


(and consequently

for

pass through by WaMu Delaware as

distributions to the holders of

the

Trust Securities), to WaMu Cayman as

dividends on the Fixed Rate Company Preferred

Securities (and consequently

for

payment by WaMu Cayman as

dividends to holders of

the

WaMu Cayman Preferred Securities) and to University Street as

dividends on

the Company

Common Securities.

Subject to the

limitations and assumptions described under "Certain U.

S.

Federal Income

Tax Considerations," the Company intends to be treated as a partnership (other than a publicly

traded partnership taxable as

a corporation)

for


tax

purposes and

will receive the opinion of

Mayer, Brown, Rowe & Maw LLP to the effect that,

for

United States

Federal income tax purposes, the Company will not be treated as

an association taxable as a

corporation or

as

a publicly traded partnership taxable as

a corporation.

The Company will be managed by

a Board of

Managers. The Company's Board of

Managers will have three members, one of

whom is not, and has not been during the preceding

five years, an

officer or

employee of WMI or

any affiliate of

WMI, other than a financing

subsidiary (

the

" Independent Manager").

4

CONFIDENTIAL


Initial Conveyances

In connection with the Offering, WMB will convey a portfolio of

first lien, closed-end, fixed

rate home equity loans (" HELs") to the Company in exchange

for

100% of

the Company

Preferred Securities. Concurrently with such transfer by WMB, University Street will convey a

portfolio of

HELs to the Company in exchange

for

100% of


The portfolio conveyed by WMB and University Street to the Company will consist of

approximately $5,389,459,150 of HELs in the aggregate. The Company will convey 100% of the

HELs that it owns to the Asset Trust in exchange

for

the Class A Asset Trust Certificate of

the

Asset Trust. WMB will then sell

the

Fixed-

to-

Floating Rate Company Preferred Securities and

the


for

cash to WaMu Delaware and WaMu Cayman,

respectively.

University Street

University Street, Inc. is a Washington corporation. It has elected to be treated as a real

estate investment trust

for

United States Federal income tax purposes. University Street will hold

100% of

the Company Common Securities which represent 100% of

the voting rights in the

Company (subject to the limited rights of

holders of

the Company Preferred Securities described

herein).

The Asset Trust

Washington Mutual Home Equity Trust I is a Delaware statutory trust formed pursuant to a

trust agreement, to be entered into on

or

before the closing date, between the Company, as

depositor, and Deutsche Bank Trust Company Delaware, as Delaware trustee (the " PSA

Delaware Trustee"). The Pooling and Servicing Agreement among the Company, WMB, as

servicer, Deutsche Bank Trust Company Delaware, as Delaware trustee, and Deutsche Bank

National Trust Company, as Trustee (the " Pooling and Servicing Agreement"), will restate the

trust agreement and will be the governing instrument of

the Asset Trust. The Asset Trust will

make an election to be treated as a real estate mortgage investment conduit ("REMIC")

for




the portfolio of

HELs to be conveyed by

the Company to the Asset Trust in connection with the Offering. The HELs were originated by

WMB primarily through

its retail branches between September 2001 and September 2005. As

of

January 31, 2006, the HELs to be transferred into the Asset Trust had an aggregate unpaid



WMI

With a history dating back to 1889, Washington Mutual, Inc., a Washington corporation, is a

retailer of

financial services to consumers and small businesses. Based on

its consolidated

assets on September 30, 2005, WMI was the largest thrift holding company in the United States

and the seventh largest among

all

U.

S.-based bank and thrift holding companies. As

of

September 30, 2005, WMI, together with

its subsidiaries, had total assets of

approximately

$333.6 billion, total liabilities of

approximately $311.0 billion and total stockholders' equity of

approximately $22.6 billion. As

of September 30, 2005, WMI and

its subsidiaries also had total

deposits of

approximately $190.4 billion. WMI's common stock is listed on the New York Stock

Exchange under the symbol " WM". The principal business offices of WMI are located at

1201

Third Avenue, Seattle, Washington 98101 and

its telephone number is 206-461-2000.

WMB

Washington Mutual Bank (formerly known as Washington Mutual Bank, FA) is a federally

chartered savings association, chartered and operating under the United States Home Owners'

5

CONFIDENTIAL


Loan Act of

1933, as amended. WMB engages in mortgage banking, consumer banking and

small business banking. WMB, as

a federally chartered association, has the authority to make

various types of

loans, including loans secured by homes and commercial real estate, secured

and unsecured consumer loans, and secured and unsecured commercial loans. As a federal

savings association, WMB is subject to regulation and examination by

the OTS,

its primary

regulator. WMB is an

indirect wholly-owned subsidiary of

WMI.

Prior to 2004, WMB had two sister depositary institutions which were both owned directly

by

WMI. WMB has since acquired both of


these institutions,

Washington Mutual Bank fsb, a federal savings bank, became a wholly-owned subsidiary of

WMB on February 1,



the state of



2005.

6

CONFIDENTIAL


The Offering

Issuer As

to the Trust Securities, Washington Mutual Preferred

Funding Trust I, a Delaware statutory trust.

As

to the Fixed-

to-

Floating Rate Company Preferred Secu-

rities, Washington Mutual Preferred Funding LLC, a Dela-

ware limited liability company.

As

to the Fixed-

to-


(which will be represented by

the Fixed-

to-

Floating Rate

Depositary Shares)

for

which the Trust Securities will be

exchanged upon the occurrence of a Conditional Ex-

change, Washington Mutual, Inc., a Washington

corporation.

Offered Securities Fixed-

to-

Floating Rate Perpetual Non-cumulative Trust Se-

curities, liquidation preference $100,000 per security and

$1,250,000,000 in the aggregate, issued by WaMu

Delaware.

Dividends. . . . . . . . . . . . . . . . . . . . . . . . Dividends on the Fixed-

to-

Floating Rate Company Pre-

ferred Securities will be passed through by WaMu Dela-

ware as

distributions on the Trust Securities on each date

on which the Company pays to WaMu Delaware dividends

on

the Fixed-

to-

Floating Rate Company Preferred Securi-

ties, in an amount per Trust Security equal to the amount

of

dividends received by WaMu Delaware on a like amount

of

Fixed-

to-


(including Additional Amounts, if any).

For purposes of

this offering circular, we refer to distribu-

tions payable by

the Company on

its securities as

" divi-

dends". Dividends on the Fixed-

to-


Preferred Securities are payable as

follows:

Dividend Rate. Dividends on the Fixed-

to-

Floating Rate

Company Preferred Securities will accrue at

a rate per

annum equal to 6.534% until March 15, 2011 and 3-

month

USD L1BOR plus 1.4825%

for

the Dividend Period starting

in March, 2011 and each Dividend Period thereafter applied

to the liquidation preference of

$1,000 per Fixed-

to-

Floating Rate Company Preferred Security.

Dividend Payment Dates. If declared by

the Company's

Board of Managers, the Dividend Payment Dates

for

the

Fixed-

to-

Floating Rate Company Preferred Securities will

be ( i) March 15, June

15

,

September 15 and December 15

of

each year commencing on June 15, 2006 and through

and including March 15, 2011, and (

ii) each March 15,

June 15, September 15 and December 15 thereafter, or

in

each case the next Business Day if any such day is not a

Business Day.

Declaration of

Dividends, etc. Dividends on the Fixed-

to-

Floating Rate Company Preferred Securities when, as and

if declared by


Managers out of

7

CONFIDENTIAL


Redemption / Replacement Capital

Covenant .

legally available funds, will be payable at

the applicable

dividend rate applied to the liquidation preference per

Fixed-

to-

Floating Rate Company Preferred Security accru-

ing on a non-cumulative basis on each such security as

follows: ( i) from March 7, 2006 in the case of

the

Fixed-

to-


of-

fered hereby and (

ii)

if additional Fixed-

to-

Floating Rate

Company Preferred Securities are issued at

a future date,

from ( A)

March 7,

2006 if such date is before the Dividend

Payment Date in June 2006, ( B)

the date of

issue if such

date is a Dividend Payment Date and ( C)

either the

immediately preceding Dividend Payment Date or

the date

of

issuance as

determined by

the Company if the date of

issuance is other than a Dividend Payment Date and is

after the Dividend Payment Date in June 2006. Any such

dividends will be distributed to holders of

Fixed-

to-

Floating

Rate Company Preferred Securities in the manner de-

scribed under "Description of

the Fixed-

to-

Floating Rate

Company Preferred Securities - Dividends."

Non-cumulative Dividends. Dividends on the Fixed-

to-

Floating Rate Company Preferred Securities are not cumu-

lative. Accordingly, in the event dividends are not declared

on the Fixed-

to-


ties

for

payment on any Dividend Payment Date, then any

accrued dividends will cease to accrue and be payable. If


Managers has not declared a

dividend before the Dividend Payment Date

for

any Divi-

dend Period, the Company will have no

obligation to pay

dividends accrued

for

such Dividend Period after the

Dividend Payment Date

for

that Dividend Period, whether

or

not dividends on the Fixed-

to-



the Company Common Securities

are declared

for

any future Dividend Period.

General. On each day on which the Company redeems

Fixed-

to-

Floating Rate Company Preferred Securities,

WaMu Delaware will apply the redemption proceeds it

receives on the Fixed-

to-


Securities to redeem a like amount of

Trust Securities. The

redemption provisions of the Fixed-

to-

Floating Rate Com-

pany Preferred Securities are described below.

Subject to a covenant in favor of

certain of

WMI's

debtholders limiting WMl's and

its subsidiaries' right to

repurchase or

redeem the Fixed-

to-



the Trust Securities (among

others) as

described in the next paragraph, and subject to

the Company having received the prior approval of

the

OTS

for

any proposed redemption of

Fixed-

to-

Floating

Rate Company Preferred Securities, the Company may, at

8

CONFIDENTIAL


its option, redeem the Fixed-

to-


Preferred Securities:

• in whole but not in part, prior to the Dividend Payment

Date in March 2011, if a Tax Event, an Investment


a Regulatory Capital Event

occurs. The cash redemption price will be the greater of

( i) $1,000 per Fixed-

to-


ferred Security or

(

ii) the sum of

present values of

$1,000 per Fixed-

to-


Security and

all undeclared dividends

for

the Dividend

Period from the redemption date to and including the

Dividend Payment Date in March 2011, discounted to the

redemption date on a quarterly basis (assuming a

360-day year consisting of

twelve 3D-day months) at

the

Treasury Rate, as

calculated by

an Independent Invest-

ment Banker, plus 0.30%,

plus any declared and unpaid dividends to the redemp-

tion date; or

• in whole or

in part, on

or

after the Dividend Payment

Date in March 2011, at a cash redemption price of

$1,000

pe

r

Fixed-to-


Security, plus any declared and unpaid dividends to the

redemption date, without accumulation of

any undeclared

dividends.

See "Description of

Fixed-

to-


ferred Securities - Redemption."

Restriction on Redemption or Repurchases. At

or

prior to

initial issuance of

the Trust Securities, WMI will enter into a

" Replacement Capital Covenant" as

described under

" Description of

the Trust Securities - Restriction on Re-

demption or

Repurchases." In the Replacement Capital

Covenant, WMI will covenant in favor of

certain of

its

debtholders that, if WMI or

a subsidiary repurchases or

redeems any Trust Securities, WaMu Cayman Preferred

Securities or

Company Preferred Securities

or,

after a

Conditional Exchange, Fixed-

to-


Shares ( or

related Fixed-

to-

Floating Rate WMI Preferred

Stock), WMI or

its subsidiaries will do

so only if and to the

extent that the total redemption or purchase price is equal

to or

less than designated percentages of

the

ne

t

cash

proceeds that WMI or

its subsidiaries have received during

the 180 days prior to such redemption or

repurchase from

the issuance of

other securities or

combinations of

securi-

ties having the characteristics described under "Descrip-

tion of

the Trust Securities - Restriction on Redemption or

Repurchases.' ,

Ranking. . . . . . . . . . . . . . . . . . . . . . . . .. Trust Securities. The Trust Securities will be the only

securities issued by WaMu Delaware. The Amended and

Restated Trust Agreement of WaMu Delaware (the " Trust

9

CONFIDENTIAL


Agreement") will provide that WaMu Delaware will not

issue any other securities.

Fixed-

to-

Floating Rate Company Preferred Securities. The

Fixed-

to-


rank pari passu with the Fixed Rate Company Preferred

Securities and senior to the Company Common Securities

in terms of

dividends and liquidation payments.

During a Dividend Period, the Company may not declare or

pay any dividends on any of

its Junior Equity Securities

other than dividends payable in Junior Equity Securities, or


otherwise acquire

for

consideration,

directly or

indirectly, any Junior Equity Securities (other

than as a result of

reclassification of

Junior Equity

Securities

for

or


the

exchange or

conversion of

Junior Equity Securities

for

or

into other Junior Equity Securities), unless dividends

for

such Dividend Period on

all outstanding Company Pre-

ferred Securities have been declared and paid in full, or

declared and set aside

for

payment, as

the case may be.

The Company may from time to time issue additional Parity

Equity Securities without the consent of

the holders of

the

Company Preferred Securities, provided that ( i) after

giving effect to such issuance, the pro forma net book

value of

the Company's assets (after giving effect to the

acquisition of

any New Assets in connection with the

issuance of

such Parity Equity Securities) will equal or

exceed 1.5 times the sum of the aggregate liquidation

preference of

the preferred securities of the Company then

outstanding and any such Parity Equity Securities that the

Company proposes to issue, (

ii) after giving effect to such

issuance, the Company's pro forma funds from continuing

operations, or

" FFO", for the four fiscal quarters beginning

with the fiscal quarter in which such Parity Equity Securi-

ties are proposed to be issued (calculated ( A)

assuming

that such proposed Parity Equity Securities are issued and

that, if any Parity Equity Securities (including the Parity

Equity Securities that the Company proposes to issue)

bear dividends based on a floating rate, the applicable

dividend rate will not change during such four fiscal

quarters from the rate in effect on the applicable date of

determination and ( B)

as

adjusted to reflect any New

Assets) equals or

exceeds 150% of

the amount that would

be required to pay full annual dividends on

all preferred

securities of

the Company then outstanding and any such

Parity Equity Securities that the Company proposes to

issue and (

iii) the Company is not otherwise in breach of

any of

its covenants set forth in the LLC Agreement. See

"Description of

the Fixed-

to-


ferred Securities - Ranking."

In the Exchange Agreement, WMI will covenant in favor of

the holders of the Trust Securities and the WaMu Cayman

10

CONFIDENTIAL


Preferred Securities that, if full dividends on

( i) the

Company Preferred Securities, (

ii) the Trust Securities or

(Hi) the WaMu Cayman Preferred Securities

for

any

Dividend Period are not paid, then WMI will not declare or

pay dividends with respect

to,

or

redeem, purchase or

acquire, any of


succeeding Dividend Period, except dividends in connec-

tion with a shareholders' rights plan, if any, or

dividends in

connection with benefits plans.

Conditional Exchange. . . . . . . . . . . ..


an

Exchange Event, each Trust Security will be automatically

exchanged

for

a like amount of

Fixed-

to-

Floating Rate

Depositary Shares representing 1/ 1 OOOthof a share of

WMl's Series I Perpetual Non-cumulative Fixed-

to-

Floating

Rate Preferred Stock (the "Fixed-

to-

Floating Rate Deposi-

tary Shares").

"Exchange Event" means ( i) WMB becoming " undercapi-

talized" under the OTS' "prompt corrective action" regula-

tions, ( H) WMB being placed into conservatorship or

receivership or

(iH) the OTS, in its sole discretion, directing

such exchange in anticipation of WMB becoming "under-

capitalized" in the near term or

taking supervisory action

that limits the payment of

dividends, as

applicable, by

WMB, and in connection therewith, directs such exchange.

The Fixed-

to-

Floating Rate WMI Preferred Stock will have

substantially equivalent terms as

to dividends, redemption

and liquidation preference as

the Fixed-

to-

Floating Rate

Company Preferred Securities, except that: ( i) the

Fixed-

to-

Floating Rate WMI Preferred Stock will not have

the benefit of the covenants described under "Description

of

Fixed-

to-

Floating Rate Company Preferred Securities -

Voting Rights and Covenants;" (

ii) the Fixed- to-Floating

Rate WMI Preferred Stock will be redeemable prior to the

Dividend Payment Date occurring in March 2011 only upon

the occurrence of

a Regulatory Capital Event ( as de-

scribed herein); (

iii) Additional Amounts will not be

payable with respect to the Fixed-

to-

Floating Rate WMIPreferred Stock; and (

iv)

if WMI fails to pay, or

declare

and set aside

for

payment,

full

dividends on

the Fixed-

to-


for

six Dividend Peri-

ods, the authorized number of

WMl's directors will

in-

crease by two, and the holders of

Fixed- to-Floating Rate

WMI Preferred Stock, voting together with the holders of

any other equity capital securities of WMI having similar

voting rights, including the Fixed Rate WMI Preferred

Stock, will have the right to elect two directors in addition

to the directors then in office at

the next annual meeting of

shareholders. The Fixed-

to-


Stock will be subject to the Replacement Capital Covenant

provisions described under" - Redemption / Replacement

Capital Covenant" above.

11

CONFIDENTIAL


Voting Rights and Certain

Covenants .


the holders of

the Trust Securities that it will not issue any

preferred stock that would rank senior to the

Fixed-

to-

Floating Rate WMI Preferred Stock upon

its issuance. Each

share of

Fixed-

to-

Floating Rate WMI Preferred Stock will,

upon issuance, rank at

least pari passu with the most

senior preferred stock of

WMI, if any, then outstanding.

Except as

set forth below, the holders of

the Fixed-

to-

Floating Rate Company Preferred Securities will not have

voting rights.

The LLC Agreement will provide that, except with the

consent or

affirmative vote of

the holders of

at

least two-

thirds of

the Fixed-

to-


Securities and

the

Fixed Rate Company Preferred Securi-

ties, voting together as a single class, the Company will

not:

• effect a consolidation, merger or

share exchange with or

into another entity other than an

entity controlled by, or

under common control with, WMI;

• issue any securities of

the Company ranking senior to

the Company Preferred Securities in respect of

pay-

ments of

dividends or

on liquidation to the Company

Preferred Securities (" Senior Equity Securities");

• incur any indebtedness for borrowed money;

• pay dividends on the Company's Junior Equity Securities

unless the Company's FFO

for

the four prior fiscal

quarters equals or

exceeds 150% of

the amount that

would be

required to pay

full

annual dividends on

all


well as

any other Parity Equity Securities;

• amend or

otherwise change the requirement that the

Company make investments and distributions with the

proceeds of

the Company's assets such that the Com-

pany's FFO over any period of

four fiscal quarters will

equal or exceed 150% of



all outstanding

Company Preferred Securities, as

well as any other

Parity Equity Securities;

• issue any additional Company Common Securities to any

person, other than University Street or

another affiliate

ofWMI;

• amend or

otherwise change the terms of

any Asset

Documentation in a manner which is materially adverse

to WaMu Delaware or

the holders of


• remove or cause to be removed, as applicable, "Wash-

ington Mutual" from the Company's, WaMu Delaware's

or WaMu Cayman's name unless

the name of WMI

12

CONFIDENTIAL


changes and the Company makes a change to the

Company's, WaMu Delaware's and WaMu Cayman's

name to be consistent with the new group name;

• take any action or

fail to take any action that would

cause the Company to fail to be treated as a partnership

(other than a publicly traded partnership taxable as a

corporation)

for


tax

purposes;

• amend or


Company not engage in a U.

S.

trade or

business

for

United States Federal income tax purposes;

• amend or


Company hold only assets that qualify for the portfolio

interest exemption under the Code and are exempt from

gross basis United States withholding taxes;

• amend or


Company manage

its affairs such that income with

respect to the Trust Securities does not constitute

" unrelated business taxable income"

for

United States

Federal income tax purposes; or

• amend

its Certificate of

Formation or

LLC Agreement in

a manner that materially and adversely affects the terms

of

the Company Preferred Securities; provided, however,

that, if such amendment affects only one class of

Company Preferred Securities, such amendment will

require only the class vote of

the holders of

at

least two-

thirds of

the applicable Company Preferred Securities of

such class (voting separately and not as a single class

with the other class) and, if such amendment affects

both classes but affects them differently, then such

amendment will require a class vote of

each class of

Company Preferred Securities, each voting separately.

In addition, the LLC Agreement will provide that, without

the consent of

all

of

the Managers, including the Indepen-

dent Manager, the Company will not:

• terminate, amend or

otherwise change any Asset

Documentation; or


share exchange (ex-

cluding the Conditional Exchange) that is not tax- free to

the holders of

the Fixed-

to-


Preferred Securities, and the related Trust Securities,

unless such transaction was approved by

the consent or

affirmative vote of

the holders of

at

least two- thirds of

the Fixed-

to-


and the Fixed Rate Preferred Securities, voting together

as a single class.

In addition, the LLC Agreement will provide that if ( i) the

Company fails to pay full dividends on the Company

13

CONFIDENTIAL


Preferred Securities on any Dividend Payment Date,

(

ii) WaMu Delaware fails to pass through full dividends

paid by

the Company on the Fixed-

to-

Floating Rate

Company Preferred Securities to the holders of

the Trust

Securities on any Dividend Payment Date or

(

iii) a

Bankruptcy Event occurs, the holders of

the Fixed-

to-

Floating Rate Company Preferred Securities and the Fixed

Rate Company Preferred Securities, voting together as a

single class, by

majority vote, are entitled to remove the

initial or

any succeeding Independent Manager and to fill

the vacancy created by such removal or

any other vacancy

existing in the office of


Each holder of

Trust Securities will have the right to direct

the Property Trustee acting

for WaMu Delaware, as holder

of

the

Fixed-

to-


ties, as

to the exercise of

the voting rights described above

pertaining to a like amount of

Fixed-

to-

Floating Rate

Company Preferred Securities representing

its respective

Trust Securities. The voting rights described above with

respect to the Fixed Rate Company Preferred Securities

will be passed on

to the holders of

the related WaMu

Cayman Preferred Securities. See "Description of

the Trust

Securities - Voting Rights."

Additional Amounts. . . . . . . . . . . . . ..

If the Company or WaMu Delaware is required to pay any

Additional Taxes as a result of

an Additional Tax Event, the

Company

will

pay as additional amounts on the Fixed-

to-

Floating Rate Company Preferred Securities such amounts

as

will be

required so

that dividends on

the Fixed-

to-

Floating Rate Company Preferred Securities, and accord-

ingly the amounts passed through by WaMu Delaware on

the Trust Securities, will not be reduced as a result of

any

such Additional Taxes. See "Description of

the Fixed-

to-

Floating Rate Company Preferred Securities - Additional

Amounts." If investors exchange their Fixed-

to-

Floating

Rate Company Preferred Securities

for

Fixed-

to-

Floating

Rate WMI Preferred Stock upon a Conditional Exchange,

WMI will not be obligated to pay Additional Amounts on the

Fixed-

to-

Floating Rate WMI Preferred Stock.

Assets and the Asset Trust. . . . . . .. The initial assets of

the Company will consist of

the

Class A Asset Trust Certificate representing

its interest in

the Asset Trust. The Asset Trust is a Delaware statutory

trust formed under the laws of

the State of

Delaware

pursuant to a trust agreement between the Company, as

depositor, and Deutsche Bank Trust Company Delaware,

as Delaware trustee. The Pooling and Servicing Agreement

among the Company, as

depositor, WMB, as

Servicer,

Deutsche Bank Trust Company Delaware, as PSA Dela-

ware Trustee, and Deutsche Bank National Trust Company,

as Trustee, will restate the trust agreement and will

thereafter be the governing instrument of

the

Asset Trust.

14

CONFIDENTIAL


The Asset Trust will make a REMIC election

for

United

States Federal income tax purposes.



a

portfolio (including payments thereon received from and

after February 1,

2006) of

HELs and certain related assets

originated by WMB primarily through

its

retail branches

between September 1,2001 and September 30, 2005. As

of

January 31, 2006, the 56,090 HELs had an aggregate

unpaid principal balance of


These loans typically are made

for

reasons such as home

purchases, home improvements, furniture and fixtures

purchases, purchases of automobiles and debt consolida-

tion. These HELs are first lien, closed- end fixed rate home

equity loans and are generally repaid on a self-amortizing

basis.

From time to time, the Company may acquire Additional

Assets.

All

Additional Assets acquired by

the Company will

be Eligible Assets.

Listing . . . . . . . . . . . . . . . . . . . . . . . . . .. The Trust Securities will not be

listed on any securities

exchange or


Use of

Proceeds.. . . . .. . . ..

. . . . . .. WaMu Delaware will use the proceeds of

the sale of

the

Trust Securities to purchase a like amount of

Fixed-

to-

Floating Rate Company Preferred Securities from WMB,which the Company will issue to WMB in exchange

for

the

conveyance of

a portfolio of

HELs to the Company. The

WMI Group will use the proceeds from the sale of

the

Fixed-

to-

Floating Rate Company Preferred Securities to

WaMu Delaware and the Fixed Rate Preferred Securities to

WaMu Cayman

for

general corporate purposes, which may

include the repurchase of

WMI's common stock.

Ratings. . . . . . . . . . . . . . . . . . . . . . . . .. The Trust Securities are expected to be assigned upon

issuance ratings of

" BBB" by

Standard & Poor's Rating

Services, a division of

The McGraw Hill Companies, Inc.,

" Baa2" by

Moody's Investors Services, Inc. and "A-" by

Fitch, Inc. A rating is not a recommendation to buy, sell or

hold securities and may be

subject to revision, suspension

or

withdrawal at

any time by

the assigning rating

organization.

Tax Consequences . . . . . . . . . It is anticipated that WaMu Delaware will be

treated as

a

grantor trust

for

United States Federal income tax pur-

poses. Accordingly, each holder of

a Trust Security will be

treated as

if it owned directly the Fixed-to-Floating Rate

Company Preferred Securities allocable to such Trust

Security.

The Company intends to qualify as a partnership (other

than a publicly traded partnership taxable as a corpora-

tion)

for

United States Federal income tax purposes, and

thus, the Fixed-

to-

Floating Rate Company Preferred Secu-

rities held by WaMu Delaware are intended to constitute

15

CONFIDENTIAL


equity interests in such partnership. As a partnership, the

Company intends that it will not be

subject to United States

Federal income tax. Instead, each holder o.

f a Trust

Security will be required to report on

its United States

Federal income tax return

its share o.

f the income, gains,

losses, deductions and credits o.

f the Company that are

allocable to WaMu Delaware, even i. f such holder has not

received any cash distributions.

See " Certain U.

S.

Federal Income Tax Considerations-

United States Federal Income Tax Consequences."

ERISA Considerations. . . . . . . . . . . . . No

Trust Security may be purchased by

or

trans.ferred to

any Bene.

fit Plan Investor, except .

for

an

insurance com-

pany general account that represents, warrants and cove-

nants that, at

the time o.

f acquisition and throughout the

period it holds the securities, ( A)

it is eligible .

for

and

meets the requirements o.

f the Department o.

f Labor

Prohibited Transaction Class Exemption 95- 60, ( B)

less

than 25% o.

f the assets of

such general account are ( or


a Benefit Plan Investor and ( C)

it is

not a person who has discretionary authority or

control

with respect to the assets of WaMu Delaware or

any

person who provides investment advice

for

a fee (direct or

indirect) with respect to such assets, or

any affiliate of

such a person and would not otherwise be excluded under

29

C.

F.

R.

2510.3- 101 ( f) (

1).

Governing Law . . . . . . . . . . . . . . . . . .. The Trust Agreement, the Trust Securities, the LLC Agree-

ment and the Fixed-

to-


Securities will be governed

by,

and construed in accor-

dance with, the laws o.

f the State of

Delaware. The

Fixed-

to-

Floating Rate WMI Preferred Stock will be gov-

erned by and construed in accordance with the laws of

the

State of

Washington. The Fixed-

to-

Floating Rate Deposi-

tary Shares will be governed by, and construed in accor-

dance with, the laws of

the State o.

f New York.

CUSIP . . . . . . . . . . . . . . . . . . . . . . . . . .. 93934W AA 3

ISIN US93934WAA36

16

CONFIDENTIAL


RISK FACTORS

Purchasers should carefully consider

the

following risk factors in conjunction with the other

information contained in this offering circular, as

well as

information that is incorporated by

reference in this offering circular, before purchasing any Trust Securities, the financial entitlements

of

which will be

substantially similar to those of

a like amount of

Fixed-

to-


Preferred Securities and which are conditionally exchangeable into Fixed-

to-

Floating Rate

Depositary Shares representing interests in Fixed-

to-

Floating WMI Preferred Stock.

Risks Relating to the Terms of the Trust Securities and the Fixed- to-Floating Rate Company


Holders of

Trust Securities will only receive distributions if the Company pays dividends on the

Fixed-to-Floating Rate Company Preferred Securities.

Amounts available to WaMu Delaware

for

payment on the Trust Securities will be limited to

dividends received by WaMu Delaware as

the holder of

the Fixed-

to-


Preferred Securities. If the Company does not declare and pay dividends on the Fixed-

to-

Floating

Rate Company Preferred Securities, WaMu Delaware will not pass through such dividends to

holders of


Dividends on

the Fixed-to-Floating Rate Company Preferred Securities are not cumulative and

purchasers will not receive dividends on

the Trust Securities for any quarter unless dividends

are authorized and declared by the Company's Board of Managers

for

that quarter on the like

amount of Fixed-

to-

Floating Rate Company Preferred Securities held by WaMuDelaware.

Dividends on the Fixed-

to-

Floating Rate Company Preferred Securities are not cumulative.

Consequently, if the Board of

Managers does not declare a dividend on the Fixed-

to-

Floating


for

any quarter, WaMu Delaware, as

holder of

the Fixed-

to-

Floating Rate Company Preferred Securities, and consequently the holders of

Trust Securities,

will not receive dividends

for

that quarter. In addition, the Company's Board of

Managers may

determine that it would be

in the Company's best interests to pay less than the

full

amount of

the

stated dividends on the Fixed-

to-

Floating Rate Company Preferred Securities or

no dividends

for

any quarter even though funds are available. Factors that would generally be

considered by

the

Company's Board of

Managers in making this determination are the amount of

available funds,

the Company's financial condition and capital needs, the impact of

current and pending

legislation and regulations, economic conditions, and tax considerations.

The level of

the Company's assets relative to the aggregate liquidation preference of

the

Company Preferred Securities could shrink over time because

of, among other things, dividends

paid by

the Company on the Company Common Securities or

other Junior Equity Securities if

any are issued at

a future date.

The LLC Agreement includes provisions that limit the Company's ability to pay dividends on

the Company's Junior Equity Securities but, subject to satisfaction of

those limitations, does not

prohibit dividends that could cause the level of

the Company's assets relative to the aggregate


the Company Preferred Securities to shrink. These limitations are

described under "Description of

the Fixed-

to-


Ranking," "- Restrictions on

Dividends" and "Voting Rights and Covenants." They include the

following:

• during a Dividend Period, the Company may not pay dividends on Junior Equity

Securities, or


otherwise acquire

for

consideration directly or

indirectly (with limited exceptions) Junior Equity Securities, unless dividends

for

such

Dividend Period on

all outstanding Company Preferred Securities have been declared and

paid in full, or

set aside

for

payment, as the case may be; and

17

CONFIDENTIAL


• without the consent or

affirmative vote of

the holders of

at


theFixed-to-Floating Rate Company Preferred Securities and the Fixed Rate Company Securities,

voting together as a single class, the Company may not:

• pay dividends on Junior Equity Securities unless the Company's FFO

for

the four prior

fiscal quarters equals or

exceeds 150% of

the amount that would be required to pay full

dividends on the outstanding Company Preferred Securities, as well as any other Parity

Equity Securities; or

• amend or

otherwise change the requirement that the Company make investments and

distributions with the proceeds of

the Company's assets such that the Company's FFO

for

any period of

four fiscal quarters

will

equal or

exceed 150% of

the

amount that would

be required to pay full annual dividends on

all outstanding Company Preferred Securities,

as

well as any other Parity Equity Securities.

As

HELs in the Asset Trust prepay or

repay principal and distributions with respect to such

principal payments are made by

the Asset Trust to the Company on the Class A Asset Trust

Certificate, subject to the limitations referenced above, the Company may choose to apply such

amounts to pay dividends on the Company Common Securities or

reinvest such amounts in

additional Eligible Assets. Additionally, subject to the limitations referenced above, the Company

could distribute a portion of

the Class A Asset Trust Certificate as a dividend on the Company

Common Securities. The Company has no

current intention to pay an

extraordinary dividend, and

WMI has no current intention to cause or

permit the Company to pay an extraordinary dividend.

Nevertheless, dividends paid by

the Company on

the Company Common Securities could result

in a reduction in the Company's assets that could have the consequence, notwithstanding

its

compliance with the limitations referred to above, of

the Company not having funds available to

pay full dividends on the Company Preferred Securities in future periods or

loss by

investors of

some or

all

of

the amount of

their investment were the Company to be liquidated.

The Trust Securities and the Fixed-

to-

Floating Rate Company Preferred Securities are perpetual

and not redeemable at

the option of

the holder, and holders of

the Trust Securities can have no

assurance of

receiving their initial investment back.

The Trust Securities may not be redeemed at

the option of

the holder thereof under any

circumstances, are perpetual and have no maturity date. If and when the Company redeemsFixed-to-

Floating Rate Company Preferred Securities, WaMu Delaware will redeem a like amount of

Trust

Securities. While the Fixed-

to-

Floating Rate Company Preferred Securities may be redeemed at

the

option of

the Company under certain circumstances described herein, any such redemption is

subject to the approval of

the OTS and may be constrained by

operation of

the Replacement

Capital Covenant. Investors in the Trust Securities will have no

right to reclaim their initial

investment from WaMu Delaware and there can be

no guarantee that the Trust Securities will ever

be redeemed. If investors in the Trust Securities choose to sell their Trust Securities in order to

reclaim

all

or

part of

their initial investment in the absence of

any redemption, there can be

no

guarantee that such investors would be

able to sell their securities in the secondary market, or

that

if such sale occurred the sale price would be

at

or

above the initial price.

A decline in WMB's capital levels may result in a Conditional Exchange. If a Conditional

Exchange occurs, it is likely to occur at

a time when WMB's and WMJ'sfinancial condition has

deteriorated and may have other adverse consequences.

The returns from an investment in the Trust Securities will be dependent to a significant

extent on

the performance and capital of WMB due to the potential

for

a Conditional Exchange.

A decline in the performance and capital levels of WMB or

the placement by

the OTS of WMB

into conservatorship or

receivership could result in a Conditional Exchange of

the Trust

Securities for Fixed-

to-

Floating Rate Depositary Shares representing Fixed-

to-

Floating Rate WMI

18

CONFIDENTIAL


Preferred Stock. The Fixed-

to-

Floating Rate WMI Preferred Stock would represent an investment

in WMI and not in the Company or

WaMu Delaware. Under these circumstances:

• the Trust Securities would be exchanged

for

a preferred equity interest in WMI at a time

when WMB's and, ultimately, WMI's financial condition has deteriorated or

when WMBmay have been placed into conservatorship o

r

receivership and, accordingly, it is unlikely

that WMI would be

in a financial position to make any dividend payment on the amount of

Fixed-

to-

Floating Rate WMI Preferred Stock;

• in the event of

a liquidation of

WMI, the claims of

creditors of WMI would be

entitled to

priority in payment over the claims of

holders of

equity interests such as

the Fixed-

to-

Floating Rate Depositary Shares, and, therefore, the former holders of

the Trust

Securities who would then hold the Fixed-

to-

Floating Rate Depositary Shares represent-

ing Fixed-

to-

Floating Rate WMI Preferred Stock because of

the occurrence of

the

Conditional Exchange may receive substantially less than such holders would receive had

the Trust Securities not been exchanged

for

the Fixed-

to-


Shares. See "- Risk Factors Applicable to Fixed-

to-


Issued in a Conditional Exchange - The Fixed-

to-

Floating Rate WMI Preferred Stock will

rank subordinate to the direct indebtedness of

WMI;"

•

for

United States Federal income tax purposes, a Conditional Exchange would most likely


the Trust Securities, and in that event such holders

generally would incur a gain or

loss, as


the difference

between their adjusted tax basis in the Trust Securities and the fair market value of

the

Fixed-

to-

Floating Rate Depositary Shares; and

• although the terms of

Fixed-

to-

Floating Rate Depositary Shares are substantially similar

to the terms of

the Fixed-

to-

Floating Rate Company Preferred Securities, there are

differences that holders of

Trust Securities might deem to be important, such as

the fact

that holders of

Fixed-

to-

Floating Rate Depositary Shares will not generally have voting

rights, except as

required by law or

in connection with the right to elect directors if

dividends are missed (see "Description of

the Fixed-

to-


Stock - Voting Rights"), or

benefit from any protective covenants.

The terms of

the Trust Securities and the Fixed-to-Floating Rate Company Preferred Securities

provide

for

limited voting rights.

Except as

specified in the Trust Agreement or

in relation to the right to direct the manner in

which the Property Trustee acting on behalf of WaMu Delaware exercises

its voting rights with

respect to the Fixed-

to-

Floating Rate Company Preferred Securities, holders of

Trust Securities

are not entitled to voting rights. Except as

specified in the LLC Agreement, WaMu Delaware, as

holder of

Fixed-

to-

Floating Rate Company Preferred Securities, is not entitled to voting rights.

However, the Company is prohibited by the LLC Agreement from taking certain actions without

the consent or

vote of

at


either

the

Fixed-

to-


Securities voting separately or

the Fixed-

to-

Floating Rate Company Preferred Securities and the

Fixed Rate Company Preferred Securities, voting together as

a single class, as

applicable. For a

description of

the matters on which the holders of

Fixed-

to-


Securities have a right to vote, see "Description of

the Fixed-

to-


Preferred Securities - Voting Rights and Covenants."

19

CONFIDENTIAL


Holders of

the Trust Securities and Fixed- to-Floating Rate Company Preferred Securities have

no redemption rights; however, the Company may (but is not required

to)

redeem the Fixed-

to-

F/

oating Rate Company Preferred Securities upon the occurrence of

a Tax Event, an Investment


a Regulatory Capital Event prior to March 15, 2011, and at

any time

thereafter and such redemption will cause an automatic redemption of


Subject to the Replacement Capital Covenant and the prior approval of

the OTS, the

Company may redeem the Fixed-

to-

Floating Rate Company Preferred Securities ( i) in whole but

not in part upon the occurrence of


a

Regulatory Capital Event prior to March 15, 2011, and (

ii)

in whole or

in part, at

any time on

or

after March 15, 2011, at

a redemption price equal to the liquidation preference per Fixed-

to-

Floating Rate Company Preferred Security, plus declared but unpaid dividends, if any, plus a

U.

S.

Treasury- based "make-whole" amount if the redemption occurs prior to March 15, 2011.

The redemption by

the Company of

the Fixed-

to-


automatically cause a redemption of


for

which the redemption price will be

paid from the proceeds WaMu Delaware receives from the Company as a consequence of

the

redemption of

the Fixed-

to-

Floating Rate Company Preferred Securities. The occurrence of

a Tax

Event, an Investment Company Act Event or

a Regulatory Capital Event will not, however, give a

holder of

the Trust Securities any right to request that the Fixed-

to-



the Trust Securities be redeemed.

If the Company redeems the Fixed-

to-

Floating Rate Company Preferred Securities, the Trust

Securities will be automatically redeemed, and the former holders of

the Trust Securities may not

be able to invest their redemption proceeds in securities with a dividend yield and other terms

comparable to that of

the Trust Securities. A Treasury based "make whole" amount will be

payable only in connection with a redemption prior to the Dividend Payment Date in March 2011.

The Fixed-

to-

F/

oating Rate Company Preferred Securities will rank subordinate to claims of

the

Company's creditors and on a parity with other series of

preferred securities issued by the

Company.

The Fixed-

to-

Floating Rate Company Preferred Securities will rank subordinate to all

claims

of

the Company's creditors. The Fixed-

to-

Floating Rate Company Preferred Securities will rank

pari passu as

to dividends and upon liquidation with the Fixed Rate Company Preferred

Securities and other Parity Equity Securities that the Company may issue. The Company will

issue the Fixed Rate Company Preferred Securities to WaMu Cayman at

a time substantially

contemporaneous with this Offering, and may issue additional Parity Equity Securities at any time

in the future, subject to certain conditions at

the time of

issuance, without the consent or

approval of

the holders of

the

Trust Securities. Accordingly, if

• the Company does not have funds legally available to pay full dividends on the Fixed-

to-

Floating Rate Company Preferred Securities and any Parity Equity Securities; or

• in the event of

the Company's liquidation, dissolution or

winding up, the Company does

not have funds legally available to pay the full liquidation value of

the Fixed-

to-

Floating

Rate Company Preferred Securities and any Parity Equity Securities,

any funds that are legally available to pay such amounts will be

paid pro rata to the Fixed-

to-

Floating Rate Company Preferred Securities and any other Parity Equity Securities then

outstanding. See " Description of

Other Company Securities - Fixed Rate Company Preferred

Securities.' ,

There has never been a market for the Trust Securities.

Prior to this Offering, there was no market

for

the Trust Securities. Although the Initial

Purchasers intend to make a market in the Trust Securities, they are under no obligation to do

so

20

CONFIDENTIAL


and, to the extent that such market making is commenced, it may be discontinued at

any time.

The Trust Securities will not be


automated dealer quotation

system. There can be

no assurance that an

active and liquid trading market

for

the Trust

Securities will develop or

be sustained. If such a market were to develop, the prices at

which the

Trust Securities trade would depend on many factors, including prevailing interest rates, the

operating results of

the Company, WMB and WMI, and the market

for

similar securities. Holders

of

Trust Securities may not be able to resell their Trust Securities at

or above the initial price.

Furthermore, the Trust Securities are not and will not be registered under the Securities Act, will

be deemed to be restricted securities within the meaning of Rule 144 under the Securities Act

and are subject to significant transfer restrictions as

described in "Notice to Investors." These

restrictions on transfer may inhibit the development of

an active and liquid trading market

for

the

Trust Securities and may adversely impact the market price of


The Trust Securities are not obligations

of,

or

guaranteed

by,

any other entity_

The Trust Securities do not constitute obligations or

equity securities of WMI, WMB, the

Company, Marion Holdings Inc., an intermediate holding company between WMB and University

Street ("Marion"), University Street, the Asset Trust, WaMu Cayman or

any other entity, nor are

WaMu Delaware's obligations with respect to the Trust Securities guaranteed by

any other entity.

In particular, neither WMI, WMB, the Company, University Street, Marion, the Asset Trust, WaMu

Cayman nor any other entity guarantees that WaMu Delaware will pass through any dividends

paid by

the Company to WaMu Delaware as

the holder of

the Trust Securities, nor are they

obligated to provide additional capital or

other support to WaMu Delaware to enable WaMuDelaware to make distributions in the event the Company fails to pay dividends o

n the Fixed-

to-

Floating Rate Company Preferred Securities and WaMu Delaware is thus unable to pass through

such dividends on the Trust Securities to holders of

the Trust Securities. The Trust Securities are

not

exchangeable

for

Fixed-

to-

Floating Rate Depositary Shares or

Fixed-

to-

Floating Rate WMIPreferred Stock except upon a Conditional Exchange. No holder o

f

Trust Securities will have the

right to require WaMu Delaware to exchange the Trust Securities

for

Fixed-

to-

Floating Rate

Depositary Shares.

The Fixed- to-Floating Rate Company Preferred Securities represent solely an interest in the

Company and are not obligations

of,

or

guaranteed

by,

any other entity_

The Fixed-

to-

Floating Rate Company Preferred Securities do not constitute obligations or

equity securities of any entity other than the Company, including WMI, WMB, Marion, University

Street, WaMu Cayman, the Asset Trust and WaMu Delaware, nor are the Company's obligations

with respect to the Fixed-

to-

Floating Rate Company Preferred Securities guaranteed by any other

entity. In particular, neither WMI, WMB, Marion, University Street, WaMu Delaware, the Asset

Trust, WaMu Cayman nor any other entity, guarantees that the Company will declare or

pay any

dividends to WaMu Delaware, nor are they obligated to provide additional capital or

other support

to the Company to enable the Company to pay dividends on the Fixed-

to-


Preferred Securities to WaMu Delaware in the event the Company's assets and results from

operations are insufficient

for

such purpose.

Risks Associated with the Company's Business

The Company is effectively controlled by WMI and the Company's relationship with WMI, and

lor

WMB may create potential conflicts of

interest.

All

of

the Company's officers and certain of

the Company's managers are also officers of

WMI or WMB or

their affiliates. After this Offering, WMI, WMB and University Street will continue

to control

all

of

the Company's outstanding voting securities. WMI, WMB, and University Street

will have the right to elect

all

of

the Company's managers, including the Independent Manager.

21

CONFIDENTIAL


WMB and University Street may have interests that are not identical to the Company's

interests. WMI, through

its subsidiary, New American Capital, Inc., is the ultimate owner of

WMB's and University Street's common stock, and may have investment goals and strategies

that differ from those of

the holders of

the Trust Securities. Consequently, conflicts of

interest

between the Company, on one hand, and WMB, University Street and/ or

WMI, on the other

hand, may arise.

The Company is dependent on the officers and employees of WMI and WMBfor the selection,

structuring and monitoring of

the loans in the Asset Trust and the Company's relationship with

WMI and / or WMBmay create potential conflicts of

interest.

WMI and WMB are involved in virtually every aspect of

the Company's existence. WMBadministers the Company's day-

to-

day activities under the terms of

certain agreements between

WMB and the Company. The Company is dependent on

the diligence and skill of

the officers and

employees of WMB

for

the selection, structuring and monitoring of

the HELs in the Asset Trust

and the Company's other Eligible Investments.

This dependency and the Company's close relationship with WMI and WMB may create

potential conflicts of

interest. Specifically, such conflicts of

interest may arise because the

employees of

WMI and WMB ( i) were directly involved in the decisions regarding the amount,

type and price of

HELs and other assets acquired indirectly from University Street and WMBprior to the Offering and (

ii) will make decisions on

the amount, type and ( if applicable) price of

any future acquisitions by

the Company of

Additional Assets from University Street, WMI or

other

parties.

The Company is dependent on the officers and employees of WMBfor the servicing of

the loans

in the Asset Trust and the Company's relationship with WMBmay create potential conflicts of

interest.

The Company is dependent on WMB and others

for

the servicing of

the HELs in the Asset

Trust and is expected to be dependent on WMB and others

for

the servicing of

any underlying

collateral with respect to Additional Assets. WMB administers the Company's day-

to-

day

activities under the terms of

the Asset Documentation relating to the Company's assets. These

agreements contain and will contain terms which the Company believes are consistent with those

resulting from arm's-length negotiations. With respect to the Pooling and Servicing Agreement

and the Asset Trust, WMB's servicing fee will be a per annum fee, paid monthly,

for

each HEL

based on the unpaid principal balance of

such HEL and will equal 0.125% per annum. WMB, as

Servicer, will be entitled to retain certain fees and ancillary charges, including any prepayment

fees, insufficient funds fees, modification fees, payoff statement fees and late charges with

respect to the HELs as

additional servicing compensation and will also be

entitled to certain

income generated by

permitted investments made with collections on the HELs.

Despite the Company's belief that the terms of

the Asset Documentation between WMB and

the Company reflect and will reflect terms consistent with those negotiated on

an arm's- length

basis, the Company's dependency on WMB's officers and employees and the Company's close

relationship with WMB may create potential conflicts of

interest. Specifically, such conflicts of

interest may arise because the employees of WMB have the power to modify the terms of

HELs

and other assets in the Asset Trust and other Eligible Assets and make business decisions with

respect to the servicing of

such underlying assets, particularly to the extent such underlying

collateral is defaulted or

otherwise non-performing.

22

CONFIDENTIAL


Regulators may limit the Company's ability to implement the Company's business plan and may

restrict the Company's ability to pay dividends.

Because the Company is an

indirect subsidiary of WMB, regulatory authorities will have the

right to examine the Company and

its activities and, under certain circumstances, to impose

restrictions on WMB or

the Company that could impact

its ability to conduct business pursuant to

the Company's business plan and that could adversely affect the Company's financial condition

and results of

operations.

If the OTS, which is WMB's primary regulator, determines that WMB's relationship with the

Company results in an unsafe or unsound practice, or

if,

in certain instances, WMB is no longer

well-capitalized, then the OTS has the authority

to:

• restrict the Company's ability to transfer assets;

• restrict the Company's ability to pay dividends to its security holders;

• restrict the Company's ability to redeem

its preferred securities; or

• require WMB to sever

its relationship with the Company or

divest

its ownership of

the

Company.

If the OTS determines that WMB is operating with an


capital, or

that the

payment of

dividends by

either WMB or

its subsidiaries, under the then- present circumstances, is

an unsafe and unsound practice, the OTS could restrict the Company's ability to pay dividends.

If any of

the Company, the Asset Trust or WaMu Delaware loses

its exemption under the

Investment Company Act it could have a material adverse effect on

the Company and would

likely result in a redemption of

the Fixed-

to-


Trust Securities.

Each of

the Company, the Asset Trust and WaMu Delaware believes that it is not, and

intends to conduct

its operations so

as not to be, required to register as


under the Investment Company Act. Under the Investment Company Act, a non-exempt entity

that is an investment company is required to register with

the SEC and is subject to extensive,

restrictive and potentially adverse regulation relating

to,

among other things, operating methods,

management, capital structure, dividends and transactions with affiliates. The Investment

Company Act exempts entities that, directly or

through majority-owned subsidiaries, are

" primarily engaged in the business of

purchasing or

otherwise acquiring mortgages and other

liens on and interests in real estate" (which the Company refers to as

"Qualifying Interests").

Under current interpretations of

the staff of

the SEC, in order to qualify

for

this exemption, each

of

the Company and the Asset Trust, among other things, must maintain at

least 55% of

the

Company's assets in Qualifying Interests and also may be required to maintain an additional 25%

in Qualifying Interests or

other real estate related assets. The assets that the Company or

the

Asset Trust may acquire therefore may be

limited by

the provisions of

the Investment Company

Act. The Company and the Asset Trust have each established a policy of

limiting authorized

investments which are

no

t

Qualifying Interests to no more than 20% of

the

value of

their

respective total assets. The Investment Company Act does not treat cash and cash equivalents

as

either Qualifying Interests or

other real estate related assets.

Based on the criteria outlined above, the Company and the Asset Trust each believe that,

as

of

the time of

the Offering, the Company's and the Asset Trust's Qualifying Interests will

comprise at

least 90% of

the estimated fair market value of

their respective total assets. As a

result, the Company and the Asset Trust each believe that they are not required to register as

an

investment company under the Investment Company Act. Neither the Company nor the Asset

Trust intends, however, to seek an exemptive order, no-action letter or

other form of

interpretive

guidance from the SEC or

its staff on

this position. If the SEC or

its staff were to take a different

23

CONFIDENTIAL


position with respect to whether the Company's or

the Asset Trust's assets constitute Qualifying

Interests, the Company or

the Asset Trust could be

required either ( i) to change the manner in

which it conducts

its operations to avoid being required to register as

an investlllent company, or

(

ii)

to register as

an investment company, either of which could have a material adverse effect

on the Company or

the Asset Trust, as

the case may be, the Company's ability to make

payments in respect of

the Fixed- to-Floating Rate Company Preferred Securities and, accord-

ingly, the trading price of

the Trust Securities. Further, in order to ensure that the Company and

the Asset Trust at

all times continues to qualify

for

the above exemption from the Investment

Company Act, the Company and the Asset Trust may be

required at

times to adopt less efficient

methods of

financing certain of

the Company's and the Asset Trust's assets than would

otherwise be

the case and may be precluded from acquiring certain types of

assets whose yield

is higher than the yield on assets that could be purchased in a manner consistent with the

exemption. The net effect of

these factors may be

to lower at

times the Company's net interest

income. Finally, if the Company or

the Asset Trust were an unregistered investment company,

there would be a risk that the Company or

the Asset Trust, as

the case may be, would be

subject to monetary penalties and injunctive relief in an action brought by the SEC, that the

Company or

the Asset Trust, as the case may be, would be unable to enforce contracts with

third parties and that third parties could seek to obtain rescission of

transactions undertaken

during the period the Company or

the Asset Trust was determined to be

an unregistered

investment company. In the event the Company, the Asset Trust or WaMu Delaware is ever

considered an investment company under the Investment Company Act as a result of

an

Investment Company Act Event, the Company would likely redeem the Fixed-

to-

Floating Rate

Company Preferred Securities. See "Description of

the Fixed-

to-


Preferred Securities - Redemption."

Additionally, the Company may from time to time have Asset Subsidiaries other than the

Asset Trust. The Company may not establish an Asset Subsidiary unless the establishment and

operation of

such Asset Subsidiary will not cause the Company to be


which is required to register under the Investment Company Act and such Asset Subsidiary is not

itself an investment company which is required to register under the Investment Company Act. If

any such Asset Subsidiary were to be

required to register as

an

investment company, the results

would be

similar to those described above in respect to the Asset Trust being required to register

as

an

investment company.

Adverse Effect of

Determination of

Company's Partnership Status


the Company Preferred Securities, the Company will receive an

opinion from Mayer, Brown, Rowe & Maw LLP to the effect that,

for

United States Federal

income

tax

purposes, ( i) the Company will not be

treated as

an

association taxable as a

corporation and (

ii) although no activities closely comparable to that contemplated by the

Company have been the subject of any U.

S.

Treasury regulation, revenue ruling or

judicial

decision, the Company will not be treated as a publicly traded partnership taxable as a

corporation. The opinions are based on certain assumptions and on certain representations and

agreements regarding restrictions on the future conduct of

the activities of

the Company.




taxable as a corporation

for

United States Federal income tax purposes, then the Company

would be

subject under the Code to the regular corporate income tax. Such taxes would reduce

the amounts available to make payments on the Company Preferred Securities.

24

CONFIDENTIAL


The Company has no

control over changes in interest rates and such changes could negatively

impact the Company's financial condition, results of

operations, and ability to pay dividends.

Initially, the Company's income consists primarily of

payments received on

the HELs which

are the underlying assets supporting the Class A Asset Trust Certificate (such underlying assets,

together with any collateral with respect to any Additional Assets, the " Company's Portfolio"). At

January 31, 2006, 100% of

the HELs to be included in the Company's Portfolio bore interest at

fixed rates; however, in the future, the Company could acquire Additional Assets which include or

are secured by

adjustable rate loans. Adjustable rate loans decrease the risks to a lender

associated with changes in interest rates but involve other risks. As

interest rates rise, the

payment by the borrower rises to the extent permitted by the terms of

the loan, and the

increased payment increases the potential

for

default. At

the same time, the marketability of

the

underlying property may be adversely affected by higher interest rates. In a declining interest rate

environment, there may be

an increase in prepayments on the HELs or

other assets in the

Company's Portfolio as

the borrowers refinance their mortgages at

lower interest rates. Under

these circumstances, the Company may find it more difficult to acquire Additional Assets with

rates sufficient to support the payment of

the dividends on

the Fixed-

to-


Preferred Securities. A declining interest rate environment would adversely affect the Company's

ability to pay full, or

even partial, dividends on

the Fixed-

to-


Securities.

The loans in the Company's Portfolio are subject to economic conditions that could negatively

affect the value of

the collateral securing such loans andI or

the results of

the Company's

operations.

The value of

the collateral underlying the Company's Portfolio and

lor

the results of

the

Company's operations could be affected by

various conditions in the economy, such as:

• local and other economic conditions affecting real estate and other collateral values;

• sudden or

unexpected changes in economic conditions, including changes that might

result from terrorist attacks and the United States' response to such attacks;

• the continued financial stability of a borrower and the borrower's ability to make loan

principal and interest payments, which may be adversely affected by

job

loss, recession,

divorce, illness or

personal bankruptcy; and

• interest rate levels and the availability of

credit to refinance loans at

or

prior to maturity.

The loans in the Company's Portfolio that are held through the Asset Trust are concentrated in

two states, and adverse conditions in those states, in particular, could negatively impact the

Company's operations.

At

January 31, 2006, more than 79% ( as a percentage of

loan principal balances) of

the

assets in the Company's Portfolio were located in Texas and California. Because of

the

concentration of

the Company's interest in those states, in the event of adverse economic

conditions in those states, the Company would likely experience higher rates of

loss and

delinquency on

the

Company's Portfolio than if the

underlying HELs were more geographically

diversified. Additionally, the HELs in the Company's Portfolio may be subject to a greater risk of

.

default than other comparable loans in the event of

adverse economic, political, or

business

developments or

natural hazards that may affect Texas and California, and the ability of

property

owners or

commercial borrowers in those states to make payments of

principal and interest on

the underlying loans. In the event of

any adverse development or

natural disaster in those states,

the Company's ability to pay dividends on the Fixed-

to-


Securities could be adversely affected.

25

CONFIDENTIAL


The Company cannot assure purchasers that it paid WMBand University Street fair market

valuefo

r

all

of

the Company's assets because the Company has not obtained any third party

valuations of

all such assets. Nor can the Company assure purchasers that the) Company will

acquire or dispose of

its assets in the future at

their fair market value.

The Company has adopted policies with a view to ensuring that

all

financial dealings

between WMB, University Street and the Company will be

fair to each party and consistent with

market terms. However, there has been no

third party valuation of

all

of

the Company's assets.

In addition, it is not anticipated that third party valuations will be obtained in connection with


dispositions of

assets even in circumstances where an

affiliate of

the

Company is selling the assets to the Company, or

purchasing the assets from the Company.

Accordingly, the Company cannot assure purchasers that the purchase price the Company paid

for

all

of

the Company's assets was equal to the fair market value of

those assets. Nor can the

Company assure purchasers that the consideration to be paid by

the Company

to,

or

received by

the Company from, WMB, University Street or any of the Company's affiliates in connection with


dispositions of assets will be equal to the fair market value of such assets.

The Asset Trust or

any other Asset Subsidiary, and therefore, the Company, could incur losses

as a result of

environmental liabilities of

properties underlying the Company's assets in the

Company's Portfolio through foreclosure action.

The Asset Trust or

any other Asset Subsidiary may be forced to foreclose on

an underlying

HEL or

other assets where the borrower has defaulted on

its obligation to repay the applicable

loans. It

is possible that the Asset Trust or any other Asset Subsidiary, and therefore, the

Company, may be subject to environmental liabilities with respect to foreclosed property. The

discovery of

these liabilities and any associated costs

for

removal of

hazardous substances,

wastes, contaminants or

pollutants, could have a material adverse effect on

the fair value of

such

assets.

Delays in liquidating defaulted loans could occur and could cause the Company's business to

suffer.

Substantial delays could be encountered in connection with the liquidation of the collateral

securing defaulted loans in the Company's Portfolio, with corresponding delays in the Company's

receipt of

related proceeds. An action to foreclose on a mortgaged property or

repossess and

sell other collateral securing a loan is regulated by

state statutes and rules. Any such action is

subject to many of

the delays and expenses of

lawsuits, which may impede the Company's ability

to foreclose on

or

sell the collateral or

to obtain proceeds sufficient to repay

all amounts due on

the related loan in the Company's Portfolio.

The Company may invest in assets that involve new risks and need not maintain the current

asset coverage.

Although the Company's Portfolio currently consists primarily of

HELs held through the

Asset Trust, to the extent it acquires Additional Assets in the future, the Company is not required

to limit

its investments to assets of

the types currently in the Company's Portfolio. See ' The

Company - Business of

the Company - Assets of

the Company." Assets such as second lien

closed end home equity loans, first or

second lien home equity lines of

credit, mortgage loans on

single family or

multi-family residences, commercial mortgage loans or

other real estate assets

may involve different risks not described in this offering circular. Moreover, while the LLC

Agreement will call for maintaining specified levels of FFO coverage as

to expected dividends,

the Company is not required to maintain the levels of

asset coverage that currently exist.

26

CONFIDENTIAL


The Company is dependent on WMI, WMBand University Street with respect to its acquisition of

Additional Assets and may be subject to conflicts of

interest with respect to its acquisition of

new assets.

The dependency of

the Company on WMI, University Street and WMB and the Company's

close relationship with WMI, University Street and WMB may create potential conflicts of

interest

in connection with the Company's acquisition of

Additional Assets. The Company will be

dependent on WMI, University Street and WMB to identify Additional Assets which it may acquire,

but WMI, University Street and WMB are not required to contribute or

sell Additional Assets to

the Company. If WMI, University Street and WMB are unable to identify, or

are unwilling to

contribute or

sell, suitable Additional Assets, then over time the Company's level of

FFO

coverage as

to expected dividends will decline. Moreover, conflicts of

interest may arise because

the employees of

WMI, University Street and WMB will, subject to certain restrictions, make

decisions on the amount, type and ( to the extent the Company purchases Additional Assets)

price of

future acquisitions by

the Company of

Additional Assets from University Street, WMB or

other members of

the WMI Group as

well as

future dispositions of

assets to WMB, University

Street or

third parties.

Risk Factors Applicable to Fixed-

to-

Floating Rate Depositary Shares Issued in a Conditional

Exchange.

Holders of

Trust Securities may have adverse tax consequences as a result of

a Conditional

Exchange.

For United States Federal income tax purposes, a Conditional Exchange would most likely


Trust Securities under the Code, and they would incur a gain or

loss, as


the difference between their adjusted tax basis in the

Trust Securities and the fair market value of

the Fixed-

to-

Floating Rate Depositary Shares. In

addition, dividends, if any, paid to Foreign Holders of

Fixed-

to-


received upon a Conditional Exchange generally will be subject to a 30% U.

S.

withholding tax

unless the holder qualifies

for

a reduction from withholding tax under an applicable United States

income tax treaty.

A decline in WMI's financial condition may restrict

its ability to pay dividends and could result

in a loss on the investment of

the former holders of

Trust Securities.

If WMl's financial condition were to deteriorate, the holders of

the Fixed-

to-

Floating Rate

Depositary Shares could suffer direct and materially adverse consequences, including suspension

of

the payment of

non- cumulative dividends on the Fixed-

to-


and, if a liquidation, dissolution or

winding up

of WMI were to occur, loss by

holders of

Fixed-

to-

Floating Rate Depositary Shares of

all

or

part of

their investment. See "Description of

the Fixed-

to-

Floating Rate WMI Preferred Stock."

A Conditional Exchange may be based on WMB's receivership, which could lead to WMI's

bankruptcy and would mean that others are likely to have liquidation claims senior to that of

the

holders of

the Fixed-

to-

Floating Rate Depositary Shares.

An

Exchange Event triggering a Conditional Exchange will occur if WMB is placed into

conservatorship or

receivership. WMB's conservatorship or

receivership could lead to WMI

becoming subject to a voluntary or

involuntary proceeding under the U.

S.

Bankruptcy Code. In the

event of WMI's bankruptcy, the claims of WMl's secured, senior, general and subordinated

creditors would be entitled to a priority of payment over the claims of

holders of

equity interests

such as the Fixed-

to-

Floating Rate WMI Preferred Stock. As a result of such subordination, if WMI

became subject to a bankruptcy proceeding after a Conditional Exchange the holders of

the

27

CONFIDENTIAL


Fixed-

to-

Floating Rate Depositary Shares would likely receive, if anything, substantially less than

they would have received had the Conditional Exchange not occurred.

The Fixed-to

-Floating Rate WMI Preferred Stock will rank subordinate to the direct indebtedness

of

WMI.

The Fixed-to

-Floating Rate WMI Preferred Stock will b

e subordinate and rank junior in right

of

payment to all

of

WMI's indebtedness

for

borrowed money and indebtedness evidenced by

notes or

other securities. Because the sole source of

funds

for

payment in respect of

the

Fixed-

to-

Floating Rate Depositary Shares is the Fixed-

to-

Floating Rate WMI Preferred Stock, the

Fixed-

to-

Floating Rate Depositary Shares are effectively subordinated on the same basis as

the

Fixed-

to-

Floating Rate WMI Preferred Stock. The terms of

the Fixed-

to-


Shares and the Fixed-

to-

Floating Rate WMI Preferred Stock will not limit in any way WMI's ability

to incur additional indebtedness.

The Fixed-

to-

Floating Rate WMI Preferred Stock will be structurally subordinated to all

obligations of

WMJ'ssubsidiaries, and as a holding company, WMI may require cash from

its

subsidiaries to make payments with respect to the Fixed-

to-


WMI is a holding company that conducts

its operations through

its operating subsidiaries and

relies primarily on interest payments, dividends, proceeds from inter- company transactions and

loans from those subsidiaries to meet

its obligations

for

payment with respect to its outstanding

equity securities, any and

all

of

which may be subject to contractual restrictions and regulatory

restrictions. Accordingly, the Fixed-

to-

Floating Rate WMI Preferred Stock (and thus the Fixed-

to-

Floating Rate Depositary Shares) is structurally subordinated to all existing and future liabilities of

WMl's subsidiaries. Holders of

Fixed-

to-

Floating Rate Depositary Shares should look only to the

assets of

WMI, and not any of

its subsidiaries,

for

payments with respect to the Fixed-

to-

Floating

Rate Depositary Shares. If WMI is unable to obtain cash from

its subsidiaries it may be unable to

fund dividend payments in respect of

the Fixed-

to-




the Fixed-

to-

Floating Rate

Depositary Shares will not have the benefit of

the same favorable covenants as

the Fixed-

to-

Floating Rate Company Preferred Securities.



the Fixed-

to-

Floating Rate

Depositary Shares will not benefit from the same favorable covenants as

the Fixed-

to-

Floating

Rate Company Preferred Securities.

WMI is not obligated to pay dividends on the Fixed-

to-

Floating Rate WMI Preferred Stock and

dividends on these securities

are

not cumulative.


to-

Floating Rate WMI Preferred Stock are not cumulative.

Consequently, if the board of

directors of WMI ("WMl's Board of

Directors") does not declare

dividends on the Fixed-

to-

Floating Rate WMI Preferred Stock for any quarterly period, the

holders of

the Fixed-

to-

Floating Rate Depositary Shares would not be entitled to any such

dividend whether or not funds are or subsequently become available.

WMl's Board of

Directors may determine that it would be

in WMl's best interest to pay less

than the full amount of

the stated dividends on the Fixed-

to-


or

no

dividends

for

any quarter even if funds are available. Factors that would be considered by

WMI's Board of

Directors in making this determination are WMI's financial condition and capital

needs, the impact of

current and pending legislation and regulations, economic conditions,

tax

considerations, and such other factors as WMI's Board of

Directors may deem relevant.

28

CONFIDENTIAL


There is no

active trading market for Fixed-

to-

Floating Rate WMI Preferred Stock or

the Fixed- to-

Floating Rate Depositary Shares and such trading market may never develop.

The Fixed-

to-

Floating Rate WMI Preferred Stock and the Fixed-

to-

FloatingRate Depositary

Shares will be new issues of

securities. WMI does not intend to cause the listing or

quotation of

the Fixed-

to-


the Fixed-

to-


on any securities exchange or

automated dealer quotation system. The Initial Purchasers are

under no obligation to and do not intend to make a market in the Fixed-

to-

Floating Rate

Depositary Shares. Consequently, it is unlikely that an active and liquid trading public market

for

the Fixed-

to-


the underlying Fixed-

to-

Floating Rate WMI

Preferred Stock will develop or

be maintained. The lack of

liquidity and an active trading market

could adversely affect ability of

the holders of

Fixed-

to-

Floating Rate Depositary Shares to

dispose of

such shares.

In addition, neither the Fixed-to

-Floating Rate Depositary Shares nor the Fixed-

to-

Floating

Rate WMI Preferred Stock represented by

such shares have or

will be

registered under the

Securities Act and will be deemed to be restricted securities within the meaning of

Rule 144 of

the Securities Act. Holders of

Fixed-

to-

Floating Rate Depositary Shares will not be

able to offer,

sell, pledge or

otherwise transfer the Fixed-to

-Floating Rate Depositary Shares other than:

• to a qualified institutional buyer within the meaning of

Rule 144A of

the Securities Act in a

transaction complying with Rule 144A;

• otherwise in accordance with an applicable exemption from the registration requirements

of the Securities Act; or

• to WMI or

one of

WMI's affiliates, and in any case, in accordance with exemptions from

any applicable state securities or

blue sky laws.

These restrictions on transfer may inhibit the development of

an active and liquid trading

market

for

the Fixed-

to-

Floating Rate Depositary Shares and may adversely impact the market

price of

such shares.

29

CONFIDENTIAL


CERTAIN INFORMATION CONCERNING WMB

General

Washington Mutual Bank (formerly known as Washington Mutual Bank, FA and referred to

herein as

" WMB") is a federally chartered savings association, chartered and operating under

the United States Home Owners' Loan Act of

1933, as

amended. WMB engages in mortgage

banking, consumer banking and small business banking. WMB, as a federally chartered

association, has the authority to make various types of

loans, including loans secured by homes

and commercial real estate, secured and unsecured consumer loans, and secured and unsecured

commercial loans. As

a federal savings association, WMB is subject to regulation and

examination by

the U.

S.

Office of

Thrift Supervision (together with any successor regulator, the

"OTS"),

its primary regulator. WMB is an indirect wholly-owned subsidiary of

WMI.

Prior to 2004, WMB had two sister depository institutions which were both owned directly

by WMI. WMB has since acquired both of


these institutions,

Washington Mutual Bank fsb, a federal savings bank, became a wholly- owned subsidiary of

WMB on February 1,



the state of



2005.

WMB has applied to the OTS

for

approval to acquire Long Beach Mortgage Company. Long

Beach Mortgage Company's primary business is to originate, purchase, securitize and sell

subprime loans. Long Beach Mortgage Company is a wholly- owned subsidiary of WMI and is a

non-bank affiliate of WMB. Assets originated by Long Beach Mortgage Company will not be

owned by the Asset Trust.

The Trust Securities will be exchangeable, without the approval or

any action on the part of

the holders of

such securities,

for

Fixed-

to-

Floating Rate Depositary Shares under any of

the

following circumstances, each of

which is referred to as

an Exchange Event:

• WMB becomes " undercapitalized" under the OTS' "prompt corrective action" regulations;

• WMB is placed into conservatorship or

receivership; or

• the OTS, in its sole discretion, anticipates that WMB may become "undercapitalized" in

the near term or

takes supervisory action that limits the payment of

dividends by WMB,

and in connection therewith, directs such exchange.

Capital Adequacy

WMB is subject to OTS capital requirements. The capital adequacy requirements are

quantitative measures established by OTS regulations that require WMB to maintain minimum

amounts and ratios of

capital. The OTS requires WMB to maintain minimum ratios of core and

total capital to risk-weighted assets, as well as core capital to adjusted total assets and tangible

capital to adjusted total assets. Under applicable OTS regulations " Tier 1 capital" and " core

capital" have the same meaning.

Federal law and regulations establish minimum capital standards, and under the OTSregulations, WMB is required to have a ( i) leverage ratio o

f

core capital to adjusted total assets

of

at

least 4.00%, (

ii) a ratio of

core capital to total risk-weighted assets ratio of

at

least 4.00%,

(

iii) a ratio of

total capital to risk-weighted assets of

at

least 8.00% and (

iv)

a ratio of

tangible

capital to total adjusted assets of

at

least 1.50%. A savings association's adjusted total assets

represent the savings association's total assets on

its

Thrift Financial Report Consolidated

Statement of

Condition filed with the OTS less assets of

non- includable subsidiaries, goodwill

and other intangibles assets (exclusive of

mortgage servicing rights and purchased credit card

relationships), disallowed servicing assets and purchased credit card relationships and accumu-

30

CONFIDENTIAL


lated gains (losses) on certain available- for- sale securities and cash flow hedges. For purposes

of

determining risk-weighted assets

for

the risk-based capital ratios, the book value of

each of

the savings association's on-balance sheet assets, and a portion of

certain off-balance sheet

items and exposures, are weighted from 0% to 100% based on broad categories. For instance,

U.

S.

government debt obligations are generally risk-weighted at

0%; certain qualifying residential

mortgage loans on one-

to-

four family dwellings are generally risk weighted at

50%; and

commercial loans and most other assets are generally risk-weighted at 100%. Off-balance sheet

items (including letters of

credit, loan commitments, swaps and other derivatives) are converted

into on-balance sheet "equivalent" amounts

for

risk-based capital purposes, then assigned a risk

weight like other assets. The capital risk weighting assigned to certain asset- backed securities

may vary from 20% to 200% depending on credit rating. Subordinated residual interests retained

in asset securitizations, credit enhancement and forms of

" recourse" can result in higher capital

charges or

deductions from capital.

For purposes of

the OTS regulations, " total capital" is defined as

the sum of

core capital

and supplementary capital. "Core capital" generally includes: common shareholders' equity

(which includes related surplus); non- cumulative perpetual preferred stock (which includes

related surplus); and qualifying minority interests in the equity accounts of

consolidated

subsidiaries (which may include such instruments as qualifying REIT preferred stock and the

Company Preferred Securities). " Supplementary capital" generally includes (subject to certain

limits and sub- limits): cumulative perpetual preferred stock; maturing capital instruments; Dutch

auction and money market preferred stock; hybrid capital instruments (including certain

mandatory convertible notes); term subordinated debt; the savings association's allowance

for

loan and lease losses ( up

to a maximum of

1.25% of

total risk-weighted assets); and up

to 45%

of

the pretax net unrealized gains of

available- for-sale equity securities investments. Supplemen-

tary capital is permitted to count towards only one-half of

total capital. Both core capital and

tangible capital are subject to various deductions. Some of

these deductions are more stringent

for

tangible capital than core capital, including goodwill, certain other intangible assets, and

certain servicing assets in excess of

certain limits.

Federal law and regulations also establish five capital categories

for

savings associations:

well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and criti-

cally undercapitalized. A savings association is treated as well-capitalized if its ratio of

total

capital to risk-weighted assets is 10.00% or

more,

its ratio of

core capital to risk-weighted assets

is 6.00% or

more,

its leverage ratio is 5.00% or

more, and it is not subject to any federal

supervisory agreement order or

directive to meet a specific capital level. In order to be

adequately capitalized, any savings association must have a ratio of

total capital to risk-weighted

assets of

not less than 8.00%, a ratio of

core capital to risk-weighted assets of

not less than

4.00%, and (unless it is in the most highly- rated category) a leverage ratio of

not less than

4.00%. Any savings association that is neither well-capitalized nor adequately capitalized will be

considered undercapitalized. Any savings association with a tangible equity ratio of

2.00% or

less

will be considered critically undercapitalized.

Undercapitalized savings associations are subject to certain prompt corrective action

requirements, regulatory controls and restrictions, which become more extensive as

an

association becomes more severely undercapitalized. Failure by WMB to comply with applicable

capital requirements, if unremedied, would result in restrictions on

its activities and lead to

regulatory enforcement actions against WMB including, but not limited

to,

the issuance of

a

capital directive to ensure the maintenance of

required capital levels. The Federal Deposit

Insurance Corporation Improvement Act of

1991 requires the federal banking regulators to take

prompt corrective action with respect to depository institutions that do not meet minimum capital

requirements. Additionally, FDIC or OTS approval of

any regulatory application filed

for

its review

may be dependent on compliance with capital requirements.

31

CONFIDENTIAL


In addition, the OTS from time to time may impose higher specific capital requirements on

any savings association that is perceived to have risks, exposures, credit concentration, rapid

growth or

other circumstances warranting special attention. Failure to satisfy sUc; ha capital

directive could subject an association to civil money penalties, judicial enforcement and

administrative remedies available to the OTS, as

well as a finding that a savings association is

" undercapitalized" .

Whether WMB would ever be

determined by

the OTS to be

" undercapitalized" or

at

risk of

becoming " undercapitalized" in the near term - thereby triggering the exchange of

the Trust

Securities

for

Fixed-

to-

Floating Rate Depositary Shares - could be influenced not only by the

OTS' capital adequacy regulations,

bu

t

also by

the

regulator's interpretations and judgment on

other matters. For example, the OTS' views on asset credit quality potentially could affect a thrift

or

savings association's capital status. Among other things,

the OTS typically evaluates asset

quality, loan loss reserves and procedures during periodic regulatory examinations of

each

federal savings association.

If, following such an examination or

otherwise, the OTS in its

discretion were to require WMB to significantly increase

its reserves against credit losses ( i. e.,

the

allowance

for

loan and lease losses), this could potentially reduce WMB's retained earnings

and regulatory capital. As

noted above, a savings association's allowance

for

loan and lease

losses is includable within supplementary capital only up

to a limit, and is not includable at

all

in

core capital.

A savings association's regulatory capital status, and the risk of

being deemed "undercapi-

talized" could also be

affected by

other developments or

by

future changes in regulatory capital

and other standards. WMB and WMI continue to actively follow the progress of

the U.

S.

banking

agencies and the Basel Committee on Banking Supervision in developing a new

se

t

of

regulatory

risk- based capital requirements. The Basel Committee on Banking Supervision is a committee

established by

the

central bank governors of

certain industrialized nations, including the United

States. The new requirements are commonly referred to as Basel" or The New Basel Capital

Accord; however, final requirements have not been adopted. WMB and WMI are also assessing

the potential impacts of

Basel

II.

The regulatory capital ratios calculated

for

WMB, along with the capital amounts and ratios

for

the minimum regulatory requirement and the minimum amounts and ratios required to be

categorized as well-capitalized under the regulatory framework

for

prompt corrective action were

as follows:

December 31, 2005

WMB

Actual

Amount Ratio

Minimum to be

Categorized as

Well- Capitalized

Minimum Under the OTS'

Regulatory Prompt Corrective

Requirement Action Regulations

Amount Ratio Amount Ratio

(Dollars in millions)

Total capital to total risk- weighted

assets .......................... $26,530 11.62% $18,260 8.00% $22,825 10.00%

Core capital to total risk- weighted

assets .......................... 19,661 8.61 9,130 4.00 13,695 6.00


(leverage) ...................... 21,098 6.56 12,860 4.00( 1)

16,075 5.00


(tangible equity) ................ 20,642 6.43 4,816 1.50 n/ a n/ a

32

CONFIDENTIAL


WMB

Actual

Amount Ratio

December 31, 2004

Minimum to be

..Categorized as

Well-Capitalized



Requirement Action Provisions




assets ........................... $20,698 11.68% $14,174 8.00% $17,718 10.00%


assets ........................... 14,392 8.12 7,087 4.00 10,631 6.00


(leverage) ....................... 14,530 5.46 10,635 4.00( 1 ) 13,294 5.00


(tangible equity) ................. 14,530 5.46 3,988 1.50 n/ a n/ a

December

31

,

2003

WMB

Actual

Amount Ratio

Minimum to be

Categorized as

Well- Capitalized



Requirement Action Regulations




assets .......................... $15,444 10.80% $11,441 8.00% $14,302 10.00%


assets .......................... 12,472 8.72 5,721 4.00 8,581 6.00


(leverage) ...................... 12,531 5.50 9,116 4.00( 1)

11,395 5.00


(tangible equity) ................ 12,531 5.50 3,419 1.50 n/ a n/

a

( 1) The minimum leverage ratio guideline is 3% for

financial institutions that do

not anticipate significant growth and that

have well-diversified risk, excellent asset quality, high liquidity, good earnings, effective management and monitoring

of

market risk and, in general, are considered top- rate, strong banking organizations.

Benefits to WMB

WMB has requested confirmation from the OTS that the Company Preferred Securities

constitute core capital of WMB under

the

OTS's applicable regulatory capital regulations and,

upon receipt of

such confirmation, intends to treat the Company Preferred Securities accordingly.

33

CONFIDENTIAL


USE OF PROCEEDS

WaMu Delaware will use the proceeds of

the sale of

the Trust Securities in this Offering,

expected to be approximately $1,225,000,000, net of

underwriting commissions, to purchase from

WMB a like amount of

Fixed-

to-

Floating Rate Company Preferred Securities, which the Company

will issue to WMB in exchange

for

the conveyance from WMB of

a portfolio of

HELs. The WMIGroup will use the proceeds from the sale o

f

the Fixed-

to-


Securities to WaMu Delaware and the Fixed Rate Company Preferred Securities to WaMu

Cayman

for

general corporate purposes, which may include the repurchase of

WMl's common

stock.

34

CONFIDENTIAL


WAMU DELAWARE

Washington Mutual Preferred Funding Trust I ("WaMu Delaware") is a statutory trust

created under the Delaware Statutory Trust Act, as amended (the "Trust Act") ,pursuant to a

certificate of

trust filed with the Secretary of

State of

the State of

Delaware and the execution of

a trust agreement of WaMu Delaware on February 23, 2006. WaMu Delaware will continue

its

existence from and after the closing of

the Offering pursuant to an amended and restated trust

agreement ( as

so amended and restated, the " Trust Agreement"), to be entered into by and

among

the

Company, as grantor, Wilmington Trust Company, as property trustee (

the

"Property

Trustee"), and Wilmington Trust Company, as Delaware trustee (the "Delaware Trustee"), as

of

the date the Trust Securities are issued. The rights of

the holders of

the Trust Securities,

including economic rights, rights to information and voting rights, are as

set forth in the Trust

Agreement and the Trust Act.

The Trust Agreement generally limits WaMu Delaware's activities to ( i) holding the

Fixed-

to-

Floating Rate Company Preferred Securities, (

ii) issuing the Trust Securities,

(

iii) passing through dividends paid by the Company to WaMu Delaware on the Fixed-

to-

Floating

Rate Company Preferred Securities and (iv

)performing functions necessary o

r

incidental

thereto. WaMu Delaware is prohibited from issuing other equity securities or

any debt securities

or

engaging in any other activities. Subject to the limitations and assumptions described under

"Certain U.

S.

Federal Income Tax Considerations," WaMu Delaware will be

treated as

a grantor

trust

for

United States Federal income tax purposes, with the result that holders of

Trust

Securities will be

treated as

beneficial owners of

Fixed- to Floating Rate Company Preferred

Securities

for

United States Federal income tax purposes. The Fixed-

to-


Preferred Securities will be

the only assets of WaMu Delaware. The principal executive offices of

WaMu Delaware will be located at

1201 Third Avenue, Seattle, WA 98101. The office of

the

Delaware Trustee is Rodney Square North, 1100 North Market Street, Wilmington, DE 19890.

Copies of

the Trust Agreement will be available upon request to WMI.

As

set forth

in,

and subject

to,

the Trust Agreement, the Property Trustee and the Delaware

Trustee will have exclusive and complete authority to carry out the purposes of

WaMu Delaware.

The Property Trustee will hold title to the Fixed-

to-


Securities

for

the benefit of

the holders of

the Trust Securities, and, as such holder, the Property

Trustee will have the power to exercise

all

rights, powers and privileges with respect to the

Fixed-

to-

Floating Rate Company Preferred Securities under the LLC Agreement. In addition, the

Property Trustee will maintain exclusive control of

a segregated non- interest bearing bank

account to hold

all payments made in respect of

the Fixed-

to-


Securities

for

the benefit of

the holders of


Pursuant to the Trust Agreement,

all charges or

expenses of WaMu Delaware other than

payments required under the terms of

the Trust Securities, including the fees, charges and

expenses of

the Property Trustee, the Delaware Trustee, the Registrar, and Transfer Agent or

any Paying Agent, will be paid or

caused to be paid by the Company; provided, however, that if

the Company does not payor cause to be paid such fees, charges and expenses or

can only

pay such fees, charges and expenses in a manner that would allocate such fees, charges and

expenses against the interests of

the holders of

the Fixed- to Floating Rate Company Preferred

Securities, WMB will pay such fees, charges and expenses; provided further, that if the Property

Trustee or

the Delaware Trustee incurs fees, charges or

expenses,

for

which they are not

otherwise liable under the Trust Agreement, or

if the Paying Agent or

Registrar and Transfer

Agent incurs fees, charges or

expenses

for

which they are not otherwise liable under the Agency

Agreement, in each case at the request of a holder of

Trust Securities or

other person, such

holder or

other person will be liable

for

such fees, charges and expenses.

The information with respect to WaMu Delaware that is required by paragraph ( d)

( 4)

( i) of

Rule 144A under the Securities Act, will be available upon request to the Property Trustee until

the earlier of

( i) the redemption in full of


(

ii) the Conditional Exchange.

35

CONFIDENTIAL


THE COMPANY

Washington Mutual Preferred Funding LLC (the "Company") is a Delaware; limited liability

company formed on February 3, 2006 under the Delaware Limited Liability Company Act, as

amended (the "LLC Act"), pursuant to an initial limited liability company agreement and a

certificate of

formation filed with the Secretary of

State of

the State of

Delaware. The limited

liability company agreement will be amended and restated in its entirety on

or

about March 7,

2006 ( as

so amended and restated, the "LLC Agreement").

The LLC Agreement generally limits the Company's activities to ( i) issuing the Fixed-

to-

Floating Rate Company Preferred Securities, the Fixed Rate Company Preferred Securities and

the common securities of

the Company (the " Company Common Securities") and additional

Parity Equity Securities of

the Company, (

ii) acquiring and holding Eligible Investments, including

the Class A Asset Trust Certificate (which will be the sole initial Eligible Investments of

the

Company) in accordance with the investment policy as

described in "- Business of

the

Company - Assets of

the Company" and (

iii) performing functions necessary or

incidental

thereto. Subject to the limitations and assumptions described under "Certain U.

S.

Federal Income

Tax Considerations," the Company intends to be treated as a partnership (other than a publicly

traded partnership taxable as a corporation)

for


tax

purposes.

Further, the Company may not take any action, or

permit any action to be taken, that would

cause the Company to fail

to be

treated as a partnership

for

United States Federal income tax

purposes

for

so long as any Company Preferred Securities are outstanding, except with the

consent or

affirmative vote of

the holders of

at


the Fixed-

to-

Floating Rate

Company Preferred Securities and the Fixed Rate Company Preferred Securities, voting together

as a single class. The principal executive office of

the Company is 1201 Third Avenue, Seattle,

Washington 98101. Copies of

the LLC Agreement will be available upon request to WMI.

The Company will receive the opinion of

Mayer, Brown, Rowe & Maw LLP to the effect that,

for

United States Federal income tax purposes, the Company will not be treated as

an

association taxable as a corporation or

as a publicly traded partnership taxable as a corporation.

Capitalization

Upon completion of

this Offering, University Street, Inc., an

indirect subsidiary of WMB

("University Street"), will hold

all

of

the Company Common Securities, representing 100% of

the

voting rights in the Company (subject to the limited voting rights of

holders of

the Company

Preferred Securities described under "Description of

Fixed-

to-


Securities - Voting Rights and Covenants"). Upon completion of

this Offering, WaMu Delaware

will hold

all

of

the Fixed-

to-

Floating Rate Company Preferred Securities and WaMu Cayman will

hold

all

of


The following table illustrates the expected capitalization of

the Company as

of

the closing

of

this Offering, after giving effect to the issuance of

the Company Common Securities, the

Fixed-

to-

Floating Rate Company Preferred Securities and the Fixed Rate Company Preferred

Securities on

the closing date:

Fixed-

to-

Floating Rate Company Preferred Securities .

Fixed Rate Company Preferred Securities .

Company Common Securities .

Total Capitalization .

36

As

of

the Closing Date

(Unaudited)

$1,250,000,000

$750,000,000

$3,389,459,150

$5,389,459,150

CONFIDENTIAL


Business of

the Company

Assets of

the CompanyIn connection with

the

Offering, WMB

will

convey a portfolio of

HELs to the Company in

exchange for 100% of

the Company Preferred Securities. Concurrently, University Street will

convey a portfolio of


for


The portfolios conveyed by WMB and University Street to the Company will consist of

HELs

having an aggregate principal balance of

approximately $5,389,459,150 as

of

January 31, 2006

and includes payments received on such portfolio from and after February 1,

2006. The Company

will then convey the assets received by

it from WMB and University Street to the Asset Trust in

exchange for interests in the Asset Trust represented by

the Class A Asset Trust Certificate and

the Class R Asset Trust Certificate.

The Eligible Investments (which will initially consist of

the Class A Asset Trust Certificate

owned by

the Company) from time to time will generate net income

for

payment of

dividends by

the Company to WaMu Delaware as

holder of

the Fixed-

to-


Securities (and consequently

for

pass through by WaMu Delaware to holders of

the Trust

Securities), to WaMu Cayman as holder of

the Fixed Rate Company Preferred Securities (and,

consequently for payment as

dividends by WaMu Cayman to the holders of

the WaMu Cayman

Preferred Securities), and to University Street as

holder of


The Company intends to manage

its assets so

as

( i) to ensure that the Company will at

all

times maintain

its exemption under the Investment Company Act, (

ii)

to result in the Company at

all

times maintaining sufficient FFO to allow payments to be made with respect to its Junior

Equity Securities (including payments to University Street as

holder of

the Company Common

Securities) and (

iii) to maintain the desired treatment under the Code

for

the Company's assets

and obligations.

Current requirements under the Investment Company Act mandate that in order to maintain

its exemption from registration as

an investment company the Company must limit

its assets

which are not Qualifying Interests to no more than 20% of

its

total assets at

any time. The

Company expects that initially the distributions it receives from the Asset Trust as holder of

the

Class A Asset Trust Certificate will significantly exceed the amount required to pay dividends on

the Company Preferred Securities and any Parity Equity Securities. Cash received from

the

Asset

Trust and any Permitted Investments purchased with such funds are not Qualifying Interests, and

therefore funds received from the Asset Trust and retained by

the Company will be

limited

(together with any other assets which are not Qualifying Interests) to 20% of

the Company's

total assets at

any time. For this and other reasons, in the ordinary course, the Company expects

that it will distribute

all

or

substantially

all

of

the funds it receives from the Asset Trust to

University Street, as

holder of

the Company Common Securities, to the extent it is permitted to

do

so

in accordance with the restrictions on dividends with respect to the Company Common

Securities and such funds are not otherwise required to pay dividends on the Company Preferred

Securities and any other Parity Equity Securities. The Company intends to invest funds it receives

from the Asset Trust in Permitted Investments prior to such funds being distributed to the holders

of

the Company Common Securities, the Company Preferred Securities and any other Parity

Equity Securities.

The Company also expects that over time

the


the HELs held by the

Asset Trust will decrease as a result of

principal payments and payoffs. Since ( i) in accordance

with the terms of

the Pooling and Servicing Agreement, additional assets may only be added to

the Asset Trust in very limited circumstances and (

ii) funds distributed to the Company by

the

Asset Trust may be distributed to University Street as discussed above and to the extent held by

the Company will generally (when invested in Permitted Investments) generate a lower rate of

return than the HELs held in the Asset Trust, over time the Company expects that

its FFO will

decline. Accordingly, prior to the point that the Company's FFO level is reduced to a level that

37

CONFIDENTIAL


would prevent payments with respect to its Junior Equity Securities ( including payments to

University Street as

holder of

the Company Common Securities) the Company intends to acquire

additional income producing investments which constitute Eligible Assets. Any additional assets

which are acquired by

the Company will not be

transferred to the Asset Trust or

serviced in

accordance with the Pooling and Servicing Agreement. Additional assets which are acquired by

the Company and are not Permitted Investments (such assets, " Additional Assets") may (but

are

no

t

in all cases required

to)

consist of

obligations of

Asset Subsidiaries. The terms of

the

Asset Documentation with respect to any Additional Assets will provide

for

the servicing of

such

Additional Assets.

" Eligible Assets" means assets:

( a)

which ( i) are securities, interests or

other obligations of

an Asset Subsidiary

which are backed or

collateralized by

first or

second lien closed end home equity

loans, first or


credit, mortgage loans on single

family or

multi- family residences, commercial mortgage loans or

other real estate

assets, in each case, with respect to real estate located in the United States;

provided, however, that the Company may acquire and hold first or

second lien

closed end home equity loans, first or


credit,

mortgage loans on

single family or

multi-family residences, commercial mortgage

loans or

other real estate assets directly if the Company receives an Asset Tax

Opinion in connection with such assets or

(

ii) otherwise satisfy the Rating Agency

Condition and are approved by

all

of

the managers, including the Independent

Manager;

( b)

which will be

serviced and maintained in accordance with Asset Documentation;

( c)

the collateral

for

which is not permitted to include under the related Asset

Documentation any first or

second lien closed end home equity loans, first or


credit, mortgage loans on single family or

multi-

family residences, commercial mortgage loans or

other real estate assets as

to

which the applicable obligor was more than 30 days delinquent as

of

the

applicable cut-

off date or

transfer date;

( d)

the collateral

for

which does not create or

carry any obligation of

the Company or

any Asset Subsidiary to make future advances or

loans to any obligor with respect

to such collateral under lines of

credit, revolving loan facilities or

other similar

features; and

( e) the acquisition, maintenance and servicing of which will not ( in itself or

in

connection with any of

the

Company's other assets):

( i) cause the Company to be

an " investment company" which is required to

register under the Investment Company Act;

(

ii) cause the imposition of

United States Federal income withholding tax in

respect of

payments made by

the Company on the Company Preferred Securities

or

any Parity Equity Securities;

(

iii) cause the Company to be treated under the Code as a publicly traded

partnership taxable as a corporation; or

(

iv)

cause the Company to be

treated as

engaged in a U.

S.

trade or

business, as

determined for United States Federal income tax purposes.

"Asset Documentation" means ( a)

with respect to the Asset Trust and the Class A Asset

Trust Certificate, the Pooling and Servicing Agreement and any related Custody Agreement and

( b)

with respect to any Additional Assets, the documentation ( i) governing the maintenance and

38

CONFIDENTIAL


servicing of

such Additional Assets and custodial arrangements related thereto and ( to the extent

applicable) any underlying collateral related to such Additional Assets and (

ii) establishing ( if

applicable) any Asset Subsidiary created in connection with such Additional Assets; provided that

the execution of

any such documentation, to the extent such documentation is not substantially

similar in all material respects to the Pooling and Servicing Agreement (with such changes as

may be necessary or

desirable to reflect the collateral

for

such Additional Assets), must satisfy

the Rating Agency Condition and be approved by

all

of

the managers, including the Independent

Manager.

" Asset Subsidiary" means the Asset Trust and, with respect to any Additional Assets, an

entity formed

for

the purpose holding the collateral related to such Additional Assets and making

payments with respect thereto to the Company and:

( a)

in which the Company holds

all

or

substantially

all

of

the

economic interests;

( b)

which is established and governed pursuant to Asset Documentation;

( c) which is not an " investment company" which is required to register under the

Investment Company Act;

( d)

the establishment and operation of

which will not cause the Company to be

an

" investment company" which is required to register under the Investment Company

Act;

( e)


which will not cause the imposition of

United States

Federal withholding tax in respect of

payments by

the Company on

the Company


any Parity Equity Securities;

( f) the establishment and operation of

which will not cause the Company to be treated

under the Code as

a publicly traded partnership taxable as

a corporation; and

( g)


which will not cause the Company to be

treated as

engaged in a US trade or

business, as determined

for


tax purposes.

" Asset Tax Opinion" means, with respect to any assets, an

opinion of

counsel from a

nationally recognized tax counsel to the effect that the acquisition and ownership of

such assets

by

the Company will not ( in itself or

in connection with any of

the Company's other assets):

( a)

cause the imposition of

United States Federal withholding tax in respect of

payments made by the Company on the Company Preferred Securities or any

Parity Equity Securities;

( b) cause the Company to be treated under the Code as a publicly traded partnership

taxable as a corporation; or

( c)

cause the Company to be treated as engaged in a U.

S.

trade or

business, as

determined

for


tax

purposes.

" Asset Portfolio" means the Class A Asset Trust Certificate and any Permitted Investments

and Additional Assets held by

the Company from time to time.

" Eligible Investments" means Permitted Investments, the Class A Trust Certificate, the

Class R Asset Trust Certificate and Eligible Assets.

" Permitted Investments" means one or

more of

the obligations or

securities listed below:

( a)

obligations

of,

or

guaranteed as

to principal and interest by, the United States of

America or

any agency or

instrumentality thereof when such obligations are

backed by

the full faith and credit of

the United States of

America;

39

CONFIDENTIAL


( b)

repurchase agreements on obligations described in clause ( a)

of

this definition of

"Permitted Investments"; provided further, that the unsecured obligations of

the

party agreeing to repurchase such obligations have at

the time one of

the two

highest short term debt ratings of

each of

the Rating Agencies; and provided that

such repurchaser's unsecured long term debt has one of the two highest

unsecured long term debt ratings of each of the Rating Agencies;

( c)

federal funds, certificates of

deposit, time deposits and bankers' acceptances of

any bank or

trust company incorporated under the laws of


America or

any state; provided that the debt obligations of

such bank or

trust

company (

or,

in the case of

the principal bank in a bank holding company system,

debt obligations of

the bank holding company) at the date of

acquisition thereof

have one of the two highest short term debt ratings of each of the Rating

Agencies and unsecured long term debt has one of

the two highest unsecured

long term debt ratings of

each of

the Rating Agencies;

( d)

federal funds, certificates of

deposit, time deposits, demand deposits and bankers'

acceptances of WMB;

( e)

obligations

of,

or

obligations guaranteed

by,

any state of


America or

the District of

Columbia, provided that such obligations at

the date of

acquisition thereof shall have one of

the two highest long- term debt ratings

available

for

such securities from each of


( f) commercial paper of

any corporation incorporated under the laws of

the United

States of

America or

any state thereof, which on

the date of

acquisition has the

highest commercial paper rating of

each of

the Rating Agencies; provided that the

corporation has unsecured long term debt that has one ofthe two highest

unsecured long term debt ratings of

each of


( g)

securities (other than stripped bonds or

stripped coupons) bearing interest or

sold at

a discount that are issued by

any corporation incorporated under the laws

of


America or

any state thereof and have one of

the two

highest long- term unsecured ratings available

for

such securities from each of

the

Rating Agencies; and

( h)

any other category of

investments that satisfy the Rating Agency Condition and isapproved b

y

all

of

the managers, including the Independent Manager; subject to

the receipt by

the Company of

an Asset Tax Opinion with respect to such

category of

investments;

provided, however, that any of

the investments listed above will not be Permitted Investments to

the extent that investment therein would cause the outstanding principal amount of

Permitted

Investments that are then held by

the Company to exceed 20% of

the aggregate principal amount

of

all

Eligible Investments. In no event shall an instrument be a Permitted Investment if such

instrument ( x)

evidences a right to receive only interest payments with respect to the obligations

underlying such instrument or

( y)

has been purchased at

a price greater than the outstanding


such instrument.

" Rating Agencies" means, at

any time, S& P,

Moody's and Fitch, but only in the case of

each

such agency if it is rating the relevant security, including the Trust Securities or

the WaMu

Cayman Preferred Securities, at

the time

or,

if none of

them is providing a rating

for

the relevant

security, including the Trust Securities or

the WaMu Cayman Preferred Securities at

such time,

then any " nationally recognized statistical rating organization" as

that phrase is defined

for

purposes of

Rule 436 ( g)

( 2)

under the Securities Act, which is rating such relevant security.

40

CONFIDENTIAL


"Rating Agency Condition" means written notice from each Rating Agency confirming that

the proposed change or

modification will not result in a reduction of

the rating then currently

assigned by such Rating Agency to the Trust Securities or

the WaMu Cayman preferred

Securities. .

Employees and Administration Agreement

Prior to issuing the Fixed-

to-

Floating Rate Company Preferred Securities, the Company and

WMB will enter into an Administrative Services Agreement (

the

"Administrative Services

Agreement") pursuant to which WMB will provide ( or

cause to be provided) certain accounting,

legal, tax and other support services to the Company, assist the Company in maintaining

compliance with

all pertinent U.

S.

local, state and federal laws and provide necessary

administrative, record keeping and secretarial services to the Company. Under such agreement,

the Company will agree to reimburse the provider of

such services from time to time

for

the

value of

services provided by such provider to the Company. The Company expects that any

such reimbursement will be

in a de

minimis amount.

The Company will maintain limited liability company records and audited financial statements

that are separate from those of WMI and any of

its other affiliates. None of

the officers,

employees or

managers of

the Company will have any direct or

indirect pecuniary interest in any

security to be acquired or

disposed of

by the Company or

in any transaction in which the

Company has an

interest.

Management of

the Company


The Company will be managed by a Board of Managers. The LLC Agreement will provide

that the Company's Board of

Managers will at

all times be composed of

three members, one of

whom is not and has not been during the preceding five years an

officer or

employee of WMI or

any affiliate of

WMI, other than a financing subsidiary (the " Independent Manager"). The

Company's managers will serve until their successors are duly elected and qualified. Except in

certain circumstances described under "- Independent Manager" below, action by the

Company's Board of

Managers will be

by

majority vote. The Company will have five officers upon

issuance of

the Fixed-

to-


The persons who will be

the managers and executive officers of

the Company upon

completion of

the Offering will include:

Name

Robert Williams .

Peter Freilinger .

Kenneth J.

Uva .

Doreen Logan .

Paul Phillips .

Chad Smith .

Position and Offices Held

Manager and Senior Vice-President

Manager and Senior Vice-President

Independent ManagerFirst Vice President and Assistant Secretary

Vice President

First Vice President and Secretary

Each of

the initial managers (other than the Independent Manager) and officers of

the

Company are individuals who are officers or

employees of WMI or

one of

its affiliates. The initial

Independent Manager is Kenneth J.

Uva, who is an employee of

CT Corporation.

Independent Manager

Under the LLC Agreement, in order to be considered " independent", a manager must not,

during the preceding five years, have been a director or

employee of WMI or

any affiliate of

WMI,

other than a direct or


WMI.

41

CONFIDENTIAL


The LLC Agreement will require that, in assessing the benefits to the Company of

any

proposed action requiring

his

or



holders of



the holders

of

the Company Preferred Securities, the Company's Independent Manager owes such holders

the same duties which the Independent Manager owes to the holders of Company Common

Securities.

The LLC Agreement will provide that, for so long as any Company Preferred Securities are

outstanding, certain actions by

the Company are subject to prior approval of

all Managers

including the Independent Manager. The Company will not be

able, without the approval of

the

Independent Manager, to ( i) terminate, amend or

otherwise change any of

the Company's Asset

Documentation or

(

ii) effect a consolidation, merger or

share exchange that is not tax- free to the

holders of

the Company Preferred Securities unless such consolidation, merger or

share

exchange was approved by

the consent or

affirmative vote of

the holders of

at


the Fixed-

to-

Floating Rate Company Preferred Securities and the Fixed Rate Company Preferred

Securities, voting together as

a single class. In addition, in the event that the Asset Trust fails to

make a payment to the Company or any payments are not received with regard to any Additional

Asset in violation of

the terms of

the related Asset Documentation on any scheduled payment

date, the Independent Manager will have the authority to cause the Company, as

the holder of

the Series A Asset Trust Certificate or

any Additional Asset, as

applicable to enforce

its rights in

such capacity until payments have been resumed and a year has passed since the date of

the

latest scheduled payment date with respect to which the Asset Trust or

the Additional Asset

failed to make a payment.

The holders of

the Company Preferred Securities, voting together as a single class, by

majority vote of

the votes cast on such matter at

a meeting properly called and held or

by

written

instructions signed by

the holders of

Company Preferred Securities representing a majority of

the

voting rights of

all outstanding Company Preferred Securities, voting together as a single class,

are entitled to remove the initial or any succeeding Independent Manager and to f

ill the vacancy

created by such removal or any other vacancy existing in the office of

the Independent Manager

if ( i) the Company fails to pay

full dividends on

the Company Preferred Securities on any

Dividend Payment Date, (

ii) WaMu Delaware fails to pass through dividends paid by

the

Company on

the Fixed-

to-

Floating Rate Company Preferred Securities to the holders of

the Trust


(

iii) a Bankruptcy Event occurs. The person so

elected will be deemed to be

an Independent Manager irrespective of

whether he

or

she meets

the independence test described above. Such right will continue

for

as

long as any Fixed-

to-

Floating Rate Company Preferred Securities are outstanding.

"Bankruptcy Event" means the Company, WaMu Delaware or

WaMu Cayman ( i) becomes

insolvent or

is unable to pay

its debts or

fails or

admits in writing

its inability generally to pay

its

debts as

they become due, (

ii) makes a general assignment, arrangement or

composition with or

for

the benefit of

its creditors or

(

iii) institutes or has instituted against it a proceeding seeking a

judgment of

insolvency or

bankruptcy or any other relief under any bankruptcy or

insolvency law

or

other similar law affecting creditors' rights, or

a petition is presented

for

its winding up

or

liquidation.

Compensation of


The Company intends to pay the initial Independent Manager a reasonable fee

for

his or

her

services as a manager of

the Company, plus reimbursement of

expenses

for

attendance at

each

meeting of


Managers. As

to managers and officers of

the Company who

are also officers or

employees of WMI or

one of

its affiliates, the Company will pay, or

reimburse

the related affiliate for, a portion of

the salary and benefits of

any such persons in proportion to

the estimated amount of

time spent by such person on the Company's business as compared to

42

CONFIDENTIAL


time spent on

the business of

WMI or

one of

its other affiliates. However, the Company expects

such amount to be

de minimis.

Indemnification of


The LLC Agreement will provide that the Company will, to the fullest extent permitted by

law, indemnify any manager or

officer of

the Company

for

any liability and related expenses

(including reasonable counsel's fees) arising out of such manager's or

officer's status as a

manager or

officer of

the Company; provided, however, that a court of competent jurisdiction has

not determined that such manager or

officer did not act in good faith and in a manner that he

or

she reasonably believed to be

in,

or

not opposed

to,

the best interests of

the Company and, with

respect to any criminal action or

proceeding, had no reasonable cause to believe that his or

her

conduct was unlawful. The LLC Agreement will provide that the right to indemnification is a

contract right and set forth certain procedural and evidentiary standards applicable to

enforcement of

a claim. The LLC Agreement will provide that the Company may purchase and

maintain insurance to protect any manager or

officer against any liability asserted against him or

her, or

incurred by him or

her, arising out of

his or

her status as

such.

Additional Covenants of

the Company in the LLC Agreement

The LLC Agreement provides that, so

long as

any Company Preferred Securities are

outstanding, the Company will not authorize, create or

increase the authorized amount of

or

issue any class or

series of any equity shares of

the Company, or any warrants, options or

other

rights convertible or

exchangeable into any class or

series of

any equity shares of

the Company,

ranking senior to the Company Preferred Securities, either as

to dividend rights, redemption

rights or

rights on dissolution, liquidation or

winding up

of

the Company without the consent or

an affirmative vote of

the holders of

at


the Fixed-

to-


Preferred Securities and the Fixed Rate Company Preferred Securities, voting together as a

single class. The LLC Agreement also provides that, except with the consent or

affirmative vote

of

the holders of

at


the Fixed-

to-


and the Fixed Rate Company Preferred Securities, voting together as a single class, the

Company will not take certain other actions.

These actions are described under " Description of

the Fixed-

to-


Preferred Securities - Voting Rights and Covenants."


The information with respect to the Company that is required by

paragraph ( d)

( 4)

( i) of

Rule 144A under the Securities Act, including quarterly unaudited and annual audited financial

statements, in each case prepared in accordance with U.

S.

GAAP, will be available upon request

to WMI until the earlier of

( i) the redemption in full of

the Fixed-

to-



(

ii) the Conditional Exchange.

43

CONFIDENTIAL


THE ASSET TRUST

General

Washington Mutual Home Equity Trust I (the " Asset Trust") is a statutory trust formed

under the laws of

the State of

Delaware pursuant to a trust agreement between the Company, as

depositor, and Deutsche Bank Trust Company Delaware, as Delaware trustee. The Pooling and

Servicing Agreement among the Company, as

depositor, WMB, as

servicer (the "Servicer"),

Deutsche Bank Trust Company Delaware, as Delaware trustee (the " PSA Delaware Trustee")

and Deutsche Bank National Trust Company, as trustee (the " Trustee"), will restate the trust

agreement and will be the governing instrument of

the Asset Trust.

The Asset Trust will not own any assets other than the HELs and the other assets

described below. The Asset Trust will not have any liabilities other than those incurred in

connection with the Pooling and Servicing Agreement and any related agreement. The Asset

Trust will not have any directors, officers or

other employees. No equity contribution will be made

to the Asset Trust by WMB, the depositor or

any other party, except

for

a de minimis contribution

made by

the depositor pursuant to the initial trust agreement, and the Asset Trust will not have

any other capital. The fiscal year end of

the Asset Trust will be December 31. The Asset Trust

will act through the Trustee and the PSA Delaware Trustee, whose fees and reasonable

expenses will be paid or

reimbursed by

the Servicer.

For purposes of

this offering circular with respect to the underwriting, origination and

servicing of

the HELs in the Asset Trust, references to WMB include WMB, originators acquired

by WMB and WMB's subsidiaries.

General Description of

Assets

The assets of


HELs having, as

of

the Cut-Off Date, a value of

approximately $5,389,459,150, payments received thereon and certain other investments. The

HELs were originated by WMB primarily through

its retail branches between September 1,

2001

and September 30, 2005. As

of

January 31, 2006, the HELs transferred into the Asset Trust had

an aggregate unpaid principal balance of


The assets of


56,090 HELs that had an aggregate unpaid

principal balance as

of the Cut-Off Date of

approximately $5,389,459,150. The HELs have a

weighted average gross interest rate of 6.076% and range from a gross interest rate of 4.00% to

11.315%. The weighted average current, unpaid principal balance of

the HELs is $96,086 with a

minimum current, unpaid principal balance of

$25,002 and a maximum current, unpaid principal

balance of

$965,000. Assets in the Asset Trust have various original maturities ranging from

5 years to 40 years and werE:), on average, originated within the last 25.46 months. The current

averageloan-

to-

value ratio is 53.48% and the average loan-

to-

value ratio at

origination was

57.51%. The HELs have a weighted average Credit Score ( as

defined below) of

757. Most of

the

properties underlying the HELs are owner occupied with 3.86% of

the properties non-owner

occupied. The HELs are geographically concentrated in Texas (49.01%), California (30.59%),

Florida (7.17%), and New York (5.08%). HELs are typically made

for


purchases, home improvements, furniture and fixtures purchases, purchases of

automobiles and

debt consolidation. The HELs are generally repaid on a fully- amortizing basis.

Acquisition of

the Portfolio and Related Transactions

In anticipation of

the transactions described in this offering circular, WMB contributed a pool

of


for

a corresponding amount of

the Company's Fixed-

to-

Floating Rate Company Preferred Securities and Fixed Rate Company Preferred Securities. In

addition, University Street contributed a pool of HELs to the Company in exchange for

all

of the

44

CONFIDENTIAL


Company Common Securities. The aggregate value of

these contributions totaled approximately

$5,389,459,150.

Concurrently with the issuance of

the Trust Securities, the Company will cOntribute to the

Asset Trust

all

of

the HELs it received from WMB and University Street. Such contribution will be

made in exchange

for

the Class A-

1 Washington Mutual Home Equity Trust I Certificate (the

"Class A Asset Trust Certificate") and the Class R Washington Mutual Home Equity Trust I

Certificate (the "Class R Asset Trust Certificate"). For United States Federal income tax

purposes, the Class A Asset Trust Certificate will represent the sole class of

regular interests in

the Asset Trust, and the Class R Asset Trust Certificate will represent the sole class of

residual

interests in the Asset Trust. The Company will retain the Class A Asset Trust Certificate and

expects to sell the Class R Asset Trust Certificate to WMB.

The Asset Trust will own the right to receive

all payments of

principal and interest on the

HELs due after January 31, 2006 (the "Cut-Off Date"). A schedule to the Pooling and Servicing

Agreement will include information about each HEL, including:

• the outstanding principal balance as

of

the close of

business on the Cut-Oft Date;

• the term of

the HEL; and

• the applicable interest rate as

of

the close of

business on the Cut-Oft Date.

The notes relating to the HELs

will

not be endorsed to the

Asset Trust and no assignments

to the Asset Trust of

the mortgages securing the HELs will be prepared. WMB, in its capacity as

initial Custodian, will have possession of

and will review such notes and the HELs as

Custodian

for

the Asset Trust and financing statements will be

filed evidencing the Asset Trust's interest in

the HELs.

In exchange

for

the HELs and the other assets described above, the Trustee will

authenticate and deliver the Class A Asset Trust Certificate and the Class R Asset Trust Certifi-

cate pursuant to the order of

the depositor.

Description of

the Portfolio

General

All

of

the HELs in the portfolio of


closed- end, first lien home

equity loans secured by a first lien that primarily is on the borrower's residence. Such residences

are largely single family properties. These loans typically are made

for


purchases, home improvements, acquisition of

furniture and fixtures, purchases of

automobiles,

and debt consolidation. The HELs are generally paid on a fully- amortizing basis. As

of

January 31, 2006, none of

the HELs were delinquent in payments

for

a period of

more than 30

days; however, the process of

selection

for

the HELs conveyed to the Asset Trust excluded any

such loans. Nevertheless, there can be

no assurance that HELs held in the portfolio of

the Asset

Trust will not become delinquent in the future. WMB's delinquency experience with respect to

first lien, closed-end home equity loans owned by WMB and

its subsidiaries has consistently

been less than one percent of

the total outstanding unpaid principal balance of such loans. As

of

December 31, 2005, total delinquencies of

the first lien, closed-end home equity loans owned by

WMB and

its subsidiaries, including charge- ofts during 2005, were 0.60% of

the total unpaid

principal balances of

such loans.

45

CONFIDENTIAL


The following tables represent information as

of

January 31, 2006 with respect to the HELs

included in the portfolio of

the

Asset Trust:

Distribution by

Current Principal Balance

Current Principal Balance

$0-$ 49,999 .

$50,000-$ 74,999 .

$75,000-$ 99,999 .

$100,000-$ 199,999 .

$200,000-$ 299,999 .

$300,000-$ 499,999 .

Greater than $500,000 .

Total .

Distribution by

Current Gross Interest Rate

Current Gross Interest Rate

4.00- 4.99% .

5.00-5.99 .

6.00-6.99 .

7.00-7.99 .

8.00- 8.99 .

9.00- 9.99 .

10.00- 10.99 .

11.00- 11 .99 .

Total .

Distribution by Property Type

Property Type

Single Family .

Townhouse .

Condominium .

Manufactured Housing .

Total .

Number of

Loans

11,198

13,561

11,231

17,073

2,322

644

61

56,090

Number of

Loans

15

26,026

27,509

2,277

209

26

25

3

56,090

Number of

Loans

51,667

2,071

2,269

83

56,090

46

Current Principal

Balance

$ 432,387,414

853,233,512

976,769,683

2,313,001,283

539,701,841

236,692,050

37,673,368

$5,389,459,150

Current Principal

Balance

$ 1,977,067

2,624,484,236

2,571,843,320

173,421,367

14,243,687

1,654,510

1,658,731

176,232

$5,389,459,150

Current Principal

Balance

$4,958,055,897

253,335,974

171,618,855

6,448,424

$5,389,459,150

Percent of

Overall Portfolio

Balance

8.02%

15.83

18.12

42.92

10.01

4.39

0.70

100.00%

Percent of

Overall Portfolio

Balance

0.04%

48.70

47.72

3.22

0.26

0.03

0.03

0.00

100.00%

Percent of

Overall Portfolio

Balance

92.00%

4.70

3.18

0.12

100.00%

CONFIDENTIAL


Distribution by

State

State

Texas .

California .

Florida .

New York .

Washington .

New Jersey .

Oregon .

Georgia .

Idaho .

Arizona .

Other .

Total .

Distribution by

Credit Score

Credit Score( 1)

Less than 600 .

600- 649 .

650- 699 .

700- 749 .

750- 799 .

800- 849 .

Total .

Number of

Loans

28,652

15,288

4,943

2,486

1,181

694

788

446

334

305

973

56,090

Number of

Loans

900

1,786

5,866

11,759

21,633

14,146

56,090

Current Principal

Balance

$2,641,385,492

1,648,481,206

386,598,404

273,920,738

110,746,674

76,275,944

74,128,630

38,773,740

27,517,454

26,256,800

85,374,067

$5,389,459,150

Current Principal

Balance

$ 80,943,626

169,408,159

566,608,998

1,160,863,350

2,144,571,619

1,267,063,398

$5,389,459,150

Percent of

Overall Portfolio

Balance

49.01%

30.59

7.17

5.08

2.05

1.42

1.38

0.72

0.51

0.49

1.58

100.00%

Percent of

Overall Portfolio

Balance

1.50%

3.14

10.51

21.54

39.79

23.51

100.00%

( 1)

"Credit Score" means a statistical credit score obtained by WMB and many other mortgage lenders in connection with

a loan application to help assess a borrower's creditworthiness. A Credit Score is generated by

models developed by

a third party, Fair, Isaac & Co., and made available

to

WMB through three national consumer reporting agencies. The

Credit Score is based on

a borrower's historical credit data, including, among other things, payment history,

delinquencies on

accounts, levels of

outstanding indebtedness, length of

credit history, types of

credit and bankruptcy

experience. A higher Credit Score indicates a more favorable credit rating.

47

CONFIDENTIAL


Distribution by

Current Loan-

to-

Value Ratio

Current Loan-

to-

Value Ratio( 1)

Less than 10.001% .

10.001- 20.000 .

20.001- 30.000 .

30.001- 40.000 .

40.001- 50.000 .

50.001- 60.000 .

60.001- 70.000 .

70.001- 80.000 .

80.001- 90.000 .

90.001- 100.000 .

Total .

Number of

Loans

887

4,030

5,876

7,745

8,680

9,517

9,082

9,703

567

3

56,090

Current Principal

Balance

$ 35,940,629

218,673,171

416,715,161

645,895,191

815,139,892

997,096,237

1,018,570,234

1,173,314,741

67,808,505

305,389

$5,389,459,150

Percent of

Overall Portfolio

Balance

0.67%

4.06

7.73

11.98

15.12

18.50

18.90

21.77

1.26

0.01

100.00%

( 1) The current loan-to-value ratio of

a mortgage loan is a fraction, the numerator of

which is the outstanding principal

balance of

the mortgage loan and

the denominator of

which is the

collateral value, generally at

time of

origination of

the related mortgage property. expressed as a percentage.

Distribution by

Remaining Months to Maturity

Remaining Months to Maturity

Less than 61 .

61-120 .

121- 180 .

181- 240 .

241- 300 .

301- 360 .

Greater than 360 .

Total .

Distribution by

Year of

Origination

Year of

Origination

2001 .

2002 .

2003 .

2004 .

2005 .

Total .

Number of

Loans

939

5,522

12,882

28,716

342

7,688

1

56,090

Number of

Loans

266

5,685

27,005

16,285

6,849

56,090

48

Current Principal

Balance

$ 39,046,979

318,110,997

1,011,975,772

3,034,564,574

37,686,873

948,039,671

34,284

$5,389,459,150

Current Principal

Balance

$ 21,414,942

548,951,912

2,649,489,615

1,593,766,430

575,836,251

$5,389,459,150

Percent of

Overall Portfolio

Balance

0.72%

5.90

18.78

56.31

0.70

17.59

0.00

100.00%

Percent of

Overall Portfolio

Balance

0.40%

10.19

49.16

29.57

10.68

100.00%

CONFIDENTIAL


Underwriting

General

The HELs owned by

the Asset Trust were, in all material respects, originated in accordance

with the underwriting guidelines of WMB as

described herein. The HELs have been underwritten

by WMB using automated underwriting systems.

WMB's underwriting guidelines generally are intended to evaluate the prospective borrower's

credit standing and repayment ability and the value and adequacy of

the mortgaged property as

collateral. Some HELs are manually underwritten, in which case an underwriter reviews

information submitted by the borrower and supporting documentation, if required, and a credit

report of

the

borrower, and based on that review determines whether to originate a loan in the

amount and with the terms requested by

the borrower. Some HELs are underwritten through

WMB's automated underwriting system, described below.

Prospective borrowers are required to provide details about their financial factors such as

their assets, liabilities and related monthly expenses, as

well as income and employment

information. Borrowers may provide this information by

electronic transmission to a bank

representative who inputs the information directly into the lending system. Each borrower also

provides an

authorization to access a credit report that summarizes the borrower's credit history.

Evaluation of

the Borrower's Credit Standing

To evaluate a prospective borrower's credit history, the loan underwriter obtains a credit

report relating to the borrower from one or

more credit reporting agencies. The credit report

typically contains information relating to such matters as

credit history with local and national

merchants and lenders, installment debt payments and any record of

defaults, bankruptcy,

repossession, suits or

judgments. In most cases the credit report provides a Credit Score

for

the

borrower. Credit Scores are designed to assess a borrower's creditworthiness and likelihood to

default on

an obligation over a defined period (usually two to three years) based on a

borrower's credit history. Credit Scores do

not necessarily correspond to the probability of

default over the life of

a HEL because they reflect past credit history, rather than an assessment

of

future payment performance. Credit Scores range from approximately 430 to approxi-

mately 850, with higher scores indicating more favorable credit history. In the case of

co-

borrowers, the Credit Score

for

the primary borrower is typically used, unless the co- borrower

has a Credit Score that is 40 points lower than that of

the primary borrower, in which case the

lower score is then used. The primary borrower is determined by

the applicant at

the time the

borrowing request is made. Minimum Credit Scores are required for some loan products and

loan programs. Credit Scores may not be

available

for

some borrowers.

Evaluation of

the Borrower's Repayment Ability

In evaluating a prospective borrower's ability to repay a HEL, the loan underwriter considers

the ratio of

the borrower's total monthly debt (including non-housing expenses) to the

borrower's gross income (referred to as

the "debt- to-income ratio" or

"back- end ratio"). The

maximum acceptable ratios may vary depending on other loan factors, such as

loan amount and

loan purpose, loan-

to-

value ratio, credit score and the availability of

other liquid assets.

Exceptions to the ratio guidelines may be made when compensating factors are present.

Evaluation of

the Adequacy of

the Collateral

The adequacy of

the property being pledged as

collateral generally is determined by

an

appraisal made in accordance with pre-established appraisal guidelines. At

origination,

all

appraisals are required to conform to the Uniform Standards of

Professional Appraisal Practice

adopted by

the Appraisal Standards Board of

the Appraisal Foundation, and are made on forms

49

CONFIDENTIAL


acceptable to the Federal National Mortgage Association and/ or

the Federal Home Loan

Mortgage Corporation. Appraisers may be

staff appraisers employed by WMB or

independent

appraisers selected in accordance with the pre-established appraisal guidelines. Such guidelines

generally require that the appraiser, or

an agent on

its behalf, personally inspect the property and

verify whether the property is in adequate condition and, if the property is new construction,

whether it is substantially completed. However, in the case of HELs underwritten through WMB's

automated underwriting system, an automated valuation method (" AVM") may be used in lieu of

a traditional appraisal. The AVM relies on public records regarding the encumbered property

and / or

neighboring properties and statistically derives a value using that information. If AVMs are

used, they comply with the requirements of

the Financial Institutions Reform and Recovery Act of

1989, as

amended, and are independently verified periodically. In either case, the appraisal

normally is based upon a market data analysis of

recent sales of

comparable properties and,

when deemed applicable, a replacement cost analysis based on

the current cost of

constructing

or

purchasing a similar property.

Title insurance or

alternative services ( e.

g.,

lien insurance) are required

for

all HELs.

Certain of

the HELs owned by the Asset Trust involve the use of

"alternative services". These

services consist of

three services (including property reports and recording services) and are

used in lieu of

title insurance, endorsements and title company services. Alternative services may

be used in certain circumstances including in connection with first liens that

are

being granted to

a lender other than in connection with the purchase of

a home; or

in connection with loans made

to borrowers who already own, on a free and clear basis, the property being used as

collateral to

secure the loan in question. Alternative services provide a low cost alternative to standard title

insurance and provide acceptable risk coverage in the event of

default.

Documentation Programs

Each HEL owned by

the Asset Trust has been underwritten using either WMB's

full

income

documentation program or

its stated income program. Under WMB's full documentation program,

the prospective borrower's stated income is verified through receipt of

the borrower's most

recent pay stub and most recent W- 2 form

or,

in the case of

self-employed borrowers or

borrowers with more than 25% of

their income from commissions, two years of personal (and, if

applicable, business) tax returns. For self-employed borrowers, profit and loss statements may

also be required.

Under WMB's stated income program, the prospective borrower's income and assets either

are not required to be obtained or

are obtained but not verified. Eligibility criteria and the amount

of

the loan are determined by

an automated underwriting system. Purchase loans as

well as

refinance loans may be

eligible

for

participation in WMB's stated income program.

A credit report

for

the borrower generally is required

for

all HELs underwritten under either

program.

Exceptions to Program Parameters

Exceptions to WMB's loan program parameters may be made on a case-

by-

case basis if

compensating factors are present. In those cases, the basis

for

the exception is documented,

and in some cases the approval of

a senior underwriter is required. Compensating factors may

include, but are not limited

to,

low loan-

to-

value ratio, good credit standing, the availability of

other liquid assets and stable employment.

Automated Underwriting System

Currently,

all HELs originated by WMB utilize a proprietary automated underwriting system

known as

"SUCCESS". Based on

the borrower's credit report and the information provided by

the borrower, the system either ( i) approves the loan subject to the satisfaction of

specified

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conditions, which may include the receipt of

additional documentation, (

ii) refers the loan

application to an underwriter for manual underwriting, or

(

iii) declines the file based on

predetermined eligibility criteria. In making the underwriting decision, SUCCESS pistinguishes

among different levels of

credit standing, based on a proprietary custom score model, the

borrower's Credit Score, and specific policies, application and loan characteristics. WMB has

developed these credit standing levels based on a statistical analysis of


its

portfolio of

home equity loans. WMB has used analysis of


its

portfolio of home equity loans. WMB has used SUCCESS to underwrite HELs since May 2001.

WMB regularly evaluates and validates SUCCESS and to date has completed

all required

compliance and fair lending evaluations in a satisfactory manner. WMB periodically upgrades

its

proprietary automated underwriting system. SUCCESS was last upgraded in November 2004.

Quality Control Review

WMB's credit risk oversight department conducts quality control reviews of

statistical

samplings of

previously originated HELs on a regular basis.

Credit Risk Management Policies

Credit risk within the WMI Group is managed by means of

a broad set of

policies and

principles contained in its credit policy. The Chief Credit Officer is responsible for overseeing the

work of

a credit policy committee, monitoring the quality of

the WMI Group's credit portfolio,

determining the reasonableness of the WMI Group's allowance

for

loan losses, reviewing and

approving large credit exposures and setting underwriting criteria

for

credit- related products and

programs. Credit risk management is based on analyzing the creditworthiness of

the borrower,

the adequacy of

the underlying collateral given current events and conditions and the existence

and strength of

any guarantor support.

Credit risk assessment is a process that requires the evaluation of

numerous factors, many

of

which are qualitative. Process integrity relies on

the ability of

the WMI Group's lending

personnel to analyze

all

risk elements. It also depends on maintaining risk rating accuracy by

recognizing changing elements of

credit risk and promptly initiating risk rating changes.

Conflicts of

Interest Policies

Pursuant to WMB's code of

ethics (the "Code of

Ethics"), WMB extends credit to

borrowers only when such extension of

credit is financially reasonable

for

both WMB and the

borrower in question. Pursuant to the Code of

Ethics, lending personnel cannot permit personal

relationships or

other considerations to influence lending decisions, and cannot approve

extensions of

credit

to,

or

be involved in the funding or

auditing of

any loans made to family or

friends.

Servicing and the Servicers

General

All

of

the HELs owned by the Asset Trust will be serviced by WMB, as the Servicer,

pursuant to the Pooling and Servicing Agreement. WMB will have possession of

the mortgage

files (Le., the credit reports, servicing documents, etc.) in its capacity as

Servicer and the Loan

Documents ( as

defined below) in its capacity as

Custodian

for

the Asset Trust.

The Pooling and Servicing Agreement will provide that WMB may not resign from

its

obligations and duties thereunder as

Servicer except upon a determination that

its duties

thereunder are no longer permissible under applicable law. No such resignation will become

effective until a successor Servicer has assumed WMB's servicing obligations and duties under

51

CONFIDENTIAL


the Pooling and Servicing Agreement. In the event of

a Servicer resignation, the Company,

subject to the terms of

the Pooling and Servicing Agreement, shall appoint a successor Servicer.

The Servicer will receive a fee

for

its services as

Servicer under the Pooling and Servicing

Agreement. The servicing fee will be calculated as a per annum percentage

for

each HEL based

on the principal balance

for

such HEL. The servicing fee with respect to each such HEL will equal

0.125%

pe

r

annum and

will

be paid monthly. This Servicer

will

be entitled to retain certain

ancillary fees and charges, including, but not limited

to,

any prepayment fees, insufficient funds

fees, modification fees, payoff statement fees and late charges with respect to the HELs as

additional servicing compensation and will also be

entitled to certain income generated by

permitted investments made with collections on the HELs. The Servicer generally will pay

all

expenses incurred in connection with

its responsibilities as

Servicer under the Pooling and

Servicing Agreement (subject to reimbursement

for

certain expenses and advances, including

those incurred by

it in connection with the liquidation of

defaulted HELs, the restoration of

damaged mortgaged properties, and payments by

the Servicer

for

taxes and insurance premiums

with respect to mortgaged properties).

Any person into which the Servicer may be merged, converted or

consolidated, or

any

person resulting from any merger, conversion or

consolidation to which the Servicer is a party

will be the successor Servicer under the Pooling and Servicing Agreement.

The Servicer

will

outsource to third party vendors some servicing functions, as described

under" - The Servicer - Servicing Procedures - The Servicer's Third Party Vendors and

Service Providers" below.

The Servicer

The Servicer's Servicing Experience

WMB, including

its predecessors in interest, has been servicing loans secured by

real estate

or

other property

for

over 115 years. The home equity loans serviced by WMB include c1osed-

end fixed and adjustable rate home equity loans and open- end home equity lines of

credit. The

HELs in WMB's portfolio have been originated by WMB.

The following table shows the number and aggregate unpaid principal balance of

HELs

serviced by the Servicer as

of December 31

for

each of

the most recent three years:

Closed-end Home Equity Loans Serviced by

the

Servicer

December 31

2004 2003 2002(Dollars in Thousands)

Number of

Closed-End Home Equity Loans Serviced by

WMB .

Aggregate Unpaid Principal Balance .

150,450

$9,851,722

131,105

$7,918,281

126,547

$6,364,840

Servicing Procedures

Servicing Functions. The functions to be

performed by

the

Servicer under

the

Pooling and

Servicing Agreement will include, among other servicing functions, payment collection, payment

application, and default management. The Servicer will perform

its servicing functions at

loan

servicing centers located in Melbourne, Florida; Houston, Texas; San Antonio, Texas; Stockton,

California; Chatsworth, California; Seattle, Washington; and Canyon Park, Washington.

Servicing Standard; Waivers and Modifications. Pursuant to the Pooling and Servicing

Agreement, the Servicer will be required to service the HELs owned by

the Asset Trust,

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consistent with prudent first lien, closed- end home equity loan servicing practices and (unless

inconsistent with those servicing practices) in the same manner in which, and with the same

care, skill, prudence and diligence with which, it services and administers similar. HELs

for

its

own portfolio. The Servicer will be required to make reasonable efforts to collect or

cause to be

collectedall payments under the HELs and, to the extent consistent with the Pooling and

Servicing Agreement and applicable insurance policies, follow such collection procedures as are

followed with respect to comparable HELs that are held in portfolios of

responsible mortgage

lenders in the local areas where each mortgaged property is located. Under the terms of

the

Pooling and Servicing Agreement, the servicing standard applicable to the Servicer may only be

modified with the consent of

the Company.

Under

the

terms of

the

Pooling and Servicing Agreement,

the

Servicer (subject to certain

conditions) may waive, modify or

vary any term of

any HEL or

consent to the postponement of

strict compliance with any such term or

in any manner grant indulgence to the applicable obligor

if it has determined, exercising

its good faith business judgment in the same manner as

it would

if it were the owner of

the related HEL, that the security for, and the timely and full collectability

of, such HEL would not be adversely affected by such waiver, modification, postponement or

indulgence, and may make certain other modifications with respect to the HELs and the related

property in accordance with the terms of

the Pooling and Servicing Agreement.

Loan Servicing System. In performing

its servicing functions, the Servicer generally will

use computerized loan servicing systems. The Servicer leases

its primary servicing system from

AMS- CGI (known as " Advanced Gonsumer Lending System" or

" AGLS"). ACLS produces

detailed information about the financial status of each HEL, including outstanding principal

balance, current interest rate, outstanding fees and information about transactions that affect the

HEL, including the amount and due date of

each payment, the date of

receipt of

each payment,

and how the payment was applied. ACLS works in conjunction with AMS- CGI's Computer

Automated Collection System ("GAGS") to monitor payment collections and to provide default

collection activity information regarding delinquent consumer loans. The Servicer began using

ACLS in 2003. Prior to November 2003, the Servicer serviced equity HELs using an ALLTEL loan

servicing system; in November 2003, the Servicer transferred servicing onto the ACLS servicing

platform by

converting approximately 948,000 loan records from the ALLTEL loan servicing

system to ACLS.

Collections and Distributions. Under the terms of

the Pooling and Servicing Agreement,

collections with respect to the HELs will be collected by the Servicer and initially deposited into

accounts controlled by the Servicer and may be commingled with funds with respect to other

HELs or

mortgage loans serviced or

owned by

the

Servicer. The Servicer is required to deposit

collections received with respect to the HELs owned by

the Asset Trust into a certificate account

controlled by

the Trustee under the Pooling and Servicing Agreement on a monthly basis. The

amount of

collections required to be remitted to the Trustee in any given monthly deposit is

determined by

the timing of

the Servicer's receipt of

collections and the type of

collections they

represent. In accordance with the terms of

the Pooling and Servicing Agreement, the Servicer

may retain certain amounts with respect to expenses and advances from collections or

apply

them towards the costs of

certain costs and permitted expenses connected with the servicing of

the HELs. The Servicer will neither be

permitted nor required to make servicer advances to cover

any gap between scheduled payments on the HELs and the actual collections thereon in any

given period.

Subject to the terms and conditions set forth in the Pooling and Servicing Agreement, on a

monthly basis the Trustee will distribute collections deposited in the certificate account to the

Company, as

holder of

the Class A Asset Trust Certificate, less ( a)

fees, expenses and

indemnities payable to the Trustee and the PSA Delaware Trustee and ( b)

fees and certain other

amounts payable to the Servicer. No amounts will be payable from collections with respect to the

Class R Asset Trust Certificate.

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Under the terms of

the Pooling and Servicing Agreement, collections with respect to the

HELs may be invested in certain permitted investments prior to their distribution to the Company,

as holder of

the Class A Asset Trust Certificate. The Servicer shall be entitled to ; retain any

investment income produced by such investment as additional servicing compensation.

Servicingo

fDelinquent HELs; Foreclosure. The Servicer will make reasonable efforts to

collect or

cause to be collected

all payments on the HELs owned by

the Asset Trust that are 16

or

more days delinquent. Strategic decisions regarding early stage collection efforts are guided

by

Experian's Strategic Account Management System, Probe@. Early stage collections, in other

words, collections beginning on

the 16th day of

delinquency and continuing through the 89th day

of

delinquency, are conducted primarily through the use of

automated outbound collection

telephone calls and debt collection letters. Late stage collections, or

collection efforts taking

place from the 90th day and through the 180th day of

delinquency, are segregated in CACS by

risk and a combination of

manual and automated collection efforts are used. CACS also

segregates delinquent accounts by

status, including bankruptcy, probate, foreclosure, real-estate-

owned and "special activities" ( e.

g., consumer credit counseling and recovery). These collection

efforts are carried out by personnel who specialize in debt collection and recovery. Such efforts

may include payment reminder telephone calls to the borrower, letter campaigns, drive- by

property inspections and other collection activities permissible under the Loan Documents and

applicable law.

The Servicer will be required under the Pooling and Servicing Agreement to foreclose upon

the mortgaged property related to each defaulted HEL as

to which no satisfactory arrangements

can be made

for

collection of

delinquent payments. Under the Pooling and Servicing Agreement,

the Servicer will be

permitted, in lieu of

foreclosure, if prudent to do

so and taking into account

the desirability of

maximizing net liquidation proceeds, to accept a payment of

less than the

outstanding principal balance of

the defaulted HELs. The Servicer will not be

permitted to

foreclose upon a mortgaged property if it is aware of

evidence of

toxic waste or

other

environmental contamination on the mortgaged property and it determines that it would be

imprudent to foreclose.

Insurance. The Servicer maintains a blanket hazard policy

for

all HELs. In addition, the

Servicer tracks

all HELs

for

compliance with applicable law regarding flood insurance coverage.

When necessary, the Servicer " force places" flood insurance policies.

Limitations on the Servicer's Liability

The Pooling and Servicing Agreement will provide that neither the Servicer nor any director,

officer, employee or

agent of

the Servicer (the " Servicer Indemnified Parties") will be under any

liability to the Asset Trust, the Company or

the holder of

the Class A Asset Trust Certificate and

the Class R Asset Trust Certificate or

others

for

any action taken ( or

not taken) by any Servicer

Indemnified Party in good faith pursuant to the Pooling and Servicing Agreement, or

for errors in

judgment; provided, however, that the Servicer shall not be protected against any liability that

would otherwise be imposed by reason of

willful misfeasance, bad faith or

gross negligence in

the performance of

duties or

by reason of

reckless disregard of

obligations and duties

thereunder. The Pooling and Servicing Agreement will further provide that any Servicer

Indemnified Party is entitled to indemnification by the Asset Trust and will be held harmless

against any loss, liability or

expense incurred in connection with any legal action relating to the

Pooling and Servicing Agreement or

the certificates issued thereunder (except any such loss,

liability, or

expense otherwise reimbursable pursuant to the Pooling and Servicing Agreement)

and any loss, liability or

expense incurred by reason of

willful misfeasance, bad faith or

gross

negligence in the performance of

duties thereunder or

by reason of

reckless disregard of

obligations and duties thereunder. In addition, the Pooling and Servicing Agreement will provide

that the Servicer is not under any obligation to appear

in,

prosecute or

defend any legal action

that is not incidental to its responsibilities under the Pooling and Servicing Agreement and that in

54

CONFIDENTIAL


its opinion may involve it in any expense or

liability. The Servicer may however, in its discretion,

undertake any such action that it may deem necessary or

desirable with respect to the Pooling

and Servicing Agreement and the rights and duties of

the parties thereto and

thl:

3interests of

the

holders of

the Class A Asset Trust Certificate and the Class R Asset Trust Certfficate. In such

event, the legal expenses and costs of such action and any liability resulting therefrom will be

expenses, costs and liabilities of

the Asset Trust, and the Servicer will be entitled to be

reimbursed therefor and to charge

the

certificate account.

Servicer Termination, Servicer Replacement. Under the terms of

the Pooling and Servicing

Agreement, after the occurrence of

anyone of

several typical Servicer termination events,

including but not limited to a receivership with respect to the Servicer or

(subject to the

expiration of

typical grace periods and materiality requirements) the failure by

the Servicer to

make required deposits to the certificate account, the Company may remove the Servicer. If the

Servicer is removed by

the Company, the Company shall have the sole power to appoint a

replacement Servicer.

The Servicer's Third Party Vendors and Service Providers. Under the Pooling and

Servicing Agreement, the Servicer may perform

its servicing responsibilities through agents or

independent contractors, but shall not thereby be

released from any of

its responsibilities

thereunder. The Servicer expects that it will outsource some of

its responsibilities pursuant to

these provisions, which services may include some or

all

of

the following: ( i) management of

foreclosure actions, (

ii) monitoring of

borrower bankruptcy proceedings, (

iii) preservation of

properties related to delinquent loans, (

iv)

processing of

primary mortgage insurance claims,

( v) maintenance, marketing and sale of

real-estate- owned properties, (

vi) assuring that hazard

insurance coverage is maintained, (

vii)

determining whether flood insurance coverage is required

and assuring that any required coverage is maintained, (viii) tax bill procurement and tracking of

delinquent

tax

payments, (

ix)

printing and mailing billing statements, ( x)

depositing borrower

payments into lockbox accounts, (

xi) performing certain calculations with respect to scheduled

and actual collections, (

xii)

performing certain

tax

related calculations, (xiii) performing

calculations with respect to monthly distributions from the Asset Trust and (xiv) performing

reporting functions required under the Pooling and Servicing Agreement. From time to time, the

Servicer may cease to outsource one or

more of

the foregoing servicing functions or

may choose

to outsource additional servicing functions. Some vendors may perform more than one function,

and some functions may be performed by more than one vendor.

The Servicer's Quality Control Procedures

The Servicer uses a combination of

management controls and technology controls to ensure

the accuracy and integrity of

servicing records. Management controls include the use of

approval

levels, the segregation of

duties, and reconciliations of

servicing data and accounts, among

others. Technology controls include the use of

data security controls and interface controls to

ensure that only authorized persons have

the

ability to access and change system data or

to

submit data to or

receive data from vendors and investors. Specific security profiles

for

each job

function include a predetermined

se

t

of

data security controls that are appropriate

for

that

job

function. The regional data center

for

the ACLS Server, which is located in Seattle, Washington,

is kept in a fire resistant environment, and commercial electrical power is backed up

by

generators.

In addition, the Servicer conducts periodic internal audits of

critical servicing and technology

functions. External audits by

entities such as

the OTS and United Guaranty and the annual

examination by

WMl's independent accountants in connection with their audit of

WMI and

its

subsidiaries may provide independent verification of

the adequacy of

such functions.

The Servicer maintains detailed business continuity plans so

that it can resume critical

business functions in the event of

a disaster or

other serious system outage, which plans are

55

CONFIDENTIAL


reviewed and updated periodically. The Servicer is obligated to return to full system functionality

within 48 hours of

a reported system outage. The Servicer performs annual disaster recovery

tests in which it reroutes data and servicing system operations to the designated backup

site,

and then processes sample transactions from

all servicing locations to ensure the functionality of

such backup

site.

It

is the Servicer's policy to require

its other third party vendors to implement measures

similar to those described above to ensure the accuracy and integrity of

servicing records.

The Custodian

Washington Mutual Bank will act as

custodian (the " Custodian")

for

the Asset Trust

pursuant to a Custody Agreement, to be entered into on

or

before the closing date (the "Custody

Agreement"), among the Trustee, the Servicer and the Custodian. The Custodian will hold the

notes, mortgages and other legal documents related to the HELs (collectively, the " Loan

Documents")

for

the benefit of

the Trustee. The Custodian will maintain the Loan Documents in

secure and fire resistant facilities. The mortgage files held by

the Servicer will not be

physically

segregated from Loan Documents in the Custodian's custody but will be kept in shared facilities.

The Custodian

will

review the Loan Documents related to each HEL and deliver to the

Trustee a

certification to the effect that, except as

noted in the certification,

all required documents have

been executed and received.

In the event of

the termination of

the Custody Agreement, the Custodian will be required to

deliver the Loan Documents in the Custodian's custody to the Trustee or

any successor

Custodian appointed by

the Company.

The Servicer may pay the Custodian a fee

for

its services under the Custody Agreement

from time to time. Payment of

this fee will not affect dividends to the Company.

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CONFIDENTIAL


WMI

General

WMI is a Washington corporation. It owns two federal savings associations as

well as

numerous nonbank subsidiaries. WMI is a multiple savings and loan holding company. As

a

savings and loan holding company, WMI is subject to regulation by

the OTS.

WMl's federal savings associations are subject to extensive regulation and examination by

the OTS, their primary federal regulator, as

well as

the

U.

S.

Federal Deposit Insurance

Corporation (" FDIC"). Prior to 2004, WMB had two sister depository institutions which were

both owned directly by WMI. WMB has since acquired both of


these institutions, Washington Mutual Bank fsb, a federal savings bank, became a wholly-owned

subsidiary of WMB on February 1,

2004. The other institution, Washington Mutual Bank, a

savings bank chartered under

the

laws of

the state of

Washington, converted into a federally

chartered savings bank and then was merged into WMB on January 1,

2005. Consequently, WMI

no

longer owns a state savings bank that is subject to regulation and supervision by

the

Director

of

Financial Institutions of

the State of

Washington or

by

the FDIC. WMl's nonbank financial

subsidiaries are also subject to various federal and state laws and regulations.

All

of

WMl's banking subsidiaries are under the common control of

WMI and are insured by

the FDIC. If an

insured institution fails, claims

for

administrative expenses of

the receiver and

for

deposits in U.

S.

branches (including claims of

the FDIC as subrogee of

the failed institution)

have priority over the claims of

general unsecured creditors. In addition, the FDIC has authority

to require any of

WMI's banking subsidiaries to reimburse it for

losses it incurs in connection

either with the failure of

another of

WMl's banking subsidiaries or

with the FDIC's provision of

assistance to one of

WMI's banking subsidiaries that is in danger of

failure.

Holding Company Status and Acquisitions

WMI is a multiple savings and loan holding company, as defined by federal law, because it

owns more than one savings association. WMI is regulated as a unitary savings and loan holding

company, however, because the OTS deems WMI's federal savings associations to have been

acquired in supervisory transactions. Therefore, WMI is exempt from certain restrictions that

would otherwise apply under federal law to the

activities and investments of

a multiple savings

and loan holding company. These restrictions will apply to WMI if any of

WMl's banking

institutions fails to meet a qualified thrift lender test established by

federal law. As

of

December 31, 2004, WMl's banking subsidiaries were in compliance with qualified thrift lender

standards.

WMI may not acquire control of

another savings association without the prior approval of

the OTS. WMI may

not

be

acquired by

a company, other than a bank holding company, unless

the OTS approves such an

acquisition, or

by

an

individual unless the OTS does not object after

receiving notice. WMI may not be

acquired by

a bank holding company unless

the

Board of

Governors of

the Federal Reserve System (the "Federal Reserve") approves. In any case, the

public must have an opportunity to comment on the proposed acquisition, and the OTS or

Federal Reserve must complete an application review. Without prior approval from

the

OTS, WMI

may not acquire more than 5% of

the voting stock of

any savings institution that is not one of

WMl's subsidiaries.

The Gramm-Leach- Bliley

Act

generally restricts any non- financial entity from acquiring WMI

unless such non- financial entity was, or

had submitted an application to become, a savings and

loan holding company as

of

May 4,

1999. Because WMI was treated as

a unitary savings and

loan holding company prior to that date, WMI may engage in non- financial activities and acquire

non- financial subsidiaries.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

WMB is the Servicer and the originator of

the HELs. WMB is expected to be the Servicer

and may be the originator with respect to any Additional Assets. University Street is an indirect

subsidiary of WMB. The Company is a subsidiary of

University Street.

There is not currently, and there was not during the past two years, any material business

relationship, agreement, arrangement, transaction or

understanding that is or

was entered into

outside the ordinary course of

business or

is or

was on terms other than would be obtained in an

arm's- length transaction with an unrelated third party, between ( i) any of WMB or

University

Street on

the one hand and (

ii) any of

the Company, the Asset Trust, WaMu Delaware or WaMu

Cayman on the other hand.

Employees of WMB administer the day-

to-

day activities of

the Company under the terms of

Administrative Services Agreement, which obligates the Company to pay an annual service fee as

provided under such agreement. Additionally, the Company periodically reimburses WMB

for

general overhead expenses. The Company expects that the amount of

such service fees and

reimbursements will be

de minimis.

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DESCRIPTION OF THE TRUST SECURITIES


the Trust Securities,

which will represent undivided beneficial ownership interests in a like amount of

Fixed-

to-

Floating

Rate Company Preferred Securities held by WaMu Delaware. This description is qualified in its

entirety by reference to the terms and provisions of

the Trust Agreement. A copy of

the Trust

Agreement may be obtained upon request to WMI.

General

The Fixed-

to-

Floating Rate Perpetual Non-cumulative Trust Securities, liquidation preference

$100,000 per security (the " Trust Securities"), of WaMu Delaware are beneficial ownership

interests in WaMu Delaware, the terms of

which are

se

t

forth in the Trust Agreement. The


the Trust Securities is $1,250,000,000.

The funds of WaMu Delaware available

for

distribution to the holders of


will be

limited solely to payments received by WaMu Delaware from the Company as

dividends

on, or upon redemption

of, the Fixed-

to-

Floating Rate Company Preferred Securities, which

payments will be passed through upon receipt by WaMu Delaware to the holders of

the Trust

Securities. Consequently, if the Company does not pay any dividend or

make any redemption

payment on the Fixed-

to-

Floating Rate Company Preferred Securities, WaMu Delaware will not

have funds to make the related distribution or

redemption payment on the Trust Securities.

Distributions on and the redemption price of

each Trust Security will be passed through to the

holders of

the Trust Securities on the same dates and in the same amounts as

the corresponding

dividends and redemption price, as

applicable, that are paid by

the Company to WaMu Delaware

on a like amount of

Fixed-

to-

Floating Rate Company Preferred Securities; provided that if any

such payment of

dividends or

redemption price is received by WaMu Delaware after 2:

00

P.

M.

New York time, such payment will instead be passed through to the holders of

the Trust

Securities on the next day that is a Business Day. The Dividend Payment Dates and related

Dividend Periods are the same

for

the Trust Securities and the Fixed-

to-


Preferred Securities, and, accordingly, the terms " Dividend Payment Date", " Dividend Period" and

" Business Day" have the same meanings as

applied to each of

those securities.

The Trust Securities are automatically exchangeable under certain circumstances into a like

amount of

Fixed-

to-

Floating Rate Depositary Shares. See "- Conditional Exchange."

Under the Trust Agreement, WaMu Delaware is prohibited from issuing any securities other

than the Trust Securities.

The Trust Securities are not obligations

of,

or

guaranteed by, WMI, WMB, Marion, the

Company, University Street, WaMu Cayman or

any of

their respective affiliates or

any other

entity. The Trust Securities represent equity interests solely in WaMu Delaware and do not

represent an interest in any of


Distributions

Distributions on the Trust Securities will be passed through on each date on which the

Company pays to WaMu Delaware dividends on the Fixed-

to-


Securities owned by WaMu Delaware, in an amount per Trust Security equal to the amount of

dividends received by WaMu Delaware on such date on a like amount of

Fixed-

to-

Floating Rate

Company Preferred Securities (including Additional Amounts, if any); provided that if any such

payment of

dividends is received by WaMu Delaware after 2:

00

P.

M.

New York time, such

59

CONFIDENTIAL


payment will instead be passed through to the holders of

the Trust Securities on

the next day

that is a Business Day. Accordingly:

• if the Company pays full dividends on a Dividend Payment Date

for

the Fixed-

to-

Floating

Rate Company Preferred Securities, WaMu Delaware will pass through corresponding full

distributions on the Trust Securities on such Dividend Payment Date;

• if the Company pays partial dividends on a Dividend Payment Date

for

the Fixed-

to-

Floating Rate Company Preferred Securities, WaMu Delaware will pass through partial

distributions in the same proportionate amount on the Trust Securities on such Dividend

Payment Date; and

• if the Company pays no dividends on a Dividend Payment Date

for

the Fixed-

to-

Floating

Rate Company Preferred Securities, WaMu Delaware will not pass through any

distributions on

the Trust Securities on such Dividend Payment Date.

See "Description of

the Fixed-

to-

Floating Rate Company Preferred Securities - Dividends."

The record date

for

distributions on the Trust Securities will be the first day of

the month in

which the relevant Dividend Payment Date occurs

or,

if any such day is not a Business Day, the

next day that is a Business Day.


to-

Floating Rate Company Preferred Securities are non-cumulative.

Accordingly, distributions on the Trust Securities are non-cumulative. If WaMu Delaware passes

through no

distributions or

less than

full

distributions on

the Trust Securities on a Dividend

Payment Date because it received no dividend or

less than full dividends on the Fixed-

to-

Floating

Rate Company Preferred Securities, holders of

Trust Securities will have no right to receive, and

WaMu Delaware will have no obligation to pass through, such unpaid distributions at

a future

date, whether or

not dividends or

distributions are paid on a future Dividend Payment Date on

the Company Common Securities or


Restrictions on

Dividends



capital or

is engaged

in,

or


in,

an

unsafe and unsound banking practice, the OTS could restrict payment of

dividends by

the

Company on

the Fixed-

to-

Floating Rate Company Preferred Securities, resulting in a correspond-

ing restriction in the distributions passed through by WaMu Delaware to the holders of

the Trust

Securities.


WMI will covenant in the Exchange Agreement

for

the benefit of

the holders of

the Trust

Securities and

the WaMu Cayman Preferred Securities that if f

or

any Dividend Period

full

dividends on

( i) the Company Preferred Securities, (


(

iii) the WaMu

Cayman Preferred Securities have not been declared and paid, then, as

described under

" Description of

the Fixed-

to-

Floating Rate Company Preferred Securities - Restrictions on

Dividends by

WMI", WMI will not declare or

pay dividends with respect

to,

or

redeem, purchase

or

acquire, any of

its equity capital securities during the next succeeding Dividend Period, except

dividends in connection with a shareholders' rights plan, if any, or

dividends in connection with

benefits plans.

Redemption

The Trust Securities will not be redeemable at

the option of

the holders thereof. On each

day on which the Company redeems Fixed-

to-


WaMu Delaware will redeem a like amount of

Trust Securities

for

a redemption price in the same

60

CONFIDENTIAL


amount as the corresponding redemption price paid to WaMu Delaware on a like amount of

Fixed-

to-

Floating Rate Company Preferred Securities; provided that if any such payment of

the

redemption price is received by WaMu Delaware after 2:

00

P.

M.

New York Time, WaMu

Delaware will redeem the like amount of

Trust Securities on the next day that is a Business Day.

See " Description of

the Fixed-

to-

Floating Rate Company Preferred Securities - Redemption."

If the redemption of

the Fixed-

to-

Floating Rate Company Preferred Securities is in part

instead of

in whole on any redemption date, then the particular Trust Securities to be redeemed

will be

selected not more than 60 days prior to the redemption date by

the Property Trustee from

the outstanding Trust Securities not previously called

for

redemption, by such method as

the

Property Trustee deems fair and appropriate.

A notice of

redemption of

the Trust Securities will be mailed by

first class mail, postage

prepaid, addressed to the holders of

record of

the securities to be redeemed at

their respective

last addresses appearing on

the books and records of WaMu Delaware. Such mailing will be

at

least 30 days but not more than 60 days before the date fixed

for

redemption.


Repurchases

At

or

prior to the initial issuance of

the Trust Securities, WMI will enter into a "Replacement

Capital Covenant" relating to the Trust Securities, the WaMu Cayman Preferred Securities, the

Fixed-

to-

Floating Rate Company Preferred Securities, the Fixed-

to-


Shares (and related Fixed-

to-

Floating Rate WMI Preferred Stock), the Fixed Rate Company

Preferred Securities, and the Fixed Rate Depositary Shares (and related Fixed Rate WMIPreferred Stock) that may b

e issued upon a Conditional Exchange (collectively, the " Replace-

ment Covenant Covered Securities"). WMl's covenants in the Replacement Capital Covenant run

only to the benefit of

holders of

Covered Debt ( as

defined below), and are not enforceable by

holders of

Trust Securities or

of

any other Replacement Covenant Covered Securities. However,

those covenants could preclude WMI from redeeming or

repurchasing Replacement Covenant

Covered Securities at

a time WMI might otherwise wish to do so.

In the Replacement Capital Covenant, WMI covenants to redeem or

repurchase Replace-

ment Covenant Covered Securities only if and to the extent that the total redemption or

repurchase price is equal to or

less than the sum, as

of

the date of

redemption or

repurchase, of

( i) 133.33% of


its subsidiaries have received during the

180 days prior to such date from the issuance and sale of

common stock of WMI plus (

ii) 100%

of


its subsidiaries have received during the 180 days

prior to such date from the issuance of

securities that, among other things:

-are, with limited exceptions (including for certain hybrid securities that are in the form of

debt), pari passu with or

junior to the Fixed-

to-


WMl's liquidation, dissolution or

winding up;

- are perpetual, or

have a mandatory redemption or

maturity date that is not less than forty

years after the date of

initial issuance of

such securities; and

- provide

for

dividends or

other distributions that are either non-cumulative

or,

if cumulative,

are subject to certain optional or

mandatory deferral provisions and certain explicit

replacement provisions.

WMI's ability to raise proceeds from qualifying securities during the 180 days prior to a

proposed redemption or

repurchase sufficient to allow such redemption or

repurchase to

proceed without violating the Replacement Capital Covenant will depend on, among other things,

market conditions at

such times as

well as

the acceptability to prospective purchasers of

the

terms of

such qualifying securities.

61

CONFIDENTIAL


WMI's covenants in the Replacement Capital Covenant will run in favor of

persons that buy,

hold or

sell WMl's indebtedness during the period that such indebtedness is "Covered Debt",

which is currently comprised of WMl's 4.625% Subordinated Notes due 2014, wh. ich have CUSIP

No. 939322AN3. Other debt will replace WMI Covered Debt under the Replacement Capital

Covenant on the earlier to occur of

( i) the date two years prior to the maturity of

such existing

Covered Debt or

(

ii) the date WMI gives notice of

a redemption of

such existing Covered Debt

such that the date such existing Covered Debt is repurchased in such an amount that, the

outstanding principal amount of

such existing Covered Debt is or

will become less than

$100 million.

The Replacement Capital Covenant is subject to various additional terms and conditions and

this description is qualified in its entirety by

reference to the Replacement Capital Covenant, a

copy of

which is available upon request from WMI. The Replacement Capital Covenant may be

terminated if the holders of

at

least 51% by

principal amount of

each of

the Covered Debt so

agree, or

if WMI no longer has outstanding any long- term indebtedness that qualifies as Covered

Debt, without regard to whether such indebtedness is rated by a nationally recognized statistical

rating organization.

Subject to the Replacement Capital Covenant and the terms of

any outstanding debt

instruments, WMI or

its

affiliates may from time to time purchase any outstanding Trust

Securities by tender, in the open market or

by private agreement.

Voting Rights

Except as set forth below, the holders of

Trust Securities will have no voting rights.

In the event that WaMu Delaware is entitled to exercise

its voting rights with respect to the

Fixed-

to-

Floating Rate Company Preferred Securities, each holder of

Trust Securities will have

the

right to direct the manner in which the Property Trustee on behalf of WaMu Delaware

exercises such voting rights with respect to a like amount of

Fixed-

to-


Preferred Securities on a proportionate basis. If the Property Trustee receives notice from the

Company that WaMu Delaware as

holder of

Fixed-

to-


is entitled to vote on any matter, promptly after learning of

such entitlement, the Property Trustee

shall cause to be mailed to each holder of

Trust Securities, notice of

such vote (including a

description of

the subject matter of

the vote and related circumstances to the extent known to

the Property Trustee), along with a copy of

any notice or

other written communication received

by the Property Trustee from the Company with respect to such vote and related matters. In

each such notice the Property Trustee shall request direction from each holder of

Trust

Securities as

to how WaMu Delaware as a holder of

Fixed-

to-


Securities shall vote on the matter at

issue. Each holder of

Trust Securities shall have the right to

direct the manner in which

the

Property Trustee on behalf of WaMu Delaware exercises such

voting rights with respect to a like amount of

Fixed-

to-


Securities.

Notwithstanding the description above of

the voting rights available to holders of

the Trust

Securities under the Trust Agreement, such voting rights may be exercised only by a beneficial

owner of

a Trust Security that is a U.

S.

Person or

by a U.

S.

Person acting as

irrevocable agent

with discretionary powers

for

the beneficial owner of

a Trust Security that is not a U.

S.

Person.

Beneficial owners of

Trust Securities that are not U.

S.

Persons must irrevocably appoint a

U.

S.

Person with discretionary powers to act as

their agent with respect to such voting rights. As

used in this paragraph, the term " U.

S.

Person" means,

for


purposes, a citizen or

resident of

the United States, a corporation created or

organized in or

under the laws of


any state, an estate the income of

which is includible in

gross income

for

United States Federal income tax purposes regardless of

its source, or

a trust

if a court within the United States is able to exercise primary supervision over

its administration

62

CONFIDENTIAL


and one or

more United States persons have authority to control


the

trust.

In the case where the Company, the Property Trustee and the Delaware Trustee wish to

enter into one or

more agreements supplemental to the Trust Agreement, they may do

so without

the consent of

the holders of


for

the following purposes: ( i) to evidence the

succession of

another entity to the Company and the assumption by any such successor of

the

covenants of

the Company contained in the Trust Agreement; (

ii)

to add to the covenants of

the

Company

for

the benefit of

the holders of

the Trust Securities, or

to surrender any right or

power

conferred upon the Company; (

iii) ( A)

to correct or

supplement any provision of

the Trust

Agreement which may be defective or

inconsistent with any other provision therein or

( B)

to

make any other provisions with respect to matters or

questions arising under the Trust

Agreement, provided that any such action taken under this clause (

iii) shall not materially

adversely affect the interests of

the holders of

the Trust Securities; or

(

iv)

to cure any ambiguity

or

correct any manifest error. Any other amendment or agreement supplemental to the Trust

Agreement must be

in writing and approved by a majority of

the holders ( by aggregate

liquidation preference) of

the Trust Securities then outstanding, provided that,

for

the purpose of

such approval, any Fixed-

to-

Floating Rate Company Preferred Securities that are directly or

indirectly held or

beneficially owned by any member of

the WMI Group will be treated as

if they

were not outstanding.


Each Trust Security will be exchanged automatically

for

a like amount of

newly issued

Fixed-

to-

Floating Rate Depositary Shares, each representing a 1/

1 OOOthinterest in one share of

Fixed- to-Floating Rate WMI Preferred Stock, if the OTS so directs in writing upon or

after the

occurrence of

an Exchange Event. An

"Exchange Event"

will

occur when:

• WMB becomes " undercapitalized" under the OTS' "prompt corrective action" regulations;

• WMB is placed into conservatorship or

receivership; or

• the OTS, in its sole discretion, anticipates WMB becoming " undercapitalized" in the near

term or

takes a supervisory action that limits the payment of

dividends by WMB and in

connection therewith, directs an exchange.

For purposes of

this offering circular, this exchange is referred to as the " Conditional

Exchange".


an Exchange Event, each holder of

Trust

Securities will be unconditionally obligated to surrender to WMI or

its agent any certificates

representing the Trust Securities owned by such holder, and WMI will be unconditionally

obligated to issue to such holder, in exchange

for

each such Trust Security, a depositary receipt

representing a like amount of

Fixed-

to-

Floating Rate Depositary Shares. Any Trust Securities

purchased or

redeemed by WMI or

any of

its affiliates prior to the time of

exchange will not be

deemed outstanding and will not be subject to the Conditional Exchange.

The Conditional Exchange will occur as

of

8:

00

A.

M. New York time, on the date

for

such

exchange set forth in the applicable OTS directive,

or,

if such date is not set forth in the directive,

as

of

8:

00

A.

M., New York time, on

the

earliest possible date such exchange could occur

consistent with the directive, as evidenced by

the issuance by WMI of

a press release prior to

such time. As

of

the time of

exchange,

all

of

the Trust Securities will be transferred to WMI

without any further action by WaMu Delaware,

all

rights of

the holders of

Trust Securities as

holders of

beneficial interests in WaMu Delaware will cease, and such persons will be,

for

all

purposes, the holders of

Fixed-

to-


63

CONFIDENTIAL


WMI will mail notice of

the issuance of

an OTS directive after the occurrence of

an

Exchange Event to each holder of

Trust Securities within 30 days, and WMI will deliver ( or

cause

to be

delivered) to each such holder depositary receipts

for

Fixed-

to-

Floating Ra, te Depositary

Shares upon surrender of

the Trust Securities. Until such depositary receipts are delivered or

in

the event such depositary receipts are not delivered, any certificates previously representing

Trust Securities will be deemed

for

all purposes to represent Fixed-

to-


Shares.

All

corporate authorization necessary

for

WMI to issue the Fixed-

to-

Floating Rate

Depositary Shares and the Fixed-

to-

Floating Rate WMI Preferred Stock as

of

the time of

exchange will be completed prior to or

upon completion of

this Offering. Accordingly, once the

OTS directs a Conditional Exchange after the occurrence of

an Exchange Event, no action will be

required to be taken by

holders of

Trust Securities, by WMI, by WMB (other than to inform the

OTS), by the Company or

by WaMu Delaware in order to effect the automatic exchange as

of

the time of

exchange. After the occurrence of

the Conditional Exchange, the Trust Securities will

be owned by WMI.

Holders of

Trust Securities, by

purchasing such securities, whether in this Offering or

in the

secondary market after this Offering, will be deemed to have agreed to be bound by

the

unconditional obligation to exchange such Trust Securities

for

Fixed-

to-


Shares if the OTS so directs following the occurrence of

an Exchange Event. The Trust

Agreement provides that the holders of

Trust Securities will be unconditionally obligated to

surrender such Trust Securities. Prior to issuance of

the Trust Securities, WMI will enter into an

Exchange Agreement (the "Exchange Agreement") among WMI, WaMu Delaware, WaMuCayman and Mellon Investor Services LLC, a

s

depositary (the "Depositary"), to implement the

Conditional Exchange.

Holders of

Trust Securities cannot exchange their Trust Securities

for

Fixed-

to-

Floating Rate

Depositary Shares voluntarily. Absent an OTS directive after the occurrence of

an Exchange

Event, no exchange of


for

Fixed-

to-

Floating Rate Depositary Shares will

occur. Upon the issuance of

an OTS directive on

or

following the occurrence of

an Exchange

Event, the Fixed-

to-

Floating Rate WMI Preferred Stock and the related Fixed-

to-

Floating Rate

Depositary Shares to be issued in the Conditional Exchange will constitute a newly issued series

of

preferred stock of WMI and will have substantially similar terms and provisions with respect to

dividends, liquidation, and redemption as the Fixed-

to-


Securities, except that the Fixed-

to-

Floating Rate Depositary Shares:

• will not have the benefit of the covenants, including with respect to any additional taxes,

described under " Description of

Fixed-

to-


Voting Rights and Covenants;"

• will be redeemable prior to the Dividend Payment Date occurring in March 2011 only upon

the occurrence of

a Regulatory Capital Event; and

• Additional Amounts will not be payable with respect to the Fixed-

to-

Floating Rate WMI

Preferred Stock.

In addition, if WMI fails to pay, or

declare and set aside

for

payment, full dividends on the

Fixed-

to-


for

six Dividend Periods, the authorized number of

WMI's directors will increase by

two, and the holders of

Fixed- to-Floating Rate WMI Preferred

Stock, voting together with the holders of

any other Voting Parity Stock, including the Fixed Rate

WMI Preferred Stock, will have the right to elect two directors in addition to the directors then in

office at


shareholders.


the holders of


and the WaMu Cayman Preferred Securities that, prior to the issuance of

the Fixed-

to-

Floating

Rate WMI Preferred Stock upon a Conditional Exchange, WMI will not issue any preferred stock

that would rank senior to the Fixed-

to-


its issuance.

64

CONFIDENTIAL


Each share of

Fixed-

to-

Floating Rate WMI Preferred Stock will upon issuance rank at

least pari

passu with the most senior preferred stock of

WMI, if any, then outstanding. The Initial

Purchasers are under no obligation to and do not intend to make a market in th.

e Fixed-

to-

Floating Rate Depositary Shares. Absent the occurrence of

a Conditional Exchange, holders of

Trust Securities will have no dividend, liquidation preference, redemption or

other rights with

respect to any security of

WMI, WMB or

University Street.

Form, Transfer and Book- Entry Procedures

The Trust Securities will be issued only in book- entry form. See " Book- Entry Issuance."

Payments and Paying Agent

Payments in respect of

the Trust Securities in the form of

Global Securities will be made to

the address of

the holder entitled thereto as such address will appear on the register. The DTC

nominee (the "Nominee") will be the registered holder of

the Trust Securities in the form of

Global Securities. Payments made to the order of

the Nominee will be made by

wire transfer to

DTC and DTC will credit the relevant accounts of

the DTC Participants. In the event that the

circumstances described under "Book- Entry Issuance - Form, Denomination, Transfer and

Book- Entry Procedures - Special Situations When the Global Security Will Be Terminated" apply

and the Trust Securities are not in the form of

Global Securities, payments in respect of the Trust

Securities will be made by wire transfer, direct deposit or check mailed to the address of

the

holder entitled thereto as such address

will

appear on

the

securities register. The paying agent

(the "Paying Agent")

for

the Trust Securities initially will be Wilmington Trust Company ( in its

individual capacity, "WTe") and any co- paying agent will be appointed by WaMu Delaware. The

Paying Agent and any co- paying agent (collectively, the " Paying Agents") will be permitted to

resign as

Paying Agents upon 30

days' written notice to the Company. In the event that WTC will

no longer be the Paying Agent, the Company will appoint a successor to act as Paying Agent.

Registrar and Transfer Agent

WTC will act as

Registrar (the " Registrar") and Transfer Agent (the "Transfer Agent")

for


Registration of

transfers of

Trust Securities will be effected without charge by

or

on behalf

of WaMu Delaware, but the Property Trustee or

the Registrar and Transfer Agent will require,

prior to registration, payment ( or

the giving of

such indemnity as

the Registrar and Transfer

Agent may require) of

a sum sufficient to cover any tax or

other governmental charges that may

be imposed in connection with any transfer of

definitive Trust Securities. WaMu Delaware will not

be required to register or

cause to be registered the transfer of

definitive Trust Securities during

the period of

15 days before the day of

selection

for

redemption of

such Trust Securities and

ending at

the close of

business on the day of

mailing of

the notice of

redemption

for

the Trust

Securities that have been called for redemption.

Expenses of the Paying Agent, Transfer Agent and Registrar

If

the

Paying Agent, Transfer Agent or

Registrar incurs fees, charges or

expenses,

for

which

it is not otherwise liable under the Agency Agreement, to be entered into on

or

before the closing

date, among WTC, as

Registrar, Transfer Agent and Paying Agent, and WaMu Delaware acting

through the Property Trustee at

the request of

a holder of

Trust Securities or

other person, such

holder or

other person will be

liable

for

such fees, charges or

expenses.

65

CONFIDENTIAL


Notices

Notices to the holders of

the Trust Securities will be given by

delivery of

the relevant notice

to DTC and any other relevant securities clearing system identified in writing by WaMu Delaware

for

communication by each of

them to entitled participants.

Listing

The Trust Securities will not be


automated dealer

quotation system.

Governing Law

The Trust Agreement and the Trust Securities will be governed by and construed in

accordance with the laws of

the State of

Delaware.

Restrictions on

Transfer

For information regarding restrictions on ownership and transfer of

the Trust Securities, see

"Notice to Investors."

66

CONFIDENTIAL


DESCRIPTION OF THE FIXED-TO- FLOATING RATE COMPANY PREFERRED SECURITIES


the Fixed-

to-

Floating

Rate Company Preferred Securities. This description is qualified in its entirety by

reference to the

terms and provisions of

the LLC Agreement. A copy of

the LLC Agreement may be obtained upon

request to WMI.

General

The Fixed-

to-

Floating Rate Perpetual Non- cumulative Preferred Securities, liquidation

preference $1,000 per security and $1,250,000,000 in the aggregate (

the

" Fixed-

to-

Floating Rate

Company Preferred Securities"), are limited liability company interests in the Company, the terms

of

which are set forth in the LLC Agreement. When issued, the Fixed-

to-


Preferred Securities will be

validly issued, and no additional payments will be required pursuant

to the LLC Act

for

such securities to represent limited liability company interests in the Company.

The holders of

the Fixed-

to-

Floating Rate Company Preferred Securities will have no pre-emptive

rights with respect to any limited liability company interests in the Company or

any other

securities of

the Company convertible into or

carrying rights or

options to purchase any such

securities. The Fixed-

to-

Floating Rate Company Preferred Securities are perpetual and will not be

convertible into Company Common Securities or

any other class or

series of

limited liability

company interests in the Company and will not be subject to any sinking fund or

other obligation

of

the Company

for

their repurchase or

retirement.

The Fixed-

to-

Floating Rate Company Preferred Securities will be issued in certificated form

only.

The Fixed-

to-

Floating Rate Company Preferred Securities are

not

obligations

of,

or

guaranteed by, WMI, WMB, Marion, University Street or any of

their respective affiliates or any

other entity. The Fixed-

to-

Floating Rate Company Preferred Securities solely represent an

interest in the Company and do not represent an

interest in any of


The Fixed-

to-

Floating Rate Company Preferred Securities are not insured or

guaranteed by

the

FDIC.

Ranking

The Fixed-

to-

Floating Rate Company Preferred Securities will rank senior to the Company

Common Securities and will rank pari passu with the Company's other preferred securities,

including the Fixed Rate Company Preferred Securities, in terms of

payment of

dividends and on

liquidation.

The Company's Board of

Managers has

the

power to create and issue Junior Equity

Securities and additional equity securities ranking pari passu with the Fixed-

to-

Floating Rate

Company Preferred Securities in terms of

payment of

dividends or

on

liquidation or

redemption

(any such securities together with the Fixed Rate Company Preferred Securities, the "Parity

Equity Securities") without the consent of

the holders of

the Company Preferred Securities,

provided, that ( i) after giving effect to the issuance of any Parity Equity Securities, the pro forma

net book value of

the Company's assets (after giving effect to any assets acquired by the

Company in connection with the issuance of

such Parity Equity Securities (" New Assets")) will

equal or

exceed 1.5 times the sum of

the aggregate liquidation preference of

the preferred

securities of

the Company then outstanding and any such Parity Equity Securities that the

Company proposes to issue, (

ii) after giving effect to such issuance, the Company's pro forma

FFO

for

the four fiscal quarters beginning with

the

fiscal quarter in which such Parity Equity

Securities are proposed to be issued (calculated ( A)

assuming that such proposed Parity Equity

Securities are issued and that, if outstanding or

proposed new Parity Equity Securities bear

dividends based on a floating rate, the applicable dividend rate will not change during such four

67

CONFIDENTIAL


fiscal quarters from the rate in effect on the applicable date of

determination and ( B)

as

adjusted to reflect any New Assets) equals or

exceeds 150% of



all preferred securities of

the Company tren outstanding

and any such Parity Equity Securities that the Company proposes to issue and (Hi) the Company

is not otherwise in breach of any of

its covenants set forth in the LLC Agreement. Funds from

operations, or

"FFO", means

ne

t

income (computed in accordance with GAAP), excluding gains

( or

losses) from sales of

property, plus depreciation and amortization, and after adjustments

for

unconsolidated partnerships and joint ventures. Adjustments

for

unconsolidated partnerships and

joint ventures will be

calculated to reflect funds from operations on

the same basis.

The LLC Agreement provides that, so long as any Fixed-

to-


Preferred Securities remain outstanding, the Company may not, except with the consent of

at


the Fixed Rate Company Preferred Securities and the Fixed-

to-

Floating Rate

Company Preferred Securities, voting together as

a single class, issue Senior Equity Securities.

Dividends

For purposes of

this offering circular, we refer to distributions payable by

the Company on

its securities as

" dividends". Dividends on the Fixed-

to-


Securities will be payable

if, when and as declared by


Managers out of

its legally available funds, on a non-cumulative basis at

an annual rate of

6.534% until March 15,

2011 and 3- month USD L1BOR plus 1.4825%

for

the Dividend Period starting in March 2011 and

each Dividend Period thereafter, in each case, on the liquidation preference thereof, which is

$1,000 per security.


to-


if, when and as

declared by


Managers, will be payable quarterly in arrears on March 15,

June 15, September 15 and December 15

of

each year, commencing on June 15, 2006,

or,

if any

such day is not a Business Day, the next Business Day (each such date, a "Dividend Payment

Date"). Each period from and including a Dividend Payment Date ( or

the date of

issuance of

the

Fixed-

to-

Floating Rate Company Preferred Securities) to but excluding the following Dividend

Payment Date is referred to herein as a " Dividend Period", except that the Dividend Period

for

the Dividend Payment Date in June 2011 shall commence on March 15, 2011. Dividends on the

Fixed- to-Floating Rate Company Preferred Securities will accrue as

follows: ( i) from March 7,

2006 in the case of

the Fixed-

to-

Floating Rate Company Preferred Securities offered hereby and

(

ii)

if additional Fixed-

to-

Floating Rate Company Preferred Securities are issued at

a future date,

from ( A)

March 7,

2006 if such date is before June 15, 2006, ( B)

the date of

issue if such date

is a Dividend Payment Date, and ( C)

the immediately preceding Dividend Payment Date or

the

date of

issue ( as

determined by

the Company) if the date of

issue is other than a Dividend

Payment Date and is after June 15, 2006. The record date

for

the payment of

dividends, if

declared, will be

the first day of

the month in which the relevant dividend payment occurs

or,

if

any such day is not a Business Day, the next day that is a Business Day. Dividends payable on

the Fixed- to-Floating Rate Company Preferred Securities

for

any period greater or

less than a full

Dividend Period will be computed on the basis of

( x)

for

any Dividend Period ending prior to the

Dividend Payment Date in March 2011, twelve 30-day months, a 360-day year, and the actual

number of

days elapsed in the period, and ( y)

for

any Dividend Period thereafter, the actual

number of

days in the relevant period divided by 360. No interest will be paid on any dividend

payment of

Fixed-

to-

Floating Rate Company Preferred Securities, Trust Securities or

Fixed-

to-


" Business Day" means any day other than a Saturday, Sunday or

any other day on which

banks in New York, New York, London, England, Seattle, Washington or

Wilmington, Delaware

are generally required or

authorized by

law to be

closed.

68

CONFIDENTIAL


" 3-

Month USD LlBOR" means, with respect to any Dividend Period, a rate determined on the

basis of

the offered rates

for

three- month U.

S.

dollar deposits of

not less than a principal amount

equal to that which is representative

for

a single transaction in such market at

such time,

commencing on the first day of

such Dividend Period, which appears on US L1BOR Telerate

Page 3750 as

of

approximately 11: 00

a.

m., London time, on the L1BOR Determination Date

for

such Dividend Period. If

on any L1BOR Determination Date no rate appears on US L1BOR

Telerate Page 3750 as

of


a.

m., London time, the Company or

another

affiliate of

WMI on behalf of

the Company

will

on such L1BOR Determination Date request four

major reference banks in the London interbank market selected by

the Company to provide the

Company with a quotation of

the rate at

which three-month deposits in U.

S.

dollars, commencing

on the first day of

such Dividend Period, are offered by them to prime banks in the London

interbank market as

of


a.

m., London time, on such L1BOR Determination

Date and in a principal amount equal to that which is representative

for

a single transaction in

such market at

such time. If

at

least two such quotations are provided, 3-

Month USD L1BOR

for

such Dividend Period will be the arithmetic mean (rounded upward if necessary to the nearest

.00001 of

1%) of

such quotations as

calculated by

the Company. If fewer than two quotations

are provided, 3-

Month USD L1BOR

for

such Dividend Period will be the arithmetic mean

(rounded upward if necessary to the nearest .00001 of

1%) of

the rates quoted as

of


a.

m., New York time, on the first day of such Dividend Period by three major

banks in New York, New York selected by the Company

for

loans in U.

S.

dollars to leading

European banks,

for

a three-month period commencing on

the

first day of

such Dividend Period

and in a principal amount of

not less than $1,000,000.

"LIB OR Business Day" means any day on which commercial banks are open

for

general

business (including dealings in deposits in U.

S.

dollars) in London.

"LlBOR Determination Date" means, as

to each Dividend Period, the date that is two L1BOR

Business Days prior to the first day of

such Dividend Period.

" US LlBOR Telerate Page 3750" means the display page of

Moneyline's Telerate Service

designated as 3750 ( or

such other page as may replace that page on

that service, or

such other

service as may be nominated as

the information vendor,

for

the purpose of

displaying rates

comparable to 3-

month USD L1BOR).


to-

Floating Rate Company Preferred Securities are non- cumulative.

If the Company's Board of

Managers does not declare a dividend on the Fixed-

to-

Floating Rate


declares less than a full dividend in respect of

any Dividend

Period, holders of

the Fixed-

to-

Floating Rate Company Preferred Securities will have no

right to

receive any dividend or

a full dividend, as

the case may be,

for

that Dividend Period, and the

Company will have no

obligation to pay any dividends or

full

dividends on

the

Fixed-

to-

Floating


for

that Dividend Period, whether or

not dividends are

declared and paid

for

any future Dividend Period with respect to any of

the Fixed-

to-

Floating

Rate Company Preferred Securities, the Fixed Rate Company Preferred Securities, any other

series of

Parity Equity Securities, any Junior Equity Securities or

the Company CommonSecurities.


During a Dividend Period, no dividends will be declared or

paid on any securities of

the

Company ranking junior to the Company Preferred Securities in respect of

payments of

dividends

69

CONFIDENTIAL


or

on liquidation (" Junior Equity Securities"), other than dividends payable in Junior Equity

Securities, and no Junior Equity Securities will be repurchased, redeemed or

otherwise acquired

for

consideration, directly or

indirectly (other than as a result of

reclassification of

Junior Equity

Securitiesfo

r

or

into other Junior Equity Securities, or the exchange or conversion of

Junior

Equity Securities

for

or

into other Junior Equity Securities), unless dividends

for

such Dividend

Period on

all outstanding Company Preferred Securities have been declared and paid in full, or

declared and

se

t

aside

for

payment, as

the

case may be.

When dividends are not paid in full on, or

a sum sufficient for such full payment is not set

apart for, the Fixed-

to-

Floating Rate Company Preferred Securities, the Fixed Rate Company

Preferred Securities and any other Parity Equity Securities, if any,

all dividends declared upon the

Fixed-to-Floating Rate Company Preferred Securities, the Fixed Rate Company Preferred

Securities and any other Parity Equity Securities, if any, will be declared pro rata. Thus, the

amount of

dividends declared per Fixed-

to-

Floating Rate Company Preferred Security, the Fixed

Rate Company Preferred Securities and such other Parity Equity Securities, if any, will in all

cases bear to each other the same ratio that ( i) full dividends per Fixed- to-Floating Rate

Company Preferred Security

for

the then- current Dividend Period, which will not include any

accumulation in respect of

unpaid dividends for prior Dividend Periods, and (

ii) full dividends,

which will not include any accumulation in respect of unpaid dividends

for

prior Dividend Periods,

on such other capital securities, bear to each other.



capital or

is engaged

in,

or


in,

an

unsafe and unsound banking practice, the OTS could restrict the Company's ability to pay

dividends, including dividends to the holders of

the Fixed-

to-


Securities. See "The Company - Business of

the Company."


WMI will covenant in the Exchange Agreement for the benefit of

the holders of

the Trust

Securities and the WaMu Cayman Preferred Securities that if full dividends on

( i) the Company

Preferred Securities, (


(

iii) the WaMu Cayman Preferred Securities for

any Dividend Period have not been declared and paid, WMI will not declare or

pay dividends with

respect

to,

or

redeem, purchase or

acquire any of


succeeding Dividend Period, except dividends in connection with a shareholders' rights plan, if

any, or


Redemption

The Fixed-

to-

Floating Rate Company Preferred Securities will not be redeemable at the

option of

the holders thereof. Subject to a covenant in favor of

certain of

WMl's debtholders

limiting WMl's and

its subsidiaries' right to repurchase or

redeem the Fixed-

to-

Floating Rate


the Trust Securities (among others) as

described under

" Description of


Repurchases", and subject

to the Company having received the prior approval of

the OTS

for

any proposed redemption of

Fixed-

to-

Floating Rate Company Preferred Securities, the Company may, at

its option redeem the

Fixed-

to-

Floating Rate Company Preferred Securities:

• in whole but not in part, prior to the Dividend Payment Date in March, 2011, upon the

occurrence of


a Regulatory Capital

Event, at

a cash redemption price equal to the greater

of:

( i) $1,000 per Fixed-

to-

Floating Rate Company Preferred Security, or

(

ii) the sum of

present values of

$1,000 per Fixed-

to-


Security and


for

the Dividend Period from the redemption

70

CONFIDENTIAL


date to and including the Dividend Payment Date in March 2011, discounted to the

redemption date on a quarterly basis (assuming a 360-day year consisting of

twelve

30-day months) at

the Treasury Rate, as

calculated by

an Independent Investment

Banker, plus 0.30%, .


• in whole or

in part, on

or


a cash

redemption price of

$1,000 per Fixed-

to-

Floating Rate Company Preferred Security, plus

any declared and unpaid dividends to the redemption date, without accumulation of any

undeclared dividends.

The Fixed Rate Company Preferred Securities will be separately redeemable on similar

terms and conditions.

"Comparable Treasury Issue" means the United States Treasury security selected by

the

Independent Investment Banker as having a maturity comparable to the term remaining to the

Dividend Payment Date in March 2011 that would be

utilized, at

the time of

selection and in

accordance with customary financial practice, in pricing new issues of

perpetual preferred

securities having similar terms as the Fixed-

to-

Floating Rate Company Preferred Securities with

respect to the payment of

dividends and distributions of

assets upon liquidation, dissolution or

winding up

of

the issuer of

such preferred stock.

"Comparable Treasury Price" means with respect to any redemption date

for

the Fixed-

to-

Floating Rate Company Preferred Securities the average of

the Reference Treasury Dealer

Quotations

for

such redemption date, after excluding the highest and lowest of

such Reference

Treasury Dealer Quotations, or

if the Independent Investment Banker obtains fewer than five

such Reference Treasury Dealer Quotations, the average of

all such quotations.

" Independent Investment Banker" means an independent investment banking institution of

national standing appointed by

the Company.

An

" Investment Company Act Event" occurs when the Company determines, based upon

receipt of

an opinion of

counsel, that there is a significant risk that the Company, the Asset Trust

or

any other Asset Subsidiary, WaMu Delaware or

WaMu Cayman is or

will be

considered an

" investment company" that is required to be registered under the Investment Company Act, as a

result of a change in applicable laws, regulations or

related interpretations.

"Reference Treasury Dealer" means each of

three primary U.

S.

government securities

dealers (each a "Primary Treasury Dealer"), as specified by

the

Company; provided that if any

Primary Treasury Dealer as

specified by the Company ceases to be a Primary Treasury Dealer,

the Company will substitute

for

such Primary Treasury Dealer another Primary Treasury Dealer

and if the Company fails to select a substitute within a reasonable period of

time, then the

substitute will be a Primary Treasury Dealer selected by

the Independent Investment Banker after

consultation with the Company.

" Reference Treasury Dealer Quotations" means, with respect to the Reference Treasury

Dealer and any redemption date, the average, as

determined by

the Independent Investment

Banker, of

the bid and asked prices

for

the Comparable Treasury Issue (expressed, in each

case, as a percentage of

its principal amount) quoted in writing to the Independent Investment

Banker by such Reference Treasury Dealer at

5:

00

p.

m., New York City time, on the third

Business Day preceding such redemption date.

A " Regulatory Capital Event" occurs when

the Company determines, based upon receipt of

an opinion of

counsel, that there is a significant risk that the Company Preferred Securities will

no

longer constitute core capital of WMB

for

purposes of

the capital adequacy regulations issued

by

the OTS as a result of

a change in applicable laws, regulations or

related interpretations after

issuance of


71

CONFIDENTIAL


A " Tax Event" occurs when the Company determines, based upon receipt of

an

opinion of

counsel, that there is a significant risk that ( i) the Company will be required by a relevant

jurisdiction to withhold amounts from payments to the holders of any Company I? referred

Securities

for

taxes or

any other governmental charges, ( H)

WaMu Delaware will be required by

a relevant jurisdiction to withhold amounts from payments to the holders of


for

taxes or

any other governmental charges, (Hi) WaMu Cayman will be

required by

a relevant

jurisdiction to withhold amounts from payments to the holders of


Securities

for

taxes or

any other governmental charges, (

iv)

WaMu Cayman is or

will be

treated

as engaged in a trade or

business within the United States

for


purposes or

( v)

the Company is or

will be

treated as a publicly traded partnership taxable as

a

corporation or

as

an association taxable as a corporation

for


purposes.

"Treasury Rate" means the rate per year equal to the quarterly equivalent yield to maturity

of

the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue

(expressed as a percentage of

its principal amount) equal to the Comparable Treasury Price

for

such redemption date. The Treasury Rate will be calculated on the third Business Day preceding

the redemption date.

A notice of redemption of

the Fixed-

to-

Floating Rate Company Preferred Securities will be

mailed by

first class mail, postage prepaid, addressed to the holders of

record of

the securities

to be redeemed at

their respective last addresses appearing on

the books and records of

the

Company. Such mailing will be

at

least 35 days but not more than 65 days before the date fixed

for

redemption.

The Company's ability to redeem any Fixed-

to-

Floating Rate Company Preferred Security is

subject to compliance with applicable regulatory requirements, including the prior approval of

the

OTS, relating to the redemption of

capital instruments. Under current policies of

the OTS, such

approval would be granted only if the redemption were to be made out of

the proceeds of

the

issuance of

another capital instrument or

if the OTS were to determine that the conditions and

circumstances of WMB warrant the reduction of

a source of

permanent capital.

The Fixed Rate Company Preferred Securities are subject to their own redemption

provisions and may be redeemed separately.

Restrictions on Redemption or Repurchases

At

or

prior to issuance of

the Fixed-

to-


Trust Securities, WMI

will

enter into the Replacement Capital Covenant described under

" Description of


Repurchases," limiting

WMl's and

its subsidiaries, including the Company's, ability to redeem or

repurchase certain

securities, including the Fixed-

to-



In the event the Company voluntarily or

involuntarily dissolves and winds up, the holders of

Fixed-

to-

Floating Rate Company Preferred Securities at

the time outstanding will be entitled to

receive liquidating dividends in the amount of

$1,000 per security, plus any authorized, declared,

but unpaid dividends to the date of

liquidation, out of

the Company's assets legally available

for

distribution, before any distribution of

assets is made to holders of

Junior Equity Securities and

subject to the rights of

general creditors.

After payment of

the full amount of

the liquidating distributions to which they are entitled,

the holders of

Fixed-

to-

Floating Rate Company Preferred Securities will have no

right or

claim to

any of

the Company's remaining assets. In the event that, upon any such voluntary or

involuntary

dissolution and winding up, the available assets are insufficient to pay the amount of

the

72

CONFIDENTIAL


liquidation distributions on

all outstanding Fixed-

to-


and the corresponding amounts payable on

the Fixed Rate Company Preferred Securities and

any other Parity Equity Securities, if any, then the holders of

Fixed-

to-


Preferred Securities, the Fixed Rate Company Preferred Securities and any other Parity Equity

Securities, if any, will share ratably in any such distribution of

assets in proportion to the full

liquidating distributions to which they would otherwise be

respectively entitled.

For such purposes, the Company's consolidation or

merger with or


consolidation or

merger of


into the Company, or

the sale of

all

or

substantially

all

of

the Company's property or

business, will not be deemed to constitute the

Company's dissolution and winding

up

.

Voting Rights and Covenants

Except as

set forth below, holders of

Fixed-

to-


will not have voting rights. The LLC Agreement provides that, so long as any Fixed-

to-

Floating

Rate Company Preferred Securities are outstanding, the Company will not, except with the

consent or

affirmative vote of

the holders of

at


the Fixed-

to-

Floating Rate

Company Preferred Securities and the Fixed Rate Company Preferred Securities (provided that

for

the purpose of

such approval, a like amount of

Company Preferred Securities as any Trust

Securities or WaMu Cayman Preferred Securities that are directly or

indirectly held or

beneficially

owned by any member of WMI Group will be treated as

if they were not outstanding), voting

together as a single class:


share exchange with or

into another entity other than an

entity controlled

by,

or

under common control with, WMI;

• issue any Senior Equity Securities;

• incur any indebtedness

for

borrowed money;

• pay dividends on the Company's Junior Equity Securities unless the Company's FFO

for

the

four prior fiscal quarters, equals or

exceeds 150% of

the

amount that would be


all outstanding Company Preferred Securities, as

well as any other Parity Equity Securities;

• amend or

otherwise change the requirement that the Company make investments and

distributions with the proceeds of

the Company's assets such that the Company's FFOover any period o

f

four fiscal quarters will equal or

exceed 150% of

the amount that

would be required to pay full annual dividends on

all outstanding Company Preferred

Securities, as

well as any other Parity Equity Securities;

• issue any additional Company Common Securities to any person, other than University

Street or

another affiliate of

WMI;

• amend or

otherwise change the terms of

any Asset Documentation in a manner which is

materially adverse of WaMu Delaware, WaMu Cayman, or

the holders of

the Trust

Securities or

the WaMu Cayman Preferred Securities;

• remove or

cause to be removed, as

applicable, "Washington Mutual" from the

Company's, WaMu Delaware's or

WaMu Cayman's name unless the name of

WMIchanges and the Company makes a change to the Company's, WaMu Delaware's and

WaMu Cayman's name to be

consistent with the new group name;

• take or

fail

to take any action that would cause the Company to fail

to be

treated as

a

partnership (other than a publicly traded partnership taxable as a corporation)

for

United

States Federal income tax purposes;

73

CONFIDENTIAL


• amend or

otherwise change the requirement that the Company not engage in a U.

S.

trade

or

business

for

United States Federal income tax purposes;

• amend or

otherwise change the requirement that the Company hold only assets that

qualify

for

the portfolio interest exemption under the Code and are exempt from United

States Federal withholding taxes;

• amend or

otherwise change the requirement that the Company manage

its affairs such

that

its income does not constitute "unrelated business taxable income"

for

United States

Federal income tax purposes; or

• amend

its Certificate of

Formation or

LLC Agreement in a manner that materially and

adversely affects the terms of

the Company Preferred Securities, provided, however, that,

if such amendment affects only one class of

Company Preferred Securities, such

amendment will require only the class vote of

such class (voting separately and not as a

single class with the other class) and, if such amendment affects both classes but affects

them differently, then such amendment will require a class vote of each class of Company

Preferred Securities, each voting separately.

In addition, the LLC Agreement provides that, except with the consent of

all

of

the

Company's managers, including

its Independent Manager, the Company will not:

• terminate, amend or

otherwise change any Asset Documentation; or


share exchange (excluding the Conditional Exchange)

that is not tax- free to the holders of

the Fixed-

to-


Securities, and the related Trust Securities, unless such transaction was approved by

the

consent or

affirmative vote of

the holders of

at


the Fixed-

to-

Floating

Rate Company Preferred Securities and Fixed Rate Company Preferred Securities, voting

together as a single class.

In addition, the LLC Agreement will provide that if ( i) the Company fails to pay

full

dividends on the Company Preferred Securities on any Dividend Payment Date, (

ii) WaMu

Delaware fails to pass through full dividends paid by

the Company on

the Fixed-to-

Floating Rate

Company Preferred Securities to the holders of

the Trust Securities on any Dividend Payment

Date or

(

iii) a Bankruptcy Event occurs, the holders of the Fixed-

to-


Preferred Securities and the Fixed Rate Company Preferred Securities, voting together as a

single class, by

majority vote, are entitled to remove the initial or

any succeeding Independent

Manager and to fill the vacancy created by such removal or

any other vacancy existing in the

office of


The LLC Agreement requires that, in assessing the benefits to the Company of

any




holders of



the holders

of

the Company Preferred Securities, the Company's Independent Manager owes the same

duties to such holders which the Independent Manager owes to the holders of

Company

Common Securities.

As a condition to effecting any consolidation, merger or

share exchange described above,

the Company will mail to the holders of

record of

the Fixed-

to-


Securities a notice of

such consolidation, merger or

share exchange. The notice will be mailed at

least 15 days prior to such transaction becoming effective and will contain a description of

such

transaction together with a certificate of

one of

the Company's officers stating that such

transaction complies with the requirements set forth in the LLC Agreement and that

all conditions

precedent provided therein relating to such transaction have been fulfilled.

74

CONFIDENTIAL


As

described under "Description of

the Trust Securities - Voting Rights," each holder of

Trust Securities will have the right to direct the manner in which Property Trustee on behalf of

WaMu Delaware exercises

its voting rights as

to a like amount of

Fixed-

to-

Floating Rate

Company Preferred Securities held by WaMu Delaware with respect to any of

the matters on

which a holder of

Fixed-

to-

Floating Rate Company Preferred Securities is entitled to vote.

WMI's articles of

incorporation do

not

contain similar covenants regarding the Fixed-

to-

Floating Rate WMI Preferred Stock following an exchange of

the Trust Securities. Therefore,

following a Conditional Exchange, holders of

the Fixed-

to-

Floating Rate Depositary Shares would

no longer have any voting rights, except as

provided by Washington law or

in connection with the

right to elect directors if dividends are skipped or

not paid in full. See below under "Description

of

the Fixed-

to-

Floating Rate WMI Preferred Stock - Voting Rights."

Additional Amounts

If the Company or

WaMu Delaware is required to pay any Additional Taxes as

a result of

an

Additional Tax Event, the Company will pay as additional amounts on the Fixed-

to-

Floating Rate

Company Preferred Securities such amounts as will be required so that dividends on the

Fixed-

to-

Floating Rate Company Preferred Securities or

the Trust Securities, as

applicable, will

not be reduced as a result of

any such Additional Taxes ("Additional Amounts").

"Additional Taxes" means the sum of

any additional taxes, duties and other governmental

charges to which a WaMu Delaware has become subject from time to time as a result of

an

Additional Tax Event.

An

"Additional Tax Event" means the determination by

the Company, based upon receipt of

an opinion of

counsel, rendered by a law firm experienced in such matters, in form and

substance reasonably satisfactory to the Company and WMI, to the effect that, as a result of

any

amendment

to,

or

change (including any announced proposed change)

in,

the laws ( or

any

regulations thereunder) of


of

any political subdivision or

taxing authority

thereof or

therein, or

as a result of

any official administrative pronouncement or

judicial decision

interpreting or

applying such laws or

regulations, which amendment or

change is effective or

which proposed change, pronouncement or

decision is announced on

or

after the date of

issuance of

the Trust Securities, there is a significant risk that ( i) the Company or WaMu

Delaware

is,

or

will

be within 90 days of

the

date of

such opinion of

counsel, required by a

relevant jurisdiction to withhold amounts from payments to the holders of

the Fixed-

to-

Floating

Rate Company Preferred Securities or

Trust Securities, respectively,

for

any taxes, duties and

other governmental charges, (

ii) WaMu Delaware

is,

or

will be

within 90 days of

the date of

such

opinion of

counsel, subject to United States Federal income

tax

with respect to income received

or

accrued on the like amount of

Fixed-

to-

Floating Rate Company Preferred Securities held by

it

or

(

iii) WaMu Delaware

is,

or

will be

within 90 days of

the date of

such opinion of

counsel,

subject to more than a de minimis amount of

other taxes, duties or

other governmental charges.

Amendments and Termination of

the LLC Agreement

University Street may, at

any time and from time to time, without the consent of

the holders

of

the Fixed-

to-

Floating Rate Company Preferred Securities, amend the LLC Agreement: ( i) ( A)

to

correct or

supplement any provision in the LLC Agreement that may be defective or

inconsistent

with any other provision therein, or

( B)

to make any other provisions with respect to matters or

questions arising under the LLC Agreement, provided, that any such action taken under this

clause ( x)

will not materially adversely affect the interests of

the holders of

Fixed-

to-

Floating Rate

Company Preferred Securities, as

set forth in an

officer's certificate; or

( y)

will cure any ambiguity

or

inconsistency or

correct any manifest error. Any other amendment of

the LLC Agreement must

be approved by

vote of

holders of

two- thirds ( by

aggregate liquidation preference) of

the

Fixed-

to-

Floating Rate Company Preferred Securities and Fixed Rate Company Preferred Securities, voting

75

CONFIDENTIAL


together as

a single class (see

..-

Voting Rights and Covenants"); provided that,

for

the purpose

of


Company Preferred Securities as any Trust Securities or WaMu

Cayman Preferred Securities that are directly or

indirectly held or

beneficially owned by

any

member of WMI Group will be treated as

if they were not outstanding. The Company will notify the

Paying Agents and the holders of

the Trust Securities of any such amendment of

the LLC

Agreement within a reasonable period of

time.

The LLC Agreement will terminate upon the termination of

the Company under the LLC Act.

Governing Law

The LLC Agreement and the Fixed-

to-

Floating Rate Company Preferred Securities will be

governed

by,

and construed in accordance with, the laws of

the State of

Delaware.

76

CONFIDENTIAL


DESCRIPTION OF OTHER COMPANY SECURITIES

The fol/ owing summary of

the terms of

the other Company securities does not purport to be

complete and is subject in aI/ respects to the applicable provisions of

the LLC ACt and the LLC

Agreement. A copy of

the LLC Agreement may be

obtained upon request to WMI.

Common Securities

General

Upon consummation of

this Offering, the Company will have outstanding 1,000 Company

Common Securities,

all

of

which will be held by

University Street.

The Company Common Securities may be sold, assigned or

otherwise transferred by

University Street to another entity, subject to WMI maintaining direct or

indirect ownership of

100% of

the outstanding Company Common Securities and receipt by

University Street of

an

opinion of

counsel to the effect that as a result of

any such sale, transfer or

assignment the

Company will not be taxable as a corporation

for


Pursuant to the LLC Agreement, except with the consent or

the affirmative vote of

the

holders of

at


the Fixed-

to-


Fixed Rate Company Preferred Securities, voting together as a single class, the Company will not

issue any additional Company Common Securities to any person, other than University Street or

another affiliate of

WMI.

No

additional payments will be

required pursuant to the LLC Act

for

Company CommonSecurities to represent limited liability company interests in the Company upon issuance against

full payment of

the purchase price therefor.

Voting

Subject to the limited rights of

the holders of

the Fixed-

to-


Securities, as described under " Description of

the Fixed-

to-


Securities - Voting Rights and Covenants," and corresponding rights of

the holders of

the Fixed

Rate Company Preferred Securities and any voting rights granted to holders of

Parity Equity

Securities

all voting rights of

the Company's security holders are vested in the Company

Common Securities.

Dividends

The Company Common Securities will rank junior to the Company Preferred Securities as

to

payment of

dividends. No dividends will be declared or

paid in any Dividend Period on the

Company Common Securities, other than dividends payable in Company Common Securities, and

no Company Common Securities will be repurchased, redeemed or

otherwise acquired

for

consideration, directly or

indirectly (other than as a result of

reclassification of

Company

Common Securities

for

or

into Company Common Securities, or

the exchange or

conversion of

Company Common Securities

for

or

into Company Common Securities), unless dividends in such

Dividend Period on

all

outstanding Company Preferred Securities have been declared and paid in

full, or

set aside

for

payment, as the case may be. Pursuant to the LLC Agreement, except with

the consent or the affirmative vote of

the holders of

at


the Fixed-

to-

Floating

Rate Company Preferred Securities and the Fixed Rate Company Preferred Securities, voting

together as a single class, the Company will not pay any dividends on the Company Common

Securities unless the Company's FFO

for

the four prior fiscal quarters equals or

exceeds 150%

of

the amount that would be required to pay full annual dividends on

all outstanding Company

Preferred Securities, as

well as

on

all

Parity Equity Securities, if any; provided, that,

for

the

purpose of


Company Preferred Securities as any Trust Securities

77

CONFIDENTIAL


or WaMu Cayman Preferred Securities that are directly or

indirectly held or


any member of

WMI Group will be

treated as

if they were not outstanding.

Liquidation Rights

The Company Common Securities will rank junior to the Company Preferred Securities upon

liquidation. In the event of any voluntary or

involuntary dissolution of the Company, after

all

of

the

Company's debts and liabilities have been satisfied and there have been paid or

set aside

for

the

holders of

the Company Preferred Securities

the

full preferential amounts to which such holders

are entitled, the holders of

Company Common Securities will be entitled to share equally and

ratably in any assets remaining.


The Fixed Rate Company Preferred Securities rank pari passu with the Fixed-

to-

Floating

Rate Company Preferred Securities offered hereby as


the

Company. The terms of

the Fixed Rate Company Preferred Securities are substantially identical

to the Fixed-

to-

Floating Rate Company Preferred Securities other than with respect to the rate

applicable to dividends thereon. The Fixed Rate Company Preferred Securities will,

if, when and

as

declared by



an annual rate of

7.25%.

The Fixed Rate Company Preferred Securities will be held by WaMu Cayman, which will issue a

like amount of WaMu Cayman Preferred Securities to investors in a separate offering

contemporaneous to the Offering. The Fixed Rate Company Preferred Securities will not be

listed

on any securities exchange or


Ability to Issue Additional Preferred Securities

Pursuant to the LLC Agreement, the Company may not issue any Senior Equity Securities

or

incur any indebtedness except with the consent or

affirmative vote of

holders of

at

least

two- thirds of

the Fixed-

to-

Floating Rate Company Preferred Securities and the Fixed Rate

Company Preferred Securities, voting together as a single class, as

described under " Description

of

the Fixed-

to-

Floating Rate Company Preferred Securities - Voting Rights and Covenants".

The Company may issue additional Parity Equity Securities without the consent of

the holders of

Company Preferred Securities only if the tests described under " Description of

the Fixed-

to-

Floating Rate Company Preferred Securities - Ranking" are satisfied.

78

CONFIDENTIAL


DESCRIPTION OF THE FIXED-TO- FLOATING RATE WMI PREFERRED STOCK


the Fixed-

to-

Floating

Rate WMI Preferred Stock. The description is qualified in its entirety by


provisions of

WMl's articles of

incorporation and articles of

amendment establishing the Fixed-

to-

Floating Rate WMI Preferred Stock. A copy of

WMl's articles of

incorporation and such articles of

amendment can be obtained upon request to WMI.

General

WMI has authorized and reserved

for

issuance, upon a Conditional Exchange as described

under "Description of

the Trust Securities - Conditional Exchange," 1,250 shares of

its Series I

Perpetual Non- cumulative Fixed-

to-

Floating Rate Preferred Stock, no par value and liquidation

preference $1,000,000 per share (the "Fixed-

to-

Floating Rate WMI Preferred Stock"). The shares

of

Fixed-

to-

Floating Rate WMI Preferred Stock, if and when issued upon a Conditional Exchange,

will be represented by

fixed-

to-

floating rate depositary shares of WMI (the "Fixed-

to-

Floating

Rate Depositary Shares"), each representing 111000th of

a share of

Fixed-

to-

Floating Rate WMIPreferred Stock. The holders o

f

the Fixed-to

-Floating Rate WMI Preferred Stock will have n

o pre-

emptive rights with respect to any shares of

WMl's capital stock or

any of

its other securities

convertible into or

carrying rights or

options to purchase any such capital stock. The Fixed-

to-

Floating Rate WMI Preferred Stock is perpetual and will not be

convertible into shares of

WMIcommon stock o

r

any other class or

series of

its capital stock, and will not be subject to any

sinking fund or

other obligation

for

its repurchase or

retirement.

The Fixed-

to-

Floating Rate WMI Preferred Stock, upon issuance, will have substantially

equivalent terms as

to dividends, redemption, liquidation preference and redemption preference

as

the Fixed- to-Floating Rate Company Preferred Securities and Trust Securities

for

which they

may be exchanged, except that the Fixed-

to-

Floating Rate WMI Preferred Stock: ( i) will not have

the benefit of

the covenants described under " Description of

Fixed-to

-Floating Rate Company

Preferred Securities - Voting Rights and Covenants" or

"- Additional Amounts" and (

ii) will be

redeemable prior to the Dividend Payment Date occurring in March 2011 only upon the

occurrence of

a Regulatory Capital Event. In addition, if WMI fails to pay, or

declare and set

aside

for

payment, full dividends on the Fixed-

to-

Floating Rate WMI Preferred Stock after

its

issuance

for

six Dividend Periods, the authorized number of

WMl's directors will increase by

two,

and the holders of

Fixed-

to-

Floating Rate WMI Preferred Stock, voting together with the holders

of any other shares after

its issuance of WMI ranking on a parity with the Fixed-

to-

Floating Rate


to dividends or upon liquidation, including the Fixed Rate WMI Preferred

Stock ("WMI Parity Stock"),

will

have

the

right to elect two directors in addition to the directors

then in office at


shareholders. Accordingly, the Dividend Payment

Dates and related Dividend Periods

for

the Fixed-

to-

Floating Rate WMI Preferred Stock, once

issued, will be the same as

the Dividend Payment Dates and related Dividend Periods for the

Trust Securities and the Fixed-

to-

Floating Rate Company Preferred Securities, and the terms

"Dividend Payment Date" and " Dividend Period" have the same meanings as

applied to the

Fixed-

to-

Floating Rate WMI Preferred Stock as

applied to each of

those securities; it being

understood that in the event that the Fixed-

to-

Floating Rate WMI Preferred Stock is not issued

prior to March 15, 2011, a Dividend Payment Date shall be deemed to occur on such date with

respect to the Fixed-

to-


for

the purposes of

determining the

interest rate and the terms of

redemption thereof. The term "Business Day", when used with

reference to the Fixed-

to-

Floating Rate WMI Preferred Stock, means any day other than a

Saturday, Sunday or any other day on which banks in New York, New York or

Seattle,

Washington are generally required or

authorized by law to be closed.

The Fixed-

to-

Floating Rate WMI Preferred Stock will be subject to the Replacement Capital

Covenant described under "Description of


Repurchases" above.

79

CONFIDENTIAL


Ranking

WMI will covenant in the Exchange Agreement in favor of the holders of

th~ Trust Securities

and the WaMu Cayman Preferred Securities, as applicable, that, prior to the issuance of

the

Fixed-

to-

Floating Rate WMI Preferred Stock upon a Conditional Exchange, WMI will not issue

any preferred stock that would rank senior to the Fixed-

to-


the Fixed Rate WMI Preferred Stock upon

its issuance.

The Fixed-

to-

Floating Rate WMI Preferred Stock will, upon issuance, rank senior to WMl's

common stock and at

least pari passu with the most senior preferred stock of

WMI, if any, then

outstanding, and to any other preferred stock that WMI may issue in the future. WMI may

authorize and issue additional shares of

preferred stock that may rank junior to or

pari passu

with the Fixed- to-Floating Rate WMI Preferred Stock as

to dividends and upon liquidation,

winding up, or

dissolution without the consent of

the holders of

the Fixed- to-Floating Rate WMI

Preferred Stock.

Dividends


to-

Floating Rate WMI Preferred Stock will be payable

if, when and

as declared by WMI's Board of

Directors out of

its legally available funds, on a non- cumulative

basis at

an annual rate of

6.534%

to,

but not including, March 15, 2011 (whether or

not a

Business Day) and 3-

Month USD L1BOR plus 1.4825% thereafter on the liquidation preference

thereof, which is $1,000,000 per share, from and including the Dividend Payment Date on

or

prior

to their date of

issuance. Dividends on the Fixed-

to-

Floating Rate WMI Preferred Stock,

if, when

and as declared by WMI's Board of

Directors, will be payable quarterly in arrears on each

Dividend Payment Date, commencing on the first such day after issuance of

the Fixed-

to-

Floating

Rate WMI Preferred Stock. The record date

for

the payment of

dividends, if declared, will be the

first day of

the month in which the relevant Dividend Payment Date occurs

or,

if any such day is

not a Business Day, the next day that is a Business Day. Dividends payable on the Fixed-

to-

Floating Rate WMI Preferred Stock for any period greater or

less than a full Dividend Period will

be computed on the basis of

( i) for

any Dividend Periods ending prior to or

in March 2011,

twelve 3D-day months, a 360-day year, and the actual number of

days elapsed in the period and

(

ii)

for

any Dividend Periods thereafter in the actual numbers elapsed in the relevant dividend

period by 360. No interest will be paid on any dividend payment of

Fixed-

to-

Floating Rate WMIPreferred Stock o

f

or

Fixed- to-Floating Rate Depositary Shares. Holders of

Fixed-

to-

Floating

Rate Depositary Shares will receive 1/

1 OOOthof any such dividend payment on the Fixed- to-



to-

Floating Rate WMI Preferred Stock are non-cumulative. If WMl's

Board of

Directors does not declare a dividend on the Fixed Rate WMI Preferred Stock or

declares less than a full dividend in respect of

any Dividend Period, the holders of

the Fixed- to-

Floating Rate WMI Preferred Stock will have no

right to receive any dividend or

a full dividend, as

the case may be, for the Dividend Period, and WMI will have no obligation to pay a dividend or

to

pay full dividends for that Dividend Period, whether or

not dividends are declared and paid

for

any future Dividend Period with respect to the Fixed-

to-


WMl's common stock or

any other class or

series of

WMI's preferred stock.

Redemption

The Fixed-

to-

Floating Rate WMI Preferred Stock will not be redeemable at

the option of

the

holders thereof. Subject to a covenant in favor of

certain of

WMI's debtholders limiting WMI's

and

its subsidiaries' right to repurchase or

redeem the Fixed-

to-


Stock (among others) as

described under " Description of

the Trust Securities - Restriction on

80

CONFIDENTIAL


Redemption or

Repurchases," WMI may, at

its option redeem the Fixed- to-Floating Rate WMI

Preferred Stock:

• in whole but not in part, prior to the Dividend Payment Date in March 2011, upon the

occurrence of

a Regulatory Capital Event at

a cash redemption price equal to the greater

of:

( i) $1,000,000 per share of

Fixed-

to-


(

ii) the sum of

present values of

$1,000,000 per share of

Fixed-

to-

Floating Rate WMIPreferred Stock and


for

the Dividend Period from the

redemption date to and including the Dividend Payment Date in March 2011,

discounted to the redemption date on a quarterly basis (assuming a 360-day year

consisting of

twelve 30-day months) at the Treasury Rate, as calculated by

an

Independent Investment Banker, plus 0.30%,


• in whole or

in part, on

or


a cash

redemption price of

$1,000,000 per share of

Fixed-

to-


plus any declared and unpaid dividends to the redemption date, without accumulation of

any undeclared dividends.

Dividends will cease to accrue on the Fixed-

to-

Floating Rate WMI Preferred Stock called

for

redemption on and as

of

the date fixed

for

redemption and such Fixed-to-Floating Rate WMI

Preferred Stock will be deemed to cease to be outstanding; provided, that the redemption price,

including any authorized and declared but unpaid dividendsfo

rthe current Dividend Period, if

any, to the date fixed for redemption, has been duly paid or

provision has been made

for

such

payment.

Notice of

any redemption will be mailed at

least 30 days, but not more than 60 days, prior to

any redemption date to each holder of

the Fixed-

to-

Floating Rate WMI Preferred Stock to be

redeemed at

such holder's registered address.

Replacement

At

or

prior to issuance of

the Fixed-

to-

Floating Fixed Rate Company Preferred Securities

and the Trust Securities, WMI will enter into the Replacement Capital Covenant described under

" Description of


Repurchases," limiting

WMI's ability to redeem or

repurchase certain securities, including the Fixed Rate WMI Preferred

Stock.


In the event WMI voluntarily or


winds up, the holders of

Fixed-

to-

Floating Rate WMI Preferred Stock at

the time outstanding will be entitled to receive

liquidating distributions in the amount of

$1,000,000 per share, or

$1,000 per Fixed- to-Floating

Rate Depositary Share representing a 1/ 1OOOthinterest in the Fixed- to~Floating Rate WMI

Preferred Stock, plus an amount equal to declared but unpaid dividends

for

the current Dividend

Period to the date of

liquidation, out of

WMl's assets legally available

for

distribution to its

shareholders, before any distribution of


WMI's common stock or

any securities ranking junior to the Fixed-

to-

Floating Rate WMI Preferred Stock and subject to

the rights of

the holders of

any class or

series of

securities ranking on a parity upon liquidation

with the Fixed-

to-

Floating Rate WMI Preferred Stock upon liquidation and the rights of

its

depositors and creditors.

After payment of

the

full amount of

the

liquidating distributions to which they are entitled,

the holders of

the Fixed-

to-

Floating Rate WMI Preferred Stock will have no

right or

claim to any

81

CONFIDENTIAL


of

WMI's remaining assets. In the event that, upon any such voluntary or

involuntary liquidation,

dissolution, or

winding up, WMI's available assets are insufficient to pay the amount of

the

liquidation distributions on

all outstanding Fixed-

to-

Floating Rate WMI Preferred $tock and the

corresponding amounts payable on any other securities of

equal ranking, then the holders of the

Fixed-

to-

Floating Rate WMI Preferred Stock and any other securities of

equal ranking will share

ratably in any such distribution of

assets in proportion to the full liquidating distributions to which

they would otherwise be respectively entitled.

For such purposes, WMI's consolidation or

merger with or


consolidation or

merger of


into

it,

or

the sale of

all

or

substantially

all

of

WMl's property or

business, will not be deemed to constitute

its liquidation, dissolution, or

winding up.

Voting Rights

Holders of

Fixed-

to-

Floating Rate WMI Preferred Stock will not have any voting rights,

including the right to elect any directors, except upon issuance as required by law, or

as set forth

below if WMI fails to pay, or

declare and set aside

for

payment, full dividends on Fixed-

to-

Floating Rate WMI Preferred Stock for six Dividend Periods.

If WMI fails to pay, or

declare and set asidefor

payment,

full


to-

Floating Rate WMI Preferred Stock after issuance or

any other class or

series of WMI Parity

Stock (including the Fixed Rate WMI Preferred Stock) having similar voting rights (" Voting Parity

Stock")

for

six Dividend Periods or

their equivalent, the authorized number of

WMl's directors

will be

increased by

two. Subject to compliance with any requirement

for

regulatory approval

of,

or

non-objection

to,

persons serving as

directors, the holders of

Fixed-

to-

Floating Rate WMI

Preferred Stock, voting together as a single class with the holders of

any Voting Parity Stock, will

have the right to elect two directors in addition to the directors then in office at

WMI's next

annual meeting of

shareholders. This right will continue at

each subsequent annual meeting until

WMI pays dividends on the Fixed-

to-

Floating Rate WMI Preferred Stock and any Voting Parity

Stock

for

three consecutive Dividend Periods or

its equivalent and pays or

declares and sets

aside

for

payment dividends

for

the fourth consecutive Dividend Period or

its equivalent.

The term of

such additional directors will terminate, and the total number of

directors will be

decreased by

two, at

the first annual meeting of

shareholders after WMI pays dividends on the

Fixed-

to-

Floating Rate WMI Preferred Stock and any Voting Parity Stock

for

three consecutive

Dividend Periods or

its equivalent and declares and pays or

sets aside for payment dividends on

the Fixed-

to-

Floating Rate WMI Preferred Stock and any Voting Parity Stock

for

the fourth

consecutive Dividend Period

or,

if earlier, upon the redemption of

all Fixed-

to-

Floating Rate WMIPreferred Stock. After the term o

f

such additional directors terminates, the holders of

the

Fixed-

to-

Floating Rate WMI Preferred Stock will not be able to elect additional directors unless


to-

Floating Rate WMI Preferred Stock have again not been paid or

declared and set aside

for

payment

for

six future Dividend Periods.

Any additional director elected by the holders of

Fixed- to-Floating Rate WMI Preferred

Stock and Voting Parity Stock may only be removed by

the vote of

the holders of

record of

the

outstanding Fixed-

to-

Floating Rate WMI Preferred Stock and Voting Parity Stock, voting together

as a single and separate class, at

a meeting of WMI shareholders called

for

that purpose. As

long as


to-


any Voting Parity Stock

have not been paid

for

six Dividend Periods or

their equivalent, any vacancy created by

the

removal of

any such director may be

filled only by

the vote of

the holders of

the outstanding

Fixed-

to-

Floating Rate WMI Preferred Stock and any Voting Parity Stock, voting together as a

single class, at

the same meeting at

which such removal is considered.

Washington law attaches mandatory voting rights to classes or

series of

shares that are

affected by certain amendments to the articles of

incorporation. The holders of

the outstanding

82

CONFIDENTIAL


shares of

a class or

series are entitled to vote as a separate voting group if shareholder voting is

otherwise required by

Washington law and if the amendment would:

• increase the aggregate number of

authorized shares of

the class or

series;

• effect an exchange or

reclassification of

all

or

part of

the issued and outstanding shares

of

the class or

series into shares of

another class or

series, thereby adversely affecting

the holders of

the shares so exchanged or

recl9.ssified;

• change the rights, preferences, or

limitations of

all

or

part of

the issued and outstanding

shares of

the class or

series, thereby adversely affecting the holders of

shares of

the

class or

series;

• change

all

or

part of

the

issued and outstanding shares of

the

class or

series into a

different number of

shares of

the same class or

series, thereby adversely affecting the

holders of

shares of

the class or

series;

• create a new class or

series of

shares having rights or

preferences with respect to

dividends or

other distributions or

to dissolution that are, or

upon designation by

the

board of

directors may be, prior, superior, or

substantially equal to the shares of

the class

or

series;

• increase the rights or

preferences with respect to distributions, or

on liquidations or

dissolution, or

the number of


any class or

series that, after giving

effect to the amendment, has rights or

preferences with respect to distributions, or

on

liquidations or

dissolution that are, or

upon designation by

the board of

directors may be,

prior, superior, or

substantially equal to the shares of

the class or

series;

• limit or

deny an

existing pre-emptive right of

all

or

part of

the shares of

the class or

series;

• cancel or

otherwise adversely affect rights to distributions that have accumulated but not

ye

t

been declared on

all

or

part of

the shares of

the class or

series; or

• effect a redemption or

cancellation of

all

or

part of

the shares of

the class or

series in

exchange

for

cash or

any other form of

consideration other than shares of

the

corporation.

WMI will covenant in the Exchange Agreement that in the event WMI, prior to the

Conditional Exchange, effects, or

is,

the subject of

a merger, consolidation, statutory share

exchange, sale of

all

or

substantially

all

of

its assets or

other form of business combination,

( i) in which WMI is not the surviving, resulting or

receiving corporation thereof or

(

ii)

if WMI isthe surviving o

r

resulting corporation, shares representing a majority of

WMI's total voting power

are either converted or

exchanged into securities of

another person or

into cash or

other

property (any such transaction in either ( i) or

(

ii) being a " Business Combination"), then WMI

( i) shall not enter into such Business Combination unless the Successor Entity agrees, effective

upon the consummation of

such Business Combination, to abide by

all

of

WMI's obligations

under the provisions of

the Exchange Agreement restricting the payment of

dividends by WMI in

the event dividends are not paid with respect to the Company Preferred Securities and (

ii) may,

at

the election of

the Board of

Directors of WMI prior to the effectiveness of

such Business

Combination, assign, effective upon the consummation of

such Business Combination,

all

of

its

other obligations under the Exchange Agreement to a Successor Entity that has both Fixed Rate

Substitute Preferred Stock and Fixed-

to-

Floating Rate Substitute Preferred Stock and, as a result

of such assignment,

all references to WMI, Fixed Rate WMI Preferred Stock, Fixed-

to-

Floating

Rate WMI Preferred Stock, Fixed Rate Depositary Share and Fixed-to-Floating Rate Depositary

Share shall become and be deemed to be references to such Successor Entity, to such Fixed

Rate Substitute Preferred Stock, to such Fixed-

to-

Floating Rate Substitute Preferred Stock, to a

Fixed Rate Successor Depositary Share and to a Fixed-

to-

Floating Rate Successor Depositary

Share, respectively.

83

CONFIDENTIAL


" Successor Entity" means a corporation designated by

the Board of

Directors of WMI

( i) that is the surviving, resulting or

receiving corporation, as

applicable, in any Business

Combination, (

ii) the securities of

which are received in a Business Combination, by some or

all

holders of

WMI voting shares or

(

iii) that the Board of

Directors of

WMI determines to be

an

acquiror of WMI in a Business Combination.

"Fixed-

to-

Floating Rate Substitute Preferred Stock" means a class or

series of

equity

securities of

a Successor Entity having the preferences, limitations and relative rights in its

articles or

certificate of

incorporation or

other constituent documents that are substantially similar

to those set forth in the articles of

amendment establishing the Fixed-

to-

Floating Rate WMI

Preferred Stock.

"Fixed Rate Substitute Preferred Stock" means a class or

series of


a

Successor Entity having the preferences, limitations and relative rights in its articles or

certificate

of

incorporation or

other constituent documents that are substantially similar to those set forth in

the articles of

amendment establishing the Fixed Rate WMI Preferred Stock.

"Fixed-

to-

Floating Rate Successor Depositary Share" means a depositary share substantially

similar to a Fixed-

to-

Floating Rate Depositary Share representing an interest in the Fixed-

to-

Floating Rate Substitute Preferred Stock.

"Fixed Rate Successor Depositary Share" means a depositary share substantially similar to a

Fixed Rate Depositary Share representing an interest in the Fixed Rate Substitute Preferred

Stock.


For a description of

how an exchange of

the Trust Securities into Fixed-

to-

Floating Rate

Depositary Shares may occur upon an Exchange Event, purchasers should read " Description of

the Trust Securities - Conditional Exchange."

84

CONFIDENTIAL


DESCRIPTION OF THE FIXED- TO-FLOATING RATE DEPOSITARY SHARES


the Fixed-

to-

Floating

Rate Depositary Shares. This description is qualified in its entirety by


provisions of

the Deposit Agreement, the form of

depositary receipts, which contain the terms and

provisions of

the Fixed-

to-

Floating Rate Depositary Shares, and WMl's articles of

incorporation and

articles of

amendment. Copies of

each of

the foregoing documents may be obtained upon request

to WMI.

General

Each depositary share will represent a 1/


Fixed-

to-

Floating

Rate WMI Preferred Stock (the " Fixed-

to-

Floating Rate Depositary Shares"). The Fixed-

to-

Floating Rate Depositary Shares will be evidenced by

depositary receipts. The shares of

Fixed-

to-

Floating Rate WMI Preferred Stock underlying the Fixed-

to-


Shares will, upon an exchange as a result of

an Exchange Event, be deposited with the, as

Depositary, under a Deposit Agreement, to be entered into on

or

before the closing date (the

" Deposit Agreement"), among WMI, the Depositary, the registrar appointed thereunder and

all

holders from time to time of

depositary receipts issued by

the

Depositary thereunder. WMI does

not intend to list or

quote the Fixed-

to-


the Fixed-

to-

Floating

Rate WMI Preferred Stock on any securities exchange or


Accordingly, there will be

no public trading market

for

the Fixed-

to-


Shares or

the Fixed-

to-

Floating Rate WMI Preferred Stock. The Initial Purchasers are under no

obligation to and do not intend to make a market in the Fixed-

to-


Shares.

Subject to the terms of

the Deposit Agreement, each owner of

a Fixed-

to-

Floating Rate

Depositary Share will be

entitled, through the Depositary, to all the rights, preferences and

privileges of

a share of

Fixed-

to-

Floating Rate WMI Preferred Stock. Owners of

a single Fixed-

to-

Floating Rate Depositary Share, representing a 1/


Fixed-

to-

Floating Rate WMI Preferred Stock, will be subject to all

of

the limitations of

the fractional share

represented thereby, which are summarized above under " Description of the Fixed-

to-

Floating

Rate WMI Preferred Stock."

The Depositary

will

act

as transfer agent and registrar and paying agent with respect to the

Fixed-

to-


The Depositary's office at

which the depositary receipts will be administered is located at

480 Washington Blvd., Jersey City, NJ 07310.

Purchasers may hold Fixed-

to-

Floating Rate Depositary Shares either directly or

indirectly

through their broker or

other financial institution. If purchasers hold Fixed-

to-

Floating Rate

Depositary Shares directly, by having Fixed-to-Floating Rate Depositary Shares registered in their

name on the books of

the Depositary, the purchaser is a depositary receipt holder. If purchasers

hold the Fixed- to-Floating Rate Depositary Shares through their broker or

financial institution

nominee, the purchasers must rely on the procedures of

such broker or

financial institution to

assert the rights of

a depositary receipt holder described in this section. Purchasers should

consult with their broker or

financial institution to find out what those procedures are.

Issuance of

Depositary Receipts

Automatically upon a Conditional Exchange, WMI will issue the shares of

Fixed-

to-

Floating

Rate WMI Preferred Stock, and WMI will deposit such shares of

the Fixed-

to-

Floating Rate WMI

Preferred Stock with the Depositary, which will then issue and deliver the depositary receipts to

WMI. WMI will, in turn, deliver the depositary receipts to the holders of

Trust Securities as

of

the

date of

a Conditional Exchange. Depositary receipts will be issued evidencing only whole

85

CONFIDENTIAL


Fixed-to-Floating Rate Depositary Shares. Following the occurrence of

a Conditional Exchange,

each Trust Security will be exchanged

for

a like amount of

depositary receipts. See " Description

of

the Trust Securities - Conditional Exchange."

Dividends and Other Distributions

The Depositary will distribute

all cash dividends, dividends paid in Fixed-

to-

Floating Rate

Depositary Shares representing paid- up and non-assessable shares of

Fixed-

to-

Floating Rate

WMI Preferred Stock or

other cash distributions received in respect of

the Fixed- to-Floating Rate

WMI Preferred Stock to the record holders of

Fixed-

to-

Floating Rate Depositary Shares in

proportion to the numbers of

such Fixed-

to-

Floating Rate Depositary Shares owned by such

holders on the relevant record date. In the event of

a distribution other than in cash, the

Depositary will distribute property received by

it to the record holders of

Fixed-

to-

Floating Rate

Depositary Shares entitled thereto, unless the Depositary determines that it is not feasible to

make such distribution, in which case the Depositary may, after consultation with WMI, sell such

property and distribute the net proceeds from such sale to such holders.

Redemption of

Fixed-

to-


If the Fixed-

to-

Floating Rate WMI Preferred Stock underlying the Fixed-

to-

Floating Rate

Depositary Shares are redeemed, the Fixed-

to-

Floating Rate Depositary Shares will be redeemed

with the proceeds received by

the Depositary resulting from the redemption, in whole or

in part,

of

such Fixed-

to-

Floating Rate WMI Preferred Stock held by

the Depositary. The redemption

price per Fixed-

to-

Floating Rate Depositary Share will be equal to the applicable redemption

price per share payable with respect to such Fixed-

to-

Floating Rate WMI Preferred Stock. If less

than

all the Fixed-

to-

Floating Rate Depositary Shares are to be redeemed, the Fixed- to-Floating

Rate Depositary Shares to be redeemed will be selected by

lot

or

pro rata, in WMI's sole

discretion.

After the date fixed

for

redemption (which will be the same date as

the redemption date, if

any, for the Fixed-

to-

Floating Rate WMI Preferred Stock), the Fixed-

to-


Shares so called

for

redemption will no longer be deemed to be outstanding and

all rights of

the

holders of

the Fixed-

to-

Floating Rate Depositary Shares will cease, except the right to receive

the moneys payable upon such redemption and any money or

other property to which the

holders of

such Fixed-

to-

Floating Rate Depositary Shares were entitled upon such redemption

upon surrender to the Depositary of

the depositary receipts evidencing such Fixed-

to-

Floating

Rate Depositary Shares.

Amendment of

Deposit Agreement

The form of

depositary receipt evidencing the Fixed- to-Floating Rate Depositary Shares and

any provision of the Deposit Agreement may at any time be amended by agreement between

WMI and the Depositary. However, any amendment which materially and adversely alters the

rights of

the holders of

depositary receipts will not be effective unless such amendment has been

approved by

the holders of

at

least a majority of

the Fixed-

to-


then outstanding. Every holder of

an outstanding depositary receipt at

the time any amendment

becomes effective will be deemed, by

continuing to hold such depositary receipt, to consent and

agree to such amendment and to be bound by

the Deposit Agreement as amended thereby.

Charges of

Depositary

WMI will pay the charges of

the Depositary in connection with the initial deposit of

the

Fixed-

to-

Floating Rate WMI Preferred Stock and the initial issuance of

the Fixed to Floating Rate

Depositary Shares upon a Conditional Exchange, and any redemption of

the Fixed- to-Floating

Rate WMI Preferred Stock. Holders of

Fixed-

to-

Floating Rate Depositary Shares will pay

all other

86

CONFIDENTIAL


transfer and other taxes and governmental charges and, in addition, such other charges as

are

expressly provided in the Deposit Agreement to be

for

their accounts.

All

other charges and

expenses of

the Depositary and of

any registrar incident to the performance of

their respective

obligations arising from the depositary arrangements will be paid by WMI only after prior

consultation and agreement between the Depositary and WMI and consent by WMI to the

incurrence of

such expenses, which consent will not be unreasonably withheld.

Miscellaneous

The Depositaryw

ill

forward to the

holders of

the

Fixed-

to-


all reports and communications from WMI which WMI would be required to furnish to the holders

of

the Fixed-

to-


Neither the Depositary nor WMI will be

liable if it is prevented or

delayed by law or

any

circumstances beyond

its control in performing

its obligations under the Deposit Agreement. The

obligations of WMI and the Depositary under the Deposit Agreement will be limited to

performance in good faith of

their duties thereunder, and they will not be

obligated to prosecute

or

defend any legal proceedings in respect of

any Fixed- to-Floating Rate Depositary Shares or

the Fixed-

to-

Floating Rate WMI Preferred Stock unless satisfactory indemnity is furnished. They

may rely upon written advice of

counselor independent accountants, or

information provided by

persons presenting Fixed-

to-

Floating Rate WMI Preferred Stock for deposit, holders of

Fixed- to-


other persons believed to be competent and on documents

believed to be genuine.

Resignation and Removal of

Depositary; Termination of

Deposit Agreement

The Depositary may resign at

any time by

delivering to WMI notice of

its election to do so,

and WMI may at

any time remove the Depositary, with any such resignation or

removal taking

effect upon the appointment of

a successor depositary and

its acceptance of

such appointment.

Such successor depositary will be appointed by WMI within 60 days after delivery of

the notice of

resignation or

removal. Upon termination of

the Deposit Agreement, the Depositary will

discontinue the transfer of

depositary receipts, will suspend the distribution of

dividends to the

holders thereof and will not give any further notices (other than notice of

such termination) or

perform any further acts under the Deposit Agreement, except that the Depositary will continue

to collect dividends and other distributions pertaining to Fixed-

to-


Stock and

will

continue to deliver Fixed-

to-

Floating Rate WMI Preferred Stock certificates

together with such dividends and distributions and the net proceeds of

any sales of

rights,

preferences, privileges, or

other property in exchange

for

depositary receipts surrendered. At

any

time after the expiration of

three years from the date of

termination, the Depositary may sell the

Fixed-

to-

Floating Rate WMI Preferred Stock and hold the proceeds of

such sale, without interest,

for

the benefit of

the holders of

depositary receipts who have not then surrendered their

depositary receipts. After making. such sale, the Depositary will be

discharged from

all

obligations

under the Deposit Agreement except to account

for

such proceeds.

87

CONFIDENTIAL


DESCRIPTION OF THE OTHER WMI CAPITAL STOCK

As

of

the date hereof, the authorized capital stock of WMI consists of

1,60Q,000,000 shares

of WMI common stock and 10,000,000 shares of

preferred stock, no par value. As

of

the close of

business on February 15, 2006, there were 994,380,908 shares of

WMI common stock

outstanding and no shares of

preferred stock of WMI outstanding. As

of

the close of

business on

February 15, 2006, 700,000 shares of

preferred stock of WMI were authorized, but unissued, as

contemplated by WMI's Rights Agreement, dated as

of

December 20, 2000, entered into by and

between WMI and Mellon Investor Services LLC The shares of WMI preferred stock to be issued

upon the occurrence of a Conditional Exchange have been duly authorized and when and if

issued will be validly issued, fully paid, nonassessable and free of preemptive rights, with no

personal liability attaching to the

ownership thereof.

WMI has authorized

for

issuance in connection with the offering of

the Trust Securities and

the related issuance by the Company of

its Fixed-

to-


up

to 750 shares of

its Series J Perpetual Non- cumulative Fixed Rate Preferred Stock, no par

value, and liquidation preference of

$1,000,000 per share (the "Fixed Rate WMI Preferred

Stock"). The shares of

Fixed Rate WMI Preferred Stock will be

issued by WMI solely upon the

occurrence of

a Conditional Exchange. The shares of

Fixed Rate WMI Preferred Stock, if and

when issued upon the occurrence of

a Conditional Exchange, will be represented by

Fixed Rate

Depositary Shares of WMI (the "Fixed Rate Depositary Shares"), each of

which will represent

1/ 1OOOthof a share of

Fixed Rate WMI Preferred Stock.

The Fixed Rate WMI Preferred Stock will rank pari passu with the Fixed-

to-

Floating Rate



WMI. The terms of

the Fixed Rate

WMI Preferred Stock are substantially identical to the Fixed-

to-


Stock other than with respect to the rate applicable to dividends thereon. The Fixed Rate WMI

Preferred Stock will,

if, when and as

declared by

WMl's Board of

Directors, pay dividends at

an

annual rate of

7.25%. The Fixed Rate WMI Preferred Stock will not be

listed on any securities

exchange or


88

CONFIDENTIAL


BOOK-ENTRY ISSUANCE

Form, Denomination, Transfer and Book- Entry Procedures

General

The Trust Securities are being offered and sold only to persons who are both qualified

institutional buyers within the meaning of

Rule 144A under the Securities Act and qualified

purchasers within the meaning of

Section 2 ( a)

(51) of

the Investment Company Act in reliance

on

an exemption from registration pursuant to Rule 144A under the Securities Act.

The Trust Securities will be issued only in fully registered form. Each purchaser in the

Offering and each account

for

which it is purchasing will hold at

least $300,000 liquidation

preference of


at

least three Trust Securities) and transfer at

least $100,000



at

least one Trust Security) and each subsequent

purchaser and each account

for

which it is purchasing will hold and transfer at

least $100,000



at

least one Trust Security). Any transfer, sale or

other disposition of

Trust Securities having a liquidation preference of

less than $100,000 or

which result in a beneficial owner holding Trust Securities having an aggregate liquidation

preference of

less than $100,000, will be deemed to be

null and void ab

initio and of

no legal

effect whatsoever. Any such transferee will be deemed not to be

the beneficial owner of

such

Trust Securities

for

any purpose, including, but not limited

to,

the receipt of

dividends on such

Trust Securities, and such transferee will be deemed to have no interest whatsoever in such

Trust Securities.

Each purchaser of

Trust Securities pursuant to the Offering, and each purchaser who holds

a beneficial interest in the Global Security at

any time, will be deemed to have represented to

WaMu Delaware that it is both a qualified institutional buyer within the meaning of

Rule 144A

under the Securities Act and a qualified purchaser within the meaning of

Section 2 ( a)

(51) under

the Investment Company Act. If a beneficial owner of

Trust Securities who is required to be a

qualified purchaser within the meaning of

Section 2(

a)

(51) under the Investment Company Act

is at

any time not a qualified purchaser, WaMu Delaware may ( i) require such beneficial owner

to sell

its Trust Securities to a person who is a qualified purchaser and who is otherwise

qualified to purchase such Trust Securities in a transaction exempt from registration under the

Securities Act or

(

ii) require the beneficial owner to sell such Trust Securities to WaMu Delaware

or

an

affiliate thereof at

a price equal to the least of

( A)

the purchase price paid by

the holder

for

such Trust Securities, ( B)

100% of

the liquidation preference thereof or

( C)

the fair market

value thereof.

Global Security

The Trust Securities initially will be represented by one or

more securities in registered,

global form (the " Global Security"). The Global Security will be deposited upon issuance with

the Registrar as Custodian

for

The Depository Trust Company (" DTG") in New York, New York,

and registered in the name of DTC or

its nominee (the " Nominee"), in each case

for

credit to an

account of a DTC Participant, as described below.

Special Considerations for Global Securities

As

an

indirect holder, a purchaser's rights relating to a Global Security will be governed by

the account rules of

the purchaser's financial institution and of DTC, as well as the general laws

relating to securities transfers. WaMu Delaware will not recognize the purchaser as a holder of

Trust Securities and instead will deal only with DTC or

its nominee. See "- The DTC System."

89

CONFIDENTIAL


Purchasers should be aware that because Trust Securities are issued only in the form of

a

Global Security:

• they cannot get Trust Securities registered in their name;

• they cannot receive physical certificates

for

their interest in the Trust Securities;

• they will be

" Street Name" holders and must look to their own bank or

broker

for

payments on the Trust Securities and the protection of

their legal rights relating to the

Trust Securities;

• they may not be able to sell interests in the Trust Securities to some insurance

companies and other institutions that are required by law to own securities in the form of

physical certificates; and

• DTC's policies will govern payments, transfers, exchanges and other matters relating to

the purchaser's interest in the Global Security. See "- The DTC System". WaMu

Delaware, the Company and the Registrar have no responsibility

for

any aspect of

DTC's

actions or

for

its records of

ownership interests in the Global Security. WaMu Delaware,

the Company and the Registrar also do not supervise DTC in any way.

Special Situations When the Global Security Will Be Terminated

In a few special situations, the Global Security will terminate and interests in it will be

exchanged

for

physical certificates representing Trust Securities. After that exchange, the choice

of

whether to hold Trust Securities directly or

in " Street Name" will be

up

to the beneficial

owner. Purchasers must consult their own bank or

broker to find out how to have their interests

in Trust Securities transferred to their own name, so that they will be

direct holders.

The special situations for termination of

the Global Security are:

• DTC notifies WaMu Delaware that it is unwilling, unable or

no

longer qualified to continue

as

the depositary

for

the Trust Securities; or

• WaMu Delaware in its sole discretion determines that the Global Security will be

exchangeable for certificated Trust Securities.

When the Global Security terminates, DTC (and not WaMu Delaware,

the Company or

the

Securities Registrar) is responsible

for

deciding the names of

the institutions that will be the

initial direct holders.

If Trust Securities are issued in certificated form, dividends, if any, will be payable, and

Trust Securities may be transferred or

exchanged, at

the corporate trust office of

the Registrar in

New York, New York, provided that payment of

interest on certificated Trust Securities may be

made at

the option of WaMu Delaware by check mailed to the address of

the persons entitled

thereto.

The DTC System

DTC is a limited-purpose trust company created to hold securities for

its participating

organizations (the " OTe Participants"). DTC also facilitates the clearance and settlement

between Participants of

transactions of

securities deposited with DTC through changes in the

account records of DTC Participants. DTC Participants include securities brokers and dealers

( including the Initial Purchasers), banks, trust companies, clearing corporations and certain other

organizations. Access to DTC's system is also available to other entities such as

securities

brokers and dealers, banks and trust companies that work through a DTC Participant (the

" Indirect Participants").

90

CONFIDENTIAL


When the Trust Securities are purchased through the DTC system, the purchase must be

made by

or

through a DTC Participant, who will receive credit

for

the Trust Securities on DTC's

records. The purchaser's ownership interest will only be recorded on the DTC Participants' ( or

Indirect Participants') records. DTC has no knowledge of

a purchaser's individual ownership of

the Trust Securities. DTC's records only show the identity of

the DTC Participants and the

amount of

the Trust Securities held by

or

through them. A purchaser will not receive a written

confirmation of

its purchase or

sale or

any periodic statement directly from DTC; it will receive

these from the DTC Participant or

Indirect Participant. Thus, the DTC Participants ( or

Indirect

Participants) are responsible

for

keeping an accurate account of

the holdings of

their customers.

Any redemption notices with respect to the Trust Securities will be

sent by

the Company

and WaMu Delaware directly to DTC, who will in turn inform the DTC Participants, who will then

contact the beneficial owners. If less than

all

of

the Trust Securities are being redeemed, DTC's

current practice is to choose by

lot

the amount of

the interest of each DTC Participant to be

redeemed. Each DTC Participant will then use an appropriate method to allocate the redemption

among

its beneficial holders.

Itis DTC's current practice, upon receipt of any payment to credit DTC Participants'

accounts on the payment date based on their holdings of

beneficial interests in the Global

Securities as shown on DTC's records. In addition, it is DTC's current practice to assign any

consenting or

voting rights to DTC Participants whose accounts are credited with Trust Securities

on a record date, by

using an omnibus proxy. Payments by DTC Participants to owners of

beneficial interests in the Global Security, and voting by DTC Participants, will be based on

the

customary practices between the DTC Participants and owners of

beneficial interests, as

is the

case with securities held

for

the account of

customers registered in "Street Name". However,

payments will be the responsibility of

the DTC Participants and not of

DTC, the Securities

Registrar, WaMu Delaware or

the Company.

Interests in the Trust Securities will trade in DTC's same-day funds settlement system, and

secondary market trading activity in such interests will therefore settle in immediately available

funds, subject in all cases to the rules and procedures of

DTC and

its participants.

DTC has advised WaMu Delaware that it will take any action permitted to be taken by a

holder of

the Trust Securities only at

the direction of

one or

more participants to whose account

with DTC interests in the Global Security are credited and only in respect of

such portion of

the

aggregate principal amount of


to which such participant or

participants

has or have given such direction.

Although DTC has agreed to the foregoing procedures in order to facilitate transfers of

beneficial ownership interests in the Global Security among participants of DTC it is under no

obligation to perform or

continue to perform such procedures, and such procedures may be

discontinued at any time. Neither the Company, WaMu Delaware, the Securities Registrar or any

of

their representative agents

will

have any responsibility

for

the performance by DTC

its

participants or

indirect participants of

its obligations under the rules and procedures governing

their operations, including maintaining, supervising or

reviewing the records relating

to,

or

payments made on account

of, beneficial ownership interests in the Global Security.

Euroc/ ear and Clearstream

Clearstream Banking, societe anonyme, 42 Avenue JF Kennedy, L- 1855, Luxembourg

("Clearstream"), is a subsidiary of

Clearstream International ("Clearstream International"), a

Luxembourg limited liability company formed in January 2000 through the merger of

CedeI

International and Deutsche Boerse Clearing, a subsidiary of

Deutsche Boerse AG. In July 2002,

Deutsche Boerse AG acquired Cedel International and

its 50% ownership of

Clearstream

International.

91

CONFIDENTIAL


Clearstream is registered as a bank in Luxembourg, and as such is subject to supervision

by

the Luxembourg Financial Sector Supervisory Commission, which supervises Luxembourg

banks.

Clearstream holds securities

for

its customers ("

C/

earstream Participants") and facilitates

the clearance and settlement of

securities transactions by

electronic book- entry transfers

between their accounts. Clearstream provides various services, including safekeeping, adminis-

tration, clearance and settlement of

internationally traded securities and securities lending and

borrowing. Clearstream also deals with domestic securities markets in several countries through

established depository and custodial relationships. Clearstream has established an electronic

bridge with Euroclear Bank S.

A./ N.

V.

as

the Euroclear Operator in Brussels to facilitate

settlement of

trades between systems. Clearstream currently accepts over 200,000 securities

for

clearance.

Clearstream International's customers are world- wide financial institutions including under-

writers, securities brokers and dealers, banks, trust companies and clearing corporations.

Clearstream International's United States customers are limited to securities brokers and dealers

and banks. Currently, Clearstream International has over 2,500 customers located in over

94 countries, including

all major European countries, Canada and the United States. Indirect

access to Clearstream is available to other institutions which clear through or

maintain custodial

relationship with an account holder of

Clearstream.

The Euroclear System (" Euroc/ ear") was created in 1968 to hold securities

for

its

participants (" Euroc/ ear Participants") and to clear and settle transactions between Euroclear

Participants through simultaneous electronic book- entry delivery against payment, thereby

eliminating the need for physical movement of

certificates and any risk from lack of

simultaneous

transfers of

securities and cash. Transactions may be

settled in a variety of

currencies, including

United States dollars. Euroclear includes various other securities, including securities lending and

borrowing and interfaces with domestic markets in several countries generally similar to the

arrangements

for

cross- market transfers with DTC described above. Euroclear is operated by

Euroclear Bank S.

A./

N.

V.

(

the

" Euroc/ ear Operator").

All

operations are conducted by

the

Euroclear Operator, and

all Euroclear securities clearance accounts and Euroclear cash accounts

are accounts with the Euroclear Operator. Euroclear pic establishes policy

for

Euroclear on

behalf of

Euroclear Participants. Euroclear Participants include banks (including central banks),

securities brokers and dealers and other professional financial intermediaries. Indirect access to

Euroclear is also available to other firms that clear through or

maintain a custodial relationship

with a Euroclear Participant, either directly or

indirectly.

Securities clearance accounts and cash accounts with the Euroclear Operator are governed

by

the Terms and Conditions Governing Use of

Euroclear and the related Operating Procedures

of

the Euroclear System and applicable Belgian law (collectively, the "Euroc/ ear Terms and

Conditions"). The Euroclear Terms and Conditions govern transfers of

securities and cash within

Euroclear, withdrawals of

securities and cash from Euroclear, and receipts of payments with

respect to securities in Euroclear.

All

securities in Euroclear are held on a fungible basis without

attribution of

specific certificates to specific securities clearance accounts. The Euroclear

Operator acts under the Euroclear Terms and Conditions only on

behalf of

Euroclear Participants,

and has no record

of,

or

relationship with, persons holding through Euroclear Participants.

92

CONFIDENTIAL


CERTAIN U.

S.

FEDERAL INCOME TAX CONSIDERATIONS

United States Internal Revenue Service Circular 230 Notice: To ensure compliance with

Internal Revenue Service Circular 230, prospective investors are hereby notified that: ( i) any

discussion of

U.

S.

Federal tax issues contained or

referred to in this offering circular or

any

document referred to herein is not intended or

written to be used, and cannot be used, by

prospective investors

for

the purpose of

avoiding penalties that may be imposed on them under the

U.

S.

Internal Revenue Code; (

ii) such discussion is written

for

use in connection with the

promotion or

marketing of

the transactions or

matters addressed herein; and (

iii) prospective

investors should seek advice based on their particular circumstances from an independent tax

advisor.

General

The following discussion summarizes the principal United States Federal income tax

treatment of WaMu Delaware and the Company, and the principal United States Federal income

tax consequences to holders of

the Trust Securities. This discussion is of

a general nature and is

not intended to be, nor should it be construed as, tax advice to any holder. Purchasers should

consult their own tax advisor regarding the tax consequences of

acquiring, owning and disposing

of

Trust Securities.

The discussion is addressed only to holders that beneficially own Trust Securities as

capital

assets and does not purport to be a comprehensive description of

all the

tax

considerations that

may be relevant to particular holders in light of

their personal circumstances. The discussion also

does not describe

all aspects of

taxation that may be relevant to certain types of

holders to

which special provisions of

United States Federal income tax law may apply, including:

• dealers in securities and currencies;

• regulated investment companies;

• traders in securities;

• tax-exempt organizations;

• banks and insurance companies;

o persons that hold Trust Securities as

part of

a hedge, straddle or

conversion transaction;

o persons whose functional currency is not the United States dollar; and

• U.

S.

expatriates.

The summary is based on United States Federal income tax law, including the Code,

existing and proposed U.

S.

Treasury regulations, administrative rulings and judicial decisionsall

as

currently in effect. These legal sources are subject to change or

differing interpretations at

any time, which change or

interpretation could apply retroactively and could affect the validity of

the discussion below. There can be

no assurance that the Internal Revenue Service (" IRS") will

take the same view of

the United States Federal income tax consequences of

an investment in


described herein.

Each purchaser is urged to consult

its own tax advisor as

to the tax consequences of

acquiring, owning and disposing of

Trust Securities, including the United States Federal, state,

local and any other tax consequences of

acquiring, owning and disposing of

Fixed-

to-

Floating

Rate Depository Shares.

As used in this discussion, the term " U.

S.

Holder" means a beneficial owner of a Trust

Security that

is,

for

United States Federal income tax purposes, a citizen or

resident of

the

United States, a corporation or

partnership created or

organized in or

under the laws of

the

United States or

any state, an estate the income of

which is includible in gross income for United

States Federal income tax purposes regardless of

its source, or

a trust if a court within the

United States is able to exercise primary supervision over

its administration and one or

more

93

CONFIDENTIAL


United States persons have authority to control


the trust. The term

"Foreign Holder" means a beneficial owner of

Trust Securities that is not a U.

S.

Holder.

United States Federal Income Tax Consequences

Tax Treatment of WaMu Delaware and

its Investment in Fixed- to-Floating Rate Company


Classification of WaMu Delaware and the Company. WaMu Delaware intends to be treated

as

a grantor trust

for

United States Federal income tax purposes. Accordingly, each holder of

a

Trust Security will be treated as

if it owned directly the Fixed-

to-


Preferred Securities allocable to such Trust Security.

All

of

WaMu Delaware's assets are

expected to consist of

Fixed-to

-Floating Rate Company Preferred Securities. The Company

intends to be classified as a U.

S.

domestic partnership

for


purposes, and the Fixed-

to-

Floating Rate Company Preferred Securities acquired by WaMu

Delaware are intended to constitute equity interests in such partnership.

An entity that is classified as a partnership

for

United States Federal income tax purposes

generally is not a taxable entity and incurs no United States Federal income tax liability. Instead,

each partner is required to take into accountits allocable share of income, gains, losses,


the partnership in computing

its United States Federal income

tax

liability, if any, even if no cash distributions are made by

the partnership to the partner. An entity

that is classified as a partnership

for


tax

purposes nevertheless

will be taxable as a corporation if it is a "publicly traded partnership" and fails to satisfy a "90%

qualifying income" test, within the meaning of

Code Section 7704.

On the date of


the Trust Securities, the Company will receive an

opinion from Mayer, Brown, Rowe & Maw LLP to the effect that,fo

rUnited States Federal

income tax purposes, although no

activities closely comparable to that contemplated by the

Company have been the subject of

any U.

S.

Treasury regulation, revenue ruling or

judicial

decision, the Company will not be treated as

an association or

publicly traded partnership taxable

as a corporation. The opinions are based on certain assumptions and on certain representations

and agreements regarding restrictions on the future conduct of the activities of

the Company.



representations and agreements, if it were nonetheless determined that

the Company was

taxable as a corporation

for

United States Federal income tax purposes, then cash available

for

distribution in respect of

the Company Preferred Securities would be reduced on account of

taxes payable by

the Company. A determination by the Company, based on receipt of

an opinion

of

counsel, that there is a significant risk that the Company is or

will be treated as

an association

or

publicly traded partnership taxable as a corporation would constitute a Tax Event - see

"Description of

the Fixed- to-Floating Rate Company Preferred Securities - Redemption." The

remainder of

this discussion assumes that the Company is treated as a partnership, and not as

an association or

publicly traded partnership taxable as a corporation,

for

Federal income tax

purposes, and that the Fixed-

to-

Floating Rate Company Preferred Securities will constitute equity

interests in such partnership.

Tax Consequences to U.

S.

Holders of

Trust Securities

Income and Deductions in General. Each U.

S.

Holder of

Trust Securities will be required

to report on

its United States Federal income tax return

its share of

income, gains, losses,


the Company that are allocable to WaMu Delaware, even if such holder

has not received any cash distributions from WaMu Delaware.

Distributions on Trust Securities. Distributions of

money by WaMu Delaware to a

U.

S.

Holder of

Trust Securities generally will not result in taxable gain to the U.

S.

Holder. A

U.

S.

Holder of

Trust Securities will recognize taxable gain as a result of

a distribution of

money

94

CONFIDENTIAL


by

the Company to WaMu Delaware with respect to the Fixed-

to-


Preferred Securities only if and to the extent that the U.

S.

Holder's share of

such distribution

exceeds the U.

S.

Holder's adjusted tax basis in the Fixed-

to-


Securities allocable to such U.

S.

Holder's Trust Securities immediately before the distribution. In

general, each U.

S.

Holder of

Trust Securities will have an

initial basis in the Fixed-

to-

Floating

Rate Company Preferred Securities allocable to such U.

S.

Holder's Trust Securities equal to the

amount paid by WaMu Delaware to purchase such Fixed-

to-


Securities. Such U.

S.

Holder's basis in such Fixed-to-Floating Rate Company Preferred Securities

generally will be increased by such U.

S.

Holder's share of

the Company's taxable income and

decreased, but not below zero, by such holder's share of

amounts distributed with respect to the

Fixed-

to-

Floating Rate Company Preferred Securities and Company losses, deductions and

nondeductible expenditures that are not chargeable to capital allocable to WaMu Delaware.

Allocations of

Company Income, Gain, Loss and Deductions. Each holder of

Trust

Securities must report

its proportionate share of

the Company income, gain, loss and deduction

allocated to WaMu Delaware

for

such year. Under Section 704( b)

of

the Code, a partnership's

allocation of

any item of

income, gain, loss or

deduction to a partner will be given effect

for

United States Federal income tax purposes so long as

it has " substantial economic effect," or

is

otherwise in accordance with the " partner's interest in the partnership." If

an allocation of

an

item does not satisfy this standard, it will

be reallocated among the partners on the basis of

their

respective interests in the partnership, taking into account

all facts and circumstances. The

Company believes that the allocations of

items of

income, gain, loss and deduction under the

Company Operating Agreement will be considered to have substantial economic effect under the

applicable Treasury regulations.

Limitations on Use of

Losses. U.

S.

Holders

are

not expected to be allocated any losses

for

United States Federal income tax purposes with respect to their indirect interests in the

Company. The deductibility of

losses arising from a partnership such as

the Company are subject

to certain limitations under the Code. In the event losses are allocated to U.

S.

Holders of

the

Trust Securities, such U.

S.

Holders should consult their tax advisors to determine the

deductibility of

such losses.

Sale, Exchange or

Other Disposition of

Trust Securities. In general, a U.

S.

Holder will

recognize gain or

loss upon the sale or

exchange of

such U.

S.

Holder's Trust Securities equal to

the difference between the amount realized and such U.

S.

Holder's adjusted tax basis in the

Fixed-

to-

Floating Rate Company Preferred Securities allocable to such U.

S.

Holder's Trust

Securities. Initially, the tax basis of

a U.

S.

Holder should equal the amount paid

for

its Trust

Securities. Such basis will be increased or

decreased as described above and, as a general

matter, at

all times is expected to equal the face value of

the U.

S.

Holder's Trust Securities. If a

holder's Trust Securities are exchanged

for

Fixed-

to-

Floating Rate Depositary Shares, the

transaction will be a fully taxable sale to the holder. The amount realized by a holder on

this kind

of

disposition of

a Trust Security will equal the fair market value of

the Fixed-

to-

Floating Rate

Depositary Shares received.

Company Audits. The

tax

treatment of

Company- related items is determined at

the

Company level. University Street will be appointed as

" tax matters partner" with the authority to

determine the Company's response to an

audit. The limitations period

for

assessment of

deficiencies and claims

for

refunds with respect to items related to the Company is three years

after the Company's return

for

the taxable year in question is filed, and the tax matters partner

has the authority

to,

and may, extend such period with respect to all members of the Company. If

an audit results in an adjustment, the holders of

the Trust Securities, as the deemed owners of

the Fixed-

to-

Floating Rate Company Preferred Securities, may be required to restate their

taxable income which could cause holders of

Trust Securities to pay additional taxes, interest

and possibly penalties and such holders may themselves also be subject to audits. There can be

95

CONFIDENTIAL


no assurance that the Company's or

a U.

S.

Holder's tax return will not be audited by

the IRS or

that no adjustments to such returns will be made as a result of

such an

audit.

Tax Treatment of

Tax- Exempt U.

S.

Holders of

Trust Securities

For purposes of

this discussion, a " Tax- Exempt U.

S.

Holder" means any United States do-

mestic organization qualified under Code Section 501 ( c)

(

3),

any trust or

governmental plan

qualified under Code Section 401 (

a),

any individual retirement account and any other non-

governmental U.

S.

Holder generally exempt from United States Federal income taxation. A Tax-

Exempt U.

S.

Holder is not expected to be subject to the tax on unrelated business taxable

income (" UBTI") with respect to its share of

Company income and gain allocable to WaMuDelaware o

r

any capital gains derived from an investment in the Trust Securities. However,

notwithstanding the foregoing, a Tax-Exempt U.

S.

Holder which incurs "acquisition indebted-

ness" ( as

defined in Code Section 514 (c» with respect to its Trust Securities may be subject to

the tax on UBTI in respect of

any income or

gains derived in respect of

the Trust Securities to

the extent that such Trust Securities constitute " debt- financed property" of

the Tax-Exempt

U.

S.

Holder within the meaning of

Code Section 514(b).

Tax-Exempt U.

S.

Holders should consult their own

tax

advisors regarding

the

tax

consequences to them of

an investment in the Trust Securities.

Tax Treatment of

Foreign Holders of

Trust Securities

U.

S.

Trade or

Business Status. The Company intends to conduct

its affairs so

as

to not be

engaged in a trade or

business in the United States. On the date of


the

Trust Securities, the Company will receive an opinion from Mayer, Brown, Rowe & Maw LLP to

the effect that,

for

United States Federal income tax purposes, although no

activities closely

comparable to that contemplated by the Company have been the subject of

any U.

S.

Treasury

regulation, revenue ruling or

judicial decision, it will not be

treated as

engaged in the conduct of

a

trade or

business within the United States. Mayer, Brown, Rowe & Maw LLP's opinion is not

binding on the IRS or

the courts, and no

ruling will be sought from the IRS regarding this, or

any

other, aspect of

the Company's United States Federal income tax treatment. Accordingly, no

assurance can be given that the IRS will not assert positions contrary to those stated in Mayer,

Brown, Rowe & Maw LLP's opinion or

that a court would not entertain any such assertions.

Mayer, Brown, Rowe & Maw LLP's opinion is based on certain assumptions and on certain

representations and agreements regarding restrictions on the future conduct of

the Company's

activities. Although the Company intends to conduct

its activities in accordance with such

assumptions, representations and agreements, if it were nonetheless determined to be engaged

in a trade or

business in the United States and had taxable income that was effectively


business, then each Foreign Holder would be

subject

to United States Federal income tax on such Foreign Holder's share of

the Company's effectively

connected taxable income allocable to WaMu Delaware at

regular United States corporate

income tax rates and possibly to a 30% United States branch profits tax as

well. Moreover, in the

event a Foreign Holder were to derive effectively connected income in respect of

its ownership of

Trust Securities the United States corporate income tax imposed thereon would be required to

be collected in the first instance through a withholding by

the Company of

such tax at

a rate of

35% on such Foreign Holder's distributive share of

the income. A determination by

the Company,

based on receipt of

an opinion of

counsel, that there is a significant risk that it is or

will be

treated as

engaged in a trade or

business within the United States would constitute a Tax

Event - see " Description of

Fixed-

to-

Floating Rate Company Preferred Securities." The

remainder of

this discussion assumes that the Company will not be considered to be engaged in

a trade or

business in the United States.

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CONFIDENTIAL


United States Withholding Tax. Interest that constitutes "portfolio interest" within the

meaning of

the Code is generally exempt from United States withholding tax. A Foreign Holder

will be treated as

earning directly

its share of

the income earned by the Company. The

Company's material assets will initially consist of

the " regular interest" ( i. e., the Class A Asset

Trust Certificate) issued in registered form by

the Asset Trust, which will be treated as a " real

estate mortgage investment conduit" under the Code ( a" REMIC"). REMIC regular interests are

generally treated as indebtedness

for

United States Federal income tax purposes that qualifies

for

the

portfolio interest exemption. In addition, during

the

term of

the transaction, the Company

expects, pursuant to its investment guidelines, to invest cash on hand from time to time in short

term debt instruments and other debt securities that qualify

for

the portfolio interest exemption.

Accordingly, it is expected that a Foreign Holder's share of WaMu Delaware's distributive

share of

the Company's interest income will constitute " portfolio interest", and thus, will not be

subject to U.

S.

withholding tax, so long as the Foreign Holder has certified

its status as a Foreign

Holder under penalties of

perjury on

an

appropriate IRS Form W-

8.

In addition, gain realized on

the sale, exchange or

redemption of

the Trust Securities held by a Foreign Holder generally will

not be subject to United States Federal income or

withholding tax, as

the case may be, unless

such Foreign Holder is a nonresident alien individual who holds the Trust Securities as a capital

asset and who is present in the United States more than 182 days in the taxable year of

the sale

and certain other conditions are met.

Information Reporting and Backup Withholding

Under certain circumstances, the Code requires " information reporting", and may require

" backup withholding", with respect to certain payments made on the Trust Securities and the

payment of

the proceeds from the disposition of

such instruments. Backup withholding generally

will not apply to corporations, tax-exempt organizations, qualified pension and profit sharing

trusts, and individual retirement accounts. Backup withholding will apply to a U.

S.

Holder if the

U.

S.

Holder fails to provide certain identifying information (such as

the U.

S.

Holder's taxpayer

identification number) or

otherwise comply with the applicable requirements of

the backup

withholding rules. The application

for

exemption from backup withholdingfo

ra U

.S

.

Holder is

available by providing a properly completed IRS Form W- 9.

The payment of

the proceeds from the disposition of a Trust Security by a Foreign Holder

generally

will

no

t

be subject to information reporting and backup withholding if the

Foreign Holder

certifies

its status as a Foreign Holder (and, if applicable,

its beneficial owners also certify their

status as

non-United States persons) under penalties of

perjury on

the appropriate IRS

Form W- 8,

satisfies certain documentary evidence requirements

for

establishing that it is a

Foreign Holder or

otherwise establishes an exemption.

Backup withholding is not an additional tax and may be refunded ( or

credited against the

U.

S.

Holder's or

Foreign Holder's United States Federal income tax liability, if any), provided that

certain required information is furnished. The information reporting requirements may apply

regardless of

whether withholding is required.

Tax Return Disclosure Requirements

Recently issued Treasury Regulations and other administrative guidance promulgated by the

IRS prescribe certain circumstances under which holders of

the Trust Securities could be

required to file information returns with the IRS ( the "New Reporting Rules").

The New Reporting Rules could apply to a U.

S.

Holder (and to certain Foreign Holders who

hold their Trust Securities in connection with a United States trade or

business) if WaMuDelaware o

r

the Company were to enter into one or

more "reportable transactions". The

definition of

" reportable transaction" is highly technical. It

is not expected that WaMu Delaware

or

the Company will engage in activities that would give rise to any reportable transactions. If

97

CONFIDENTIAL


WaMu Delaware or

the Company were to engage in any "reportable transaction," then, subject

to certain exceptions and threshold limitations, a U.

S.

Holder or

Foreign Holder may be required

to file IRS Form 8886 with such holder's United States Federal income tax return

for

each

taxable year in which such " reportable transaction" affects such holder's taxable income, and to

file a copy of such form with the IRS's Office of Tax Shelter Analysis. WaMu Delaware intends to

provide to the holders of

Trust Securities any information necessary to complete such form.

In addition, subject to certain significant exceptions, any holder of

Trust Securities that

recognizes a loss on a sale or

exchange of

such holder's Trust Securities may be required to file

IRS Form 8886 in the manner described above if the loss exceeds certain thresholds and no

exception applies.

Prospective purchasers of

Trust Securities are urged to consult their own tax advisors

regarding the application to them of

the New Reporting Rules with respect to an investment in


Foreign, State, and Local Taxes

Holders may be liable

for

foreign, state, and local taxes in the country, state, or

locality in

which they are resident or

doing business or

in a state or

locality in which WaMu Delaware or

the

Company conducts or

is deemed to conduct business. Because the tax laws of each country,

state, and locality may differ, each prospective purchaser should consult

its own tax advisors

with respect to any taxes that may be payable as a result of

an investment in the Trust

Securities.

98

CONFIDENTIAL



Section 406 of

the Employee Retirement Income Security Act of 1974, as amended

("ERISA") and Section 4975 of

the Internal Revenue Code of 1986, as amended (the "Code")

prohibit pension, profit- sharing or

other retirement plans and accounts subject to ERISA or

Section 4975 of

the Code and entities that are deemed to hold " plan assets" of

any of

the

foregoing (each, a " Plan") from engaging in certain transactions with persons that are " parties

in interest" under ERISA or

"disqualified persons" under the Code with respect to such Plan. Aviolation o

f

these " prohibited transaction" rules may result in an excise tax or

other penalties

and liabilities under ERISA and the Code

for

such persons or

the fiduciaries of

the Plan. In

addition, Title I of

ERISA also requires fiduciaries of

a Plan subject to ERISA to make

investments that are prudent, diversified and in accordance with the governing plan documents.

Certain transactions involving WaMu Delaware might be deemed to constitute prohibited

transactions under ERISA and the Code with respect to a Plan that purchased Trust Securities or

Fixed-

to-

Floating Rate Company Preferred Securities if assets of WaMu Delaware were deemed

to be assets of

the Plan. Under a regulation issued by

the United States Department of

Labor

(the "Regulation"), the assets of WaMu Delaware would be treated as

plan assets of

a Plan

for

the purposes of

ERISA and the Code only if the Plan acquired an

" equity interest" in WaMu

Delaware and none of

the exceptions to plan assets contained in the Regulation was applicable.

An

equity interest is defined under the Regulation as

an interest other than an instrument that is

treated as indebtedness under applicable local law and that has no substantial equity features.

The WaMu Cayman Preferred Securities and the Fixed-to

-Floating Rate Company Preferred

Securities are not likely to be treated as indebtedness

for

purposes of

the Regulation. As such,

WaMu Delaware intends to prohibit

the

acquisition and holding of

any Trust Security or

Fixed-

to-

Floating Rate Company Preferred Security or

any interest in a Trust Security or

Fixed-

to-

Floating

Rate Company Preferred Security by

or

on

behalf of

a Benefit Plan Investor ( as

defined below).

For the purposes of

the Regulation, the term "Benefit Plan Investor" includes

all employee

benefit plans, regardless of whether or

not they are subject to ERISA (such as,

for

example,

governmental plans), individual retirement accounts, Keogh Plans and other plans subject to

Section 4975 of

the Code, and entities whose underlying assets are deemed to include plan

assets by reason of

the investment in that entity by

Benefit Plan Investors, such as group trusts,

bank collective investment trusts, insurance company separate accounts, and certain insurance

company general accounts.

By acquiring a Trust Security or

Fixed-

to-

Floating Rate Company Preferred Security ( or any

interest therein), each purchaser and transferee

will

be deemed to represent, warrant and

covenant that, from the date of

acquisition throughout the period of

holding such Trust Security

or

Fixed-

to-

Floating Rate Company Preferred Security ( or

interest therein), it is not, and it is not

acquiring such Trust Security or

Fixed-

to-

Floating Rate Company Preferred Security ( or

interest

therein) with the assets of

a Benefit Plan Investor, except

for

an insurance company general

account that represents, warrants and covenants that, at

the time of

acquisition and throughout

the period it holds the securities, ( i) it is eligible

for

and meets the requirements of

the

Department of

Labor Prohibited Transaction Class Exemption 95-60, (

ii) less than 25% of

the

assets of

such general account are ( or


a Benefit Plan Investor and (

iii) it is

not a person who has discretionary authority or

control with respect to the assets of WaMu

Delaware or

any person who provides investment advice

for

a fee (direct or

indirect) with

respect to such assets, or any affiliate of such a person and would not otherwise be excluded

under 29

C.

F.

R.

2510.3- 101 ( f) (1).

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CONFIDENTIAL


RATINGSIt

is expected that the Trust Securities will be rated "Baa2" by Moody's Investor Services,

Inc. (" Moody's"), " BBB" by Standard & Poors Rating Services, a division of

the McGraw Hill

Companies, Inc. ("S&P") and" A-" by Fitch, Inc. (" Fitch"). The ratings of


are not recommendations to purchase, hold or

sell the Trust Securities, inasmuch as the ratings

do

no

t

comment as

to the

market price or

suitability

for

a particular purchaser. Nor do

the

ratings

described above address the likelihood that a holder of

Trust Securities will be able to sell such

securities. The ratings are based on current information furnished to S& P,

Moody's and Fitch by

WMI, WMB, the Company and WaMu Delaware and information obtained from other sources.

The ratings may be changed, suspended or

withdrawn at

any time as a result of

changes

in,

or

the unavailability

of, such information.

100

CONFIDENTIAL


PLAN OF DISTRIBUTION

The Company, WaMu Delaware, WMI and the Initial Purchasers have entered into a

purchase agreement with respect to the Trust Securities. Subject to certain conditions, each

Initial Purchaser has severally agreed to purchase the amount ( by

liquidation preference) of

Trust Securities indicated in the following table.

Initial Purchasers

Goldman, Sachs & Co. . .

Credit Suisse Securities (USA) LLC .

Morgan Stanley & Co. Incorporated .

Total .

Liquidation

Preference

of

Trust

Securities

$ 750,000,000

$ 250,000,000

$ 250,000,000

$1,250,000,000

The Initial Purchasers are committed to take and pay

for

all

of

the securities being offered

hereby, if any are taken. The initial offering price is set forth on the cover page of

this offering

circular. After the securities are released

for

sale, the Initial Purchasers may change the offering

price and other selling terms.


Act. The Initial Purchasers have agreed that they will only offer or

sell the Trust Securities to

persons who are both "qualified institutional buyers" within the meaning of

Rule 144A under the

Securities Act and " qualified purchasers" within the meaning of

Section 2 ( a)

(51) under the

Investment Company Act in transactions meeting the requirements of

Rule 144A.

In connection with the Offering, the Initial Purchasers may purchase and sell securities in

the open market. These transactions may include short sales, stabilizing transactions and

purchases to cover positions created by short sales. Short sales involve the sale by the Initial

Purchasers of

a greater number of

securities than they are required to purchase in the Offering.

Stabilizing transactions consist of

certain bids or

purchases made

for

the purpose of

preventing

or

retarding a decline in the market price of

the securities while the Offering is in progress.

These activities by

the Initial Purchasers may stabilize, maintain or

otherwise affect the

market price of

the securities. As

a result, the price of

the securities may be higher than the price

that otherwise might exist in the open market. If these activities are commenced, they may be

discontinued by the Initial Purchasers at

any time. These transactions may be effected in the

over- the- counter market or

otherwise.

Each of

the Initial Purchasers has represented and agreed that:

( a)

It has not made or

will not make an

offer of

the securities being offered hereby to the

public in the United Kingdom within the meaning of

section 1028 of

the Financial

Services and Markets Act 2000 ( as

amended) (" FSMA") except to legal entities which

are authorized or

regulated to operate in the financial markets

or,

if not so authorized

or

regulated, whose corporate purpose is solely to invest in securities or otherwise in

circumstances which do

no

t

require

the

publication by the company of

a prospectus

pursuant to the Prospectus Rules of

the Financial Services Authority (" FSA");

( b)

It has only communicated or

caused to be communicated and will only communicate or

cause to be communicated an

invitation or

inducement to engage in investment activity

(within the meaning of

section 21

of

FSMA) to persons who have professional

experience in matters relating to investments falling within Article 19( 5)

of

the Financial

Services and Markets Act 2000 (Financial Promotion) Order 2005 or

in circumstances

in which section 21

of FSMA does not apply to the company; and

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CONFIDENTIAL


( c)

It has complied with, and will comply with

all applicable provisions of FSMA with

respect to anything done by

it in relation to the Trust Securities

in,

from or

otherwise

involving the United Kingdom.

In relation to each Member State of

the European Economic Area which has implemented

the Prospectus Directive (each, a " Relevant Member State"), each Initial Purchaser has

represented and agreed that with effect from and including the date on which the Prospectus

Directive is implemented in that Relevant Member State (the " Relevant Implementation Date") it

has not made and will not make an offer of

the securities being offered hereby to the public in

that Relevant Member State prior to the publication of

a prospectus in relation to the securities

which has been approved by the competent authority in that Relevant Member State

or,

where

appropriate, approved in another Relevant Member State and notified to the competent authority

in that Relevant Member State,all

in accordance with the Prospectus Directive, except that it

may, with effect from and including the Relevant Implementation Date, make an offer of

securities

to the public in that Relevant Member State at

any time:

( a)

to legal entities which are authorized or

regulated to operate in the financial markets

or,

if not so authorized or

regulated, whose corporate purpose is solely to invest in

securities;

( b)

to any legal entity which has two or

more of

( i) an average of

at

least 250 employees

during the last financial year; (

ii) a total balance sheet of more than €43,000,000; and

(

iii) an annual net turnover of more than €50,000,000, as shown in its last annual or

consolidated accounts; or

( c)

in any other circumstances which do not require the publication by

the Company of

a

prospectus pursuant to Article 3 of

the Prospectus Directive.

For the purposes of

this provision, the expression an

" offer of

securities to the public" in

relation to any securities in any Relevant Member State means the communication in any form

and by any means of

sufficient information on the terms of

the offer and the securities to be

offered so

as

to enable an investor to decide to purchase or

subscribe the securities, as

the

same may be varied in that Relevant Member State by any measure implementing the Prospectus

Directive in that Relevant Member State and the expression Prospectus Directive means Directive

2003/ 71 IEC and includes any relevant implementing measure in each Relevant Member State.

The securities offered hereby may not be offered or

sold by means of

any document other

than to persons whose ordinary business is to buy or

sell shares or

debentures, whether as

principal or

agent, or

in circumstances which do not constitute an offer to the public within the

meaning of

the Companies Ordinance (Cap. 32) of

Hong Kong, and no advertisement, invitation

or

document relating to the shares may be issued, whether in Hong Kong or

elsewhere, which is

directed

at,

or

the contents of

which are likely to be accessed or

read by, the public in Hong

Kong (except if permitted to do

so under the securities laws of

Hong Kong) other than with

respect to securities which are or

are intended to be disposed of

only to persons outside Hong

Kong or

only to " professional investors" within the meaning of

the Securities and Futures

Ordinance (Cap. 571) of

Hong Kong and any rules made thereunder.

This offering circular has not been registered as a prospectus with the Monetary Authority

of

Singapore. Accordingly, this offering circular and any other document or

material in connection

with the offer or

sale, or

invitation

for

subscription or

purchase of

the securities may not be

circulated or

distributed, nor may the securities be offered or

sold, or

be made the subject of

an

invitation

for

subscription or

purchase, whether directly or

indirectly, to persons in Singapore

other than ( i) to an

institutional investor under Section 274 of

the Securities and Futures Act,

Chapter 289 of

Singapore (the " SFA"), (

ii)

to a relevant person, or

any person pursuant to

Section 275(1A), and in accordance with the conditions, specified in Section 275 of

the SFA or

102

CONFIDENTIAL


(iii) otherwise pursuant

to,

and in accordance with the conditions

of, any other applicable

provision of

the SFA.

Where the securities offered hereby are subscribed or purchased under Section 275 by a

relevant person which

is:

( i) a corporation (which is not an accredited investor) the sole

business of

which is to hold investments and the entire share capital of

which is owned by one

or

more individuals, each of whom is an accredited investor; or

(

ii) a trust (where the trustee is

not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an

accredited investor, shares, debentures and units of

shares and debentures of

that corporation

or

the beneficiaries' rights and interest in that trust will not be transferable

for

6 months after that

corporation or

that trust has acquired the shares under Section 275 except: ( A)

to an

institutional investor under Section 274 of

the SFA or

to a relevant person, or

any person

pursuant to Section 275 (1A), and in accordance with the conditions, specified in Section 275 of

the SFA; ( 8)

where no consideration is given

for

the transfer; or

( C)

by

operation of

law.


and Exchange Law of

Japan (the "Japan Securities and Exchange Law") and each Initial

Purchaser has agreed that it will not offer or

sell any securities, directly or

indirectly, in Japan or

to,

or

for

the benefit

of,

any resident of

Japan (which term as

used herein means any person

resident in Japan, including any corporation or

other entity organized under the laws of

Japan),

or

to others

for

re-

offering or

resale, directly or

indirectly, in Japan or

to a resident of

Japan,

except pursuant to an exemption from the registration requirements

of, and otherwise in

compliance with, the Securities and Exchange Law and any other applicable laws, regulations

and ministerial guidelines of Japan.

WMI, the Company and WaMu Delaware have agreed in the purchase agreement, subject to

certain exceptions, that

for

a period of

180 days after the date of

this offering circular, neither

they, nor any of

their subsidiaries or

other affiliates over which they exercise management or

voting control, nor any person acting on

their behalf will, without the prior written consent of

Goldman, Sachs & Co., offer, sell, contract to sell or

otherwise dispose of

any securities that are

substantially similar to the Trust Securities.

WMI and the Company have agreed to indemnify the Initial Purchasers against certain

liabilities, including liabilities under the Securities Act.

Certain of

the

Initial Purchasers and their respective affiliates have, from time to time,

performed, and may in the future perform, various financial advisory and investment banking

services

for

the company,

for

which they received or

will receive customary fees and expenses.

103

CONFIDENTIAL


VALIDITY OF SECURITIES

The validity of

the Trust Securities will be passed upon

for

WMI and the Initial Purchasers

by Richards, Layton & Finger, P.

A., Wilmington, Delaware. The validity of

the Fixed-

to-

Floating


will

be passed upon

for

the Company by Richards, Layton &

Finger, P.

A.,

special Delaware counsel

for

the Company,

for

WMI by

Mayer, Brown, Rowe & Maw

LLP, New York, New York, and

for

the Initial Purchasers by

Sullivan & Cromwell LLP, New York,

New York. The validity of

the Fixed-

to-

Floating Rate Depositary Shares and of

the Fixed-

to-

Floating Rate WMI Preferred Stock will be passed upon

for

WMI by

Heller Ehrman LLP, Seattle,

Washington, and by Mayer, Brown, Rowe & Maw LLP, and

for

the Initial Purchasers by

Sullivan & Cromwell LLP. Mayer, Brown, Rowe & Maw LLP and Sullivan & Cromwell LLP will rely

upon the opinion of

Richards, Layton & Finger, P.

A.,

as

to matters of

Delaware law, and upon the

opinion of

Heller Ehrman LLP as

to matters of

Washington law.

104

CONFIDENTIAL


ADDITIONAL INFORMATION

Independent Accountants

The independent registered public accountants of

the Company will be

Deloitte & Touche

LLP. Deloitte & Touche LLP are also the independent registered public accountants

for

WMI and

WMB.

No

Material Adverse Change

Except as

disclosed in this offering circular, there has been no adverse change in the

financial position of

the Company, WaMu Delaware, WMB or WMI since December 31, 2005, or

their respective dates of

establishment (which was February 3, 2006 in the case of

the Company

and February 23, 2006 in the case of WaMu Delaware), that would be deemed material in the

context of


the Trust Securities in this Offering.

Legal Proceedings

Neither the Company nor WaMu Delaware are involved in any litigation, arbitration or

administrative proceeding relating to claims or

amounts that are material in the context of

the

issue and sale of


the Fixed- to-Floating Rate Company Preferred Securities

to which the Company or WaMu Delaware are a party, nor to the best of

the Company's or

WaMu Delaware's knowledge, is there any threatened litigation, arbitration or

administrative

proceedings relating to claims or

amounts that are material in the context of

the issue and sale

of


the Fixed-

to-

Floating Rate Company Preferred Securities that would in

either case jeopardize the Company's or

WaMu Delaware's ability to discharge the Company's or

WaMu Delaware's respective obligations in respect of



or the Fixed-

to-


Neither the Company nor the Asset Trust is the subject of any litigation. None of the

Company, WMI or WMB is currently involved in or, to WMB's knowledge, currently threatened

with, any material litigation with respect to the

assets included in the

Asset Trust's portfolio,

other than routine litigation arising in the ordinary course of

business. Based on information

currently available, advice of

counsel, available insurance coverage and established reserves,

WMB believes that the eventual outcome of

the actions with respect to the assets included in the

Asset Trust's portfolio will not, in the aggregate, have a material adverse effect on the

Company's consolidated financial position or

results of

operations. However, in the event of

unexpected future developments, it is possible that the ultimate resolution of

those matters, ifunfavorable, may b

e material to the Company's results of

operations

for

any particular period.

WMB, the Company, the Asset Trust, WaMu Cayman and WaMu Delaware have not been

named as defendants in any of

the following lawsuits and, on that basis they do not expect such

lawsuits to materially affect their respective operations or

financial results.

South Ferry L.

P.

# 2 v.

Killinger et

al., No. CV04- 1599C ( W.

O.

Wa., Filed Jul. 19,2004) (the

" Securities Action"). This class action lawsuit is currently pending against WMI and certain of

its

senior executives in the U.

S.

District Court, Western Division of Washington. On behalf of a

putative class of

purchasers of WMI securities from April 15, 2003 through June 28, 2004, lead

plaintiffs allege that in various public statements the defendants purportedly made misrepresenta-

tions and failed to disclose material facts concerning, among other things, alleged internal

systems problems and hedging issues.

The defendants moved to dismiss the Securities Action on May 17, 2005. After briefing, but

without oral argument, the Court on November 17, 2005 denied the motion in principal part;

however, the Court dismissed the claims against certain of

the individual defendants, dismissed

claims pleaded on behalf of

sellers of

put options on WMI stock, and concluded that the plaintiffs

105

CONFIDENTIAL


could not rely on supposed violations of

generally accepted accounting principles to support their

claims. The remaining defendants subsequently moved

for

reconsideration

or,

in the alternative,

certification of

the opinion

for

interlocutory appeal to the United States Court of Appeals

for

the

Ninth Circuit. The District Court denied the motion

for

reconsideration, but the motion

for

certification remains pending.

Lee Family Investments, by and through

its Trustee W.

B.

Lee, Derivatively and on behalf of

Nominal Defendant Washington Mutual, Inc. v.

Killinger et

ai, No. CV05- 2121C ( W.

O.

Wa., Filed

Nov. 29, 2005) (the "Derivative Action"). On November 29, 2005,12 days after the Court denied

the motion to dismiss the Securities Action, a separate plaintiff filed in Washington State Superior

Court a derivative shareholder lawsuit purportedly asserting claims

for

the benefit of

WMI. The

defendants include those individuals remaining as

defendants in the Securities Action, as

well as

those of

WMI's current independent directors who were directors at

any time from April 15, 2003

through June 2004. The allegations in the Derivative Action mirror those in the Securities Action,

but seek relief based on claims that the independent director defendants failed to take action to

respond to the misrepresentations alleged in the Securities Action and that the filing of

that

action has caused WMI to expend sums to defend itself and the individual defendants and to

conduct internal investigations related to the underlying claims. The defendants have not yet

responded to the complaint in the Derivative Action.

Governing Law

The LLC Agreement, the Trust Agreement, the Trust Securities and the Fixed-

to-

Floating

Rate Company Preferred Securities will be governed by, and construed in accordance with, the

laws of

the State of

Delaware. The Fixed-

to-

Floating Rate WMI Preferred Stock will be governed

by and construed in accordance with the laws of

the State of

Washington. The Fixed-

to-

Floating

Rate Depositary Shares will be governed by, and construed in accordance with, the laws of

the

State of New York.

106

CONFIDENTIAL


INDEX OF TERMS

3 ( c)

( 7)

Representations .

3-

Month USD L1BOR .

Additional Amounts .

Additional Assets .

Additional Tax Event .

Additional Taxes .

Administrative Services

Agreement .

Advanced Consumer Lending

System or

ACLS .

alternative services .

Asset Documentation .

Asset Portfolio .

Asset Subsidiary .

Asset Tax Opinion .

Asset Trust .

AVM .

back- end ratio .

Bankruptcy Event .

Benefit Plan Investor .

Business Combination .

Business Day .

CACS .

Class A Asset Trust

Certificate .

Class R Asset Trust

Certificate .

Clearstream .

. Clearstream International .

Clearstream Participants .

Code .

Code of

Ethics .

Company .

Company Common Securities ..

Company Preferred

Securities .

Company's Portfolio .

Comparable Treasury Issue ..

Comparable Treasury Price ..

Conditional Exchange .

core capital .

Covered Debt .

Credit Score .

Custodian .

Custody Agreement .

Cut-Off Date .

debt- to

-

income ratio .

Delaware Trustee .

Deposit Agreement .

Depositary .

Dividend Payment Date .

Dividend Period .

DTC .

DTC Participants .

vii

69

75

38

75

75

41

53

50

38

39

39

39

i, 44

50

49

42

iii, 99

83

59, 68, 79

53

45

45

91

91

92

iii, 99

51

cover, 1,36

4,

36

1

25

71

71

63

31

62

47

56

56

45

49

35

85

64

cover, 59, 68, 79

59, 68, 79

89

vii,

90

107

Eligible Assets .

Eligible Investments .

employee benefit plan .

ERISA .

Euroclear .

Euroclear Operator .

Euroclear Participants .

Euroclear Terms and

Conditions .

Exchange Agreement. .

Exchange Event .

FDiC .

Federal Reserve .

FFO .

Fitch .

Fixed Rate Company

Preferred Securities .

Fixed Rate Depositary Shares ..

Fixed Rate Substitute

Preferred Stock .

Fixed Rate Successor

Depositary Share .

Fixed Rate WMI Preferred

Stock .

Fixed- to-

Floating Rate

Company Preferred

Securities .

Fixed- to

-

Floating Rate

Depositary Shares .

Fixed- to

-

Floating Rate

Substitute Preferred Stock

Fixed-

to

-

Floating Rate

Successor Depositary

Share .

Fixed- to

-

Floating Rate WMI

Preferred Stock .

Foreign Holder .

FSA .

FSMA .

GAAP .

Global Security .

HELs .

Independent Investment

Banker .

Independent Manager .

Indirect Participants .


.


Event .

IRS .

Japan Securities and

Exchange Law .

Junior Equity Securities .

L1BOR Business Day .

38

39

iii

iii, 99

92

92

92

92

64

11,63

xii,

57

57

10, 68

100

1

88

84

84

88

cover, 1,67

11,79,85

84

84

2,

79

94

101

101xii

89

5

71

4,41

90

cover, ix,

1

71

93

103

70

69

CONFIDENTIAL


L1BOR Determination Date .

like amount .

LLC Act

.

LLC Agreement .

Loan Documents .

Marion .

Moody's .

New Assets .

New Reporting Rules .

Nominee .

Offering .

OTS .

Parity Equity Securities .

Paying Agent( s)

.

Permitted Investments .

plan .

Plan .

plan assets .

Pooling and Servicing

Agreement .

Primary Treasury Dealer .

Property Trustee .

PSA Delaware Trustee .

qualified institutional

buyer ( s)

.

qualified purchaser ( s)

.

Qualifying Interests .

Rating Agencies .

Rating Agency Condition .

Reference Treasury Dealer ..

Reference Treasury Dealer

Quotations .

Registrar .

Regulation .

Regulatory Capital Event .

Relevant Implementation Date

Relevant Member State .

REMIC .

Reminder Notice .

Replacement Capital

Covenant .

Replacement Covenant

Covered Securities .

69

2

36

36

56

21

100

67

97

65, 89

2

cover, 2,

30

67

65

39

iii

99

iii, 99

5

71

35

5,

44

iii, 1

iii, 1

23

40

41

71

71

65

99

71

102

102

5,

97

vii

9,61

61

108

S&P .

SEC .

Section 3 ( c)

( 7)

.

Securities Act .

Securities Action .

Senior Equity Securities .

Series A-

1 WaMu Cayman


Series A-

2 WaMu Cayman


Servicer .

Servicer Indemnified Parties

SFA .

SUCCESS .

Successor Entity .

supplementary capital .

Tax Event .

Tax- Exempt U.

S.

Holder .

Thrift Financial Report( s)

.

total capital .

Transfer Agent. .

Treasury Rate .

Trust Act .

Trust Agreement .

Trust Securities .

Trustee .

UBTI .

University Street .

U.

S.

Holder .

US L1BOR Telerate

Page 3750 .

U.

S.

Person .

Voting Parity Stock .

WaMu Cayman .

WaMu Cayman Preferred

Securities .

WaMu Delaware .

WMB .

WMI .

WMI Group .

WMI's Board of

Directors .

WM I Parity Stock .

WTC .

100

xi

vi

cover,

ix,

1

105

12

1

44

54

102

50

84

31

72

96

xii

31

65

72

35

vi,

35

cover, 1,59

44

96

i, 4,

36

93

69

62

82

i, 1

1

cover, 1,

35

i, 1,30

cover, 1

1

28

79

65

CONFIDENTIAL


No

dealer, salesperson or

other person

is authorized to give any information or

to

represent anything not contained in this offer-

ing circular. You must not rely on any unau-

thorized information or

representations. This

offering circular is an offer to sell only the

notes offered hereby, but only under circum-

stances and in jurisdictions where it is lawful

to do

so. The information contained in this

offering circular is current only as

of

its date.

TABLE OF CONTENTS

Page

Notice to Investors

iii

Special Note Regarding Forward-

Looking Statements x

Where You Can Find More Information xi

Index of

Terms. . . . . . . . . . . . . . . . . . . . . .

xii

Offering Circular Summary . . . . . . . . . . . 1

Risk Factors

....

. . . . . . . . . . . . . . . . . . . . 17

Certain Information Concerning WMB 30

Use of

Proceeds 34

WaMu Delaware. . . . . . . . . . . . . . . . . . . . . 35

The Company. . . . . . . . . . . . . . . . . . . . . . . 36

The Asset Trust. . . . . . . . . . . . . . . . . . . . . 44

WMI................................ 57

Certain Relationships and Related

Party Transactions 58

Description of

the Trust Securities. . . . 59

Description of

the Fixed-

to-

Floating

Rate Company Preferred Securities 67

Description of

Other Company

Securities. . . . . . . . . . . . . . . . . . . . . . . . . 77

Description of

the Fixed-

to-

Floating

Rate WMI Preferred Stock. . . . . . . . . 79

Description of

the Fixed-

to-

Floating

Rate Depositary Shares. . . . . . . . . . . . 85

Description of the Other WMI Capital

Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Book- Entry Issuance 89

Certain U.

S.

Federal Income Tax

Considerations . . . . . . . . . . . . . . . . . . . . 93

ERISA Considerations. . . . . . . . . . . . . . . 99

Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Plan of

Distribution . . . . . . . . . . . . . . . . . . 101

Validity of

Securities. . . . . . . . . . . . . . . . . 104

Additional Information. . . .. 105

Index of

Terms..... . ..

. ..

..

. .. 107

$1,250,000,000

Washington Mutual

Preferred Funding

Trust I

Fixed-

to-

Floating Rate Perpetual

Non-cumulative Trust

Securities Automatically

Exchangeable in Specified

Circumstances into Depositary

Shares representing Preferred

Stock of


Washington

Mutual

Goldman, Sachs & Co.Sole Global Coordinator and

Sole Structuring Coordinator

Credit Suisse

Morgan Stanley

CONFIDENTIAL


Date.

(TO: The Registrar o

f

Companies

Crighton Building

GeorgeTown

WASHINGTON MUTUAL PREFERRED FUNDING (CAYMAN) I LTD.

(

the " Company")

TAKE NOTICE that the

following resolution was adopted on

7th March 2006 by

written

resolution of

the

Sole Shareholder of

the

Company:

" IT IS HEREBY RESOLVED as a Special Resolution that

the

form of

restated


Association of

the

Company as

annexed hereto be

and

is hereby approved and adopted with immediate effect in substitution for

the

original


Association of

the

Company as

previously filed with

the Registrar of

Companies. It

M C rporate Services Limited

by

Nick Bullmore

Dated tIlls 8th day of

March 2006.

CERTIFIED TO

BE A TRUE AND CORRECT COPY

SlG. --~~~___ ----

NEVDIS TAVERAS

AsstRegllltrar

(\

J\

CVf""<... J/\ L£ ClLJ

HSH/ 6J

65251 J 6027 J6

/

v 1

CONFIDENTIAL


CONFIDENTIAL


,--

(

THE COMP ANTES LAW (2004 REVISION)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

RESTATED MEMORANDUM AND ARTICLES

OF

ASSOCIATION

OF

WASHINGTON MUTUAL PREFERRED FUNDING (CAYMAN) I LTD.

(adopted by

Special Resolution on 7 March, 2006)

NPBf616525fl600336fv2

CONFIDENTIAL


THE COMPANIES LAW (2004 REVISION)

OF THE CAYMAN ISLANDS


RESTATED MEMORANDUM OF ASSOCIATION

OF

WASIDNGTON MUTUAL PREFERRED FUNDING (CAYMAN) I LTD.

(adopted by

Special Resolution on 7 March, 2006)

The name of

the Company is Washington Mutual Preferred Funding (Cayman) I

Ltd.

2 The registered office of

the Company shall be

at

the

offices of M&C Corporate

Services Limited, PO Box 309GT, Ugland House, South Church Street, George

Town, Grand Cayman, Cayman Islands, or

at

such other place as

the

Directors

may from time to time decide.

3 The objects

for

which

the Company is established

for

the

following:

( a)

to issue Ordinary Shares to the Cayman Trust;

( b)

to issue Preferred Securities and sell

the

Preferred Securities to the

Purchasers pursuant to Purchase Agreement;

( c)

to apply

the

proceeds of

sale of

the

Preferred Securities to acquire a like

amount ofWaMu LLC Preferred Securities;

( d)

to enter into, exercise its

rights under, and perform its

obligations under,

the

Administration Agreement, the

Exchange Agreement, the

Expenses

Agreement, the Purchase Agreement,

the

Agency Agreement and

the

WaMu LLC Agreement;

( e)

( f) to take

all

other actions that

the

Directors consider nece

in connection with or

incidental to the

matters contemp .

3(

a)-( d)

above, inclusive. a:

The Company shall

not

engage in any activities other than those

NPB/ 616525/ 1600336/ v 3

CONFIDENTIAL


( 4

2

The liability of

each Member is limited to the

amount from time to time unpaid on

such Member's shares.

SIG.

5 The authorized share capital of

the Company is US$ 83,500 divided into ( i) 1,000

Ordinary Shares, par value $1.00

per

Share, (

ii) 7,500 Series A-

I Preferred

Securities,

pa

r

value $1.00

pe

r

Share, and (

iii) 75,000 Series A-

2 Preferred

Securities, pa

rvalue $1.00 p

er

Share.

6 The Company has

power to register by

way of

continuation as

a body corporate

limited by

shares under the

laws of

any jurisdiction outside the

Cayman Islands

and to be

deregistered in the Cayman Islands.

7 Terms that

are

not

defined in this Memorandum of

Association but

are used

herein and are defined in the

Articles of

Association of

the

company bear the

same meaning as

those given in the

Articles of

Association of

the

Company.

CERTIFIED TO BEA TRUE AND CORRECT COpy

-~

NEYDIS TAVERAS

Asst. Rrgislnr of

C6lIIPilits

Date. ~ 1b

lli{ LyC~ ,;)

00

6.

NPB/ 616525/ 1600336/ v2

CONFIDENTIAL


CONFIDENTIAL


(

THE COMPANIES LAW (2004 REVISION)

OF

THE CAYMAN ISLANDS


RESTATED ARTICLES OF ASSOCIATION

OF

WASIDNGTON MUTUAL PREFERRED FUNDING (CAYMAN) I LTD.

(adopted by Special Resolution on 7 March, 2006)

INTERPRETATION

1 In these Articles Table A in the

First Schedule to the Statute does

not

apply and,

unless there is something in the

subject or

context inconsistent therewith:

" Accountholder"

" Administration

Agreement"

" Administrator"

" Agency Agreement"

" Articles"

" Auditor"

" Bankruptcy Event"

NPB/ 616525/ 1600336/ v3

means any person designated as

such by

the

Registrar.

means

the

Administration Agreement dated March 6,

2006

( as

amended, modified or

supplemented from time-

to-

time),

between the Company andth

eAdministrator.

means

the

Person identified as

such in the

Administration

Agreement. The initial Administrator shall be Maples

Finance Limited, a licensed trust company incorporated

under the laws of

the Cayman Islands.

means the Agency Agreement, to be

dated as

of

March 7,

2006 ( as


supplemented from time to

time), among the

Company, WaMu LLC, Wilmington

Trust (Cayman), Ltd., as

the

initial Securities Registrar,

Transfer Agent and Paying Agent and

lP.

Morgan Bank

Luxembourg S.

A.,

as Luxembourg Paying Agent.

means these articles of

association of

the

Company.

means

the

Person

for

the

time being performing

the

duties of

auditor of

the Company ( if any).

means

the

Company, WaMu LLC or

( i) becomes insolvent or

is unable to p

admits in writing

its

inability genera

they become due, (

ii) makes a.

arrangement or

composition with 0

creditors, or

(

iii) institutes or

has •

tit

ted

against it

proceeding seeking a judgment of

ins

CONFIDENTIAL


" Book Entry Preferred

Securities"

" Book- Entry Transfer"

" Business Day"

"Cayman Trust"

"Clearing Agency"

"Clearing Agency

Participant"

" Clearstream"

"Company"

"Conditional Exchange"

" Consent"

NPB/ 616525/ 1600336/ v2

2

or

any other relief under any bankruptcy or

insolvency law

or

other similar law affecting creditors' rights, or

a petition

is presented

for

its winding- up

or

liquidation.

means Preferred Securities

the

ownership and transfer of

which shall be made through Book- Entry Transfers by

a

Clearing Agency.

means transfer or

delivery of

beneficial interests in Book-

Entry Preferred Securities in accordance with

the

rules and

procedures of

the

applicable Clearing Agency (including, in

the

case of

DTC if it is the

Clearing Agency, book- entry

transfers and deliveries through DTC's DepositlWithdrawal

at

Custodian DWAC system).

means any day other than a Saturday, Sunday or

any other

day on which banks in New York, New York, Seattle,

Washington or

Georgetown, Grand Cayman,

are generally

required or

authorized by

law to be

closed.

means the trust organized under the laws of

the Cayman

Islands

for

the

purpose of

holding

the

Ordinary Shares,

existing pursuant to a Declaration of

Trust, dated March 6,

2006 ( as

amended, modified orsupplemented from time to

time), and having Maples Finance Limited as

its

initial

trustee.

means an

organization whose principal business is the

clearance and settlement of

securities transactions,

including

the

transfer of

record ownership and

the

safeguarding of

securities and funds related thereto. DTC

will be

the initial Clearing Agency.

means a broker, dealer, bank, other financial institution or

other Person (including Euroclear and Clearstream)

for

whom from time to time a Clearing Agency effects book-

entry transfers and pledges of

securities deposited with

the

Clearing Agency.

means Clearstream banking, a societe anonyme.

means

the

above named company.

has

the

meaning specified in Article 9(

f).

means ( i) as

to the

Independent Director the

written consent

of

the

Independent Director, and ( ii)

as

to the

Directors as

a

whole, the

act

of

the

Directors ( x)

by

their unanimous

CONFIDENTIAL


(

" Deposit Agreement"

" Directors"

" dividend"

" Dividend Amount"

" Dividend Payment

Date"

" Dividend Period"

" DTC"

" Electronic Record"

" Euroclear"

" Exchange Agreement"

An

" Exchange Event"

NPB/ 616525/ 1600336/

v2

3

written consent or

( y)

by

resolution at

a meeting duly called

and held adopted in accordance with these Articles and

the

Statute.

means

the

Deposit Agreement, to be dated as

of

March 7,

2006 ( as

amended or

supplemented from time-

to-

time),

among ( i) WMI, (

ii) Mellon Investor Services LLC, as

shares depositary, (

iii) Mellon Investor Services LLC, as

registrar, and ( iv)

the

holders from time- to-

time of

the

WMI Depositary Receipts.

means

the

directors

for

the

time being of

the

Company.

includes an

interim dividend.

means, as

to a Preferred Security and a Dividend Payment

Date,

the

amount of

dividends received or

receivable by

the

Company on a like amount of WaMu LLC Preferred

Securities on such Dividend Payment Date.

means, with respect to the

Preferred Securities, each

Business Day on which

the Company or

its paying agent

receives payment of

dividends on WaMu LLC Preferred

Securities; provided, however, that, if the Company or

its

paying agent receives payment of

dividends on WaMu LLC

Preferred Securities after 2:

00

P.

M., New York time, on a

Business Day, then

the

related Dividend Payment Date

shall be

the

next succeeding Business Day.

means each period from and including a Dividend Payment

Date ( or

the Issue Date, if earlier) to but

not including

the

next succeeding Dividend Payment Date.

means The Depositary Trust Company.

has the same meaning as

in the Electronic Transactions Law

(2003 Revision).

means Euroclear Bank, S.

A./

N.

B,

as

operator of

the

Euroclear System.

means

the

Exchange Agreement, to be

dated March 7,

2006

( as amended or

supplemented from time to time), among

WMI,

the

Company, WaMu Delaware and Mellon Investor

Services LLC, as

depositary.

will occur when:

CONFIDENTIAL


(

" ExpensesAgreement"

" Fixed Rate Substitute

Preferred Stock"

" Fixed Rate WMIPreferred Stock"

"Fixed- to-

Floating Rate

Substitute Preferred

Stock"

"Fixed- to-

Floating Rate

WMI Preferred Stock"

" Global Securities"

" bolder"

" Independent Director"

" Independent Manager"

NPB/ 616525! I 600336/ v2

4

( a) WMB becomes undercapitalized under

the

OTS'

"prompt corrective action" regulations at

12

C.

F.

R.

Part 565 (and including any successor regulations);

( b) WMB is placed into conservatorship or

receivership;

or

( c)

the

OTS, in its

sole discretion, anticipates WMBbecoming undercapitalized in th

e

near term or

takes a

supervisory action that limits

the

payment of

dividends by WMB and in connection therewith

directs a Conditional Exchange.

means

the

Expenses Agreement dated February 28,2006 ( as


supplemented from time to time),

between

the Company and WMB.

means a class or

series of


a Successor

Entity havingth

epreferences, limitations and relative rights

in its

articles or

certificate of

incorporation or

other

constituent documents that are substantially similar to those

set

forth in the

articles of

amendment establishing the

Fixed

Rate WMI Preferred Stock.

WMI's Series J Perpetual Non- cumulative Fixed Rate

Preferred Stock, no

pa

r

value and liquidation preference

$1,000,000

pe

r

share.

means a class or

series of


a Successor

Entity having the

preferences, limitations and relative rights

in its

articles or

certificate of

incorporation or

other

constituent documents that are substantially similar to those

se

t

forth in the

articles of

amendment establishing

the

Fixed- to-


WMI's Series I Perpetual Non- cumulative Fixed-

to-

Floating Rate Preferred Stock, no

par

value, and liquidation

preference of$ I,OOO, OOOper share.

has

the

meaning specified in Article 15.

means a Member.

has

the

meaning specified in Article

87.

has

the


CONFIDENTIAL


( " Issue Date"

" Issue Price"

" like amount"

NPB/ 616525/ l600336/ v2

5

means, with respect to a Series,

the

date of

first issue of

the

Preferred Securities of

such Series.

means:

( a)

in the

case ofthe Series A-

I Preferred Securities,

$98,000 pe

r

Share; and

( b)

in the

case of

the

Series A-

2 Preferred Securities,

$9,800 pe

r

Share.

means:

( a)

when used with respect to dividends, redemption

price or

other financial entitlements of

one or

more

Series A-

I Preferred Securities, a number ofWaMu

LLC Preferred Securities having the

same aggregate


such Series A-

I Preferred

Securities ( i.~., 100 WaMu LLC Preferred Securities

for

each Series A-

I Preferred Security);

( b)

when used with respect to dividends, redemption price

or

other financial entitlements of

one or

more Series

A-

2 Preferred Securities, a number of

WaMu LLC

Preferred Securities having the

same aggregate


such Series A-

I Preferred

Securities (i.~.,

ten WaMu LLC Preferred Securities

for

each Series A-

2 Preferred Security);

( c) when used in connection with a Conditional Exchange

of

one or

more Series A-

I Preferred Securities

for

WMI Depositary Shares, a number of WMI

Depositary Shares representing Fixed Rate WMIPreferred Stock having a

n

aggregate liquidation

preference equal to the


preference of

such Series A-


(!.~.,

for

each Series A-

I Preferred Security, 100 WMIDepositary Shares); and

( d)

when used in connection with a Conditional Exchange

of

one or

more Series A-

2 Preferred Securities for

WMI Depositary Shares, a number of

WMIDepositary Shares representing Fixed Rate WMIPreferred Stock having

the

an


preference equal to the


preference of

such Series A-

2 Preferred Securities

(i.~.,

for

each Series A-

2 Preferred Security,

ten WMI

CONFIDENTIAL


6

(..

Depositary Shares).

" Liquidation Preference" when used in connection with the

Series A-

I Preferred

Securities means $100,000 per Share and when used in

connection with

the

Series A-

2 Preferred Securities means

$10,000 per Share.

"Member" has

the

same meaning as

in the

Statute.

"Memorandum" means

the memorandum of

association of

the Company.

"Offering Circular" means the final Offering Circular, dated February 24, 2006,

relating to the

offer and sale of

the


" Ordinary Directors" has

the


87

.

"Ordinary Resolution" means a resolution passed by a simple majority of

the

Membersa

s,

being entitled to do

so

,

vote in Person

or,

where proxies

are allowed, by

proxy at

a general meeting,

and includes a unanimous written resolution. In computing

the

majority when a poll is demanded regard shall be

had to

the

number of

votes to which each Member is entitled by

the

Articles.

" Ordinary Share" an

ordinary share in the

capital of

the Company of

$1.00

par value and issued subject to and in accordance with

the

provisions of

the Statute and having

the

rights provided

for

Ordinary Shares under these Articles.

"Ordinary Shareholder" a registered holder of

an

Ordinary Share.

" OTS" means

the

United States Office of

Thrift Supervision or

any

successor United States Federal bank or

thrift regulatory

agency that is the

primary supervisory agency

for

WMB.

"Owner" means each Person who is the

beneficial owner of

Book-

Entry Preferred Securities as

reflected in the

records of

the

Clearing Agency

or,

if a Clearing Agency Participant is not

the

Owner, then as

reflected in the records of

a Person

maintaining an

account with such Clearing Agency

(directly or

indirectly, in accordance with

the

rules of

such

Clearing Agency).

" Paying Agent" means the Person identified as

such In the

Agency

Agreement.

" Person" means a legal Person, including any individual, corporation,

estate, partnership, joint venture, association, joint stock

NPB/ 6 I652511 600336/ v2

CONFIDENTIAL


(

" Preferred Securities"

" Preferred

Securityholder" or

" holder of

Preferred

Securities"

" Purchase Agreement"

" Purchasers"

" Redemption Date"

" Redemption Price"

" Register of

Members"

NPB/ 616525/ 1600336/ v2

7

company, company, limited liability company, trust,

unincorporated association, or

govemmient or

any agency or

political subdivision thereof, or

any other entity of

whatever nature.

means the Series A-

1 Preferred Securities and

the

Series

A-

2 Preferred Securities.

means a registered holder of

a Preferred Security.

means

the

Purchase Agreement, dated as

of

February

24,

2006 ( as


supplemented from time to

time), among ( i) WMI, (

ii) WMB, (

iii) WaMu LLC,

(

iv) WaMu Delaware, ( v)

the Company and (

vi) Goldman,

Sachs & Co., as

representative of

the

Purchasers, pursuant

to which, among other things, at

the

Time of

Delivery ( x)

the

Purchasers designated therein will purchase newly-

issued Preferred Securities from

the Company and ( y)

the

Company will purchase

the WaMu LLC Preferred

Securities from WaMu LLC.

has

the

meaning specified in the

Purchase Agreement.

means, with respect to the

Preferred Securities, each

Business Day on which

the Company or

its paying agent

receives payment of

the

redemption price of WaMu LLC

Preferred Securities; provided, however, that, if the

Company or

its paying agent receives payment of

the

redemption price of

WaMu LLC Preferred Securities after

2:

00

P.


a Business Day, then

the

related Redemption Date shall be

the

next succeeding

Business Day.

means, as

to a Preferred Security and a Redemption Date,

the redemption price received or

receivable by

the

Company on a like amount of WaMu LLC Preferred

Securities (including, where applicable,

the

related

Additional Taxes ( as

defined in the WaMu LLC

Agreement), if any).

means

the

register maintained in accordance with

the

Statute

and includes (except where otherwise stated) any duplicate

Register of

Members.

CONFIDENTIAL


" Registered Office"

" Registrar"

" Regulation S Global

Security"

" Relevant Event"

" Rule I44A Global

Security"

" Seal"

" Securities Registrar"

" Series"

" Series A-

I Preferred

Securities"

" Series A-

2 Preferred

Securities"

" Share" and " Shares"

NPB/ 616525/ J 600336/ v2

8

means

the

registered office

for

the time being of

the

Company.

means

the

Person identified as such In the

Agency

Agreement.

has

the


means if ( a)

the

Clearing Agency notifies the

Company that

it is unwilling or

unable to continue as

depositary

for

such


( b)

the Company, in its sole

discretion, determines that

the

Regulation S Global

Security or

Rule 144A Global Security, as

applicable, willbe

exchangeable

for

the

applicable Preferred Security in

registered certificated form.

has

the


15

.

means

the common seal of

the Company and includes every

duplicate seal.

means

the

Person identified assuch in the

Agency

Agreement.

means a series of

Preferred Securities of

the Company

established in accordance with these Articles and the

Statute.

means the Series of

Shares designated in Article 5 as

the

Company's "7.25% Perpetual Non- cumulative Preferred

Securities, Series A-

I," issued subject to and in accordance

with

the

Statute and these Articles and having

the

rights,

preferences, powers and privileges provided

for

Series A-}

Preferred Securities under these Articles.

means

the

Series of

Shares designated in Article 5 as

the

Company's " 7.25% Perpetual Non- cumulative Preferred


2," issued subject to and in accordance

with

the

Statute and these Articles and having

the

rights,

preferences, powers and privileges provided

for

Series A-

2

Preferred Securities under these Articles.

means a share or

shares in the Company and includes the

Preferred Securities and the

Ordinary Shares.

CONFIDENTIAL


( " Special Resolution"

" Statute"

" Successor Depositary

Share"

" Successor Entity"

"Time of

Delivery"

"Transfer Agent"

" vote"

" WaMu Delaware"

" WaMuLLC"

" WaMuLLC

Agreement"

"WaMuLLC

Designated Directors"

" WaMu LLC Preferred

Securities"

NPB/ 61652511600336/ v2

9

has

the

same meaning as

in the Statute, and includes a

unanimous written resolution.

means the

Companies Law (2004 Revision) of

the

Cayman

Islands.

means a depositary share substantially similar to a WMIDepositary Share representing a

n

interest in the

Fixed Rate

Substitute Preferred Stock.

means a corporation designated by

the

Board of

Directors

of WMI that ( i) is the

surviving, resulting or

receiving

corporation, as applicable, in any Business Combination,

( ii)

the

securities of

which are received in a Business

Combination by some or

all

holders of WMI voting shares

or

(

iii) that the Board of

Directors ofWMI determines to be

an

acquiror ofWMI in a Business Combination.

has

the

meaning specified in the

Purchase Agreement

means the

Person identified as

such in the

Agency

Agreement.

means, with respect to any security,

its issuer and

its holder,

the exercise of

any applicable voting, approval or

other

consensual rights, whether at

a meeting, by

poll or

by

a

written consent ( as provided by applicable law and

the

issuer's charter documents).

means Washington Mutual Preferred Funding Trust I, a

Delaware statutory trust having WaMu LLC as

depositor.

means Washington Mutual Preferred Funding LLC, a

Delaware limited liability company.

means the Amended and Restated Limited Liability

Company Agreement of WaMu LLC, to be

dated as

of

March 7,

2006 ( as


supplemented

from time to time).

has

the


87

.

means the

7.25% Perpetual Non-cumulative Preferred

Securities ofWaMu LLC, liquidation preference $1,000 pe

r

security and $750,000,000 in the

aggregate.

CONFIDENTIAL


( " WMB"

" WMI"

" WMI Depositary

Receipts"

"WMI Depositary

Shares"

10

means Washington Mutual Bank, FA, a federal savings

bank and a wholly-owned subsidiary ofWMI.

means Washington Mutual, Inc., a Washington corporation.

means receipts issued pursuant to the

Deposit Agreement

evidencing Depositary Shares.

means

the

depositary shares issuable upon a Conditional

Exchange pursuant to the

Deposit Agreement, each

representing a 1/

100th interest in one Fixed Rate WMIPreferred Stock.

2 In the

Articles:

2.1 words importing

the

singular number include

the

plural number and

vice-versa;

2.2 words importing

the

masculine gender include

the

feminine gender;

2.3 words importing Persons include corporations;

2.4 "written" and " in writing" include

all modes of

representing or

reproducing words in visible form, including in the

form of

an

Electronic

Record;

2.5 references to provisions of

any law or

regulation shall be

construed as

references to those provisions as amended, modified,

re-

enacted or

replaced from time to time;

2.6 any phrase introduced by

the terms " including", " include", " in particular"

or

any similar expression shall be

construed as

illustrative and shall not

limit

the

sense of

the words preceding those terms;

2.7 headings

are inserted

for

reference only and shall be

ignored in construing

these Articles; and

2.8 in these Articles Section 8 of

the

Electronic Transactions Law (2003

Revision) shall

no

t

apply.

COMMENCEMENT OF

BUSINESS

3 The business of

the Company may be commenced as

soon after incorporation as

the

Directors shall see

fit.

4 The Directors may pay,

out

of

the capital or

any other monies of

the

Company,

all

expenses incurred in or

about

the

formation and establishment of

the Company,

including

the

expenses of

registration.

SHARE CAPITAL

5 The authorized share capital of

the Company is ( i) 1,000 Ordinary Shares,

pa

r

value $1.00 per Share, (

ii) 7,500 "7.25% Perpetual Non-cumulative Preferred


I",

par

value $1.00 per Share and liquidation preference

NPB/ 6165251l600336/ v2

CONFIDENTIAL


6

11

$100,000 per Share, and (

iii) 75,000 " 7.25% Perpetual Non- cumulative Preferred


2," par value $1.00 per Share and liquidation preference

$10,000

pe

r

Share. The Company shall

no

t

issue Shares other than Ordinary

Shares and Preferred Securities. Series A-

I Preferred Securities in addition to

those issued pursuant to Article 8 may be

issued only in connection with an

exchange of

an

interest in the

Regulation S Global Security representing

the

Series A-

2 Preferred Securities for

an

interest in the

Rule 144A Global Security

representingth

ebeneficial interests in the Series A

-

I Preferred Securities in

accordance with these Articles and

the

Agency Agreement; Series A-

2 Preferred

Securities in addition to those issued pursuant to Article 8 may be issued only in

connection with an exchange of

an

interest in the

Rule 144A Global Security

representing the beneficial interests in the

Series A-


for

an

interest in the

Regulation S Global Security representing the

Series A-

2 Preferred

Securities in accordance with these Articles and the Agency Agreement; and

the


the

Preferred Securities at

any time

outstanding may not exceed $750,000,000.

The Company shall not issue Shares to bearer.

ISSUE OF ORDINARY SHARES

7 For so long as any Preferred Securities

are

outstanding, Ordinary Shares may only

be

issued to or

registered in the

name of

the

trustee of

Cayman Trust, at

such

price( s)

and on

such date( s)

as

may be

determined by

the

Directors. From and

after the

first date on

which the

Preferred Securities after their initial issuance

have been redeemed in full, Ordinary Shares may be

issued to or

registered in the

name of

such Persons, and issued at

such price( s)

and on

such date(

s),

as may be

determined by

the Directors from time-

to-

time.

ISSUE OF PREFERRED SECURITIES

8 Subject to the provisions of

these Articles and

the

terms and conditions of

the

Purchase Agreement, at

the

Time of

Delivery provided

for

in the

Purchase

Agreement the Directors may issue to the

Purchasers provided

for

therein up

to

3,023 Series A-

I Preferred Securities at

the

applicable Issue Price and up

to

44,770 Series A-

2 Preferred Securities at

the

applicable Issue Price.

RIGHTS, POWERS, PREFERENCES AND PRIVILEGES

OF THE PREFERRED SECURITIES

9 The Preferred Securities shall have

the

rights, powers, preferences and privileges

as

are

se

t

forth in this Article 9 and provided in the

Statute.

( a)

Series A-

I Preferred Securities and Series A-

2 Preferred Securities. Subject to ( i)

paragraph ( e)

of

th

is

Article 9 with respect to voting rights and ( ii)

the

liquidation

preference pe

r

Share of

the

Series A-

I Preferred Securities being $100,000 and

per Share of

the Series A-

2 Preferred Securities being $10,000,

the

rights, powers,

preferences and privileges of

the

Series A-

I Preferred Securities and

the

Series A-

2 Preferred Securities

are

the

same.

NPB/ 616525/ l600336/

v2

CONFIDENTIAL


( ( b)

12

Dividends. Subject to the

next succeeding sentence, dividends on

the

Preferred

Securities shall be deemed automatically declared and become due: and payable

on

each Dividend Payment Date in the Dividend Amount

for

such Dividend

Payment Date, subject to the Company having legally available funds

for

such

purpose and

the

other qualifications provided

for

in these Articles.

Notwithstanding

the

foregoing, no

dividends or

less than full dividends on

the

Preferred Securities on any Dividend Payment Date shall become due and payable

if the

Directors, by

their unanimous vote or

consent, resolve that

the Company

shall pay on

such Dividend Payment Date no

dividends or

less than full dividends

on

the

Preferred Securities. Accordingly, unless dividends otherwise payable on a

Dividend Payment Date have been eliminated or

reduced by

the unanimous vote

or

consent of

the

Directors:

( i) ifWaMu LLC pays full dividends on

the WaMu LLC Preferred Securities

on

a Dividend Payment Date,

the Company will pay corresponding full

dividends on

the

Preferred Securities on

such Dividend Payment Date;

(

ii)

if WaMu LLC pays partial dividends on


Securities on a Dividend Payment Date,

the Company will pay partial

dividends in the

same proportionate amount (relative to the applicable

liquidation preference) on

the


such Dividend

Payment Date; and

(

iii) ifWaMu LLC pays no

dividends on


on

a Dividend Payment Date, the

Company will pay no

dividends on

the


such Dividend Payment Date.

Dividends on

the

Preferred Securities payable on

a Dividend Payment Date shall

be

paid to the

Preferred Securityholders on

the

Register of

Members on

the

related record date, which shall be

the

first day of

the

month in which

the

relevant

Dividend Payment Date occurs

or,

if any such day is not a Business Day,

the

next

day that is a Business Day.

Dividends on

the


are non-cumulative, except to the

extent

that on

a Dividend Payment Date the

Company has

received from WaMu LLC a

payment of

dividends on

the WaMu LLC Preferred Securities bu

t

fails to pay the

corresponding dividend on

the


If:

( i) the Company pays no

dividends or


the

Preferred Securities on a Dividend Payment Date because it received no

dividend or



Securities, then Preferred Securityholders will have no

right to receive,

and the Company will have no

obligation to pay, such unpaid dividends at

a future date, whether or

not dividends

are paid on

a future Dividend

Payment Date on

the


the Ordinary Shares; and

NPB/ 6 I 6525/ 1 600336/ v2

CONFIDENTIAL


( (

ii)

13

the Company pays no

dividends or


the

Preferred Securities on a Dividend Payment Date where clause ( i) does

no

t

apply

but

the

Directors have unanimously detennined not to pay dividends

or

to pay less than full dividends pursuant to their authority in the second

sentence of

the

first paragraph of

this Article 9(

b),

then no

further

dividends may be

paid on

Ordinary Shares until such unpaid dividends

have been paid on

the


( c) Term and Redemption. The Preferred Securities

are perpetual Shares, subject to

the

redemption provisions of

this Article 9(

c).

The Preferred Securitiesare not redeemable at

the

option of

the

holders thereof.

The Preferred Securities shall be redeemed on each Redemption Date at

a

redemption price equal to the

Redemption Price pe

r

Preferred Security for

such

Redemption Date (which, as

reflected in the definitions of

those terms, has the

consequence that the Preferred Securities will be redeemed on

the

same dates on

which


are redeemed at

a redemption price

pe

r

Preferred Security equal to the

redemption price received by

the

Company on

a like amount ofWaMu LLC Preferred Securities).

If a redemption of WaMu LLC Preferred Securities and, as

a consequence,

Preferred Securities on any Redemption Date is in part instead of

in whole, then

the

Directors shall first allocate

the

total amount available to pay

the

Redemption

Price between

the

Series A-

I Preferred Securities andth

e

Series A-

2 Preferred

Securities in proportion to their aggregate liquidation preferences ( rounded by

the

Directors, if necessary, so

that no

Shares are redeemed in part and no

t

in whole).

The Directors shall select the

particular Shares of

Series A-


and Series A-

2 Preferred Securities, as

applicable, to be redeemed not more than

60 days prior to the

Redemption Date from the outstanding Preferred Securities

no

t

previously called

for

redemption, such selection to be made by such method

as

the

Directors deem fair and appropriate.

The Company will give to the

Preferred Securityholders and publish notice of

any

proposed redemption as

provided in Articles 142 to 146. Such notice will be

given and published at

least 30

days but not more than 60

days before

the

date

fixed.

for

n~ demption.

The Directors may redeem or

cause the Company to redeem

all

or

some of

the

Preferred Securities held by

any Person to give effect to an

exchange, conversion

or

roll up policy ( an " Exchange") disclosed in the

Offering Circular or

otherwise

adopted by

the

Directors pursuant to which Preferred Securities of

one

class ( the

" Old Shares") may, at

the

option of

the

Company, be exchanged

for

Preferred

Securities of

another class (

the

" New Shares") by

means of

the

redemption of

the

Old Shares and

the

immediate

re-

subscription on

behalf of

the

relevant Members

of

the

redemption proceeds in paying up

the New Shares.

NPB/ 616525f1600336/ v2

CONFIDENTIAL


( d)

14

On

an Exchange a Person holding Old Shares shall immediately following the

redemption of

the

Old Shares hereby subscribe

for

and shall be deemed to have

subscribed

for

without any further action required by

the

relevant Member and

shall be alloted such number of New Shares as has

the

same aggregate

Liquidation Preference as

the

Old Shares subject to the Exchange. The

subscription price

for

such New Shares shall be deemed to have been paid by

the

application of

the

redemption proceeds

for

the

Old Shares and the Company is

hereby authorised to se

t

off

any redemption proceeds payable in respect of

the

compulsory redemption of

the

Old Shares against

the

relevant Member's

obligation to payth

esubscription price

for

New Shares.

Ranking. During a Dividend Period,

the Company shall

not

pay any dividends on

the

Ordinary Shares, other than dividends payable in Ordinary Shares, and

the

Company shall not repurchase, redeem or

otherwise acquire

for

consideration

Ordinary Shares, directly or

indirectly, unless full dividends on

the

Preferred

Securities have been paid for

such Dividend Period, or

set

aside for

payment, as

the

case may

be.

In the event the Company voluntarily or


winds

up,

the

holders of

Preferred Securities at

the time outstanding will be

entitled to receive liquidating distributions in the

amount equal to the aggregate

Liquidation Preference of

the

Preferred Securities held, in each case plus

the

relevant amount of

any dividends theretofore received by

the

Company on

a like

amount of

WaMu LLC Preferred Securities no

t

yet

distributed as

a dividend on

the

Preferred Securities plus the

relevant amount of

dividends on

a like amount of

WaMu LLC Preferred Securities that

the Company is entitled to receive from

WaMu LLC but has not

ye

t

received (because,

for

example, WaMu LLC's board

of

managers has declared

but

not

ye

t

paid such dividends) before any distribution

of


Ordinary Shares, subject to the

rights of

general

creditors ofthe Company.

After payment of

the

full amount of

the

liquidating distributions to which they

are

entitled, Preferred Securityholders will have no

right or

claim to any of

the

Company's remaining assets. In the

event that, upon any such voluntary or

involuntary liquidation, dissolution or

winding- up

,

the

available assets are

insufficient to pay

the

amount of

the liquidating distributions on

all

outstanding

Preferred Securities, then

the

Preferred Securityholders will share ratably in any

such distribution of

assets in proportion to the

full liquidating distributions to

which they would otherwise be

respectively entitled.

( e)

Voting Rights. Except as

expressly provided or

required by

these Articles, the

Statute or

other applicable law, the

holder of

Preferred Securities shall no

t

have

any voting rights. In the

event holders of

Preferred Securities are entitled to vote

on

a matter together as

a single class, or

together with holders of

Ordinary Shares,

the

holders of

Series A-

I Preferred Securities will be entitled to ten

votes

pe

r

Share and

the

holders of

the

Series A-

2 Preferred Securities will be

entitled to one

vote

per

Share.

NPB/ 616525/ 16003361v2

CONFIDENTIAL


/!

15

In the

event the Company receives notice from WaMu LLC that

the Company as

holder of WaMu LLC Preferred Securities is entitled to vote on any matter,

promptly after learning of

such entitlement

the Company shall cause to be

given

and published as provided in Articles 142 to 146, notice of

such vote (including a

description of

the

subject matter of

the

vote and

related circumstances to the

extent known to the

Company), along with a copy of

any notice or

other written

communication received by

the Company from WaMu LLC with respect to such

vote and related matters. In each such notice the Company shall request direction

from each holder of

Preferred Securities as

to how the Company as

a holder of

WaMu LLC Preferred Securities shall vote a like amount of WaMu LLC


the

matter at

issue. Each holder of


shall have the

right to direct the

manner in which the

Company exercises such

voting rights with respect to a like amount ofWaMu LLC Preferred Securities.

So

long as

any Preferred Securities

are outstanding,

the Company will not,

without

the

consent of

Preferred Securityholders entitled to at


the

total voting rights of

all

outstanding Preferred Securities, voting together as

a

single class:

( i) ( x)

vary any right, power, preference or

privilege of

the

Preferred

Securities or

( y)

amend, alter, repeal or

otherwise change any other

provision of

these Articles (including this Article 9)

if such amendment,

alteration, repeal or

change pursuant to this clause ( y)

would materially

and adversely affect

the

right, powers, preferences or

privileges of

the

Preferred Securities; or

(

ii) merge, convert, consolidate, reorganize or

effect any other business

combination involving

the

Company.

Additionally so

long as


are outstanding,

the Company

will not, without the

consent of

each holder of

outstanding Preferred Securities,

authorize, create or

increase

the

authorized amount of

or

issue any class or

series

of

Shares, or

any warrants, options otherwise convertible or

exchangeable into

any class or

series of

Shares, ranking pari passu or

senior to the

Preferred

Securities, or

as

to dividend rights, redemption rights or

rights on

dissolution,

liquidation or

winding up

of

the

Company.

( f) Conditional Exchange. If the OTS directs upon

the

occurrence of

an Exchange

Event, each Preferred Security then outstanding shall be exchanged automatically

for

a like amount of

newly issued WMI Depositary Shares.

Upon the

occurrence of

a Conditional Exchange:

( i) each holder of

Preferred Securities shall be

unconditionally obligated to

surrender to WMI any certificates representing

the


owned by

such holder on

the

date and time provided in the

next

succeeding paragraph;

NPB/ 61

6525/ 1 600336/ v2

CONFIDENTIAL


iI (

ii)

16

effective on such date and time

the Company shall ( or

shall cause

the

Securities Registrar

to)

record in the

Register of

Members WMI as

owner

of

all

of

the

Preferred Securities, as

transferee from

the

Persons who are

holders of

Preferred Securities immediately prior to such date and time;

and

(

iii) the Directors shall have

the

authority to execute and deliver

all

such

documents, instruments of

transfer and notices or

otherwise on

behalf of

holders of


the

Directors shall, in their absolute

discretion, deem necessary to effect

the

Conditional Exchange.

The Conditional Exchange shall occur as

of

8:

00

A.


the

date

for

such exchange

se

t

forth in the

applicable OTS directive,

or,

if such date is

no

t

set

forth in the

directive, as

of

8:

00

A.


the

earliest

possible date such exchange could occur consistent with the

directive, as

evidenced by

the

issuance by WMI of

a press release prior to such time. As

of

the

time of

the

Conditional Exchange,all

rights of

the

exchanging holders of


the

Company's shareholders shall cease, and such Persons

shall

be

,

for

all purposes, solely holders of WMI Depositary Shares, and WMI

shall be

the

holder of

all

outstanding Preferred Securities.

Within 30

days of

the

occurrence of

an Exchange Event and in connection

therewith,

the

issuance by

the OTS of

a directive requiring a Conditional

Exchange,

the Company shall cause to be

mailed to each of

the

holders of

record

of

the

Preferred Securities immediately prior to such Conditional Exchange and

published in the

manner provided in Articles 142 to 146, notice setting forth ( i)

the

occurrence of

an Exchange Event and directive requiring a Conditional

Exchange and

( ii)

instructions where such holders of

record shall deliver the

certificates representing

the

Preferred Securities in exchange

for

WMI Depositary

Shares. WMI shall, pursuant to the

Exchange Agreement, deliver to each such

holder of

record of

the

Preferred Securities a like amount of WMI Depositary

Shares upon surrender of

the

certificates representing Preferred Securities. Any

such notice to the

holders of

record of

Preferred Securities shall be

addressed to

each such holder at

his last known address shown on

the

Register of

Members of

the

Company and

the

time of

mailing of

such notice shall be

deemed to be

the

time of

the

giving thereof Until replacement certificates representative of

WMIDepositary Shares a

re delivered or

in the

event such replacement certificates are

no

t

delivered, any certificates previously representing Preferred Securities shall be

deemed

for

all

purposes to represent WMI Depositary Shares.

Holders of

Preferred Securities, by

purchasing Preferred Securities (whether in

connection with the initial offering of

the


in the

secondary

market), will be deemed to have agreed to be bound by

the

unconditional

obligation to exchange Preferred Securities

for

a like amount of

Depositary

Shares as

provided in this Article 9(

f).

NPB/ 616525/ 1600336/ v2

CONFIDENTIAL


/

(

( g)

17

In the

event WMI effects or

is the subject of

a merger, consolidation, statutory

share exchange, sale of

all,

or

substantially all, of

its

assets or

other form of

business combination, ( i) in which WMI is not

the

surviving, resulting or

receiving corporation thereof or

(

ii)

if WMI is the

surviving or

resulting

corporation, shares representing a majority ofWMI's total voting power

are either

converted or

exchanged into securities of

another Person or

into cash or

other

property (any such transaction in either ( i) or

(

ii) being a " Business

Combination"), then, WMI ( i) shall not enter into such Business Combination

unless the Successor Entity agrees, effective upon

the

consummation of

such

Business Combination, to abide by

all

of

WMI's obligations under

the

provisions

of

the

Exchange Agreement restricting

the

payment of

dividends by WMI in the

event dividends

are

not

paid with respect to the Company Preferred Securities and

(

ii) may, at

the

election of

the

Board of

Directors of WMI prior to the

effectiveness of

such Business Combination, assign, effective upon

the

consummation of

such Business Combination, all

of

its

other obligations under

the Exchange Agreement to a Successor Entity that has both Fixed Rate Substitute

Preferred Stock and Fixed-

to-

Floating Rate Substitute Preferred Stock and, as

a

result of

such assignment,

all references to WMI, Fixed Rate WMI Preferred

Stock, Fixed-

to-

Floating Rate WMI Preferred Stock, Depositary Share shall

become and be deemed to be

references to such Successor Entity, to such Fixed

Rate Substitute Preferred Stock, to such Fixed-to-

Floating Rate Substitute

Preferred Stock, to a Successor Depositary Share, respectively. This paragraph

shall apply to any subsequent Business Combination mutatis mutandis.

Acknowledgments and Agreements Relating to Preferred Securities. Each

Preferred Securityholder ( by

purchasing a Preferred Security) and each Owner ( by

purchasing a beneficial interest in a Book- Entry Preferred Security)

( i) acknowledges that

the

offer and sale of

the

Preferred Securities has not been

and will

not

be

registered under

the

U.

S.

Securities Act of

1933, as

amended, (

ii)

acknowledges and agrees that the Company has not been and will not be

registered as

an

" investment company" within the meaning of

the

U.

S.

Investment

Company Act of

1940, as amended, and (

iii) by purchasing Preferred Securities or

interests therein, makes each of

the

representations, warranties and agreements

se

t

forth in the

Offering Circular under. the caption "Notice to Investors" to be made

by

purchasers ( as

provided in the Offering Circular to be

applicable to the

purchasers of

Series A-

I Preferred Securities or

Series A-

2 Preferred Securities,

respectively). The Company covenants and agrees to take each of

the

actions and

steps specified in the

Offering Circular under

the

caption " Notice to Investors" to

be taken by

the Company ( it being understood that

the Company is identified as

" WaMu Cayman" in the

Offering Circular), including, without limitation, those

se

t

forth under

the

sub- captions "- Series A-

I WaMu Cayman Preferred

Securities", "- Reminder Notices," "-DTC Actions with Respect to the WaMu

Cayman Preferred Securities," "-Bloomberg Screens, Etc.," "- CUSIP," and "-

Legends."

NPB/ 616525/ 1600336/ v2

CONFIDENTIAL


(

18

REGISTER OF MEMBERS10

The Company shall maintain or

cause to be

maintained the

Register of

Membersin accordance with

the

Statute. For so

long as

the Agency Agreement is in effect,th

e

Securities Registrar shall maintain

the

Register of

Members on

behalf of

the

Company in accordance with such Agreement.

CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE

11 For the purpose of

determining Members entitled to notice

of,

or

to vote at

any

meeting of

Members or

any adjournment thereof, or

Members entitled to receive

payment of

any dividend, or

in order to make a determination of

Members

for

any

other proper purpose, the

Directors may provide that the

Register of

Members

shall be

closed

for

transfers

for

a stated period which shall not in any case exceed

forty days. If the

Register of

Members shall be

closed

for

the purpose of

determining Members entitled to notice

of,

or

to vote

at,

a meeting of

Members

the Register of

Members shall be

closed

for

at

least ten days immediately

preceding

the

meeting.

12

In lieu

of,

or

apart from, closing

the

Register of

Members,

the

Directors may

fix in

advance or

arrears a date as

the record date

for

any such determination of

Members

entitled to notice

of,

or

to vote at

any meeting of

the Members or

any adjournment

thereof, or

for

the

purpose of

determining the

Members entitled to receive payment

of

any dividend or

in order to make a determination of

Members

for

any other

proper purpose (subject to Article 9(

b)

in the

case of

dividends on

Preferred

Securities).

13

If the

Register of

Members is not so

closed and no

record date is fixed

for

the

determination of

Members entitled to notice

of,

or

to vote

at,

a meeting of

Members or

Members entitled to receive payment of

a dividend,

the

date on

which notice of

the

meeting is sent or

the date on which

the

resolution of

the

Directors declaring such dividend is adopted, as

the

case may

be,

shall be

the

record date

for

such determination of

Members. When a determination of

Members entitled to vote at

any meeting of

Members has been made as

provided

in this Article, such determination shall apply to any adjournment thereof

CERTWICATES FOR SHARES

14 A Member shall only be

entitled to a share certificate if the Directors resolve that

share certificates shall be

issued. Share certificates representing Shares, if any,

shall be

in such form as

the

Directors may determine, subject to Article

15.

Share

certificates shall be

signed by

one or

more Directors or

other Person authorised by

the Directors. The Directors may authorise certificates to be

issued with the

authorised signature( s)

affixed by mechanical process. All certificates

for

Shares

shall be

consecutively numbered or

otherwise identified and shall specify the

Shares to which they relate.

All

certificates surrendered to the Company

for

transfer shall be

cancelled and subject to these Articles no new certificate shall be

NPB/ 6 I652511 600336/ v2

CONFIDENTIAL


19

issued until

the

former certificate representing a like number of

relevant Shares

shall have been surrendered and cancelled.

15 Each share certificate representing Series A-

I Preferred Securities shall bear

the

following legend:

"THIS SECURITY IS ONE OF THE 7.25% PERPETUAL NON-

CUMULATIVE PREFERRED SECURITIES, SERIES A-

I

(" SERIES Al WAMU CAYMAN PREFERRED SECURITIES")

ISSUED BY WASHINGTON MUTUAL PREFERRED

FUNDING (CAYMAN) I LTD. ("WAMU CAYMAN"). THE

ISSUER OF THIS SECURITY HAS NOT BEEN REGISTERED

AS AN INVESTMENT COMPANY UNDER THE U.

S.

INVESTMENT COMPANY ACT OF 1940, AS AMENDED(THE " INVESTMENT COMPANY ACT"), AND THIS

SECURITY HAS NOT BEEN REGISTERED UNDER THE U.

S.

SECURITIES ACT OF 1933, AS AMENDED (THE

"SECURITIES ACT"), AND NEITHER THIS SECURITY NORANY BENEFICIAL INTERESTS HEREIN MAY B

E OFFERED,

SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT

TO A PERSON WHO IS BOTH A " QUALIFIED

INSTITUTIONAL BUYER" WITHIN THE MEANING OF

RULE l44A UNDER THE SECURITIES ACT (" QUALIFIED

INSTITUTIONAL BUYER") AND A " QUALIFIED

PURCHASER" WITHIN THE MEANING OF SECTION 2(

a)(

51)

OF THE INVESTMENT COMPANY ACT AND THE RULES

AND REGULATIONS THEREUNDER (" QUALIFIED

PURCHASER") ACQUIRING FOR ITS OWN ACCOUNT ORTHE ACCOUNT O

F A PERSON WHO IS BOTH A QUALIFIED

INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER

(AN "ELIGIBLE PURCHASER") AND EACH SUCH PERSON

AND ACCOUNT FOR WHICH SUCH PERSON IS

PURCHASING ( A)

IS NOT A BROKER- DEALER THAT

OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS

THAN US$ 25 MILLION IN SECURITIES OF

ISSUERS THAT

ARE NOT ITS AFFILIATED PERSONS, ( B)

IS NOT A PLAN

REFERRED TO IN PARAGRAPH (

a)(

I)(

i)(

D)

OR (

a)(

I)(

i)(

E)

OF RULE 144A, OR A TRUST FUND REFERRED TO IN

PARAGRAPH (

a)(

l)(

i)(

F)

OF RULE 144A THAT HOLDS THE

ASSETS OF SUCH A PLAN, IF INVESTMENT DECISIONS

WITH RESPECT TO THE PLAN ARE MADE BY THE

BENEFICIARIES OF SUCH PLAN, ( C)

WAS NOT FORMED

FOR THE PURPOSE OF INVESTING IN WAMU CAYMAN,

( D)

WILL HOLD AND TRANSFER AT LEAST $100,000

LIQUIDATION PREFERENCE OF SERIES A-

I WAMUCAYMAN PREFERRED SECURITIES (i.~., A

T LEAST ONE

WAMU CAYMAN PREFERRED SECURITY), AND ( E)

UNDERSTANDS THAT WAMU CAYMAN MAY RECEIVE A

NPB/ 616525/ 1600336/

v2

CONFIDENTIAL


20

LIST OF PARTICIPANTS HOLDING POSITIONS IN THIS

SECURITY FROM ONE OR MORE BOOK-ENTRY

DEPOSITARIES. EACH PURCHASER OF THIS SECURITY

OR ANY BENEFICIAL INTERESTS HEREIN WILL BE

DEEMED TO REPRESENT THAT IT AGREES TO COMPLY

WITH THE TRANSFER RESTRICTIONS SET FORTH HEREIN

AND IN THE MEMORANDUM AND ARTICLES OF

ASSOCIATION OF WAMU CAYMAN (AS AMENDED, THE

"ARTICLES OF ASSOCIATION") AND WILL NOT

TRANSFER THIS SECURITY OR ANY BENEFICIAL

INTERESTS HEREIN EXCEPT TO AN ELIGIBLE

PURCHASER WHO CAN MAKE THE SAME

REPRESENTATIONS AND AGREEMENTS ON BEHALF OF

ITSELF AND EACH ACCOUNT FOR WHICH IT IS

PURCHASING. ANY PURPORTED TRANSFER OF THIS

SECURITY OR ANY BENEFICIAL INTERESTS HEREIN

THAT IS IN BREACH, AT THE TIME MADE, OF ANYTRANSFER RESTRICTIONS SET FORTH HEREIN OR IN

THE ARTICLES OF ASSOCIATION WILL BE VOID AB

INITIO. IF AT ANY TIME WAMU CAYMAN DETERMINES

IN GOOD FAITH THAT A HOLDER OR BENEFICIAL

OWNER OF THIS SECURITY OR BENEFICIAL INTERESTS

HEREIN IS IN BREACH, AT THE TIME GIVEN, OF ANY OF

THE TRANSFER RESTRICTIONS SET FORTH HEREIN,

WAMU CAYMAN SHALL CONSIDER THE ACQUISITION

OF THIS SECURITY OR SUCH BENEFICIAL INTERESTS

VOID, OF NO FORCE AND EFFECT AND WILL NOT, AT

THE DISCRETION OF WAMU CAYMAN, OPERATE TO

TRANSFER ANY RIGHTS TO THE TRANSFEREE

NOTWITHSTANDING ANY INSTRUCTIONS TO THE

CONTRARY TO WAMU CAYMAN, ITS AGENT FOR

REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT

(THE "TRANSFER AGENT"), OR ANY OTHER

INTERMEDIARY. IN ADDITION, WAMU CAYMAN OR ITS

TRANSFER AGENT MAY REQUIRE SUCH ACQUIRER ORBENEFICIAL OWNER TO SELL THIS SECURITY OR SUCH

BENEFICIAL INTERESTS TO AN ELIGIBLE PURCHASER.

NO SECURITY MAY BE PURCHASED OR TRANSFERRED

TO: ( 1) AN " EMPLOYEE BENEFIT PLAN" AS DEFINED IN

SECTION 3(

3)

OF THE EMPLOYEE RETIREMENT INCOME

SECURITY ACT OF

1974, AS AMENDED ("ERISA"),

WHETHER OR NOT SUBJECT TO ERISA AND INCLUDING,

WITHOUT LIMITATION, FOREIGN OR GOVERNMENTAL

PLANS, (

II) A "PLAN" WITHIN THE MEANING OF SECTION

4975 OF THE INTERNAL REVENUE CODE OF

1986, AS

AMENDED (THE "CODE"), OR (

III) ANY ENTITY WHOSE

NPB/ 616525/ 1600336/ v2

CONFIDENTIAL


t

'..

(

21

UNDERLYING ASSETS INCLUDE "PLAN ASSETS" OF ANY

OF THE FOREGOING BY REASON OF INVESTMENT BY AN

EMPLOYEE BENEFIT PLAN OR OTHER PLAN IN SUCHENTITY (EACH OF THE FOREGOING, A " BENEFIT PLANINVESTOR"), EXCEPT FOR AN INSURANCE COMPANYGENERAL ACCOUNT THAT REPRESENTS, WARRANTSAND COVENANTS THAT, AT THE TIME O

F ACQUISITION

AND THROUGHOUT THE PERIOD IT HOLDS THESECURITIES, ( 1

)

IT IS ELIGIBLE FOR AND MEETS THEREQUIREMENTS O

F THE DEPARTMENT OF LABOR

PROHIBITED TRANSACTION CLASS EXEMPTION 95-60,

( II) LESS THAN 25% OF

THE ASSETS OF

SUCH GENERALACCOUNT ARE (OR REPRESENT) ASSETS O

F A BENEFIT

PLAN INVESTOR AND (III) IT IS NOT A PERSON WHO HASDISCRETIONARY AUTHORITY OR CONTROL WITHRESPECT TO THE ASSETS O

F WAMU CAYMAN OR ANY

PERSON WHO PROVIDES INVESTMENT ADVICE FOR AFEE (DIRECT OR INDIRECT) WITH RESPECT TO SUCHASSETS, OR ANY AFFILIATE OF SUCH A PERSON ANDWOULD NOT OTHREWISE BE EXCLUDED UNDER 2

9

C.

F.

R.

2510.3- 101( F)(

1).

UNLESS THIS SECURITY IS PRESENTED BY ANAUTHORIZED REPRESENTATIVE O

F THE DEPOSITORY

TRUST COMPANY, A NEW YORK CORPORATION (" DTC"),

TO WAMU CAYMAN OR THE TRANSFER AGENT, AND

ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAMEOF CEDE & CO. OR IN SUCH OTHER NAME AS ISREQUESTED BY AN AUTHORIZED REPRESENTATIVE OFDTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR

TO SUCH OTHER ENTITY AS

IS REQUESTED BY ANAUTHORIZED REPRESENTATIVE OF DTC), ANYTRANSFER, PLEDGE, OR OTHER USE HEREOF FOR

VALUE OR OTHERWISE BY OR TO ANY PERSON IS

WRONGFUL INASMUCH. AS .THE REGISTERED OWNERHEREOF, CEDE & CO., HAS AN INTEREST HEREIN."

Each share certificate evidencing Series A-

2 Preferred Securities shall bear the

following legend:

"THIS SECURITY IS ONE OF THE 7.25% PERPETUAL NON-

CUMULATIVE PREFERRED SECURITIES, SERIES A-

2

(" SERIES A-

2 WAMU CAYMAN PREFERRED SECURITIES")

ISSUED BY WASHINGTON MUTUAL PREFERREDFUNDING (CAYMAN) I LTD. (

" WAMU CAYMAN"). THIS

SECURITY HAS NOT BEEN REGISTERED UNDER THE U.

S.

SECURITIES ACT OF

1933, AS AMENDED (THE

NPB/ 616525! 1600336/ v2

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(

22

" SECURITIES ACT"), AND NEITHER THIS SECURITY NORANY BENEFICIAL INTERESTS HEREIN MAYBE OFFERED,

SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT

( 1)

IN AN OFFSHORE TRANSACTION MEETING THEREQUIREMENTS O

F

REGULATION S UNDER THESECURITIES ACT TO A PERSON OTHER THAN A U

.S

.

PERSON, OR ( 2)

IN RELIANCE UPON RULE 144A UNDERTHE SECURITIES ACT IN A TRANSACTION INVOLVING

AN EXCHANGE OF THIS SECURITY FOR A LIKE AMOUNT

OF 7.25% PERPETUAL NON- CUMULATIVE PREFERRED

SECURITIES, SERIES A-

I,

OF WAMU CAYMAN, WHICH IS

ALSO THE ISSUER OF

THIS SECURITY, BUT ONLY UPONRECEIPT BY WAMU CAYMAN'S TRANSFER AGENT O

F

AWRITTEN CERTIFICATE ON BEHALF OF THETRANSFEROR TO THE EFFECT THAT SUCH TRANSFER IS

BEING MADE TO A PERSON WHO THE TRANSFERORREASONABLY BELIEVES IS BOTH A "QUALIFIED

INSTITUTIONAL BUYER" WITHIN THE MEANING OFRULE 144A UNDER THE SECURITIES ACT (

" QUALIFIED

INSTITUTIONAL BUYER") AND A " QUALIFIED

PURCHASER" WITHIN THE MEANING OF

SECTION 2(

a)(

51)

OF

THE U.

S.

INVESTMENT COMPANY ACT OF

1940, AS

AMENDED (" QUALIFIED PURCHASER"), ACQUIRING FOR

ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED

INSTITUTIONAL BUYER WHO IS ALSO A QUALIFIED

PURCHASER (AN " ELIGIBLE PURCHASER") IN ATRANSACTION MEETING THE REQUIREMENTS OF RULE144A UNDER THE SECURITIES ACT AND INACCORDANCE WITH ALL APPLICABLE LAWS OF THESTATES O

F THE UNITED STATES AND OTHER

JURISDICTIONS. EACH PURCHASER OF THIS SECURITY

OR ANY BENEFICIAL INTERESTS HEREIN WILL BE

DEEMED TO REPRESENT THAT IT AGREES TO COMPLYWITH THE TRANSFER RESTRICTIONS SET FORTH HEREIN

AND IN THE MEMORANDUM AND ARTICLES OFASSOCIATION OF WAMU CAYMAN (AS AMENDED, THE" ARTICLES O

F

ASSOCIATION"), AND WILL NOT

TRANSFER THIS SECURITY OR ANY BENEFICIAL

INTERESTS HEREIN EXCEPT TO A PURCHASER WHO CAN

MAKE THE SAME REPRESENTATIONS ANDAGREEMENTS ON BEHALF O

F

ITSELF AND EACHACCOUNT FOR WHICH IT IS PURCHASING. ANYPURPORTED TRANSFER OF THIS SECURITY OR ANYBENEFICIAL INTERESTS HEREIN THAT IS IN BREACH, ATTHE TIME MADE, OF ANY TRANSFER RESTRICTIONS SET

FORTH HEREIN OR IN THE ARTICLES OF ASSOCIATION

NPB/ 616525/ 1600336/ v2

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(

23

WILL BE VOID AB INITIO. IF AT ANY TlME WAMU

CAYMAN DETERMINES IN GOOD FAITH THAT A HOLDEROR BENEFICIAL OWNER OF THIS SECURITY ORBENEFICIAL INTERESTS HEREIN IS IN BREACH, AT THETlME GIVEN, OF ANY OF THE TRANSFER RESTRICTIONS

SET FORTH HEREIN, WAMU CAYMAN SHALL CONSIDER

THE ACQUISITION OF

THIS SECURITY OR SUCHBENEFICIAL INTERESTS VOID, O

F NO FORCE ANDEFFECT AND WILL NOT, AT THE DISCRETION OF WAMUCAYMAN, OPERATE TO TRANSFER ANY RIGHTS TO THETRANSFEREE NOTWITHSTANDING ANY INSTRUCTIONS

TO THE CONTRARY TO WAMU CAYMAN, ITS AGENT FOR

REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT

(THE "TRANSFER AGENT"), OR ANY . OTHERINTERMEDIARY. IN ADDITION, WAMU CAYMAN OR ITS

TRANSFER AGENT MAY REQUIRE SUCH ACQUIRER ORBENEFICIAL OWNER TO SELL THIS SECURITY OR SUCHBENEFICIAL INTERESTS TO AN ELIGIBLE PURCHASER.

NO SECURITY MAY BE PURCHASED OR TRANSFERREDTO: ( I) AN "EMPLOYEE BENEFIT PLAN" AS DEFINED IN

SECTION 3(

3)

OF THE EMPLOYEE RETIREMENT INCOMESECURITY ACT O

F

1974, AS AMENDED (" ERISA"),

WHETHER OR NOT SUBJECT TO ERISA AND INCLUDING,

WITHOUT LlMITATION, FOREIGN OR GOVERNMENTAL

PLANS, ( II) A "PLAN" WITHIN THE MEANING OF SECTION

4975 OF THE INTERNAL REVENUE CODE OF 1986, ASAMENDED (THE " CODE"), OR (III) ANY ENTITY WHOSEUNDERLYING ASSETS INCLUDE "PLAN ASSETS" OF ANY

OF THE FOREGOING BY REASON OF INVESTMENT BY AN

EMPLOYEE BENEFIT PLAN OR OTHER PLAN IN SUCHENTITY (EACH O

F

THE FOREGOING, A " BENEFIT PLANINVESTOR"), EXCEPT FOR AN INSURANCE COMPANYGENERAL ACCOUNT THAT REPRESENTS, WARRANTSAND COVENANTS THAT, AT THE TIME OF ACQUISITION

AND THROUGHOUT THE PERIOD IT HOLDS THESECURITIES, ( I) IT IS ELIGIBLE FOR AND MEETS THEREQUIREMENTS O

F

THE DEPARTMENT OF

LABORPROHIBITED TRANSACTION CLASS EXEMPTION 9

5-

60,

( II) LESS THAN 25% OF THE ASSETS OF SUCH GENERAL

ACCOUNT ARE (OR REPRESENT) ASSETS OF A BENEFIT

PLAN INVESTOR AND (III) IT IS NOT A PERSON WHO HASDISCRETIONARY AUTHORITY OR CONTROL WITHRESPECT T

O THE ASSETS OF WAMU CAYMAN OR ANY

PERSON WHO PROVIDES INVESTMENT ADVICE FOR AFEE (DIRECT OR INDIRECT) WITH RESPECT TO SUCHASSETS, OR ANY AFFILIATE OR SUCH PERSON AND

NPB/ 616525/ 1600336/ v2

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(

-' -

24

WOULD NOT OTHERWISE BE EXCLUDED UNDER

29

C.

F.

R.

25IO. 3-

IOI( F)(

1).

" UNLESS THIS SECURITY IS PRESENTED BY ANAUTHORIZED REPRESENTATIVE O

F THE DEPOSITORY

TRUST COMPANY, A NEW YORK CORPORATION (" DTC"),

TO WAMU CAYMAN OR THE TRANSFER AGENT, ANDANY CERTIFICATE ISSUED IS REGISTERED IN THE NAMEOF CEDE & CO. OR IN SUCH OTHER NAME AS IS

REQUESTED BY AN AUTHORIZED REPRESENTATIVE OFDTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR

TO SUCH OTHER ENTITY AS

IS REQUESTED BY ANAUTHORIZED REPRESENTATIVE OF DTC), ANYTRANSFER, PLEDGE, OR OTHER USE HEREOF FORVALUE OR OTHERWISE BY OR T

O ANY PERSON IS

WRONGFUL INASMUCH AS THE REGISTERED OWNER

HEREOF, CEDE &CO., HAS AN INTEREST HEREIN."

Notwithstanding any other provision of

these Articles:

( h)

The Series A-

I Preferred Securities will initially be

represented by

one or

more Share certificates in registered, global form, including

the

legend

set

forth above

for

Share certificates evidencing Series

A-

I Preferred Securities and any legend required by

a Clearing

Agency (a " Rule 144A Global Security"), and

the

Series A-

2

Preferred Securities initially will be

represented by

one or

more

Share certificates in registered, global form including the

legend

set

forth above and any other legends required by

any applicable

Clearing Agency ( the

" Regulation S Global Security" and, together

with

the

Rule I44A Global Security,

the

"Global Securities").

Each Global Security shall be a Book- Entry Preferred Security.

( i) On

the

Issue Date,

the

Company will cause

the

Global Securities to

be deposited with

the

Securities Registrar as custodian

for

DTC in

New York, New York, and registered in the name of

DTC or

a

nominee designated by DTC.

( j) Share certificates that are not Global Securities will be

issued only

in the circumstances described in the

Offering Circular under the

caption " Book- Entry Issuance- Special Circumstances When

Global Security Will Be

Terminated."

16 The Company shall

no

t

be bound to issue more than one certificate

for

Shares

held jointly by

more than one Person and delivery of

a certificate to one joint

holder shall be

a sufficient delivery to all

of

them.

17

If a share certificate is defaced, worn out, lost or

destroyed, it may be

renewed on

such terms ( if any) as

to evidence and indemnity and on

the

payment of

such

NPB/ 61652511600336/ v2

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(

25

expenses reasonably incurred by

the Company in investigating evidence, as

the

Directors may prescribe, and ( in the

case of

defacement or

wearing out) upon

delivery of

the

old certificate.

TRANSFER OF SHARES

18

Shares

are transferable subject to the

consent of

the

Directors who may, in their

absolute discretion, decline to register any transfer of

Shares without giving any

reason. If the Directors refuse to register a transfer they shall notify

the

transferee

within two months of

such refusal provided, however, that

( i) notwithstanding

the

foregoing, if for

so

long as


are outstanding, Ordinary Shares may not be

issued or

transferred to or

registered in the

name of

any Person other than

the

trustee of

the Cayman

Trust; and

(

ii) unless and until the circumstances described in the

Offering Circular under

the

caption " Book- Entry Issuance - Special Situations when Global

Security Will Be

Terminated" apply (and, as

a consequence

the

Preferred

Securities are no

longer represented by

Global Securities), Preferred

Securities may not be

recorded on

the

Register of

Members as

owned of

record by

any Person other than

the

Clearing Agency or

its nominee

(initially Cede & Co. as nominee

for

DTC).

19 Notwithstanding any other provision of

these Articles, if any Preferred Securities

are

held by

a Clearing Agency or

its nominee (initially Cede & Co. as

nominee

for

DTC) and a Relevant Event occurs, such Preferred Securities shall, upon notification

of

the

Company or

its

agent by

the

Registrar of

the

identity of

the

Accountholders

and the

number of

Preferred Securities in which they are respectively beneficially

interested as

at

the occurrence of

such Relevant Event, be

automatically transferred

to such Accountholders in the

appropriate amounts and

the

Registrar, failing whom

the Company or

such other person as

the

Directors may designate, shall forthwith

make

the

relevant entries in the

Register and shall, if the Directors deem appropriate,

issue share certificates in respect of

such transfer.

The instrument of

transfer of

any Share shall be

in writing and shall be

executed

by

or

on

behalf of

the . transferor (and if the

Directors

so

.

require, signed by

the

transferee); provided, however, that no such instrument shall be

necessary to

effect a Conditional Exchange in accordance with Article 9(

f).

The transferor

shall be deemed to remain

the

holder of

a Share until

the name of

the transferee is

entered in the

Register of

Members.

REDEMPTION AND REPURCHASE OF SHARES

20 The Ordinary Shares shall not be

redeemable. The Preferred Securities shall be

redeemable only as

provided in Article 9(

c).

21

Subject to the

provisions of

the

Statute,

the Company may purchase

its own

Shares (including any redeemable Shares) provided that the Members shall have

approved

the

manner of

purchase by Ordinary Resolution.

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(22

26

The Company may make a payment in respect of

the redemption or

purchase of

its own Shares in any manner permitted by

the

Statute, including

ou

t

of

capital.

VARIATION OF RlGHTS OF SHARES

23 Subject to Article 9(

e)

with respect to the

Preferred Securities, if at

any time

the

share capital of

the Company is divided into different classes of

Shares,

the

rights

. attached to any class (unless otherwise provided by

the terms of

issue of

the

Shares of

that class) may, whether or

not

the Company is being wound-

up,

be

varied with the consent in writing of

the holders of

two- thirds of

the

issued Shares

of

that class, or

with the sanction of

a Special Resolution passed at

a general

meeting of

the holders of

the

Shares of

that class.

24 The provisions of

these Articles relating to general meetings shall apply to every

class meeting of

the

holders of

one class of

Shares except that

the

necessary

quorum shall be

one Person holding or

representing by

proxy at

least one- third of

the

issued Shares of

the

class and that any holder of

Shares of

the

class present in

Person or

by

proxy may demand a poll.

COMMISSION ON SALE OF

SHARES

25 The Company may, in so

far

as

the

Statute permits, pay a commission to any

Person in consideration of

his subscribing or

agreeing to subscribe whether

absolutely or

conditionally

for

any Shares of

the

Company. Such commissions

may be satisfied by

the

payment of

cash and/ or

the

issue of

fully or

partly paid- up

Shares. The Company may also on any issue of

Shares pay such brokerage as

may be

lawful.

NON- RECOGNITION OF TRUSTS

26 The Company shall not be bound by

or

compelled to recognise in any way (even

when notified) any equitable, contingent, future or

partial interest in any Share, or

(except only as

is otherwise provided by

these Articles or

the

Statute) any other

rights in respect of

any Share other than an absolute right to the

entirety thereof in

the

registered holder.

LIEN ON SHARES

27

The Company shall have a first and paramount lien on

all

Shares (whether fully

paid- up

or

not) registered in the

name of

a Member (whether solely or

jointly with

others)

for

all

debts, liabilities or

engagements to or

with the Company (whether

presently payable or

not) by

such Member or

his

estate, either alone or

jointly

with any other Person, whether a Member or

not, but

the

Directors may at

any

time declare any Share to be wholly or

in part exempt from

the

provisions of

this

Article. The registration of

a transfer of

any such Share shall operate as

a waiver

of

the

Company's lien thereon. The Company's lien on a Share shall also extend

to any amount payable in respect of

that Share.

28 The Company may sell, in such manner as

the

Directors think

fit, any Shares on

which

the Company has a lien, if a sum in respect of

which the lien exists is

presently payable, and is no

t

paid within fourteen clear days after notice

has

been

given to the

holder of

the

Shares, or

to the

Person entitled to it in consequence of

NPB/ 616525/ 1600336/ v2

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29

30

27

the

death or

bankruptcy of

the

holder, demanding payment and stating that if the

notice is not complied with

the

Shares may be

sold.

To give effect to any such sale

the

Directors may authorise any Person to executean

instrument of

transfer of

the

Shares sold

to,

or

in accordance with

the

directions

of,

the

purchaser. The purchaser or

his nominee shall be

registered as

the

holder of

the

Shares comprised in any such transfer, and he

shall not be bound

to see to the

application of

the

purchase money, nor shall

his

title to the

Shares be

affected by

any irregularity or

invalidity in the

sale or

the

exercise of

the

Company's power of

sale under these Articles.

The

ne

t

proceeds of

such sale after payment of

costs, shall be applied in payment

of

such part of

the

amount in respect of

which

the

lien exists as

is presently

payable and any residue shall (subject to a like lien for

sums no

t

presently payable

as

existed upon the Shares before

the

sale) be

paid to the

Person entitled to the

Shares at

the

date of

the sale.

CALL ON SHARES

31

Subject to the

terms of

the

allotment the

Directors may from time to time make

calls upon the Members in respect of

any monies unpaid on

their Shares (whether

in respect of

par value or

premium), and each Member shall (subject to receiving

at

least fourteen days' notice specifying

the

time or

times of

payment) pay to the

Company at

the time or

times so

specified

the

amount called on

the

Shares. Acall may b

e

revoked or

postponed as

the

Directors may determine. A call may be

required to be

paid by

instalments. A Person upon whom a call is made shall

remain liable for

calls made upon him notwithstanding the

subsequent transfer of

the

Shares in respect of

which

the

call was made.

32 A call shall be deemed to have been made at

the

time when the resolution of

the

Directors authorising such call was passed.

33 The joint holders of

a Share shall be jointly and severally liable to pay

all calls in

respect thereof

34

If a call remains unpaid after it has become due and payable,

the

Person from

whom it is due shall pay interest on

the amount unpaid from

the

day it became

due and payable until it is paid at

such rate as

the

Directors may determine,

but

the

Directors may waive payment of

the interest wholly or

in part.

35

An

amount payable in respect of

a Share on

allotment or

at

any fixed date,

whether on

account of

the

par value of

the

Share or

premium or

otherwise, shall

be deemed to be a call and if it is no

t

paid

all

the

provisions of

these Articles shall

apply as

if that amount had become due and payable by

virtue

ofa call.

36 The Directors may issue Shares with different terms as

to the

amount and times of

payment of

calls, or

the

interest to be

paid.

37 The Directors may, if they think

fit, receive an amount from any Member willing

to advance

all

or

any part of

the

monies uncalled and unpaid upon any Shares held

by him, and may (until

the

amount would otherwise become payable) pay interest

NPB! 616525! 1600336!

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(3

8

28

at

such rate as

may be

agreed upon between the

Directors and the

Member paying

such amount in advance.

No

such amount paid in advance of

calls shall entitle the Member paying such

amount to any portion of

a Dividend declared in respect of

any period prior to the

date upon which such amount would, but

for

such payment, become payable.

FORFEITURE OF SHARES

41

(

39

If a call remains unpaid after it has become due and payable

the

Directors may

give to the

Person from whom it is due not less than fourteen clear days' notice

requiring payment of

the

amount unpaid together with any interest, which may

have accrued. The notice shall specify where payment is to be made and shall

state that if the

notice is not

complied with

the

Shares In respect of

which

the

call

was made will be

liable to be

forfeited.

40

If

the

notice is no

t

complied with any Share in respect of

which it was given !Jlay,

before the

payment required by

the

notice has

been made, be

forfeited by

a

resolution of

the Directors. Such forfeiture shall include

all

dividends or

other

monies declared payable in respect of

the

forfeited Share and not paid before the

forfeiture.

A forfeited Share may be

sold,

re-

allotted or

otherwise disposed of

on

such terms

and in such manner as

the

Directors think

fit and at

any time before a sale,

re-

allotment or

disposition

the

forfeiture may be

cancelled on

such terms as

the

Directors think

fit. Where

for

the

purposes of

its disposal a forfeited Share is to

be

transferred to any Person

the

Directors may authorise some Person to execute

an

instrument of

transfer of

the

Share in favour of

that Person.

42 A Person any of

whose Shares have been forfeited shall cease to be

a Member in

respect of

them and shall surrender to the Company

for

cancellation the certificate

for

the

Shares forfeited and shall remain liable to pay to the Company

all monies

which at

the

date of

forfeiture were payable by

him to the Company in respect of

those Shares together with interest, but

his liability shall cease if and when

the

Company shall have received payment in fu

ll

of

all

monies due

and payable by

him in respect of

those Shares.

43 A certificate in writing under the hand of

one Director or

officer of

the Company

that a Share has been forfeited on a specified date shall be

conclusive evidence of

the

fact as

against

all

Persons claiming to be

entitled to the

Share. The certificate

shall (subject to the

execution of

an

instrument of

transfer) constitute a good title

to the

Share and

the

Person to whom

the

Share is disposed of

shall

no

t

be bound

to see

to the

application of

the

purchase money, if any, no

r

shall his

title to the

Share be

affected by

any irregularity or

invalidity in the

proceedings in reference

to the

forfeiture, sale or

disposal of

the

Share.

44 The provisions of

these Articles as

to forfeiture shall apply in the

case of

non- payment of

any sum which, by

the

terms of

issue of

a Share, becomes

payable at

a fixed time, whether on

account of

the

par value of

the Share or

by

way of

premium as

if it had been payable by

virtue of

a

ca

ll

duly made and

notified.

NPB/ 616525/ I 600336/ v2

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29

( TRANSMISSION OF SHARES45

48

46

47

If a Member dies

the

survivor or

survivors where he was a joint holder, and

his

legal personal representatives where he was a sole holder, shall be

the

only

Persons recognised by

the Company as

having any title to his

interest. The estate

of

a deceased Member is not thereby released from any liability in respect of

any

Share, which had been jointly held by

him.

Any Person becoming entitled to a Share in consequence of

the

death or

bankruptcy or

liquidation or

dissolution of

a Member ( or

in any other way than by

transfer) may, upon such evidence being produced as may from time to time be

required by

the

Directors, elect either to become

the

holder ofthe Share or

to have

some Person nominated by

him as

the

transferee. If he

elects to become the

holder he

shall give notice to the

Company to that effect, bu

t

the

Directors shall,

in either case, have

the

same right to decline or

suspend registration as

they would

have had in the

case of

a transfer of

the Share by

that Member before

his death or

bankruptcy, as

the

case may

be.

If the

Person so becoming entitled shall elect to be

registered himself as

holder he

shall deliver or

send to the Company a notice in writing signed by

him stating that

he

so

elects.

A Person becoming entitled to a Share by reason of

the

death or

bankruptcy or

liquidation or

dissolution of

the

holder ( or

in any other case than by

transfer) shall

be

entitled to the

same dividends and other advantages to which he would be

entitled if he were

the

registered holder of

the

Share. However, he

shall not,

before being registered as

a Member in respect of

the

Share, be

entitled in respect

of

it to exercise any right conferred by

membership in relation to meetings of

the

Company and

the

Directors may at

any time give notice requiring any such

Person to elect either to be registered himself or

to transfer

the

Share. If

the

notice

is not complied with within ninety days

the

Directors may thereafter withhold

payment of

all

dividends, bonuses or

other monies payable in respect of

the

Share

until

the

requirements of

the

notice have been complied with.

AMENDMENTS OF MEMORANDUM AND ARTICLES OF ASSOCIATION ANDALTERATION OF CAPITAL

49

Subject to the

provisions of

the

Statute and

the

provisions of

these Articles as

regards

the

matters to be

dealt with by

Ordinary Resolution, and subject to Article

9(

e),

the Company may by Special Resolution:

49.1 change its name;

49.2 alter or

add to these Articles;

49.3 alter or

add to the Memorandum with respect to any objects, powers or

other matters specified therein; and

49.4 reduce

its share capital and any capital redemption reserve fund.

NPB/ 616525/ 1600336/ v2

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(

30

REGISTERED OFFICE50

Subject to the provisions of

the

Statute, the Company may by

resolution of

the

Directors change the location of

its Registered Office.

GENERAL MEETINGS

51

All

general meetings other than annual general meetings shall be called

extraordinary general meetings.

52 The Company shall, if required by

the

Statute, in each year hold a general meeting

as

its armual general meeting, and shall specify

the

meeting as

such in the notices

calling

it. The annual general meeting shall be

held at

such time and place as

the

Directors shall appoint and if no

other time and place is prescribed by

them, it

shall be

held at

the

Registered Office on

the

second Wednesday in December of

each year at

ten

o'clock in the

morning. At

these meetings

the

report of

the

Directors ( if any) shall be presented.

53 The Company may hold an

annual general meeting,

but

shall

not

(unless required

by

Statute) be

obliged to hold an

armual general meeting.

54 The Directors may call general meetings, and they shall on

a Members'

requisition forthwith proceed to convene an

extraordinary general meeting of

the

Company.

55 A Members' requisition is a requisition of

Members of

the Company holding at

the

date of

deposit of

the

requisition not less than

ten

per cent. in par value of

the

capital of

the Company which as

at

that date carries

the

right of

voting at

general

meetings of

the

Company.

56 The requisition must state the objects of

the

meeting and must be

signed by

the

requisitionists and deposited at

the

Registered Office, and may consist of

several

documents in like form each signed by

one or

more requisitionists.

57

If the

Directors do

not within twenty- one days from the date of

the

deposit of

the

requisition duly proceed to convene a general meeting to be

held within a further

twenty- one days,

the

requisitionists, or

any of

them representing more than one-

half of

the

total voting rights of

all

of

them, may themselves convene a general

meeting, but any meeting so convened shall not be

held after

the

expiration of

three months after

the

expiration of

the

said twenty- one days.

58 A general meeting convened as

aforesaid by

requisitionists shall be

convened in

the

same manner as

nearly as

possible as

that in which general meetings are to be

convened by

Directors.

NOTICE OF GENERAL MEETINGS

59

At

least five days' notice shall be given of

any general meeting. Every notice

shall be

exclusive of

the

day on which it is given or

deemed to be

given and of

the

day

for

which it is given and shall specify

the

place,

the

day and

the

hour of

the

meeting and

the

general nature of

the

business and shall be

given in marmer

hereinafter mentioned or

in such other manner if any as may be

prescribed by

the

Company, provided that a general meeting of

the Company shall, whether or

not

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31

the

notice specified in this regulation has been given and whether or

not

the

provisions of

the

Articles regarding general meetings have been complied with, be

deemed to have been duly convened if it is so

agreed:

59.1 in the case of

an

annual general meeting, by

all

the Members ( or

their

proxies) entitled to attend and vote thereat; and

59.2 in the case of

an

extraordinary general meeting, by

a majority in number

of

the Members ( or

their proxies) having a right to attend and vote at

the

meeting, being a majority together holding

no

t

less than ninety- five

pe

r

cent. in par value of

the Shares giving that right.

The accidental omission to give notice of

a general meeting

to,

or

the

non- receipt

of

notice of

a meeting

by,

any Person entitled to receive notice shall not invalidate

the

proceedings of

that meeting.

PROCEEDINGS AT GENERAL MEETINGS

61

No

business shall be

transacted at

any general meeting unless a quorum is present.

Two Members being individuals present in Person or

by

proxy or

if a corporation

or

other non- natural Person by

its duly authorised representative shall be a

quorum unless

the Company

has

only one Member entitled to vote at

such general

meeting in which case

the

quorum shall be

that one Member present in Person or

by

proxy or

( in the

case of

a corporation or

other non- natural Person) by

a duly

authorised representative.

62 A Person may participate at

a general meeting by

conference telephone or

other

communications equipment by

means of

which

all

the

Persons participating in the

meeting can communicate with each other. Participation by

a Person in a general

meeting in this manner is treated as presence in Person at

that meeting.

63 A resolution (including a Special Resolution) in writing ( in one or

more

counterparts) signed by

all Members

for

the

time being entitled to receive notice

of

and to attend and vote at

general meetings (

or,

being corporations, signed by

their duly authorised representatives) shall be

as

valid and effective as

if the

resolution had been passed at

a general meeting of

the

Company duly convened

and held.

64

If a quorum is not present within half an hour from the time appointed

for

the

meeting or

if during such a meeting a quorum ceases to be present,

the

meeting, if

convened upon the

requisition of

Members, shall be

dissolved and in any other

case it shall stand adjourned to the

same day in the

next week at

the

same time

and place or

to such other day, time or

such other place as

the

Directors may

determine, and if at

the

adjourned meeting a quorum is no

t

present within half an

hour from

the

time appointed

for

the

meeting

the Members present shall be

a

quorum.

65 The chairman, if any, of

the

board of

Directors shall preside as chairman at

every

general meeting of

the

Company, or

if there is no

such chairman, or

ifhe shall not

be

present within fifteen minutes after

the

time appointed

for

the holding of

the

meeting, or

is unwilling to act, the Directors present shall elect one of

their

number to be chairman of

the

meeting.

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66

67

68

69

32

If no

Director is willing to act

as

chairman or

if no

Director is present within

fifteen minutes after the time appointed

for

holding

the

meeting,

the Members

present shall choose one of

their number to be chairman of

the

meeting.

The chairman may, with

the

consent of

a meeting at

which a quorum is present,

(and shall if so

directed by

the

meeting), adjourn

the

meeting from time to time

and from place to place,

but

no

business shall be

transacted at

any adjourned

meeting other than

the

business left unfinished at

the

meeting from which

the

adjournment took place. When a general meeting is adjourned

for

thirty days or

more, notice of

the

adjourned meeting shall be

given as

in the

case of

an

original

meeting. Otherwise it shall not be

necessary to give any such notice.

A resolution

pu

t

to the

vote of

the

meeting shall be decided on a show of

hands

unless before, or

on

the

declaration of

the

result of,

the

show of

hands, the

chairman demands a poll, or

any other Member or

Members collectively present

in Person or

by

proxy and holding at

least

ten

per cent. in par value of

the

Shares

giving a right to attend and vote at

the

meeting demand a poll.

Unless a poll is duly demanded a declaration by

the

chairman that a resolution has

been carried or

carried unanimously, or

by

a particular majority, or

lost or

not

carried by

a particular majority, an

entry to that effect in the minutes of

the

proceedings of

the

meeting shall be conclusive evidence of

that fact without proof

of

the

number or

proportion of

the

votes recorded in favour of

or

against such

resolution.

70 The demand

for

a poll may be

withdrawn.

71

Except on

a poll demanded on

the

election of

a chairman or

on

a question of

adjournment, a poll shall be

taken as

the

chairman directs, and the

result of

the

poll shall be deemed to be

the

resolution of

the general meeting at

which

the

poll

was demanded.

72 A poll demanded on

the

election of

a chairman or

on a question of

adjournment

shall be

taken forthwith. A poll demanded on

any other question shall be

taken at

such time as

the

chairman of

the

general meeting directs, and any business other

than that upon which a poll has been demanded or

is contingent thereon may

proceed pending

the

taking of

the poll.

73

In the

case of

an

equality of

votes, whether on

a show of

hands or

on

a poll, the

chairman shall be

entitled to a second or

casting vote.

VOTES OF MEMBERS

74 Subject to any rights or

restrictions attached to any Shares, on a show of

hands

every Member who (being an

individual) is present in Person or

by

proxy or,

if a

corporation or

other non- natural Person is present by

its duly authorised

representative or

proxy, shall have one vote and on a poll every Member shall

have one vote

for

every Share of

which he

is the

holder.

75

In the

case of

joint holders of

record

the

vote of

the

senior holder who tenders a

vote, whether in Person or

by proxy, shall be accepted to the

exclusion of

the

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76

77

79

78

votes of

the

other joint holders, and seniority shall be determined by

the

order in

which

the

names of

the

holders stand in the

Register of

Members.

A Member of

unsound mind, or

in respect of

whom an

order has been made by

any court, having jurisdiction in lunacy, may vote, whether on a show of

hands or

on a poll, by

his committee, receiver, curator bonis, or

other Person on

such

Member's behalf appointed by

that court, and any such committee, receiver,

curator bonis or

other Person may vote by

proxy.

No

Person shall be

entitled to vote at

any general meeting or

at

any separate

meeting of

the holders of

a class of

Shares unless he

is registered as a Member on

the record date

for

such meeting and

all

calls or

other monies then payable by

him

in respect of

Shares have been paid.

No

objection shall be

raised to the qualification of

any voter except at

the

general

meeting or

adjourned general meeting at

which

the

vote objected to is given or

tendered and every vote not disallowed at

the

meeting shall be

valid. Any

objection made in due time shall be

referred to the

chairman whose decision shall

be

final and conclusive.

On a poll or

on a show of

hands votes may be cast either personally or

by proxy.

A Member may appoint more than one proxy or

the

same proxy under one or

more instruments to attend and vote at

a meeting. Where a Member appoints more

than one proxy

the

instrument of

proxy shall state which proxy is entitled to vote

on

a show of

hands.

80 A Member holding more than one Share need no

t

cast the

votes in respect of

his

Shares in the

same way on any resolution and therefore may vote a Share or

some

or

all such Shares either

for

or

against a resolution and/ or

abstain from voting a

Share or

some or

all

of

the

Shares and, subject to the

terms of

the

instrument

appointing him, a proxy appointed under one or

more instruments may vote a

Share or

some or

all

of

the Shares in respect of

which he

is appointed eitherfor

or

against a resolution and/ or

abstain from voting.

(

PROXIES

81

The instrument appointing a proxy shall be

in writing, be

executed under the

hand

of

the

appointor or

of

his attorney duly authorised in writing,

or,

if the

appointor

is a corporation under

the

hand of

an

officer or

attorney duly authorised

for

that

purpose. A proxy need

no

t

be a Member of

the

Company.

82

The instrument appointing a proxy shall be

deposited at

the

Registered Office or

at

such other place as

is specified for

that purpose in the

notice convening the

meeting, or

in any instrument of

proxy sent ou

t

by

the

Company:

82.1 not less than 48

hours before the time

for

holding

the

meeting or

adjourned meeting at

which the Person named in the

instrument proposes

to vote; or

82.2 in the

case of

a poll taken more than 48 hours after it is demanded, be

deposited as

aforesaid after the poll has been demanded and not less than

24

hours before

the

time appointed

for

the

taking of

the poll; or

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34

82.3 where

the

poll is not

taken forthwith

but

is taken not more than 48

hours

after it was demanded be

delivered at

the

meeting at

which: the poll was

demanded to the

chairman or

to the

secretary or

to any director;

provided that

the

Directors may in the

notice convening

the

meeting, or

in an

instrument of

proxy sent out by

the Company, direct that

the

instrument

appointing a proxy may be

deposited ( no

later than

the

time

for

holding

the

meeting

or

adjourned meeting) at

the

Registered Office or

at

such other place as

is

specified

for

that purpose in the

notice convening

the

meeting, or

in any

instrument of

proxy sent out by

the

Company. The chairman may in any event at

his discretion direct that an

instrument of

proxy shall be deemed to have been duly

deposited. An instrument of

proxy that is no

t

deposited in the

manner permitted

shall be

invalid.

(

83

84

The instrument appointing a proxy may be

in any usual or

common form and may

be

expressed to be

for

a particular meeting or

any adjournment thereof or

generally until revoked. An

instrument appointing a proxy shall be

deemed to

include

the

power to demand or

join or

concur in demanding a poll.

Votes given in accordance with

the

terms of

an

instrument of

proxy shall be

valid

notwithstanding the previous death or

insanity ofthe principal or

revocation of

the

proxy or

of

the authority under which

the

proxy was executed, or

the

transfer of

the

Share in respect of

which

the

proxy is given unless notice in writing of

such

death, insanity, revocation or

transfer was received by

the Company at

the

Registered Office before

the

commencement of

the

general meeting, or

adjourned

meeting at

which it is sought to use

the

proxy.

CORPORATE MEMBERS

85 Any corporation or

other non-natural Person which is a Member may in

accordance with

its constitutional documents, or

in the

absence of

such provision

by resolution of

its directors or

other governing body, authorise such Person as

itthinks

fit to act

as

its representative at

any meeting of

the Company or

of

any

class of

Members, and

the

Person so

authorised shall be

entitled to exercise

the

same powers on

behalf of

the

corporation which he

represents as

the

corporation

could exercise

ifit were an

individual Member.

SHARES THAT MAY NOT BE VOTED

86

Shares in the Company that

are beneficially owned by

the Company shall not be

voted, directly or

indirectly, at

any meeting and shall not be

counted in

determining

the

total number of

outstanding Shares at

any given time.

DIRECTORS

87

There shall be a board of

Directors consisting of

five members. Two of

the

five

Directors will automatically and at

all

times be

the WaMu LLC Designated

Directors. The other three Directors shall be

the "Ordinary Directors". For

purposes ofthe foregoing:

( k)

"WaMu LLC Designated Directors" means, on any day, the two

natural Persons most recently identified by WaMu LLC to the

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35

,..

( Company in writing as

the

members of

WaMu LLC's Board of

Managers that shall be

Directors of

the

Company, one of

whom

shall be

the individual who is the

" Independent Manager" of

WaMu LLC within

the

meaning of

the WaMu LLC Agreement;

( 1)

" Ordinary Directors"

are

the

three Directors elected from time-

to-

time by

the

holders of

the

Ordinary Shares in accordance with

these Articles; and

( m)

The WaMu LLC Designated Director who is the

" Independent

Manager" of WaMu LLC

for

purposes of

the WaMu LLC

Agreement, as

most recently identified by WaMu LLC to the

Company in writing (except as

provided below), shall be

the

" Independent Director" of

the Company.

If ( x) WaMu LLC fails to pay full dividends on


Securities or

on

its Fixed-

to-

Floating Rate Perpetual Non- cumulative Preferred

Securities, liquidation preference $1,000 pe

rsecurity, o

n

any dividend payment

date

for

such securities determined in accordance with the WaMu LLC

Agreement, ( y)

the Company fails to pay full dividends on

the

Preferred


( z)

a Bankruptcy Event occurs, then

( i) under the WaMu LLC Agreement the

holders of


Securities and the

Fixed- to-

Floating Rate Perpetual Non- cumulative Preferred

Securities of

WaMu LLC, voting as

a single class, will be

entitled to remove the

Person who has been

the

Independent Manager of WaMu LLC from

his office as

both a member ofWaMu LLC's Board of

Managers and

its Independent Manager

and replace such Person in such capacities with a natural Person elected by

such

securityholders, (

ii)

in order to give effect to the

rights of

the

Preferred

Securityholders to direct the manner in which

the Company exercises

its voting

rights on

such matter,

the Company shall give a notice and

act

in accordance with

the

provisions of

Article 9(

e),

and (

iii) effective upon the

Person so

elected or

nominated becoming the

Independent Manager of

WaMu LLC, such Person shall

also become

the

Independent Director of

the Company.

POWERS OF DIRECTORS

88

Subject to the

provisions of

the

Statute, the Memorandum and these Articles

(including Article

89

)

and to any directions given by Special Resolution,

the

business of

the

Company shall be

managed by

the

Directors who may exercise all

the

powers of

the

Company. No

alteration of

the

Memorandum or

Articles and no

such direction shall invalidate any prior act

of

the

Directors which would have

been valid if that alteration had not been made or

that direction had not been

given. A duly convened meeting of

Directors at

which a quorum is present may

exercise

all powers exercisable by

the

Directors.

89 Notwithstanding

the

provisions of

Article 88 and any other provisions of

these

Articles, the

Directors shall no

t

have the

power, without the

prior Consent of

the

Independent Director and the

approval of

a majority of

the

Directors, to ( i)

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91

90

36

repurchase any Ordinary Shares or

(

ii)

to the

extent within the power of

the

Directors, convert or

approve

the

conversion of

the Company into another type of

entity or

the consolidation or

merger of

the Company with or

into any other

entity,

the

consolidation or

merger of


into

the

Company,

or

the

sale by

the Company of

any of

its

assets.

All cheques, promissory notes, drafts, bills of

exchange and other negotiable

instruments and

all

receipts

for

monies paid to the Company shall be

signed,

drawn, accepted, endorsed or

otherwise executed as

the case may be

in such

manner as

the

Directors shall determine by

resolution.

Subject to the

Memorandum,

the

Directors may exercise

all

the

powers of

the

Company to borrow money and to mortgage or

charge

its undertaking, property

and uncalled capital or

any part thereof and to issue debentures, debenture stock,

mortgages, bonds and other such securities whether outright or

as

security for

any

debt, liability or

obligation of

the Company or

of

any third party ..

APPOINTMENT AND REMOVAL OF

DIRECTORS

92 The Company may by

Ordinary Resolution appoint any Person to be

an

Ordinary

Director or

may by

Ordinary Resolution remove any Director.

93 The Directors may appoint any Person to be

an

Ordinary Director, either to fill a

vacancy or

as

an additional Ordinary Director provided that

the

appointment does

not

cause

the

number of

Directors to exceed any number fixed by

or

in

accordance with these Articles as

the maximmn nmnber of

Ordinary Directors.

94 WaMu LLC Designated Directors may be

appointed and removed only In

accordance with Article

87.

VACATION OF

OFFICE OF

DIRECTOR

95 The office of

a Director shall be

vacated

if:

95.1 he

gives notice in writing to the Company that he

resigns

the

office of

Director; or

95.2 if he

absents himself (without being represented by

proxy or

an

alternate Director

appointed by him) from three consecutive meetings of

the

board of

Directors

without special leave of

absence from the

Directors, and

they pass a resolution

that he

has

by

reason of

such absence vacated office; or

95.3 if he

dies, becomes bankrupt or

makes any arrangement or

composition with

his

creditors generally; or

95.4 ifhe is found to be

or

becomes of

unsound mind; or

95.5 in the

case of

Ordinary Directors, if all

the other Ordinary Directors of

the

Company (being not less than two in nmnber) resolve that he

should be removed

as

an Ordinary Director.

PROCEEDINGS OF DIRECTORS

96 The quorum

for

the

transaction of

the business of

the Directors may be

fixed by

the

Directors, and unless so

fixed shall be two if there

are two or

more Directors,

and shall be one if there is only one Director; provided, however, that a quorum

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CONFIDENTIAL


(

37

for

the

transaction of

the

business of

the Directors will not exist without

the

presence of

the

Independent Director. A Person who holds office as

an

alternate

Director shall, if his appointor is not

present, be

counted in the quorum. ADirector who also acts a

s

an

alternate Director shall, if his appointor is not

present, count twice towards

the

quorum.

97

Subject to the

provisions of

the

Articles,

the

Directors may regulate their

proceedings as they think

fit. Questions arising at

any meeting shall be decided

by

a majority of

votes. In the case of

an

equality of

votes,

the

chairman shall have

a second or

casting vote. A Director who is also an

alternate Director shall be

entitled in the

absence of

his

appointor to a separate vote on

behalf of

his

appointor in addition to his own vote.

98 A Person may participate in a meeting of

the

Directors or

committee of

Directors

by

conference telephone or

other communications equipment by

means of

which

all

the

Persons participating in the

meeting can communicate with each other at

the

same time. Participation by a Person in a meeting in this manner is treated as

presence in Person at

that meeting. Unless otherwise determined by

the

Directors

the meeting shall be deemed to be

held at

the

place where the chairman is at

the

start of

the

meeting.

99 A resolution in writing ( in one or

more counterparts) signed by

all

the

Directors or

all

the

members of

a committee of

Directors ( an

alternate Director being entitled

to sign such a resolution on

behalf of

his appointor) shall be

as

valid and effectual

as

if it had been passed at

a meeting of

the

Directors, or

committee of

Directors as

the

case may

be

,

duly convened and held.

100 A Director or

alternate Director may, or

other officer of

the

Company on

the

requisition of

a Director or

alternate Director shall, call a meeting of

the

Directors

by

at

least two days' notice in writing to every Director and alternate Director

which notice shall

se

t

forth the general nature of

the

business to be

considered

unless notice is waived by

all

the

Directors ( or

their alternates) either

at,

before or

after

the

meeting is held.

101 The continuing Directors may

act

notwithstanding any vacancy in their body, but

if and so long as

their number is reduced below

the

number fixed by

or

pursuant

to these Articles as

the

necessary quorum of

Directors

the

continuing Directors or

Director may

act

for

the

purpose of

increasing

the

number of

Directors to that

number, or

of

summoning a general meeting of

the

Company, but

for

no

other

purpose.

102 The Directors may elect a chairman of

their board and determine the period

for

which he

is to hold office; but if no

such chairman is elected, or

if at

any meeting

the

chairman is no

t

present within five minutes after the

time appointed for

holding the

same, the

Directors present may choose one of

their number to be

chairman of

the

meeting.

103

All

acts done by

any meeting of

the

Directors or

of

a committee of

Directors

(including any Person acting as

an

alternate Director) shall, notwithstanding that it

be

afterwards discovered that there was some defect in the

appointment of

any

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38

Director or

alternate Director, or

that they or

any of

them were disqualified, be

as

valid as

if every such Person had been duly appointed and qualified to be a

Director or

alternate Director as

the

case may be

.

l04 A Director

but

not an

alternate Director may be

represented at

any meetings of

the

board of

Directors by

a proxy appointed in writing by

him. The proxy shall count

towardsth

equorum and the vote o

f

the proxy shall

for

all

purposes be deemed to

be

that ofthe appointing Director.

PRESUMPTION OF ASSENT

l05 A Director of

the Company who is present at

a meeting of

the

board of

Directors

at

which action on any Company matter is taken shall be presumed to have

assented to the

action taken unless

his dissent shall be entered in the

minutes of

the

meeting or

unless he

shall file

his written dissent from such action with

the

Person acting as

the

chairman or

secretary of

the

meeting before

the

adjournment

thereof or

shall forward such dissent by

registered post to such Person

immediately after the

adjournment of

the

meeting. Such right to dissent shall no

t

apply to a Director who voted in favour of

such action.

DIRECTORS' INTERESTS

l06 A Director may hold any other office or

place of

profit under

the Company (other

than

the

office of

Auditor) in conjunction withhis office of

Director

for

such

period and on such terms as

to remuneration and otherwise as

the

Directors may

determine.

l07 A Director may

act

by

himself or

his firm in a professional capacity

for

the

Company and he

or

his firm shall be

entitled to remuneration

for

professional

services as

if he were not a Director or

alternate Director.

l08 A Director or

alternate Director of

the Company may be

or

become a director or

other officer of

or

otherwise interested in any company promoted by

the Company

or

in which

the Company may be interested as shareholder or

otherwise, and no

such Director or


accountable to the Company

for

any

remuneration or

other benefits received by

him as

a director or

officer

of,

or

from

his

interest in,

such other company.

l09 No

Person shall be

disqualified from the office of

Director or

alternate Director or

prevented by

such office from contracting with

the

Company, either as

vendor,

purchaser or

otherwise, nor shall any such contract or

any contract or

transaction

entered into by

or

on behalf of

the Company in which any Director or

alternate

Director shall be

in any way interested be

or

be

liable to be

avoided, nor shall any

Director or

alternate Director so

contracting or

being so

interested be

liable to

account to the Company

for

any profit realised by

any such contract or

transaction

by

reason of

such Director holding office or

of

the

fiduciary relation thereby

established. A Director ( or

his

alternate Director in his absence) shall be

at

liberty

to vote in respect of

any contract or

transaction in which he

is interested provided

that

the

nature of

the

interest of

any Director or

alternate Director in any such

contract or

transaction shall be

disclosed by

him at

or

prior to its consideration

and any vote thereon.

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39

110 A general notice that a Director or

alternate Director is a shareholder, director,

officer or

employee of

any specified firm or

company and is to be

regarded as

interested in any transaction with such firm or

company shall be

sufficient

disclosure for

the

purposes of

voting on

a resolution in respect of

a contract or

transaction in which he has an

interest, and after such general notice it shall not be

necessary to give special notice relating to any particular transaction.

MINUTES

111 The Directors shall cause minutes to be made in books kept

for

the

purpose of

all

appointments of

officers made by

the

Directors,

all

proceedings at

meetings of

the

Company or

the

holders of

any class of

Shares and of

the Directors, and of

committees of

Directors including the

names of

the

Directors or

alternate

Directors present at

each meeting.

DELEGATION OF DIRECTORS' POWERS

112 The Directors may delegate any of

their powers to any committee consisting of

one or

more Directors; provided, however, that

the

Directors may

not

delegate to

any committee any of

the

powers reserved to the

Independent Director by Article

89

or

otherwise requiring

the

Consent of

the

Independent Director except with

the

consent of

the

Independent Director. They may also delegate to any managing

director or

any Director holding any other executive office such of

their powers as

they consider desirable to be

exercised by

him provided that an

alternate Director

may not

act

as

managing director and

the

appointment of

a managing director

shall be

revoked forthwith ifhe ceases to be a Director. Any such delegation may

be made subject to any conditions

the

Directors may impose, and either

collaterally with or

to the

exclusion of

their own powers and may be revoked or

altered. Subject to any such conditions,

the

proceedings of

a committee of

Directors shall be governed by

the

Articles regulating

the

proceedings of

Directors, so

far

as

they

are capable of

applying.

113 The Directors may establish any committees, local boards or

agencies or

appoint

any Person to be

a manager or

agent

for

managing

the

affairs of

the Company and

may appoint any Person to be a member of

such committees or

local boards. Any

such appointment may be made subject to any conditions

the

Directors may

impose, and either collaterally with or

to the exclusion of

their own powers and

may be

revoked or

altered. Subject to any such conditions,

the

proceedings of

any

such committee, local board or

agency shall be

governed by

the

Articles

regulating the

proceedings of

Directors, so

far

as

they are capable of

applying.

114 The Directors may by

power of

attorney or

otherwise appoint any Person to be

the

agent of

the Company on such conditions as

the Directors may determine,

provided that

the

delegation is no

t

to the

exclusion of

their own powers and may

be

revoked by

the

Directors at

any time.

115 The Directors may by

power of

attorney or

otherwise appoint any company, firm,

Person or

body of

Persons, whether nominated directly or

indirectly by

the

Directors, to be

the

attorney or

authorised signatory of

the Company

for

such

purpose and with such powers, authorities and discretions (not exceeding those

NPB/ 616525/ 1600336/ v2

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40

( vested in or

exercisable by

the Directors under these Articles) and

for

such period

and subject to such conditions as they may think

fit, and any such powers of

attorney or

other appointment may contain such provisions for

the

protection and

convenience of

Persons dealing with any such attorneys or

authorised signatories

as

the

Directors may think fit and may also authorise any such attorney or

authorised signatory to delegate

all

or

any of

the

powers, authorities and

discretions vested in him.

116 The Directors may appoint such officers as

they consider necessary on

such

terms, at

such remuneration and to perform such duties, and subject to such

provisions as

to disqualification and removal as

the

Directors may think

fit.

Unless otherwise specified in the

terms of

his appointment an

officer may be

removed by

resolution of

the Directors or

Members.

ALTERNATE DIRECTORS

117 Any Director (other than an

alternate Director) may by

writing appoint any other

Director, or

any other Person willing to act, to be

an

alternate Director and by

writing may remove from office an

alternate Director so

appointed by

him.

118 An


entitled to receive notice of

all meetings of

Directors and of

all

meetings of

committees of

Directors of

which

his appointor is

a member, to attend and vote at

every such meeting at

which

the

Director

appointing him is not

personally present, and generally to perform

all

the

functions of

his appointor as

a Director in his absence.

119 An

alternate Director shall cease to be

an

alternate Director if his

appointor ceases

to be

a Director.

120 Any appointment or

removal of

an


by

notice to the

Company signed by

the

Director making or

revoking

the

appointment or

in any

other manner approved by

the

Directors.

121 An

alternate Director shall be deemed

for

all purposes to be a Director and shall

alone be

responsible

for

his own acts and defaults and shall not be deemed to be

the

agent of

the

Director appointing him.

NO MINIMUM SHAREHOLDING

122 The Company in general meeting may

fix a minimum shareholding required to be

held by

a Director, bu

t

unless and until such a shareholding qualification is fixed a

Director is not required to hold Shares.

REMUNERATION OF DIRECTORS

123 For so long as any Preferred Securities

are

outstanding,

the

Directors shall

no

t

be

entitled to any fees, other remuneration or

expense reimbursement from

the

Company in connection with their service as

Directors ( it being understood that

the WaMu LLC Directors will receive fees and expense reimbursement in their

capacity as

members of

the

Board of

Managers of

WaMu LLC and the Ordinary

Directors shall receive fees and expense reimbursement in their capacity as

employees of

the

Administrator). Thereafter,

the

remuneration to be paid to the

Directors, if any, shall be such remuneration as

the

Directors shall determine.

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Additionally, at

any time when no

Preferred Securities are outstanding, the

Directors shall also be

entitled to be

paid

all

travelling, hotel and other expenses

properly incurred by

them in connection with their attendance at

meetings of

Directors or

committees of

Directors, or

general meetings of

the

Company, or

separate meetings of

the holders of

any class of

Shares or

debentures of

the

Company, or

otherwise in connection with

the

business of

the

Company, or

to

receive a fixed allowance in respect thereof as

may be

determined by

the

Directors, or

a combination partly of

one such method and partly the other.

124 At

any time when no


are outstanding,

the

Directors may by

resolution approve additional remuneration to any Director

for

any services other

than

his ordinary routine work as

a Director. Any fees paid to a Director who is

also counselor solicitor to the Company, or

otherwise serves it in a professional

capacity shall be

in addition to his remuneration as

a Director.

SEAL

125 The Company may, if the

Directors so determine, have a Seal. The Seal shall only

be

used by

the

authority of

the

Directors or

of

a committee of

the

Directors

authorised by

the

Directors. Every instrument to which

the

Seal has been affixed

shall be

signed by

at

least one Person who shall be

either a Director or

some

officer or

other Person appointed by

the

Directorsfor

the

purpose.

126 The Company may have for

use in any place or

places outside the

Cayman Islands

a duplicate Seal or

Seals each of

which shall be a facsimile of

the common Seal of

the Company and, if the

Directors so

determine, with

the

addition on

its face of

the name of

every place where it is to be used.

127 A Director or

officer, representative or

attorney of

the

Company may without

further authority of

the

Directors affix

the

Seal over

his signature alone to any

document of

the Company required to be

authenticated by

him under seal or

to be

filed with

the

Registrar of

Companies in the Cayman Islands or

elsewhere

wheresoever.

DIVIDENDS, DISTRIBUTIONS AND RESERVE

128 Subject to the Statute and

the

other provisions of

these Articles ( including Article

9),

the

Directors may declare dividends and distributions on Shares in issue and

authorise payment of

the

dividends or

distributions ou

t

of

the

funds of

the

Company lawfully available therefor. No

dividend or

distribution shall be

paid

except out of

the

realised or

umealised profits of

the

Company, or

out of

the

share

premium account or

as

otherwise permitted by

the

Statute.

129 Except as

otherwise provided by

the

rights attached to Shares ( it being understood

that the first sentence of

this Article 129 shall

not

apply to the

Preferred

Securities),

all dividends shall be declared and paid according to the

pa

r

value of

the

Shares that a Member holds. If any Share is issued on

terms providing that it

shall rank

for

dividend as

from a particular date, that Share shall rank

for

dividend

accordingly.


b)

with respect to dividends on

the Preferred Securities, the

Directors may deduct from any dividend or

distribution payable to any Member

NPB/ 61652511600336/ v2

CONFIDENTIAL


42

(

all sums of

money ( if any) then payable by

him to the Company on

account of

calls or

otherwise.


b)

with respect to dividends on

the

Preferred Securities,

the

Directors may declare that any

dividend or

distribution be

paid wholly or

partly

by

the

distribution of

specific assets and in particular of

shares, debentures, or

securities of

any other company or

in anyone or

more of

such ways and where

any difficulty arises in regard to such distribution,

the

Directors may settle the

same as

they think expedient and in particular may issue fractional Shares and

fix

the

value

for

distribution of

such specific assets or

any part thereof and may

determine that cash payments shall be made to any Members upon

the

basis of

the

value so

fixed in order to adjust the

rights of

all Members and

may vest any such

specific assets in trustees as may seem expedient to the Directors.

132 Any dividend, distribution, interest or

other monies payable in cash in respect of

Shares may be

paid by

wire transfer to the

holder or

by

cheque or

warrant sent

through the post directed to the registered address of

the holder

or,

in the

case of

joint holders, to the

registered address of

the

holder who is first named on

the

Register of

Members or

to such Person and to such address as

such holder or

joint

holders may in writing direct. Every such cheque or

warrant shall be made

payable to the

order of

the Person to whom it is sent. Anyone of

two or

more

joint holders may give effectual receipts

for

any dividends, bonuses, or

other

monies payable in respect of

the Share held by

them as

joint holders.

Notwithstanding

the

foregoing,

for

so

long as

the Preferred Securities

are Book-

Entry Preferred Securities, the Company shall pay dividends on

the

Preferred

Securities by

wire transfer of

Federal (same day) funds to the

Clearing Agency at

such bank account of

the

Clearing Agency as

shall be designated from time to

time by

the

Clearing Agency to the

Company.

133 No

dividend or

distribution shall bear interest against

the

Company.

134 Any dividend which cannot be

paid to a Member and/ or

which remains unclaimed

after six months from the

date of

declaration of

such dividend may, in the

discretion of

the

Directors, be

paid into a separate account in the

Company's

name, provided that the Company shall not be

constituted as

a trustee in respect of

that account and the Dividend shall remain as

a debt due to the

Member. Any

dividend which remains unclaimed after a period of

six years from

the

date of

declaration of

such dividend shall be

forfeited and shall revert to the Company.

CAPIT ALISA nON

135 The Directors may capitalise any sum standing to the

credit of

any of

the

Company's reserve accounts ( including share premium account and capital

redemption reserve fund) or

any sum standing to the

credit of

profit and loss

account or

otherwise available

for

distribution and to appropriate such sum to

Members in the

proportions in which such sum would have been divisible

amongst them had

the

same been a distribution of

profits by way of

dividend and

to apply such sum on

their behalf in paying up

in full unissued Shares

for

allotment and distribution credited as

fully paid- up

to and amongst them in the

proportion aforesaid. In such event

the

Directors shall do

all

acts and things

NPB/ 6165251l600336/

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43

required to give effect to such capitalisation, with full power to the

Directors to

make such provisions as

they think fit

for

the

case of

Shares becoming

distributable in fractions (including provisions whereby the

benefit of

fractional

entitlements accrue to the Company rather than to the Members concerned). The

Directors may authorise any Person to enter on

behalf of

all

of

the Members

interested into an agreement with

the Company providing

for

such capitalisation

and matters incidental thereto and any agreement made under such authority shall

be effective and binding on

all concerned.

BOOKS OF ACCOUNT

136 The Directors shall cause proper books of

account to be

kept with respect to all

sums of

money received and expended by

the Company and

the

matters in respect

of

which

the

receipt or

expenditure takes place,

all

sales and purchases of

goods

by

the Company and the assets and liabilities of

the

Company. Proper books shall

not be deemed to be

kept if there are not kept such books of

account as

are

necessary to give a true and fair view of

the state of

the Company's affairs and to

explain

its transactions.

137 The Directors shall from time to time determine whether and to what extent and at

what times and places and under what conditions or

regulations

the

accounts and

books of

the Company or

any of

them shall be open to the

inspection of

Members

not being Directors and no Member (

not

being a Director) shall have any right of

inspecting any account or

book or

document of

the Company except as

conferred

by

Statute or

authorised by

the

Directors or

by

the Company in general meeting.

138 The Directors may from time to time cause to be

prepared and to be

laid before

the Company in general meeting profit and loss accounts, balance sheets, group

accounts ( if any) and such other reports and accounts as may be required by law.

AUDIT

139 The Directors may appoint an

Auditor of

the Company who shall hold office until

removed from office by

a resolution of

the

Directors, and may

fix

his

or

their

remuneration.

140 Every Auditor of

the Company shall have a right of

access at

all

times to the

books and accounts and vouchers of

the Company and shall be

entitled to require

from the Directors and officers of

the Company such information and explanation

as may be necessary

for

the

performance of

the

duties of

the

Auditor.

141 Auditors shall, if so required by

the

Directors, make a report on

the

accounts of

the Company during their tenure of

office at

the

next annual general meeting

following their appointment in the

case of

a company which is registered with

the

Registrar of

Companies as

an

ordinary company, and at

the next extraordinary

general meeting following their appointment in the

case of

a company which is

registered with

the

Registrar of

Companies as

an exempted company, and at

any

other time during their term of

office, upon request of

the

Directors or

any general

meeting of

the Members.

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44

(- NOTICES

142 Notices shall be

in writing and may be

given by

the Company to any Member

either personally or

by sending it by courier, post, cable, telex,

fax

or

e-

mail to

him or

to his

address as

shown in the

Register of

Members ( or

where the

notice is

given bye-mail by

sending it to the

e-

mail address provided by

such Member);

provided that any notice to Preferred Securityholders, with respect to redemption

of


their voting or

consensual rights shall in each case be

mailed, by

first class mail, postage prepaid, to the

holders of


of

record at

the

respective last addresses appearing on

the

Register of

Members.

Any notice, if posted from one country to another, is to be sent airmail.

143 Where a notice is sent by courier, service of

the

notice shall be deemed to be

effected by

delivery of

the

notice to a courier company, and shall be deemed to

have been received on

the third day (not including Saturdays or

Sundays or

public

holidays) following the

day on

which the

notice was delivered to the

courier.

Where a notice is sent by

post, service of

the

notice shall be deemed to be

effected

by

properly addressing, pre-paying and posting a letter containing the notice, and

shall be deemed to have been received on

the

fifth day (

not

including Saturdays or

Sundays or

public holidays) following

the

day on which

the

notice was posted.

Where a notice is sent by

cable, telex or

fax, service of

the

notice shall be deemed

to be

effected by

properly addressing and sending such notice and shall be

deemed to have been received on

the

same day that it was transmitted. Where a

notice is given bye- mail service shall be deemed to be

effected by

transmitting

the

e-

mail to the

e-

mail address provided by

the

intended recipient and shall be

deemed to have been received on

the

same day that it was sent, and it shall not be

necessary

for

the

receipt ofthe e-

mail to be acknowledged by the recipient.

144 A notice may be given by

the Company to the

Person or

Persons which

the

Company has been advised

are entitled to a Share or

Shares in consequence of

the

death or

bankruptcy of

a Member in the

same manner as

other notices which

are

required to be

given under these Articles and shall be

addressed to them by

name,

or

by

the

title of

representatives of

the

deceased, or

trustee of

the

bankrupt, or

by

any like description at

the

address supplied

for

that purpose by

the

Persons

claiming to be

so

entitled, or

at

the option of

the Company by

giving the notice in

any manner in which

the

same might have been given if the

death or

bankruptcy

had

no

t

occurred.

145 Notice of

every general meeting shall be

given in any manner hereinbefore

authorised to every Person shown as

a Member in the

Register of

Members on

the

record date

for

such meeting except that in the

case of

joint holders

the

notice

shall be

sufficient if given to the

joint holder first named in the

Register of

Members and every Person upon whom

the

ownership of

a Share devolves by

reason of

his being a legal personal representative or

a trustee in bankruptcy of

a

Member of

record where

the Member of

record but

for

his death or

bankruptcy

would be

entitled to receive notice of

the

meeting, and no

other Person shall be

entitled to receive notices of

general meetings.

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45

146 Notwithstanding

the

provisions of

the

foregoing Articles 142 to 145,

for

so long

as

any Series A-

2 Preferred Securities are listed on

the

Euro MTS Market of

the

Luxembourg Stock Exchange and such exchange so

requires,

the Company will

publish any notice given to holders of

Series A-

2 Preferred Securities in one

English language newspaper that is a daily newspaper of

general circulation in

Luxembourg (expected initially to be

the Luxemburger Wort).

WlNDINGUP


d)

with respect to the

Preferred Securities, if the Company

shall be wound

up

,

and

the

assets available

for

distribution amongst

the

Members

shall be

insufficient to repay the whole of

the share capital, such assets shall be

distributed so

that, as

nearly as may

be,

the

losses shall be

borne by

the Members

in proportion to the

par

value of

the

Shares held by

them. If in a winding up

the

assets available for

distribution amongst the

Members shall be

more than

sufficient to repay

the

whole of

the

share capital at

the

commencement of

the

winding up,

the

surplus shall be

distributed amongst

the Members in proportion to

the

pa

r

value of

the

Shares held by them at

the

commencement of

the

winding up

subject to a deduction from those Shares in respect of

which there

are

monies due,

of

all monies payable to the Company

for

unpaid calls or

otherwise. This Article

is without prejudice to the

rights of

the

holders of

Shares issued upon special

terms and conditions (including Article 9(

d)

as

to the

Preferred Securities).

148 If the Company shall be wound up

the liquidator may, with the sanction of

a

Special Resolution of

the Company and any other sanction required by

the

Statute, divide amongst

the Members in kind

the

whole or

any part of

the

assets of

the Company (whether they shall consist of

property of

the

same kind or

not) and

may

for

that purpose value any assets and determine how

the

division shall be

carried out as

between the Members or

different classes of

Members. The

liquidator may, with the

like sanction, vest the

whole or

any part of

such assets in

trustees upon such trusts for

the

benefit of

the

Members as

the

liquidator, with the

like sanction, shall think

fit, but so

that no Member shall be compelled to accept

any asset upon which there is a liability.

INDEMNITY

149 Every Director, agent or

officer of

the Company shall be indemnified

ou

t

of

the

assets of

the Company against any liability incurred by

him as

a result of

any

act

or

failure to act

in carrying out

his functions other than such liability ( if any) that

he may incur by

his own wilful neglect or

default. No

such Director, agent or

officer shall be

liable to the Company

for

any loss or

damage in carrying out

his

functions unless that liability arises through

the

wilful neglect or

default of

such

Director, agent or

officer.

FINANCIAL YEAR

150 Unless

the

Directors otherwise prescribe, the financial year of

the Company shall

end on

31

st

December in each year and, following

the

year of

incorporation, shall

begin on

1st

January in each year.

TRANSFER BY WAY OF CONTINUATION

NPB/ 6165251l600336/ v2

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46

151 If the Company is exempted as

defined in the

Statute, it shall, subject to the

provisions of

the

Statute and with

the

approval of

a Special Resolution, have

the

power to register by

way of

continuation as

a body corporate under the laws of

any jurisdiction outside

the Cayman Islands and to be

deregistered in the Cayman

Islands.

CERTIFIED TO

BE A TRUE AND CORRECf COpy

SIG..

_~

~

NEYD/ S TAVERAS

Am Rtgillrar of

C9Illpuits

Dat~ < iR / tJJkCb, JoDb-,

NPB/ 616525/ 1600336/ v2

CONFIDENTIAL


Exhibit A


Board of

Directors Resolutions

WHEREAS, Washington Mutual Bank (the "Bank") indirectly owns

all

of

the issued and

outstanding common stock of

University Street, Inc. (" University Street");

WHEREAS, it is proposed that the Bank will make a contribution to University Street to

consist of

loans or

interests thereon not to exceed $1.2 billion in book value (the "University

Street Contribution) in exchangefo

r

preferred stock issued by

University Street;

WHEREAS, University Street proposes to cause the formation of

a Delaware limited

liability company (the "LLC") and in connection therewith University Street and the Bank will

contribute to the LLC assets of

approximately $5 billion, with the Bank's portion (

the

" LLC

Contribution") to consist of

loans or

interests therein not to exceed $1.0 billion in book value;

WHEREAS, in exchange

for

such contributions, University Street

will

receive

substantially

all

of

the common interests of

the LLC and the Bank or

its designee will receive

two classes or

series preferred stock of

the LLC (" LLC Preferred Interests");

WHEREAS, it is proposed that the LLC Preferred Interests

will

be

transferred by WMB or

its designee to two special purpose entities (" SPEs") which in turn will issue substantially similar

securities (the "SPE Securities") to investors; and

WHEREAS, it is proposed that the Bank's parent, Washington Mutual, Inc. ("WMI"), will

authorize two series of

preferred stock (the "WMI Preferred Stock")

for

which under certain

circumstances each class of

SPE Securities will be automatically exchanged.

THEREFORE, IT IS HEREBY RESOLVED, that the University Street Contribution and

the LLC Contribution are hereby authorized and approved, and any Authorized Officer ( as

defined below) is hereby authorized on behalf of

the Bank to negotiate, execute and deliver any

agreements or documents as such Authorized Officer deems necessary or

appropriate in

connection with the University Street Contribution or

the LLC Contribution.

RESOLVED FURTHER, that

the

Bank is hereby authorized to transfer, or

to cause

its

designee to transfer, the LLC Preferred Interests to the SPEs in exchange

for

cash and any

Authorized Officer is hereby authorized on behalf of

the Bank to negotiate, execute and deliver

any agreements or documents as such Authorized Officer deems necessary or

appropriate in

connection with such transfers;

,

RESOLVED FURTHER, each of

the Authorized Officers is her~ by

authorized on behalf

of

the Bank to negotiate, execute and deliver any agreements with the LLC as such Authorized

Officer deems necessary or

appropriate in connection with the management, operation or

administration of

the LLC;

RESOLVED FURTHER, that the Authorized Officers, or

any of

them, are authorized and

empowered, on behalf of

the Bank and in its name, with

fu

ll power and authority to delegate

such authority to one or

more attorneys-

in-

fact or

agents acting

for

such Authorized Officers, or

any of

them, in the event that it is deemed necessary or

desirable so

to do, in connection with

the offering of

the Preferred Stock, the LLC Preferred Interests or

the SPE Securities in a

127695.1

WM: CONFIDENTIAL LIMITED ACCESS

CONFIDENTIAL


private/ Regulation S offering, to prepare, cause to be

prepared or

to participate in the

preparation of,

an

offering circular or

offering memorandum with respect to such securities (and

any supplements or

amendments thereto), as

the Authorized Officers, or

any of

them, taking

such action shall approve in connection therewith in order to effect the offering of

such

securities in a private/ Regulation S offering;

RESOLVED FURTHER, that any Authorized Officer, together with other proper officers

of

the Bank (including, without limitation, those authorized from time to time pursuant to the

Bank's Asset and Liability Management Policy and the standards and procedures from time to

time in effect thereunder), is hereby authorized to negotiate, enter into, execute and deliver any

and

all

additional agreements, any undertakings or

other documents or

supplemental

agreements on

behalf of

the Bank ( including, without limitation, filings or

applications with

banking regulators, securities regulators or

stock exchanges, domestic or

foreign) and to take

any other actions, in each case, as

such Authorized Officer or

other proper officer deems to be

necessary or

advisable in connection with the issuance of

the University Street Contribution, the

LLC Contribution or

the transfers of

the LLC Preferred Interests or

to further the intent of

these

resolutions; and

RESOLVED FURTHER, that for

purposes of

these resolutions and the transactions

contemplated hereby, each of

the following shall be

an

" Authorized Officer": ( i) the Chief

Executive Officer, (

ii) the Chief Operating Officer, (

iii) the Chief Financial Officer, (

iv)

any Senior

Executive Vice President, ( v)

any Executive Vice President, (

vi) the Senior Vice President and

Treasurer, (vii) the Senior Vice President and Assistant Treasurer and (viii) the Senior Vice

President and Controller.

127695 v1

01

/

12

/

20062: 49 PM

CONFIDENTIAL


ASSISTANT SECRETARY'S CERTIFICATE

OFWASHINGTON MUTUAL, INC.

March 7,

2006

The undersigned, a duly qualified and acting Assistant Secretary of

Washington Mutual,

Inc., a Washington corporation ( the "Company"), does hereby certify as

follows:

1.

Attached hereto as

Exhibit A-

1 is a true, complete and correct copy of

the

Amended and Restated Articles of

Incorporation of

the

Company as

of

the open of

business on

March 6,

2006 and certified on such date by

the Secretary of

State of

the state of

Washington

(the "Secretary of

State"). Except for

two sets of

articles of

amendment filed on March 6,

2006

with the Secretary of

State which are attached hereto as

Exhibits A-

2 and A-

3,

there have been

no amendments or

other documents relating to or

affecting the Amended and Restated Articles

of

Incorporation filed with the Secretary of

State of

the State of

Washington since the date of

the

attached certification, and no amendments have been authorized or

approved by

the board of

directors of

the Company (the " Board"), or

its

shareholders, as

of

the date hereof, nor has any

action been taken by

the Board, the Company or

its shareholders in contemplation of

the

liquidation or

dissolution of

the Company or

any other material development~.

2.

Attached hereto as

Exhibit B-


the

currently effective Bylaws of

the Company. Except as

set forth on

Exhibit B-

2 attached hereto,

such Bylaws have not been modified, amended or

rescinded and remain in full force and effect

as

of

the date hereof.

3.

Attached hereto as

Exhibit C is a true, complete and correct copy of

a certificate

issued by

the Secretary of

State of

the State of

Washington with respect to the due

incorporation and legal existence of

the Company.

4.

Attached hereto as

Exhibit 0-


the

resolutions ( the

"Resolutions") duly adopted by

the

Board at

meetings duly called and held on

January 17

,

2006 and February 21

,

2006, in each case at

which a quorum was present and

acting throughout, approving and authorizing, among other things, the

transactions described

therein relating to ( i) the

authorization and reservation of

the

Series I Perpetual Non- cumulative

Fixed- to-

Floating Rate Preferred Stock and the Series J Perpetual Non- cumulative Fixed Rate

Preferred Stock (together, the

"Preferred Stock") and the

filing of

articles of

amendment with

respect thereto, and ( ii)

the

offer and sale of

( a)

$1,250,000,000 of

Fixed- to-

Floating Rate

Perpetual Non- cumulative Trust Securities, liquidation preference $100,000 pe

r

security ("

Trust

Securities"), by

Washington Mutual Preferred Funding Trust I, and ( b)

( i) $302,300,000 of

7.25% Perpetual Non- cumulative Preferred Securities, Series A-

1,

liquidation preference

$100,000 per security, and ( ii) $447,700,000 of

7.25% Perpetual Non- cumulative Preferred


2,

liquidation preference $10,000 pe

r

security, in each case by

Washington

Mutual Preferred Funding (Cayman) I Ltd. Except as

set forth on

Exhibit 0-

2,

the Resolutions

attached hereto as

Exhibit 0-

1 have not been amended, supplemented, modified, revoked or

rescinded and have been in fu

ll

force and effect since their adoption to and including the

date

hereof and are now in fu

ll

force and effect and the

Resolutions as

so amended as

set

forth on

Exhibit 0-

2 are the

only resolutions adopted by

the Board or

any committee thereof relating to

the

Preferred Stock or

the

Securities. Attached hereto as

Exhibits 0-

2,

0-

3 and 0-

4 are true,

complete and correct copies of

the actions of

Authorized Officers effected pursuant to the

17357747 WMI Assistant Secretary's Certificate

CONFIDENTIAL


Resolutions relating, respectively, to the pricing, articles of

amendment and forms of

certificates

for

the Preferred Stock. Each such action remains in full force and effect.5.

Attached hereto as

Exhibit E is a list of

duly elected or

appointed, qualified and

acting officers of

the Company (the "Authorized Officers"), holding the titles indicated next to

their respective names, and the signatures appearing opposite their respective names are the

true and genuine signatures of

such Authorized Officers, and each such Authorized Officer is

duly authorized to execute and deliver, on

behalf of

the Company, the agreements, documents

and other instruments related to the transactions more specifically described in or

contemplated

by

the Resolutions and was so

duly authorized at

the time of

signing and delivery of

any such

agreements, documents or

other instruments signed and delivered prior to the date hereof, and

the signatures of

such .Authorized Officers appearing on such agreements, documents or

other

instruments are the genuine signatures.

[Signature Pages to Follow]

17357747 WMI Assistant Secretwy's Certificate

CONFIDENTIAL


INWITNESS WHEREOF, the undersigned has signed this Certificate a

s

of

the date first

hereinabove written. ~ IJ /

By:

j!~

Name: Susan Taylor

Title: Assistant Secretary

I, Sophie Hager Hume, an

Assistant Secretary, hereby certify that Susan Taylor is a duly

elected, qualified and acting Assistant Secretary of

the Company as

of

the date hereof and that

the signature set

forth opposite his name is his genuine signature.

~~ me $ M!

ft+~Title: Assistant Secretary

IN WITNESS WHEREOF, I have hereunto signed my name as

of

the date first

hereinabove written.

17357747WMJAssistant Secretary's Certificate

CONFIDENTIAL


EXHIBIT AI

Amended and Restated Articles of Incorporation

17357747 WMI Assistant Secretarys Certificate

CONFIDENTIAL


I, Sam Reed, Secretary of

State of

the State of

Washington and custodian of

its

seal,

hereby issue this

certificate that the attached is a true and correct copy of

ARTICLES OF AMENDMENT

of


as

filed in this office on

February 8,

2001.

Date: March 6,

2006

Given under my hand and

the Seal of

the

State

of

Washington at

Olympia.

the

State Capital

Sam Reed, Secretary of

State

""

l{\

n n(\ 1

CONFIDENTIAL


~....

Secretary of

State


State of

the

State of


its

seal,

hereby issue this

ARTICLES OF AMENDMENTto


a Washington Profit Corporation. Articles of

Amendment were filed

for

record in this office on

the

date indicated below.

UBI Number: 601 566389

:~

Date: February 8,

2001

Effective Date:


the Seal of

the

State of

Washington at

Olympia,

cFirn~

Sam Reed, Secretary of

State

CONFIDENTIAL


043-

1663,

0

20

01


TO THE

FIl.

ED

STATE OF

WASI- IIM~ TON

FE

B

08 2001 ~

'

cr.

RETARY OF

STATe

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF

WASIDNGTON MUTUAL, INC.

Pursuant to the provisions of

Chapter 23B. 10 and Section 23B. 06.020 of

the

Washington Business Corporation Act, Washington Mutual, Inc., a Washington

corporation, hereby adopts the

following articles of

amendment to its amended and

restated articles of

incorporation: .

FIRST: The name of

the

corporation

is:


SECOND: The rights, preferences, privileges, restrictions and other matters

relating to the

Series H Preferred Stock of

the

corporation are as

follows:

1.

Designation. The designation of

this Series shall be

Series H Preferred Stock

(hereinafter referred to as

this " Series"), and

the

number of

shares constituting this Series

shall be 2,000,000. Shares of

this Series shall have a liquidation preference

of$

50

.

2.

Dividends. ( a)

The holders of

shares of


entitled to receive

cash dividends, when, as

and if declared by

the

Board of

Directors, out of

funds legally

available

for

that purpose, at

the

rates

se

t

forth below in this Section 2.

Dividends on

the

shares of


payable, when, as

and if declared by

the

Board of

Directors,

quarterly in arrears on February

16

,

May

16

,

August 16 and November 16

of

each year

(each, a "Dividend Payment Date"), commencing on

the

Initial Dividend Payment Date.

The " Initial Dividend Payment Date" shall mean

the

first Dividend Payment Date

following the effective date of

the

merger (the " Merger") of

Bank United Corp. with and

into

the

Company, or

if any such date is not a Business Day ( as

defined below),

the

next

succee!! ing Business Day. Each such dividend shall be

paid to the

holders of

record of

shares of

this Series as

they appear on

the

stock register of

the Company on

the

applicable Record Date, as

shall be fixed by

the

Board of

Directors; provided, however,

that holders of

shares of

this Series called for

redemption on

a Redemption Date falling

between

the

record date associated with a Dividend Payment Date and such Dividend

Payment Date shall receive

the

applicable dividend payment, together with

all

other

accumulated and unpaid dividends on

such date as

shall be

fixed

for

redemption.

Dividends on

the

shares ofthis Series shall accumulate and be

cumulative from the date

of

original issuance. " Business Day" shall mean any day other than a Saturday or

Sunday

or

a day on which banking institutions in New York City

are authorized or

required by

law or

executive order to remain closed.

n

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19

CONFIDENTIAL


02

04

03

1-

1563.

.

1

( b)

For each quarterly dividend period (each, a "Dividend Period") from

the

Initial Dividend Payment Date, through and including

the

Dividend Period ending August

16,2002, dividends payable on

the

shares of


payable at

a'rate per

annum of

the

liquidation preference thereof equal to 7.25% (

the

" Initial Rate Period").

For each Dividend Period after

the

Initial Rate Period, dividends payable on

the

shares of


payable at

a rate per annum of

the

liquidation preference thereof equal

to the

Reset Rate ( as

defined below). The amount of

dividends per share

for

each

Dividend Period shall be computed by

dividing the applicable rate

for

such Dividend

Period by

four and applying

the

resulting rate to the

liquidation preference per share of

this Series. Each Dividend Period (other than

the

Initial Dividend Period, defmed below)

shall commence on

a Dividend Payment Date and shall end on and include

the

day next

preceding

the

next Dividend Payment Date. The " Initial Dividend Period" shall mean

the

period commencing on

the

effective date of

the

Merger and ending on

the Initial

Dividend Payment Date.

( c)

Dividends payable on

this Seriesfor

any period greater or

less than a full

Dividend Period, other than

the

Initial Dividend Period, shall be computed on

the

basis of

a 360-day year consisting of

twelve 30- day months and,

for

any period less than one

month,

the

actual number of

days elapsed in the

period. In connection with

the

Merger,

the

shares of

Bank United Corp.'s Series B Preferred Stock (

the

" Predecessor Shares")

shall be

converted into shares of

this Series. Prior to the

completion of

the

Merger, the

board of

directors of

Bank United Corp. declared a dividend on

the

Predecessor Shares

payable on

the

Initial Dividend Payment Date. AB

successor to Bank United Corp.,

the

Company will pay on

the

Initial Dividend Payment Date

the

dividend declared

bu

t

not

paid on

the Predecessor Shares; provided that in no

event shall a holder of

this Series be

entitled to a dividend on

the

Initial Dividend Payment Date that is greater than such

holder would have been entitled to on

the

Initial Dividend Payment Date had

the

Merger

not been completed and the Predecessor Shares not been converted into shares of

this

Series.

( d)

No

full dividends shall be declared or

paid or

se

t

apart

for

payment on

the

Preferred Stock of

any series ranking, as

to dividends, on a parity with or

junior to this

Series

for

any period unless full cumulative dividends on

the shares of

this Series

for

all

full Dividend Periods ending on

or

prior to the

date of

such dividends on

such other series

ofPr. ef!

lrred Stock have been or

contemporaneously are declared and paid or

declared and

a sum sufficient

for

the

payment thereof

se

t

apart

for

such payment. When dividends are

not paid in full, as

aforesaid, upon

the

shares of

this Series and any other series of

Preferred Stock ranking on a parity as

to dividends with this Series,

all dividends

declared upon shares of

this Series and any other series of

Preferred Stock ranking on

a

parity as

to dividends with this Series shall be

declared pro rata so

that

the

amount of

dividends declared

per

share on

this Series and such other Preferred Stock shall in all

cases bear to each other the same ratio that accrued and unpaid dividends per share on

the

shares of

this Series and such other Preferred Stock bear to each other. No

interest, or

sum of

money in lieu of

interest, shall be payable in respect of

any dividend payment or

payments on

this Series which may be

in arrears.

CONFIDENTIAL


04

.3-

1663.

2

20

01

( e)

So

long as

any shares of

this Series are outstanding, no

dividend (other than a

dividend in Common Stock or

in any other stock ranking junior to this Series as

to

dividends and upon liquidation and other than as

provided in paragraph ( d)

of

this Section

2)

shall be

declared or

paid or

se

t

aside

for

payment or

other distribution declared or

made uponth

e Common Stock or

upon any other stock ranking junior to or

on a parity

with this Series as

to dividends or

upon liquidation, no

r

shall any Common Stock or

any

other stock of

the

Company ranking junior to or

on

a parity with this Series as

to

dividends or

upon liquidation be

redeemed, purchased or

otherwise acquired for

any

consideration ( or

any moneys be

paid to or

made available for

a sinking fund for

the

redemption of

any shares of

any such stock) by

the Company (except by

conversion into

or

exchange

for

stock of

the Company ranking junior to this Series as

to dividends and

upon liquidation), unless, in each case, full cumulative dividends on

all outstanding

shares of

this Series for

all

fu

ll

Dividend Periods ending on

or

prior to the

date of

such

other dividend, distribution, redemption, purchase or

other acquisition, shall have been or

contemporaneously are paid or

declared and a sum sufficient for

the

payment thereof set

aside

for

such payment.

3.

Remarketin~. ( a)

The dividend rate on this Series shall be reset to the

Reset

Rate on

the

Purchase Contract Settlement Date ( as

defmed below). The Company shall

request,

not

later than 15

nor more than 30

calendar days prior to the

Remarketing Date

( as

defined below), that

the

Depositary ( as

defined below) notifY the Holders of

shares of

this Series and the

holders of

Corporate PIES of

the

Remarketing and of

the

procedures

that must be

followed if a Holder of

Corporate PIES wishes to make a cash settlement of

its obligation to purchase Common Stock ofthe Company pursuant to the

Purchase

Contract Agreement.

( b)

Not later than 5:

00

p.

m., New York City time, on

the

seventh Business Day

preceding the

Purchase Contract Settlement Date, each Holder may elect to have the

shares of

this Series held by

such Holder remarketed in the

Remarketing. Holders of

Corporate PIES that do

not give notice of

their intention to make a cash settlement of

the

purchase contract component of

their Corporate PIES prior to such time in the

manner

specified in the

Purchase Contract Agreement, or

that give such notice

bu

t

fail to deliver

cash prior to 11: 00

a.


or

prior to the fifth Business Day

preceding the

Purchase Contract Settlement Date, shall be

deemed to have consented to

the

disRosition of

the

shares of

this Series that are a component of

their Corporate PIES in

the

Remarketing. Holders of

the

shares of

this Series that

are not a component of

Corporate PIES. wishing to have their shares of

this Series remarketed shall give to the

Purchase Contract Agent notice of

their election prior to 11: 00

a.

m., New York City time

on such fifth Business Day. Any such notice shall be irrevocable and may

no

t

be

conditioned upon the

level at

which the

Reset Rate is established in the

Remarketing.

Promptly after 11: 00

a.

m.,

New York City time, on

such fifth Business Day, the

Purchase

Contract Agent, based on

the

notices received by

it prior to such time (including notices

from the

Purchase Contract Agent as

to purchase contracts for

which cash settlement has

been elected and cash received), shall notifY

the

Remarketing Agent of

the

number of

shares of

this Series to be

tendered

for

purchase in the

Remarketing.

CONFIDENTIAL


-

04-

3-

1-

66

*

3.3---

20

01

( c)

If any Holder of

shares of

this Series does

no

t

give a notice of

its intention to

make a cash settlement or

gives such notice bu

t

fails to deliver cash as

described in

Section 3(

b)

above, or

gives a notice of

election to have shares of

this Series'that are

no

t

a

component of

Corporate PIES remarketed, then the

shares of

this Series of

such Holder

shall be

deemed tendered for

purchase in the

Remarketing, notwithstanding any failure

by

such Holder to deliver or

properly deliver such shares to the

Remarketing Agent

for

purchase.

( d)

The right of

each Holder to have shares ofthis Series tendered

for

purchase

shall be

limited to the

extent that ( i) the

Remarketing Agent conducts a remarketing

pursuant to the

terms of

the

Remarketing Agreement, (

ii)

the

shares of

this Series

tendered have not been called

for

redemption, (

iii)

the

Remarketing Agent is able to find

a purchaser or

purchasers

for

the

tendered shares of

this Series and (

iv)

such purchaser or

purchasers deliver

the

purchase price therefor to the

Remarketing Agent.

( e)

On

the

Remarketing Date,

the

Remarketing Agent shall use commercially

reasonable efforts to remarket, at

a price equal to 100.50% of

the


preference thereof,

the

shares of

this Series tendered or

deemed tendered

for

purchase.

( f)

If,

as a result ofthe efforts described in Section 3(

e),

the

Remarketing Agent

determines that it will be able to remarket

all

of

the

shares of

this Series tendered or

deemed tendered

for

purchase at

a price of

100.50% of

the


preference of

such shares prior to 4:

00

p.


the

Remarketing

Date,

the

Remarketing Agent shall determine

the

Reset Rate, which shall be

the

rate

per

annum (rounded to the

nearest one- thousandth (0.001) of

one percentper

annum) that the

Remarketing Agent determines, in its sole judgment, to be

the

lowest rate

per

annum that

will enable it to remarket

all

of

the

shares ofthis Series tendered or

deemed tendered

for

Remarketing.

( g)

If none of

the Holders of

the

shares of

this Series or

the

holders of

the

Corporate PIES elects to have shares of

this Series remarketed in the

Remarketing,

the

Reset Rate shall be

the

rate determined by

the Remarketing Agent,

in:

i. ts sole discretion,

as

the

rate that would have been established had a Remarketing of

all

the

shares of

this

Series been held on

the

Remarketing Date.

:( h)

If,

by

4:

00

p.

m.,

New York City time, on

the

Remarketing Date, the

Remarketing Agent is unable to remarket

all

of

the

Preferred Securities tendered or

deemed tendered for

purchase, a "Failed Remarketing" shall be

deemed to have occurred

and the Remarketing Agent shall so

advise by

telephone

the

Depositary and

the

Company. Inthe event of

a Failed Remarketing,

the

Reset Rate shall equal ( 1)

the

"AA"

Composite Commercial Paper Rate ( as defmed below), plus ( 2)

the

Applicable Margin

( as

defined below).

( i) By

approximately 4:

30

p.


the Remarketing Date,

proVided that there has not been a Failed Remarketing,

the

Remarketing Agent shall

advise, by

telephone ( i) the

Depositary and

the Company of

the

Reset Rate determined in

CONFIDENTIAL


04.3.1663. 4

20

01

the Remarketing and

the

number of

shares of

this Series sold in the

Remarketing, (

ii)

each purchaser ( or

the Depositary Participant thereof) of

the

Reset Rate and

the

number

of

shares of

this Series such purchaser is to purchase and (

iii) each purchaserio give

instructions to its Depositary Participant to pay

the

purchase price on

the Purchase

Contract Settlement Date in same day funds against delivery of

the shares of

this Series

purchased through

the

facilities of

the

Depositary.

( j) In accordance with

the

Depositary's normal procedures, on

the

Purchase

Contract Settlement Date, the transactions described above with respect to each Preferred

Security tendered

for

purchase and sold in the

Remarketing shall be

executed through

the

Depositary, and

the

accounts of

the respective Depositary Participants shall be

debited

and credited and such shares of

this Series delivered by book- entry as necessary to effect

purchases and

sales of

such shares of

this Series. The Depositary shall make payment in

accordance with

its normal procedures.

( k)

If any Holder of

shares of

this Series selling shares of

this Series in the

Remarketing fails to deliver such shares, the Depositary Participant of

such selling holder

and of

any other Person that was to have purchased shares of

this Series in the

Remarketing may deliver to any such other Person a number of

shares of

this Series that

is less than the

number of

shares of

this Series that otherwise was to be

purchased by

such Person. In such event,

the

number of

shares of

this Series to be

so

delivered shall be

determined by

such Depositary Participant, and delivery of

such lesser number of

shares

of

this Series shall constitute good delivery.

( 1)

Under

the

Remarketing Agreement,

the Company shall be

liable for, and shall

pay, any and

all costs and expenses incurred in connection with

the

Remarketing.

( m)

The tender and settlement procedures

se

t

in this Section 3,

including

provisions

for

payment by

purchasers of

the shares of

this Series in the Remarketing,

shall be

subject to modification to the

extent required by

the Depositary or

if the

book-

entry system is no

longer available

for

the shares ofthis Series at

the

time of

the

Remarketing, to facilitate

the

tendering and remarketing of

the

shares-. Qf

this Series in

certificated form. In addition,

the

Remarketing Agent may modify

the

settlement

procedures

se

t

forth herein in order to facilitate

the

settlement process.

:-.

( n)

Definitions:

"'AA' Composite Commercial Paper Rate" on any date shall mean ( i) the

interest

equivalent of

the

60-day rate on commercial paper placed on behalf of

issuers whose

corporate bonds

are rated "AN' by S&P or

the

equivalent of

such rating by S&P or

the

equivalent of

such rating by S&P or

another rating agency, as made available on

a

discount basis or

otherwise by

the

Federal Reserve Board for

the

business day

.immediately preceding such date or

(

ii)

if the

Federal Reserve Board does not make

available any such rate, then

the

arithmetic average of

those rates, as

quoted on a discount

basis or

otherwise, by

the

Commercial Paper Dealers to the

Remarketing Agent

for

the

close of

business on

the

Business Day next preceding such date. If any Commercial

CONFIDENTIAL


043-

1663,

5

20

01 . , ,

.......

Paper Dealer does no

t

quote a rate required to determine the

" AA" Composite

Commercial Paper Rate, the

" AA" Composite Commercial Paper Rate will be

determined

on

the

basis of

the

quotation or

quotations fumished by

the

remaining COmnlercial Paper

Dealer or

Commercial Paper Dealers and any substitute commercial paper dealer or

substitute commercial paper dealers selected by

the

Remarketing Agent

or,

if the

Remarketing Agent does

no

t

select any such substitute commercial paper dealer or

substitute commercial paper dealers, by

the

remaining Commercial Paper Dealer or

Commercial Paper Dealers.

" Applicable Margin" shall mean

the

spread determined as

se

t

forth below, based

on

the

prevailing rating of

the Remarketed shares of

this Series in effect at

the

close of

business on

the

Business Day immediately preceding the date of

a Failed Remarketing:

Prevailing Rating

AAJ " aa"

AI

" a"

BBB/ " baa"

Below BBB/ '' baa''

Spread

3.00%

4.00%

5.00%

7.00%

For purposes of

this definition, the

" prevailing rating" of

the

Remarketed shares

of

this Series shall

be:

( i) AAJ aa

if such shares have a credit rating of

AA- or

better by S&P and

" aa3" or

better by

Moody's or

the

equivalent of

such ratings by

such

agencies or

a substitute rating agency or

substitute rating agencies selected

by

the

Remarketing Agent;

(

ii)

if not under clause ( i) above, then AI

a if the

Remarketed Securities

have a credit rating of

A-

or

better by S&P and " a3"

ex.

better by Moody's

or

the

equivalent of

such ratings by

such agencies or

a substitute rating

agency or

substitute rating agencies selected by

the. Remarketing Agent;

(

iii) if not

under clauses ( i) or

(

ii) above, then BBB/ " baa" if the

Remarketed Securities have a credit rating ofBBB- or

better by S&P and

" baa3" or

better by

Moody's or

the equivalent of

such ratings by

such

agencies or

a substitute rating agency or

substitute rating agencies selected

by

the Remarketing Agent~ or

iv)

ifnot under clauses ( i) - (

iii) above, then below BBB/ " baa."

" Certificate" shall mean a Corporate PIES Certificate.

CONFIDENTIAL


043.1663. 6

20

01

"Commercial Paper Dealers" shall mean Lehman Commercial Paper Inc.,

Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated or

their

affiliates or

successors, if such affiliates or

successors

are

commercial paper lfealers.

"Common Stock" shall mean the Common Stock, no

par value, of

the

Company.

"Corporate PIES" shall mean a stock purchase unit consisting of

( A)

a stock

purchase contract under which ( i) the

holder of

the

unit will purchase from

the

Company,

for

$50.00 in cash, a certain number of

shares of

common stock of

the Company and (

ii)

the Company will pay such holder contract adjustment paYments and ( B)

beneficial

ownership of

a shares of

this Series.

"Corporate PIES Certificate" means a certificate evidencing the

rights and

obligations of

a Holder in respect of

the

number of

Corporate PIES' specified on such

certificate.

"Depositary" shall mean, with respect to shares of

this Series issuable in whole or

in part in the form of

one or

more Global Securities, a clearing agency registered under

the Exchange Act that is designated to act

as

depositary

for

such shares, and initially shall

be The Depository Trust Company.

"Depositary Participant" shall mean a member

of,

or

participant

in,

the

Depositary.

" Exchange Act" shall mean

the

Securities Exchange Act of

1934 and any statute

successor thereto, in each case as

amended from time to time, and

the

rules and

regulations promulgated thereunder.

"Global Certificate" means a Certificate that evidences

all

or

part of

the

shares of

this Series and is registered in the name of

a clearing agency or

a nominee thereof.

"Global Security" shall mean a global Series H Preferred Stock Certificate

registered in the

name of

a Depositary or

its nominee.

";:

Holder" shall mean any holder of

shares of

this Series.

''Moody's'' shall mean Moody's Investors Service, Inc.

" Purchase Contract Agent" shall mean the purchase contract agent under the

Purchase Contract Agreement, including successor purchase contract agents.

" Purchase Contract Agreement" shall mean

the

Purchase Contract Agreement

dated as

of

August

10

,

1999 between

the Company ( through

its predecessor entity, Bank

United Corp.) and Bank One N.

A.

(under

its

prior name, The First National Bank of

Chicago), as

Purchase Contract Agent.

CONFIDENTIAL


043-

1663.

7

2001

" Purchase Contract Settlement Date" shall mean August 16,2002.

" Record Date"

for

dividends on

the

shares of

this Series on any Payn1ent Date

shall mean, as

to any Global Certificate,

the

Business Day next preceding such Payment

Date, and as

to any other Certificate, 15

Business Days prior to such Payment Date.

" Remarketing Agent" shall mean

the

remarketing agent selected by

the

Company,

including any successor remarketing agents selected by

the

Company.

" Remarketing Date" shall mean

the

third Business Day preceding

the

Purchase

Contract Settlement Date.

" Reset Rate" shall mean shall mean

the

distribution rate per annum that results

from

the

Remarketing pursuant this Section 3.

" S&

P"

shall mean Standard & Poor's Ratings Services, a division of

McGraw- Hill Corporation.

4.

Redemption. ( a)

Optional Redemption. The shares of

this Series

are

not

redeemable prior to October 16

,

2002. The Company, at

its

option, may redeem shares of

this Series, as

a whole or

in part, at

any time or

from time'to time, on

or

after October 16,

2002 at

a redemption price of$ 50

per share plus accrued and unpaid cumulative

dividends thereon (whether or

no

t

declared) to the

date fixed

for

redemption.

( b)

Mandatory Redemption. The Company shall redeem, from any source of

funds legally available therefor,

all

issued and outstanding shares of

this Series, in whole

and

not

in part, on August 16, 2004, at

a redemption price of

$ 50

per

share plus accrued

and unpaid cumulative dividends thereon (whether or

not declared) to the

date fixed

for

redemption.

( c)

Redemption Procedures.

( i) In the

event that, pursuant to paragraph ( a)

above, fewer than

all

the

outstanding shares of

this Series are to be redeemed;

the

number of

shares

to be redeemed shall be

determined by

the

Board of

Directors and

the

shares to be redeemed shall be

determined by

lot

or

pro rata as may be

determined by

the

Board of

Directors or

by any other method as may be

determined by

the Board of

Directors in its sole discretion to be

equitable,

provided that such method satisfies any applicable requirements of

any

securities exchange on which this Series is listed.

(

ii)

In the

event

the Company shall redeem shares of

this Series, notice of

such redemption shall be given by

first class mail, postage prepaid, mailed

not less than 30

or

more than 60

days prior to the

redemption date, to each

holder of

record of

the

shares to be

redeemed, at

such holder's address as

the

same appears on

the stock register of

the

Company. Each such notice

CONFIDENTIAL


043-

1663,8

20

01

shall state: ( a)

the

redemption date; ( b)

the

number of

shares of

this Series

to be redeemed and, if fewer than

all

the

shares held by

such holder are to

be redeemed,

the

number of

such shares to be redeemed from ~ ch holder;

( c)

the

redemption price; ( d)

the

place or

places where certificates

for

such

shares

are to be

surrendered

for

payment of

the

redemption price; and ( e)

that dividends on

the

shares to be redeemed shall cease to accrue on

the

redemption date.

(

iii) Notice having been mailed as

aforesaid, from and after the redemption

date (unless default shall be made by

the Company in providing money

for

the

payment of

the

redemption price) dividends on

the

shares of

this Series

so

called for

redemption shall cease to accrue, and said shares shall no

longer be

deemed to be

outstanding, and all

rights of

the

holders thereof as

stockholders of

the

Company (except the

right to receive from the

Company

the

redemption price) shall cease. Upon surrender in accordance

with said notice ofthe certificates

for

any shares so redeemed (properly

endorsed or

assigned

for

transfer, if the

Board of

Directors shall so

by

the

Company at

the

redemption price aforesaid. In case fewer than

all

the

shares represented by

any such certificate

are redeemed, a without cost to

the

holder thereof.

(

iv)

Any shares of

this Series which shall at

any time have been redeemed

shall, after such redemption, have

the

status of

authorized

bu

t

unissued

shares of

Preferred Stock, without designation as

to series until such shares

are once more designated as

part of

a particular series by

the

Board of

Directors.

( v)

Notwithstanding the foregoing provisions of

this Section 4,

if full

cumulative dividends on

all outstanding shares of

this Series

are

in arrears,

no shares of

this Series shall be redeemed unless

all outstanding shares of

this Series

are simultaneously redeemed, and

the Company shall

not

purchase or

otherwise acquire any shares ofthis Series;.: provided, however,

that

the

foregoing shall not prevent

the

purchase or

acquisition of

shares of

this Series pursuant to a:

purchase or

exchange offer made on

the

same

terms to holders of

all


this Series.

5.

Conversion. The holders of

shares of

this Series shall

no

t

have any rights to

convert such shares into shares of

any other class or

series of

capital stock of

the

Company.

6.

Liquidation Ril: hts. ( a)

Upon

the

voluntary or

involuntary dissolution,

liquidation or

winding up

of

the

Company,

the

holders of

the shares of


entitled to receive and to be paid

ou

t

of

the

assets of

the Company available

for

distribution to its stockholders, before any payment or

distribution shall be made on

the

Common Stock or

on any other class of

stock ranking junior to this Series upon

CONFIDENTIAL


043-

1663.

9

20

01 ..

liquidation, the

amount of

$ 50

pe

r

share, plus accrued and unpaid cumulative dividends

(whether or

not declared) to the date ofthe liquidating distribution.

( b)

After

the

payment to the

holders of

the

shares of

this Series of

the

full

preferential amounts provided

for

in this Section 6,

the

holders of

this Series as such shall

have no

right or

claim to any of

the remaining assets of

the

Company.

( c)

If, upon any voluntary or

involuntary dissolution, liquidation, or

winding up

of

the

Company,

the

amounts payable with respect to the

shares of

this Series and any

other shares of

stock of

the Company ranking as

to any such distribution on

a parity with

the

shares of

this Series

are

not paid in full,

the

holders of

the

shares ofthis Series and of

such other shares shall share ratably in any

such distribution of

assets of

the

Company in

proportion to the

full respective distributions to which they

are entitled.

( d)

Neither the sale of

all

or

substantially

all

the property or

business of

the

Company, nor the merger or

consolidation of

the Company into or

with any other

corporation or

the

merger or

consolidation of

any other corporation into or

with

the

Company, shall be deemed to be a dissolution, liquidation or

winding up, voluntary or

involuntary, for

the

purposes ofthis Section 6.

.

7.

Rankin~. For purposes of

this reso lution, any stock of

any class or

classes 0f

the

Company shall be

deemed to rank:

( a)

prior to the shares of

this Series, either as

to dividends or

upon liquidation, if

the

holders of

such class or

classes shall be entitled to the

receipt of

dividends or

of

amounts distributable upon dissolution, liquidation or

winding up

of

the

Company, as

the

case may

be,

in preference or

priority to the

holders of

shares of

this Series;

( b)

on

a parity with shares of


to dividends or

upon

liquidation, whether or

not

the

dividend rates, dividend payment dates or

redemption or

liquidation prices

pe

r

share or

sinking fund provisions, if any, be different from those of

this Series (and whether or

not such dividends shall accumulate), if~~ holders of

such

stock shall be

entitled to the

receipt of

dividends or

of

amounts distributable upon

dissolution, liquidation or

winding up

ofthe Company; as

the

case maybe, without

prefer~

n.~ ce'

or

priority, one over the

other, as

between the

holders of

such stock and the

holders of

shares of

this Series; and

( c)

junior to shares of


to dividends or

upon liquidation, if

such class shall be Common Stock or

if the

holders of

shares of


entitled to receipt of

dividends or

of

amounts distributable upon dissolution, liquidation

or

winding up

of

the

Company, as

the

case may be

,

in preference or

priority to the

holders of

shares of

such class or

classes.

( d)

The shares of

each of

the

other series of

preferred stock ofthe Company shall

rank on

a parity with the

shares of

this Series.

CONFIDENTIAL


024030-

11663.10 '.

8.

Yotin~ Ri2hts. The holders of

the

shares of

this Series shall have.

the

following voting rights:

( a)

Each share of

this Series will have

the

right to vote, with each share of

this

Series having 0.10 vote, in connection with matters submitted generally to the holders of

the common stock and other capital stock ofthe Company entitled to yote in respect of

matters submitted to the stockholders of

the Company generally. For these purposes,

the

holders ofthe shares of

this Series and the holders of

the common stock and such other

capital stock of

the

Company, so entitled to vote, shall vote as a single class.

( b)

Unless the vote or

consent of

the holders of

a greater number of

shares shall

then be

required by

law,

the

approval ofthe holders of

at


the

then-

outstanding shares ofthis Series, given in person or

by

proxy, either in writing or

by

a

vote at

a meeting called for

the

purpose at

which the

holders of

shares of

this Series shall

vote together as

a separate class, shall be

required

for

authorizing, effecting or

validating

any amendment, alteration or

repeal, whether by

merger, consolidation or

otherwise, of

any of

the

provisions ofthe Amended and Restated Articles of

Incorporation of

the

Company or

of

any certificate amendatory thereof or

supplemental thereto ( including any

Certificate of

Designations or

any similar document relating to any series of

Preferred

Stock) that adversely affect the

powers, preferences, privileges or

rights of

this Series;

provided, however, that the

creation and issuance of

any other class or

series of

preferred

stock, or

any increase in the number of


any Preferred Stock of

any

other class or

series, in each case ranking on

a parity with or

junior to this Series with

respect to the

payment of

dividends and

the

distribution of

assets upon liquidation,

dissolution or

winding up

of

the

affairs of

the Company shall not be deemed to adversely

affect such powers, preferences or

other special rights.

( c)

Unless

the

vote or

consent of

the

holders of

a greater number of

shares shall

then be

required by

law,

the

approval of

the holders of

at


all

of

the

thenoutstanding shares of

this Series and

all other series of

preferred stock ranking on a

parity with shares of


to dividends or

upon liquidation, given in

person or

by

proxy, either in writing or

by

a vote at

a meeting called Jq[.

the

purpose at

which the holders of

shares of

this Series and such other series of

Preferred Stock shall

vote together as

a single class without regard to series, shall be

necessary

for

authorizing,

effectin~ or

validating ( i) the

creation, authorization or

issuance

of,

(

ii)

the

reclassification of

any authorized stock of

the Company into, or

(

iii)

the

creation,

authorization or

issuance of

any obligation or

security convertible into or

evidencing

the

right to purchase, any additional class or

series of

stock ranking prior to this Series, either

as

to dividends or

upon liquidation.

( d)

( i) If at

any time dividends on


in arrears in an

amount

equal to six quarterly dividends thereon,

the

occurrence of

such

contingency shall mark

the

beginning of

a period (herein called a " default

period") which shall extend until such time as

all

accrued and unpaid

dividends for

all

previous dividend periods and for

the

current dividend

period. on

all

shares of

this Series then outstanding shall have been

CONFIDENTIAL


:~

043.1663. 11

20

01

declared and paid or

se

t

apart

for

payment. During each default period,

the

holders of

shares of

this Series and other shares of

Preferred Stock on

which dividends

are

in arrears and as

to which similar voting tights have

been conferred, voting as

a class, irrespective of

series, shall have

the

right

to elect two Directors to the

Board of

Directors of

the

Company.

(

ii) During any default period, such voting right of

the

holders of

this

Series may be

exercised by

written consent, at

a special meeting called

pursuant to Section 7(

d)(

iii) hereof or

at

any annual meeting of

stockholders. The absence ofa quorum of

the

holders of

Common Stock

at

any such special or

annual meeting shall not affect

the

exercise by

the

holders of

Preferred Stock of

such voting right. At

any meeting at

which

the

holders of

Preferred Stock shall exercise such voting right initially

during an

existing default period, they shall have the-right, voting as

a

class, to elect Directors to fill such vacancies, if any, in the

Board of

Directors as may then exist up

to two Directors

or,

if such- right is

exercised at

an

annual meeting, to elect two Directors. If the

number

which may be

so

elected at

any special meeting does no

t

amount to the

required number, the

holders of

Preferred Stock shall have the

right to

make such increase in the

number of

Directors as

shall be

necessary to

permit

the

election by

them of

the

required number. After

the

holders of

the

Preferred Stock shall have exercised their right to elect Directors in

any default period and during

the

continuance of

such period,

the

number

of

Directors shall no

t

be

increased or

decreased except by

vote of

the

holders of

Preferred Stock as

herein provided. Any Director elected by

a

vote of

the

holders of

Preferred Stock may be

removed from office, with

or

without cause, only by

the

affirmative vote of

the

requisite percentage

of

holders of

Preferred Stock required to elect Directors as

specified in this

Section 8(

d).

(

iii) Unless

the

holders of

Preferred Stock, during an

existing default

period, shall have previously exercised their right

to,

el€

ct

Directors,

the

Board of

Directors may order, or

any shareholder or

shareholders owning

in the

aggregate not less than

ten

percent (10%) of

the

total number of

shares of

Preferred Stock outstanding, irrespective of

series, on which

dividends

are

in arrears and as

to which similar voting rights have been

conferred, may request,

the

calling ofa special meeting of

the

holders of

Preferred Stock, which meeting shall thereupon be

called by

the

Chairman, a Vice Chairman or

the Secretary of

the

Company. Notice of

such meeting and of

any annual meeting at

which holders of

Preferred

Stock

are entitled to vote pursuant to this Section 7(

d)(

iii) shall be

given to

each holder of

record of

Preferred Stock entitled to vote thereat by mailing

a copy of

such notice to him at

his

last address as

the same appears on

the

books of

the Company on such record date, not more than 45

days prior to

the date of

such notice, as

the

Board of

Directors may

fix

for

this purpose.

Such meeting shall be

called

for

a time not earlier than 10

days and not

CONFIDENTIAL


043,1663.12

20

01

later than 60

days after such order or

request

or,

in default ofthe calling of

such meeting within 60

days after such order or

request, such meeting may

be

called on

similar notice by

any shareholder or

shareholders'Owning in

the

aggregate not less than 10% of

the

total number of

shares of

Preferred

Stock outstanding, irrespective of

series, entitled to vote thereat.

(

iv) m any default period

the

holders of

Common Stock, and other classes

of

stock of

the Company if applicable, shall continue to be

entitled to elect

the

whole number of

Directors constituting

the

Board of

Directors until

the

holders of

Preferred Stock, voting as

a class, shall have exercised their

right to elect two Directors, after

the

exercise of

which right ( A)

the

Directors so

elected by

the

holders of

Preferred Stock shall continue in

office until their successors shall have been elected by

such holders or

until

the

expiration of

the default period, and ( B)

any vacancy on

the

Board of

Directors may (except as

provided in Section 8(

d)(

ii) hereof) be

filled by

vote of

a majority of

the

remaining Directors theretofore elected

by

the

holders of

the

class of

stock which elected

the

Director whose

office shall have become vacant. References in this Section 8(

d)

to

Directors elected by

the

holders of

a particular class of

stock shall include

Directors elected by

such Directors to fill

vacancies as

provided in clause

( B)

of

the

foregoing sentence.

( v)

Immediately upon the expiration of

a default period, ( A)

the right of

the

holders of

Preferred Stock as a class to elect Directors shall cease, ( B)

the

term of

any Directors elected by

the

holders of

Preferred Stock as

a

class shall terminate, and ( C)

the

number of

Directors shall be

such

number as may be

provided

for

in the Amended and Restated Articles of

mcorporation or

Bylaws of

the Company or

by

resolution ofthe Board of

Directors, irrespective of

any increase made pursuant to the

provisions of

Section 8(

d)(

ii) hereof (such number being subject, however, to change

thereafter in any

manner provided by

law or

in the

Amended and Restated

Articles ofmcorporation or

Bylaws of

the

Company~=Any vacancies on

the

Board of

DireCtors effected by

the

provisions of

clauses ( B)

and ( C)

in

the preceding sentence may be

filled by

a majority of

the

-remaining

Directors.

( e)

Except as

se

t

forth herein or

required by

applicable law, holders of

shares of

this Series shall have no voting rights and their consent shall

no

t

be required

for

taking

any corporate action.

TmRD: These amendments do

not provide

for

an

exchange, reclassification

or

cancellation of

any issued shares.

FOURTH: The foregoing amendments to the

amended and restated articles of

incorporation were adopted by

the

Board of

Directors of

Washington Mutual, mc. on

October 17, 2000. Shareholder action was not required.

CONFIDENTIAL


043-

1663.13

20

01

EXECUTED this

8th day of

February, 2001.

:~

, t

'..


By:

Its:

-

.- u~-=

CONFIDENTIAL


f~'.


State of

the

State of


its

seal,

hereby issue this

certificate that

the

attached is a true and correct copy of


of


RESTATED

as


January

22,

2001.

Date: March 6,

20~

''

If\

f\

f\

f\1


the

Seal of

the

State

of

Washington at

Olympia. the

State Capital

Sam Reed. Secrelary of

State

CONFIDENTIAL


I ~ • ~

', 0;

•

...'

.'

JAN 222001

SEeR/?

1{.

Ry

() r :; J I,

T£

:

TO THE

OF

WASHINGTON MUTlJAL. INC..

REST ATEf) ARTICLES OF

INCORPORA TJON

Pursuaill to the

provisions of RCW 23

B.

1/)

of

the

Washingtoli Business Corporation Act.

Washington Mutual,

Inc

.. a Washington corp() rUlioll ( tfH''' Corponltion'' j berehy . idopts

the

1()

llowing articles 1.)

1'

amendment to its restated ankles ofincorpofmjoo.

Seclion

.:!.

ARTICLES OF

AMENDMENT

SF-CONI): The C,

lrpOfalion hefell> (TCalL's. rrOri1lhe 10.000.000 shares of

rfcl~' rrcd

:-.

lock. no

par

\ alw:

r': f share. ullthorih'd pUfsuant to Articlc II

of

[ hercstatt'd anicks or

in~' nrpnrati()n or

the

Cnrpnr<lliort. a Sl'fil~ S of

rrcf1:rred StocK and hereby Jiws

the

designation.

\'()\\

ers.

preferences. limiwlions.

Jn

d

rdati\ e

ri;:

hb

of

thcsharcs of

such StTICS ( IS jllllows:

FIRST: Tht'namc of

the

CorpMatioll is Washington Mutufil. llil.:,

Section I. Iksiul1, Hion. Pa

r

Vahle and AmouriL . The~ harcs ( 11'

such sNiessha:llbe

dl'sii2natcd as

"Serids

lip Pn:: i~ rred~;~ k"-

ih~~~ 1~

al;~ 7rd'crl( rl'eadf\"'~~' riC! 5RP Pren.~

h'ip

~Qek"). [ he Shares

pI'

SUChSl: l'ks shallOe wilh

rar

vaJu~ Sr$. o I r~ rshar~:~~~ i~ i- lhJ-~of~-;;

hci

shares constituting slIch s\! ril~ sshailbc 700.()() O:

v.

ri~ y!

dc~

l, I. 1i!).\:. t:~~ tT.

fhiafl. mOT!: thah, iltOlal of

7()

O.() OO

;;;

harc5 orScric~

fU'

Yrl'icf1'(' JStoch ~ hallhe isslJableup( lnfhcl'xclci~ e o{

Higlits (

the

" Rights") issueJ pursuant Ii) till' Rif'hts Agrecment. Jatt'd as

l1f

Ikct: tl1l'wr

20.

Joo( j, hclwVt'n the

Corporation and \ kllol1

lll\ estnr Sa\ jCt~ S,

I

,1.

C..

llS Rights Agenl ( as

amended from linlctiJ

time.

the

"HighJs.. 5.

l! J~~ m\-' J)

t"),

Ihe

l~'

lard

III

!) ir~'(' lors of

the

Corporatioll shall direct b}

resolution oTreSOIUlions thaI J -:

crtilil'ate he

pl() perl~

I.'

xccutd. acknowkdged ;

tnd

riled

prmiding (' urlhe tOlal number o(

slwres

<,[

Scril's

R!'

Pt.

c'krred Stud. authorJ/ ed

ill

h~

'

lssu-:d

1."

he

inen:Jscd( tn th"':;.; tenl that

tlw Anil.'!(- s or

! rworpn( Ution lh~' ll p~ril1its) to lilt' I;,

rgest nlitnher

of\

\

hole shares (rounded up

to th"

JJeme:, 1 \\ hoil' nUl1lbcri issuahle 1JrOll e\

t'ITi~

c,,-

q:, Lbe Rjgh!~

2.

J SuhiLl'lln IhL' pri( lr and sUllL'rillr

ri! rhlS " ftht' holder;, ( II al1~

...hares pJ

;1l1~

;;<

:

ri~

'

s(

If Prel'cm: d Slock r;

il1killt! pri\\ r and ~ llrl'rior

ill

Ihe

slwrc.: s

Ill' Se'.: cs

RP

Pr('

l('

rrcd Stud

\\ ith resrect (0

di\.

idcnds. !L :

Iii

d<

kr',

pr

share

...

or

S(' I

i~'

s RP

Preferred Slod ,,11< 111ht' ultitkd III

rt'l'c.:

in',

\\ I1c.: n.

as

an

d

if lk'CI, tfcd h~

('

ll' Board

1".

1 ) ircclors OHIO/"

as:

icts ( q!

illi~; l\ ailahk Ii"

the

purpose, qllal1erly

di\ idend, payahle in lash (Hllhe lirSI hll'. illL's'\ < by

oj

\ larlh. Junt', Septemher

an

d

f) eccrnhc- r in each :,

car

{call1 :, Ud1 date heing tdCftcd to herein as

a

"()

uil!

1~

:

ri}

.

J)

I\:

i! l( i!\

j

e.'

Jl!

11l'Jl!

J2

~

I!.

C"),

l'( Jrnn1l'l1cing lIn

till'

lirst ()

uartt'fl:- Di.\ idl'nd Paymenl Date ann

thl.'

lirsl

i. s.

u.;

lI1cc of

a shart' or

fral'li,

lll

of

a " harc ( If " eries

10'

Prdi.: rred "(

DeL il1 <In:.\ IlI,\ Ulll

I'I.

'

f sharI:

(tolllHkd tll th~' J1~' aresln'n;)

\.'

ljlwl 1(

1Ih(' grc; lkr

( If ( al

~ I. DO

(

II"

(h J " lIhil'd

Iii tll,: rr

..... l'JOn j'IlI

CONFIDENTIAL


adjustment

se

t

forth in Seclion 6.1. 1,000 times

the

aggregate

per

share amount of

all

caf; h

dividends. and 1,000 times

the

aggregate

per

share amount (payahle in kind) of

all

non- cash

dividends or

other distributions other than a dividend payable in shares of

COnimon Stock,

par

value $.

01

per

share. orthe COrPOration (

the

"Common Stock") or

a subdivision of

the


Common Stock ( by

rec!

a<

;

silication or

othcnvise), declared on the Common

Stock since

the

immediately preceding, Quarterly Dividend Payment Date.

or.

v.

iith respect to the

first Quarterly Dividend Payment Date, since

the

lirstissuance of

any share or

fraction of

a share

of

Series RP

Preferred Stock. '

2.2 The CorporatiiJirshalldeclareadi:idend ordistributionim

the

Scrie~ RP',

Preferred Stock asprovidcdin Sectioii' 2.

J abo've immediately ,atler itdec1ares a dividcndtJr

distribution on

the

Common Stock (btherlhull: adividendpayablc insllarcs ofCommohStock): '

provideg tha!. in the

eventrio dividclldoTdisfrihtitioii shall have been (

lce

/

aredon theColllmon

Stock during

the

period between

ah

y

QUai1erly DividcmlPaymenl Date and

the

next subsequent

Quarterly Dividend Paym~ nt

Date. a dividl'nd of

$1.00

per

share ( lll

the

Series RP

Preferred

Stock shall nevertheless be

payahle on

such subsequent Quarterly Dividend Paymelt Date.

2.3 Dividends shall begin to ;; CCfue andbc cumulative 011 oUlstanding shares

of

Series RP

Preferred Stock fronTtheQuartcr1y Dividend Payment Dritcncxtprcccdiligthc date

of

issue of

such shares of

Series RP

Preferred Siock. ullltssthe date of

issue of

sud) shares is

prior to the record date

fo

r

the firsrQuarierlYplvidend Payrncht Date. in'whichcasedividcnds

1m such shares shall begin to accruefr( j~ lthbc1atc ofissuc'ofsuch shares~ orurilcss thedatc of

assuc is a QuartcrIvDi;,' idcndPavmenfDalc0f"

iSa

datc alter the record dale

for

the

dclemlination

of

holders of

shar6s of

Series

RI;

Preferred Sl()ckcntitledto receive a quarterlrdi\ idcndand

before such Quarterly Dividend PaymcnrDate, in either of

whkh eventsSlIchdividel1ds, shall

begin to accrue

an

d

hI.'

cumulative from such Quanctl.\ Dividend Payment Dale. Accrued

but

unpaid

di\'

idendsshall

not

bear interest Dividends paid on

the

shares of

Series RP

Preferred

Stock in an

amount less than

thc

t6tal amount of

such dividends al

the

time accrued

an

d

pil): nhlc

on

such shares shall bl:

allocated

pro nHa on

il share-

by-

share basis among

nil

such shares at

lht::

time outstanding. Th

e

Bnurdor Directors llwyflx a record date /()

r the

Jctcmlinati~ lc)

f holders

of

shares of

Series RP

Prerared Sl() ek

entitled to receive payment of

a diviJl'nd orol:' rtriblllion

dcdarcd thereoll, which record dare shall he

not more than 30

days rrio!'

I'l the

dale fixed

Itll'

the

payment thert'of.

Section J.

Y..

2(

ingJ~ igb!~. The holdetii of

shares of

Series RP

Preferred Stock shall h<

l\' c

the

following voting rights;

3.1 Except as

provided in Section J.

J an

d

subjeCT to the

provisioll

li)

t

adjustment hercinalicr

se

t

forth. each shure of

Series RP

!' referred Stock shall entitle

the

holder

thereof to 1,000 votes onalllllattcrs sunmilted 10 a n)

te of

the

stockholders of

the

Corporation,

3.2

!;,'\ ccpt as

othcr\. l: Jg

c

provided hel- cin or

by

law. the

holder, of

shatcs of

Series RP

Pre/ erreu SIOlk

and

Ihe

holders of

shur'!.' s of

COfllnlOll Stock shall \'

o\

e together as

, lllC

class on

all

matters sllhntitled

tll a vote of~ hKkholders <,

rthe'< 'orrmJtion,

lffllRl~

Ir/

l!!

lftl_

a'filI!!

lI!

I __

lTlIlI'IIiIIII"'

II.

I. lIIIII!

W:

l. l.ilWUIiIIIII_==_.=... ~~

CONFIDENTIAL


3.3

':"";

L'

j( llll1\\

ing

additional rrnvisions shall apply with respect to the

voting

of

shares of

Scril: s RP

Preferred

Sl\

l!.'

k:

.,

.1 4 ~o

I('

ng

as a

Jc/

millirrany

l) rc!

cl'L'OCC ('

i\ idt'lllb 0/

th

('

S",

ric

s

RP

I'rckrreJ Stock shull exisi or

thr:

ilqldl'rS of

any

othet ~(~6(!, sorVoting I'rcktn. J St<'

l'k shall

bt:

entitled!() dect Pn: krrnl D,

rl'L"

to,

s.

lai

.

Ill\

\ ilGHTCyillt1Kof'fiCl.' Ill':! I'rd"

rri; d Din'dm 1I1L1\

hI'

filled / except as pfo .. idc. J in Ill\.> fllll'\\\ lllg't1all~

l:(

h)

jbyan in51rUf1il.'

l1t

!') whIm!, :- igncd n~

' tht?

remaining I'rcft! rred Dir<..'dPr and rikJ with

the

C',

1rp(' r,

Hil'll imJ ( h,

in the

Gl~("( lflhe rel11ma! \' 1'

am f'rckrn.: l1 f)

irt:

"

l" tor.

Ilw nll', IIlI:\ ma\

hI.'

Ii

Ikl1

liv,

tlJe

\. tlle1ll'\<. ritlt'n ,'\

lll~

ellt

lit

t1w

h..

ldt"

r" < If

a ';lajorit:

(, rlh<.' " tll:';! i1nolllgshart:" Of\: IHillg

I't\

lft'rrvd

Sti.

JlJklhc! l. crHitli: d

Itl

,,\

ti..'

1\

1!

Ihl' .

eleetion ( If directof's.

pf:

sl'nUin pt'l'WIl \ It I,:

rro.~

yr,

inil';;()(

if\ g

lo~

cihgl il~ a smVk das:>. , Il ~

ll( h

time as

the

remo\ al

s11;.

1I1

Iw l'ffl'dl'r. l. Fad1 dirl,' i; wr

,

lf~

t'( lillkdifS afllrl"

aid h~

Ih.:

r': I11, lininl,'

Prl'l~:

rr\.

'

d Dirl'dllr ~ha! l h"

dCl'l1Jnl. 1M

all PlIl" p(

ISI'S rlnrol.

III hl,'; 1 Prel'.' ne'! !) irrllol' \\

lll" r)('

H'r

(\} no dd'ault in rrCkrl'lIl:<..'

dj\

idL

"

tH.

b liD th..: " L"

lil::-' RP

l'rl'krr.: d SInd , h;

tlll.'\ iq ;. H1J(~ I lh ....

h"

idcr, ( If tIther

',,'

1'

1,', 1'

1'

\" rill~ l'n: icrn'd "{

lId ,11< 1111111llln~ n

hL

"

CI11itkd 1" elect s\

lei!

3.3.1

If.

on

lhe

dute lISCdlod~ I~

'

Jil1jncslockholdl: rs

of

record

I()

r

an

\'

meeting of

stockholders !(

lr the

ckction

ill' Jirc'; I( lrS~\

I,\

lcfaulfjlT preference di

" idcnds ( as

d~ lincd

in Section 3.35 bclO\ v)

orilhcSerksRPPrc" ciregStikk, f; hail~,<

isi.

ihe

holdcrsof

tlie

ScricsRP

Preferred StockshaHhave. l! 1crighL vllling as

alil(

L<

;

s~

s;

d.

esctf{ jedjn~ ecti;) n3.3;2bclo~', meleet

two directors ( in . idditiori to tile directors c1ccle& btholdhs~

f(:

ditlBion Siockoflhc

(; orpomtion). SlIchright may he

e~

;

crci~

cd(

a )diil;)

Yi:

iJ4~ ling{ lf'Sl( lckholdcrs I(

lr thcdcction <,

I'

directors or

( b)

alanlcctirigofthe holders of

sh4tt~; s'qr\ jt)

titig: l) i:~

tcrred SnlCk « ls hereinaner .

defined), called

for

the

IJUmN; c in accord(\ JJcc wi~ hlh~

J3)'

htws'i. jf tlicCOm(

lfa

t

idli; uilii I

all

Sild. l

cunlill<itivedivideh4s( tctertctl' 1o'

above ).

shal ihf\'~- b@ hpititFihrujJ( ir un

ti

I nl)

b~

c(

tinlllafiw,

di\'

idelldsha\' ebec11paid1"~~ urarlyforalreustoij#,

y4

~

ti:':'

,..

.. . '. .

..3.3'.

1..'

1'

h<

::

right 0rlhe

.'.

hJj(

dJfi'$i'sgrj~~. JH~< PrcthrcdS\ tlckl( lC IccltZvr)

directors, as

descrihcdabovc: shall he

c:\ erciscd~

i~'

i~ JJ{

iSS~(\ hcnrr6ntIY with tlJcrighls ofhbldcrs

of

any other series of

Preferred Stock upon whkh\; dtihgrighlk to Clect such dircctor~ havc been

conferred.

an

d

arc

then

ex('

rcisabk. ' lheScrk~ R()PtcfcrredSfock and <

In\

additional saiesof

Preferred Stoc, k

tha

t

the

Corpl)rminnll1il »issll~~ llldJHh~ nlIlypr(\\' idcj~) rthe right to\''.

1tt.

wiii1

Ihe

. ls~

tmo

c:

gko

'"il1g series of

Prelcm.' dSlockar'.

e colketivt:

ly.

refcrrcdllil1e,re1l111S

.."

y.~

~\

il.

l. g.

Y£.

i!'..

L~

}:

r.£

g

., -,"

.

":";':.:":':\;,,<' "'"

,),-', 3 V.~ leh

diren6rd~ I:!

cBl( tn.

h~

h(

j) dltr.,'( W:

ihar~ sl,

fVoting' Prc

tcrrc~

S!() ck

shall

bt~ rckrrt: d t( lhen~' in asa" f'reft: rrL'dT5irJ'diJT/:.' XPreli.' rred l) ifl":". llfsl1alll; onlifltie hI

serve as

such

for

alem) of

on~)

ca

c

1';~~~- ih;

t~ E[

l~)~' wj5: t~ nl1inat(ihoeilroigfht ofalllllllder~

ofVotinl! PrcfcrrcdSloi: khJnlle as

a class

ftJl'

I'r"

lcrte4J)

ir~

cti;

lfs,

thc

term oi'llIfn:

co

/

.

Prcferrc, l f) ircclOrslhcn ~m:inl!~ hallterminate An;, j> rcfcrrcJDin:

cln

r

rnav he

fl.'

fllll\ l'dhv,a

nd

shan Mt

he removcd

\.'\ eert hY~ I! H:\[ 1lC{\ f lilt hold~ r"

i) rrC( Nd Qra ! llainl"

iiy

IIf

[

h\.'

<\

utslaJ; ding

shares of

Vl)(

ing

Prcfi::

rn:

d Sr{~(: k1\ 1I:

nl'milkd lovot(.' tiwthc c!

ccti( lfloJ dil

L..

..

llll"". prescnt , if I

person or

hy

proxv) and \' oling. tllgclhcr as

it singl"

I.'

lass

fai

ara Il1ci: lin).!

,)(

the

SHlcklwldns. { lr

( b)

at

a meeting Oflh", holdersof ~,

hares (>

1'

such V6rillgPt'(' fctrcd:-< tnd,. t, I! lcdhlrlhc plirpil!, c in

accordance Wilh thl" B~

1:

1\\<; oFthv Cllrj10((llioll .

CONFIDENTIAL


4

IJl.

lMlI!

l'I"

I••

~

liI'IliI'"

I"

IUI-

.'

Il'llilli'

.•..

••

IIIiI.

II1

_

Preferred Directors. then

the

nllm~r of

director~ constitutingtnc Board of

Directors of

the

Corpomtion shaUb<: reducedbYlwO. .

'.

-~'. .

'. '.. . 3.3;$ FQI"Plln'Pscsherc(

jf.

a~

'

detilllltM;

rn:

efercnCCdjViQ~ ndl" on'lbc

..'.'.

SeriesRP PrcfeiTedSI~ k$ hal!~ decn¥

jt( lhaveoccuiTcd: wfiencver thcamdunt ofcim1iii'atiyt

...

IIn

d.

QOPaiddividendson; Jltei: SeHesJ{ PPreferr~& StofkShali~. o~ quival~

Ttlol

sixfu~ I'qua~ ifly:'"

. qividcllds or

lil{)

re(

Wliet}

j.;:

rfl{ i1ofconS~ Cl1! ivc). und" having, sCl'I) CCulTcd, suchdefault ~hanbe." .

•g.!~!£ i~ i11Itl~~!~~~~..~. f! i~ f.~~. ":-...::;;.:.< . "

,

, .

.".

.','

....•

J..

4...

J.]~~; c~ t~¥.~~

tt9

~

h.#

.

c.

rcirJf~ h~~'~ thctWi~~ lrcquircdbyaphlicilb.'#. l. a..

w.

):

holders. ofSeriesRPPrct~~~ 4 .. St(

)

cKshalJbavcn( JgCDeral orspe6ialv()ting rights'andthdi'

consent shall notbel'cqtJirJdftJrtllking any corporatcaciion. .

Section 4.~~ rtajn. Restd£ tjons.

. 4.

J.

'" WhltrjC\' j) rq~'artcrWdjvjd(:

rl~ S(>toth~ rdi\. JdcndsordistdbllHoiJ~ paY:ilbl~

.."•.'

0l1

.

thcBeri es

RP

.Bref~ rred'St()C~~ 5.

pro',

j4~

dilt~ cBtiO?2ureilj'al'rcars, therea1terariWtl11ti ljilt .•'..'.

;,:~~~~~ 6~

i~ 4~ 1~:(~ 1~~~ 1t~~~~";: it~~~[; f.~~~

J~

~

WtfJ~ i~~\;~

.'..

....

...

4,.(~

J,.

d.~ 2Iitre.( i(~~ Yd

iVi~

7ti4H, pr

n~

ak~

tallY'otller'd istriJJui j( lns.

(1 n.:

1f} Y

shareso[ stock

ran

kingjunlo( (eiiIi~

ra$

lodjyidcnd sarup() n)

igurda lion. d issoillliooor winding

up) tothl~ SeriesRPPrcierrcdSlock: .'

4:

1.2 dCCUlh~ orpaydivid~ rjds, or

1114RiJ:!

nj'

othi..' rdisltihutlol1s,

nn:

my

shares of

stock rariking( lIlaparlly( cillicrusto dividcndH ()

r opMlliquidatiol1. dissoluti(

l;)

or

winding up) with the

SeriesRP Preferred Stock. except dividends paid t: ltably 011 the Series

RI'

Prcferrcd Stock unclall such parity stock (

lni,

l,'

hich/ dixidend" afe, payablc or

it1 arr~< j, 4fl

proportion to the

totaJamouills toWhichtflcholdcrsotallsul: hshilrCs

arc

thcnclilit. lcd:

...... 4.1,3.. rcdeenl ( lr purchase or

( j[ hctwisc acquire

lilt c(

lnsidel'arion (except

as

provided in Seclion4, IAhelow) sharcs oFany sl( lckrankin¥ JlIoior (either as

h)

di\

ictcnds 01'

upon liquidation. diRsolulioncir \ vinding

lip

)

to IhctSe{ ics

RP

Vrcfcrred Stock. providcdll18t the

Corporation may at

any

lime redeem. plircha! it'

i. JtothcKvise iI~

quirl' shares orany such junior

stock in exchange

for

shares nf

8/

1)'

SlOckoftlw Corporati( llJr~ itki\ 1g ju~ inr'( cith~ rMrU)

dividends or

upon diss()lut1{) ll. Iiquidatib/

i.(

lrwjmJiflgup}

i()

thc$ C'tks /{ PPrclcrtt'd Stoe!':

4.104 redeem or

purchase ( ir otherwise acquire

tilt tlH1Sideralj( lh allY

shares of

Series RP Pre1erred Slock. or

any s!

lares{ lf stocK tut1kit1g (

lh

a parity (either as

to

dividend5 or

upon IiquiJation. di5solutiollor winding

urll

\-\

ith

the

Series R P Prrfem:d Slock.

except in accordance with a / lurdJasc offer made in "" riling or

by

puhlicatioll ( a~ dcl': nnincd by

the

Board of

Directors) to allh(}! ders { If such shares upon ~ uch Jenns as

the Board of

Directors.

CONFIDENTIAL


•

{.

rp

-j' 7\ I .. J.

r

G 1

alier consideration of

:'

le n:

spectivc annual dividcnd ratcs

an

d

other relative rights and

preferenccs of

the

rcspectin: series

an

d

classes. shall dClcrminc in good Ifllth will result in filir

and equitable treatll1enlamong

the

rcspective series or

cl[(

sses.

4.2 The Cqrporationshall nOlpcr. mirany subsidiary (lfthc, Corpornlion to

purchase or

othenvi seacquireJ'orconsidcnlt

ion

anyshard.~, ofstdck, of

the. Cor'ponltilmunlc$ sthc:

Corporation could. underSe.6tion 4~

Lptirchas(' 6r(

i'nhjr\ vj~~ e[

J2qujr. C:~

llCh$ h!

ti'Cs atsllch iimc ~

tld

in such manner.' . " , ,. . .

" .

" Section 5.

Reacquired. Shares; Any shares ofSbfjesRi) l') refcrrcd'St() ck

purch4scd 6t

otherwise acquired bythcCorpomtion

in;

lny

mailner\. yhal~ocVer$ hallht~

re~

ired ~ nd

canceled

promptly after

the

acqllisitioh thereof

Air

slichsharC:~' Slmllupbl: l tilcireancdJationbccolllc .

authorized but'unissued sharcsof'I> r. efcrrcd Stock

lln

<

llniIYbe reissued aspJrtof a n~

wseric:'

l;)

f

Preferred St() ck subjecl \ 0

the

condillClIlS

an

d

restricli6l1~. bn

iSSU4hcc, selJ() rlhJicl'cin;; n

1h

e

'.

Certificate of

IncorP() rJltion. in an

y

othcrCcrtilicutc o:

fi\ rriend; n~

htbrcaiil;

g~

'

scricsnf Preferred

Stock Or

as

otherwise required hy

law.',','

, .

Section 6.

L.

ig,)

id<

lticll1; Dissoll! tioILQ.

r..~

iJlQlQgUP,. - "

;. . .

6,

1 Subject to thcpriorand ~.

upcriorrIghts of

holders orany shares () fany

series of

Preferred Stock rankingpriorai1dsupcrior

to:

thc'sharesof SericsRPPrclctrccj Stock

wi

threspcct to rights uponl, iquidarioti.

di$

so!

lltiollC;' F"

yin( l! ngnp:(

vol

illltai5' or

01her..\<

ls(;

). rio

distribution ~;

hall'be made to.

the

h()

I<!

Cl'S( ifshan,'

s()

fst() Qkr:. lllWilgjuniorrdther

asl(

j. divkknd:<;

or

UPO!! liquidation. diss(lltlliQllOrwindingup) , toJheSeri'es. RPTlrcfcrrcd Stock u]

ilcSK ,prior

thereto.

the

holders of

shares of

ScricsRP; PrefcrrcdSt() c~ shalihave rccejvi: dp~ rsh( J:

rc

iln

amount equal to the

grcatlTof I. OOOlimcs $200.(

j()

or

l: o()

O{

ifJ1C~

the

pUY1' ncntll1adcpcr sharl,' l) f

Common Stock.!,

lus

an amount equal! o

il(.' cruedtl'lUUIJl1aidd. ividends, HnddistribuU(

ih~

theri: o'n.

whether or

not

declared. to , he

date of

such payment (lhe":

B..'

djg;? J3J:Jj@ j~ tYJLVI1.

J~

[l.': i.~[~ u.<.:

s")

Following the

payment of

the full amount of

the

Series f{ lil. iquidation lire/ crepe..:. no

ilddilional

distributions shall he made to the

holders of

, har<: s of

:': cries RVPrcferrcd ShIck I: nlcss, prior

thereto.

the

holders of

shares

01

'

Commoll$ totk shall h,

I'lc, n::.: eive< 1 an

ill1lO\

lllt pu

sl1areOh.;'

"Capili'! lA~

ll1

'

i. t. lJlc

..m") equal to the

quoticnl ohlainc: dhydividing( i} the

Series R!:"- h.

i;;

tuidnlinn

Prefercllc<: hy

( ii) 1.0( 1)

{

iiS apprnl" riately ndjuslcd as

sc(

t(

lrth

ill SectiOJ1 (dtn relke! :; 11( 11

events as

stock spl

its.

~;

tock di\ idends and recapi lalil. ilti(\ flS wllh res!' ccl

III

the

('

llllini<. ln St()ck)

(such numher in clause (

ii) heing hc'reancr l'clem: d to a<

:

the

":,:\& LV~.! D!

C~

l! Lt{

I! mb~' r"

l Follo,,\

ing

the

paymcnlof the

fu

ll

HIlIOlJlll of

lh..'. S

...

rit's R P LiquidHI10ll l'rtttercncc lInd the

Carll, l!

Adjustmcllt in respl'ct ,)

1'

all

olllst< lnJillg slwrl's or

SenesRP Preferred Stock

an

d

(' Pinnwn Sto,:L

n:

spcctivcly. holders or'S

...

ril's RP

I'rt.'

li: rred Stock

an

d

holders ot'(" oll1lllon Slod

...

Irall rccei\ l:

their ratable

an

d

propottiunalC: share of

th\.' renlUining

a:~

scts

to he

distributed in the

rat", of

the

Adjustment 1\

umhc: r to I with res/ wet tosudl Pn: terrcd S(

ock;

lIld Common Stnd. on

a pe

r

shati.~

hasis. respectively.

().

2 In the (' vcnt. hl\\ Vl,'\ C:

I'. thut there Me !

lot

suf'ficicnt asst'ts ; I\ llil<

lhk

tn

pcrmit pa~: rnl'Jlt in full

{ If

the

Series RP

Liquidatioll I'rclercllcc ;

lIld

the

iiquid<

lli<

lll rrd(.' rcllcc:" of

all othn series ( 1"

preferred swck. ifltlly. \\ hid] rank

01

1

a parity

\\'

ith

the

Serie~ ({ P PrekrTL'd

CONFIDENTIAL


Sloek. then S-

tXhreroaininl? a~ SCh ;, hall

h.:

Jistrihuie: d r.

ltahJ~ 10

the

holders of

Series RP

Prd'crred Stock andkij." IJers ofsuch parityshMt:$ Cmproporiion 10 their respective liquir. lalion

preti;

n..'

ncC" S.

InlheeV~

nt.

l)() weva. thal dWTCaron<, i. sulllbcnl

as~

t:,

a\'

alI:

tQlc to remiil

p.

ayrnen: inf4! loft! le q;

lpital-,.\ iJJusi" ment. lhcnsuChre~ kining < l. SsCI.

ss,

ha.

1!

he

( listrihlJicdriltably

10

the

holders QfC()tnmm- iSliiCL ' '

,.,.

Section 9,

R.

illl1

.

U!

g.

The ScricsRP Prcfl'l1' l'dStllcks! JnIJ Tank junior to all

olher series or

the

Corporation' s PrcfcTrt.? d Stock as

IOlbe payment ofdividcllos <llidtllf.: dislrihu!

i\\

11

of

a!>

st.'

ts.

unless

rhe

terms or

an

y

slIl,; holhet sctic$ shnllpi'lwidcnthcrwise.===" '

Section

10,

i.\!

.

11£

Jl.

9.!

1l.£

u.!.

Th

e

;\:

rtieks of

lileorporation or

the

Corpnu.: i( lllshaJl

not

be

further amended inany ll1nnncrrfJaf wOlild

ll1!

lkriallyalterorlh:. ll1gl'

the

rowel's. prcfl> rCtl(; C~ of

special rights of

(

he-

Series

RI'

Pn.: lCrn .. d Stock so

as

tn aftt.' cf

thell1 udv(.> rscly \ Allholll ( he

affinnative V01(' of

the

lwlders ofa

ll1ajority or

1110re oCthe, outstanding :: haics

nt'

S\?

i'ks

RI'

Preferred Stock. Hllillg :; cparalcly as

a r:

laiis.

Section 1L

FractiOllClI ShUtes. Series

Rl'

I'ide/' red

Stock ll1a\ be

if'fHtCt! ill fhlClillll~ of

H

share which

:-;

hall

cniTli; ti;

I~'~, IJc~~ pTrotplOl1i( Jn

[osuch hOlder s J"

til'cliolla! ~hiltl'S, io t: xcreisl'

voting rights. reccivedivldclllf" partkirutc in distributinJ1Salld haw till' hCllelil \ 11'

all

olh~ r

rights ofholdl'rs ofSClit'S

HI'

PrckrteJ SInd.

, " ,( 1.'" ' (nlh.: c\.('

nt[ hcCQrr( lTati( ln~ tWll\ ildcdaTcunydjvidcnd ,mCommon

Slockpayablcin "

sJ}

ar.~. ! In.\ yriutmnSt~ k.

{ in S~

i\~ iQe.'@~() u!

standj ng

.

C (in1tlioh .Si~) ck;

or(

iIi)

combine the:( juL\; tanuin£

('(

jl! HJl(loStffl; kimoa

sJl),

ilJei;

ril.

imbcr of

sharcs; thcilin eachsuchca$ c

;: t~ 1£

s~

~

t~~~ 1~!,; t, i;:~~~~~!: 1i%~;isthe number ofsli&resdf<:(jrTJmo.

n.~

ti) ck

Ihill\\ ;: redlft. siiin( jiJ1gimrl1~ diUlcIJprjod() s[

jchcvCht.

Section 7.

,ConSolidaIion, Mcrger. s.

tc.

fri'casl.'" lhct'Qrporati6n shall cntcriJito any

consolidation, merger. Cfll11hiri: iiion or

other

tr[

lfl~ acti( mitlsvhichth

esharcs'ot' ComJilon Stock

are exchangcd

for

~ r changed into other slock()

rsi!

ctiri( ics~

c;) shand! oriill)' othtr prbpcrty. fhcn

in any such case the shares of

Serks RI} Prcl~ n~ dSt(} l: k~ li~ lla( thcsunw tini2 bcsimilarly

exchanged or

chat1~ edinan al11qunt'pqr~ harccqllalloih~'. lJ9jtJstmt7nt Ni!

mber (asappropr! a:

tdy

adjusted as

set

fort~ in Seclion6J. IO r~ t]~ Clslichcvcl) t$#$ stocksplits, sWck "dividcllds'and'

rccapi

tal

izatiolls\ yHlr rcspcc t toithe Cotlimon

St(

j~ k}~ ilh~~ I~ lCaggrcgatc3nlOun ( oi

st~) ck

securities, cashand! Oranyp(hcrpropcriy( payablc.'

in"

ki~~}~- as

the

cuse may

bc;'

intowhichortbr

whicheaeh share of

Coon

non

Stock ischilngcdorc~ chling(.' H:

.

',..'

Scction 8.

No

Regcmption. Thesharc5 orScr: ics'R} Jl'teJcm: dSI~}( k

sh

;

1I111o( be

redeemable.

THlRl>:ThcSl' i\ r

t iclc" of

!\mendmcl1t

V..

cn~ duh' ;\ dop! ed

nn Ikccmhcl

19.

200!!.

CONFIDENTIAL


"

023.1837.6

20

01

FOURTH: These Articles of

Directors, pursuant to the

provisions of RCW

December 19~ 2(

jOO;SharHlOlderapprov,~ 1 is no

t

. .,.-:."' .

CONFIDENTIAL


Exec~

ted

' his/$ J,

y OfJ; j~ j-"

2001.

CONFIDENTIAL



State of

the

State of


its

seal,

hereby issue this

certificate that the attached is a true and correct copy of


of


AMENDED &RESTATED

as


October 29

,

1999.

Date: March 6,

2006'~='"

Given under my

hand and

the

Seal of

the

State

of

Washington at

Olympia.

the

State Capital

Sam Reed. Secretary of

State

' O{\ f\{\ 1

CONFIDENTIAL


-,'

\;

.

Date: October.~ 1999

Given. under my

han. dandthe Seal oftheBtate

a/

Washington at

Olympillrthe State Capital

Amending and Restating Articles

to

WASHlNGTONMUTUAL, INC.

~(~

.

l ~SECRETARY ' if $TATE

CERTIFICATE OF AMENDMENT

STAJorE.' if WASHING'ION

UBI NtUuber: 601 566389

a Washington Profit corporation. Articles of

Amendment were filed

for

fi? cordillthis

office on

the date indicated below. :

I, RALPH MUNRO, Secretnry of

State of

tire

State of

Washington and custodian of# sseal,

hereby issue this

CONFIDENTIAL


AMENDED AND RESTATED ARTICLES OF

INCORPORATION

OF

WASHINGTON MUTUAL, INe.

Pursuant to the

provisions ofRCW 23B. 1O. 070 of

the

Washington Business

Corporation Act, Washington Mutual, Inc., a Washington corporation, hereby restates

its Articles ofIncorporation as now and heretofore amended:

ARTICLE I

Name

The name ofthis corporation is:

WASHINGTON MUTUAL, INe.

ARTICLE II

Capital Stock

A.

Issuance of

and Payment for

Stock. The total number of

shares of

capital

stock which

the Company has authority to issue is 1,610,000,000 shares of

which

1,600,000,000 shares shall be

shares of

common stock with no

par

value per

share and

10,000,000 shares shall be

shares of

preferred stock with no

par value per share. The

shares may be

issued by

the

Company from time to time as

approveg by

its Board of

Directors without the

approval of

the

shareholders. The considerationfor issuance of

the

shares shall be paid in full before their issuance. Neither promissory notes nor

the

promise. at

future services shall constitute payment or

part payment for

the

issuance of

shares of

the

Company. The consideration

for

the

shares shall be cash, tangible or

intangible property, labor or

services actually performed for

the

Company or

any

combination of

the

foregoing. In the

absence of

actual fraud in the

transaction, the

value

of

such property, labor or

services, as determined by

the

Board of

Directors of

the

Company, shall be

conclusive. Upon payment of

such consideration, such shares shall be

deemed to be

fully paid and non- assessable.

B.

Voting by

Class or

Series. Except as

expressly provided in these Articles or

in any resolutions of

the Board of

Directors designating and establishing the

terms of

any

series of

preferred stock, no

holders of

any class or

series of

capital stock shall have any

CONFIDENTIAL


right to vote as

a separate class or

series or

to vote more than one vote per

share.

Notwithstanding

the

foregoing,

the

restriction on voting separately by

clas~~ r series shall

not apply to the

extent that applicable law requires such voting, nor shall this restriction

apply to any amendment to these Articles which would adversely change

the

specific

terms of

any class or

series of

capital stock as

set

forth in this Article II or

in any

resolution of

the

Board of


terms of

any series

of

preferred stock. For purposes of

the

preceding sentence, an amendment which

increases the

number of


any class or

series of

capital stock, or

substitutes the

surviving institution in a merger or

consolidation for

the Company, shall

not

be

such an

adverse change.

C.

Common Stock. On matters on which holders of

common stock are entitled

to vote, each holder of

shares of

common stock shall be entitled to one vote

for

each share

held by

such holder.

Whenever there shall have been paid, or

declared and set

aside for

payment, to the

holders of

the


any class of

stock having preference over the

common stock as

to the

payment of

dividends, the full amount of

dividends and of

sinking fund or

retirement fund or

other retirement payments, if any, to which such

holders are respectively entitled in preference to the common stock, then dividends may

be

paid on

the common stock and on

any class or

series of

stock entitled to participate:

therewith as

to dividends, out

of

any assets legally available for

the

payment of

dividends;

but

only when and as

declared by

the

Board of

Directors.

In the

event of

any liquidation, dissolution or

winding up

of

the Company, after.

there shall have been paid to or

set

aside for

the holders of

any class having preferences

over the common stock in the event of

liquidation, dissolution or

winding up

of

the full

preferential amounts to which they are respectively entitled, the

holders of

the

common

stock, and of

any class or

series of

stock entitled to participate therewith, in whole or

in

part, as

to distribution of

assets, shall be entitled, after payment or

provision

for

payment

of

all

debts and liabilities of

the

Company, to receive pro rata the

remaining assets of

the

Company available for

distribution, in cash or

in kind.

Each share of

common stock shall have the

same relative rights as

and be

identical

in all

respects with all

the other shares of

common stock.

D.

Preferred Stock. The authorized Preferred Stock shall be comprised of

10,000,000 shares no

par

value per

share. The Board of

Directors of

the

Company is

authorized by

resolution or

resolutions from time to time adopted, to provide for

the

issuance of

preferred stock in one or

more additional series by

designating and

establishing the

terms of

such a series. With respect to any such series, the

Board of

Directors is authorized to fix and state

the

voting powers, designations, preferences and

- 2-

'_.! ..••; '-' f ..;'.:, "

-

CONFIDENTIAL


relative, participating, optional or

other special right of

the shares of

each such series and

the

qualifications, limitations and restrictions thereon, including, but

not

liI¥ ited to,

determination of

any of

the

following: ..

( I) The distinctive serial designation and

the number of

shares

constituting such series;

( 2)

The dividend rates or

the

amount of

dividends to be

paid on

the

shares of

such series, whether dividends shall be

cumulative and, if so,

from which date

or

dates, the

payment date or

dates for

dividends, and the participating or

other special

rights, if any, with respect to dividends;

( 3)

The voting powers, full, special or

limited, if any, of

shares of

such

series;

( 4)

Whether the

shares of

such series shall be

redeemable and, if so,

the

price or

prices at

which, and

the

terms and conditions on which, such shares may be

redeemed;

( 5)

The amount or

amounts payable upon the shares of

such series in the

event of

voluntary or


winding up

of

the Company;

( 6)

Whether the

shares of


entitled to the

benefit of

a

sinking or

retirement fund to be

applied to the

purchase or

redemption of

such shares, and

if so

entitled, the amount of

such fund and the

manner of

its

application, including the

price or

prices at

which such shares may be redeemed or

purchased throughth

e

application of

such fund;

( 7)

Whether the

shares of


convertible into, or

exchangeable for, shares of

any other class or

classes or

of

any othe~ eties of

the same or

any other class or

classes of

stock ofthe Company and, if so

convertible or

exchangeable,

the

conversion price or

prices, or

the

rate of

exchange, and

the

adjustments thereof, if any,

at

which'soch conversion or

exchange may be

made, and any other terms and conditions

of

such conversion or

exchange; and

( 8)

Whether

the

shares of

such series which

are redeemed or

converted

shall have the

status of

authorized but

unissued shares of

serial preferred stock and

whether such shares may be

reissued as

shares of

the

same or

any other series of

serial

Preferred Stock.

Each share of

each series of

preferred stock shall have the

same relative rights as

and be

identical in all

respects with all

the other shares of

the same series.

- 3 -

-< ...

...

-:

....

:

.,...

CONFIDENTIAL


While the

foregoing authorizes the Board of

Directors, in establishing the terms of

a series of

Preferred Stock, to permit holders of

that series of

Preferred Sto~ to elect

separately one or

more directors, in no

event shall the

total number of

directors separately

elected by

holders of

one or

more series of

Preferred Stock equal or

exceed fifty percent

(50%) of

the

total number of

authorized directors.

ARTICLE

III

Preemptive Rights

The shareholders of

the

Company shall have no

preemptive rights to acquire

additional shares of

the

Company.

ARTICLE IVBoard o

f

Directors

The Company shall be managed by

a Board of

Directors. The number of

directors

shall be

stated in the

Company's Bylaws, provided, however, that such number shall be

not less than five (

5).

There shall be three classes of

elected directors designated as Class

1,

Class 2,

and Class 3 directors. Each class shall contain one- third of

the total number of

directors, as

near as may be

.

The terms of

the

Class 1 directors shall expire at

the

first

annual shareholders' meeting after their election. The terms of

the Class 2 directors shall

expire at

the second annual shareholders' meeting after their election. The terms of

the


the

third annual shareholders' meeting after their election.

At

each annual shareholders' meeting held thereafter, directors shall be

chosen for

a term

of

three years to succeed those whose terms expire. A vacancy on

the

Board of

Directors

may be

filled by

the Board in accordance with the

applicable provisions of

the

,.:~-=

Company's Bylaws. A director elected to fill a vacancy shall be elected

for

a term of

office continuing only until the

next election of

directors by

shareholders.

- 4-

. ',.....

,...

:'. ," .1:::

CONFIDENTIAL


ARTICLE V

Removal of

Directors

Any director may be removed by

the shareholders only with good cause and in

accordance with the

applicable provisions of

the

Company's Bylaws.

ARTICLE VI

Cumulative Voting

The right to cumulate votes in the election of

directors shall not exist with respect

to shares of

stock of

the

Company.

ARTICLE VII

Bylaws

The Board of

Directors has the power to adopt, amend or

repeal the Bylaws of

the

Company, subject to the

concurrent power of

the

shareholders, by

at

least two- thirds

affirmative vote of

the

shares ofthe Company entitled to vote thereon, to adopt, amend or

repeal the

Bylaws.

ARTICLE VIII

Shareholder Vote Required to Approve Substantial Business Transaction

If pursuant to the

Washington Business Corporations Act the_ Company's

shareholders are required to approve a plan of

merger, share exchange: or

other

disposition of

all,

or

substantially all

of

the

Company's property, otherwise than in the

usual and:! egular course of

business (each of

the foregoing, a "Substantial Business

Transaction"), then ( a)

if two- thirds ofthe directors vote to recommend

the

Substantial

Business Transaction to the shareholders, the

Substantial Business Transaction shall be

approved by

each voting group entitled to vote thereon by

a simple majority of

all votes

entitled to be

cast by

that group; ( b)

in all

other cases where a shareholder vote is required

by

the

Washington Business Corporation Act, such Act, as

it may be

amended, shall

control.

- 5 -

CONFIDENTIAL


ARTICLE IX

Indemnification

The Company shall indemnify any individual made a party to a proceeding

because that individual is or

was a'director of

the Company and shall advance or

reimburse the

reasonable expenses incurred by

such individual in advance of

final

disposition of

the

proceeding, without regard to the

limitations in RCW 23B. 08.510

through 23B. 08.550 ofthe Washington Business Corporation Act, or

any other limitation

that may hereafter be enacted to the

extent such limitation may be disregarded if

authorized by

the articles of

incorporation, to the full extent and under all

circumstances

permitted by

applicable law.

ARTICLE X

Business Combinations

A.

For the

purposes ofthis Article X:

( 1)

The terms "Affiliate" and "Associate" shall have the meanings

attached to them by

Rule 12b- 2 under the


1934, as

amended,

or

any similar successor rule.

( 2)

The term "beneficial owner" and correlative terms shall have

the

meaning as

set

forth in Rule 13d- 3 under the


1934, as

amended, or

any similar successor rule. Without limitation and in addition to the

foregoing, any shares of

Voting Stock of

the

Company which any Major Stockholder has

the

right to vote or

to acquire ( i) pursuant to any agreement, ( ii) byr~son of

tenders of

shares by

shareholders of

the Company in connection with or

pursu; ntto a tender offer

made by

such Major Stockholder (whether or

not

any tenders have been accepted, but

excluding , tenders which have been rejected), or

(

iii) upon the

exercise of

conversion

rights, warrants, options or

otherwise, shall be deemed " beneficially owned" by

such

Major Stockholder.

( 3)

The term "Business Combination" shall mean:

( a)

any merger or

consolidation (whether in a single transaction

or

a series of

related transactions, including a series of

separate transactions with a Major

Stockholder, any Affiliate or

Associate thereof or

any Person acting in concert therewith)

of

the

Company or

any Subsidiary with or

into a Major Stockholder or

of

a Major

Stockholder into the

Company or

a Subsidiary;

- 6-

" : .: . "' .. :..;.. • .~ ; .... I ,.

,".:;'

CONFIDENTIAL


( b)

any sale, lease, exchange, transfer, distribution to

stockholders or

other disposition, including without limitation, a mortgage,( pledge or

any

other security device, to or

with a Major Stockholder by

the

Company or

any of

its

Subsidiaries ( in a single transaction or

a series of

related transactions) of

all,

substantially

all

or

any Substantial Part of

the

assets of

the

Company or

a Subsidiary (including,

without limitation, any securities of

a Subsidiary);

( c)

the

purchase, exchange, lease or

other acquisition by

the

Company or

any of

its


a series of

related

transactions) of

all,

substantially all

or


the

assets or

business of

a

Major Stockholder;

( d)

the

issuance of

any securities, or

of

any rights, warrants or

options to acquire any securities, of

the

Company or

a Subsidiary to a Major Stockholder

or

the

acquisition by

the Company or

a Subsidiary of

any securities, or

of

any rights,

warrants or


a Major Stockholder;

( e)

any reclassification of

Voting Stock, recapitalization or

other

transaction (other than a redemption in accordance withth

eterms o

f

the

security

redeemed) which ha

s

the

effect, directly or

indirectly, of

increasing the

proportionate

amount of

Voting Stock ofthe Company or

any Subsidiary which is beneficially owned

by

a Major Stockholder, or

any partial or

complete liquidation, spin

off,

split off

or

split

up

of

the

Company or

any Subsidiary; provided, however, that this Section A(

3)(

e)

shall

not

relate to any transaction of

the

types specified herein that has been approved by

a

majority of

the

Continuing Directors; and

( f) any agreement, contract or

other arrangement providing for

any of

the

transactions described herein.

-

( 4)

The term "Continuing Director" shall mean (ijaperson who was a

member of

the

Board of

Directors of

the Company immediately prior to the time that any

then- existjllg. Major Stockholder became a Major Stockholder, or

( ii) a person designated

.( before initially becoming a director) as

a Continuing Director by

a majority of

the

then

Continuing Directors. All

references to a vote of

the

Continuing Directors shall mean a

vote of

the

total number of

Continuing Directors.

( 5)

The term " Major Stockholder" shall mean any Person which,

together with its

Affiliates and Associates and any Person acting in concert therewith, is

the

beneficial owner of

five percent (5%) or

more of

the

votes held by

the holders of

the


the

Voting Stock of

the Company, and any Affiliate or

Associate of

a Major Stockholder, including a Person acting in concert therewith. The term "Major

Stockholder" shall not

include a Subsidiary.

- 7.,

_"" f' •

-.:

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...

CONFIDENTIAL


( 6)

The term "other consideration to be

received" shall include, without

limitation, Voting Stock retained by

the

Company's existing shareholders

ip...

the

event of

a Business Combination which is a merger or

consolidation in which

the Company is the

surviving corporation.

( 7)

The term " Person" shall mean any individual, corporation,

partnership or

other person, group or

entity (other than the

Company, any Subsidiary or

a

trustee holding stock for

the benefit of

employees of

the Company or

its

Subsidiaries, or

anyone of

them, pursuant to one or

more employee benefit plans or

arrangements).

When two or

more persons act

as

a partnership, limited partnership, syndicate, association

or

other group for

the

purpose of

acquiring, holding or

disposing of

shares of

stock, such

partnerships, syndicate, association or

group will be deemed a "Person."

( 8)

The term " Subsidiary" shall mean any business entity fifty percent

(50%) or

more of

which is beneficially owned by

the

Company.

( 9)

The term " Substantial Part," as

used in reference to the

assets of

the

Company or

any Subsidiary or

of

any Major Stockholder means assets having a value of

more than five percent (5%) of

the

total consolidated assets ofthe Company and its

Subsidiaries as

of

the end of

the Company's most recent fiscal year ending prior to the

time the

determination is made.

( l0)

The term " Voting Stock" shall mean the

stock or

other securities

entitled to vote upon any action to be

taken in connection with any Business Combination

or

entitled to vote generally in the election of

directors, including stock or

other securities

convertible into Voting Stock.

B.

Notwithstanding any other provisions of

these Articles ofIncorporation and

except as

set

forth in Section C of

this Article X,

neither

the Comp~nor any Subsidiary

shall be

a party to a Business Combination unless:

( I) The Business Combination was approved by

the Board of

Directors

of

the Co~ pany prior to the

Major Stockholder involved in the

Business Combination

becoming such; or

( 2)

The Major Stockholder involved in the

Business Combination sought

and obtained the

unanimous prior approval of

the

Board of

Directors to become a Major

Stockholder and the Business Combination was approved by

a majority of

the

Continuing

Directors; or

( 3)

The Business Combination was approved by

at

least eighty percent

(80%) of

the

Continuing Directors of

the

Company; or

- 8 -

CONFIDENTIAL


....

..

, "'.

( 4)


at

least ninety-five

percent (95%) of

the

outstanding Voting Stock beneficially owned by

shar{(holders other

than any Major Stockholder. ...

C.

The approval requirements of

Section B shall no

t

apply if:

( 1)

The Business Combination is approved by

at

least the

majority vote

of

the

shares of

the

Voting Stock and

the

majority vote of

the

shares of

the Voting Stock


shareholders other than any Major Stockholder; and

( 2)

All

of

the

following conditions

are satisfied:

( a)

The aggregate ofthe cash and the

fa

ir

market value of

other

consideration to be

received per

share ( as

adjusted for

stock splits, stock dividends,

reclassification of

shares into a lesser number and similar events) by

holders of

the

common stock ofthe Company in the

Business Combination is not

less than the

higher of

( i) the

highest per share price (including brokerage commissions, soliciting dealers' fees,

dealer-management compensation, and other expenses, including, but not limited to,

costs

of

newspaper advertisements, printing expenses and attorneys' fees) paid by

the

Major

Stockholder in acquiring any of

the Company's common stock; or

(

ii)

an amount which

bears the

same or

a greater percentage relationship to the

market price of

the Company's

common stock immediately prior to the announcement of

such Business Combination as

the

highest per

share price determined in ( i) above bears to the

market price of

the

Company's common stock immediately prior to the commencement of

acquisition of

the

Company's common stock by

such Major Stockholder, but

in no

event in excess of

two

times the

highest per share price determined in ( i) above; and

( b)

The consideration to be received in such Business

Combination by

holders of

the common stock of

the Company shallbe, except to the

extent that a stockholder agrees otherwise as

to all

or

a part of

his

ill" 7'

hershares, in the

same form and of

the

same kind as

paid by

the

Major Stockholder in acquiring his Voting

Stock .. :~

( c)

After becoming a Major Stockholder and prior to the

consummation of

such Business Combination, ( i) such Major Stockholder shall not have

acquired any newly issued shares of

capital stock, directly or

indirectly, from

the

Company or

a Subsidiary (except upon conversion of

convertible securities acquired by

it

prior to becoming a Major Stockholder or

upon compliance with the

provisions of

this

Article X or

as a result of

a pro rata stock dividend or

stock split), and (

ii) such Major

Stockholder shall not

have received the

benefit, directly or

indirectly (except

proportionately as

a shareholder), of

any loans, advances, guarantees, pledges or

other

- 9-

CONFIDENTIAL


financial assistance or

tax

credits provided by

the

Company or

a Subsidiary, or

made any

major changes in the

Company's business or

equity capital structure; and t

"

( d)

A proxy statement responsive to the

requirements of

the


1934, whether or

not

the

Company is then subject to such

requirements, shall be mailed to all shareholders of

the Company

for

the purpose of

soliciting shareholder approval of

such Business Combination and shall contain on

the

front thereof, in a prominent place, ( i) any recommendations as

to the advisability ( or

inadvisability) ofthe Business Combination which the

Continuing Directors may choose

to state, and ( ii)

the

opinion of

a reputable national investment banking firm as

to the

fairness ( or

lack thereof) of

the

terms of

such Business Combination, from

the

point of

view of

the remaining shareholders of

the

Company. Such investment banking firm shall

be engaged solely on behalf of

the

remaining shareholders, be paid a reasonable

fee

for

their services by

the

Company upon receipt of

such opinion, and be

one of

the

so-

called

major bracket investment banking firms which has not previously been associated with

such Major Stockholder and to be

selected by

a majority of

the


D.

During the time a Major Stockholder exists, a resolution to voluntarily

dissolve

the

Company shall be adopted only upon: ( 1)

the

consent of

all

of

the

Company's shareholders; or

( 2)

the

affirmative vote of

at


the

total

number of

directors, the affirmative vote of

the

holders of

at

least two- thirds ofthe shares

of

the Company entitled to vote thereon, and

the

affirmative vote of

the

holders of

at

least

two- thirds of

the

shares of

each class of

shares entitled to vote thereon as

a class, if any.

E.

As

to any particular transaction, the Continuing Directors shall have the

power and duty to determine, on

the

basis of

information known to them:

( 1)

The amount of

Voting Stock beneficially held by

any Person;

-~-=

( 2)

Whether a Person is an Affiliate or

an Associate of

another;

( 3)

Whether a Person is acting in concert with another;

:-

( 4)

Whether the

assets subject to any Business Combination constitute a

Substantial Part;

( 5)

Whether a proposed transaction is subject to the

provisions of

this

Article; and

( 6)

Such other matters with respect to which a determination is required

under this Article.

- 10-

CONFIDENTIAL


.......

Any such determination shall be

conclusive and binding for

all

purposes of

this

Article.

The affirmative vote required by

this Article is in addition to the

vote of

the

holders of

any class or

series of

stock of

the

Company otherwise required by

law, these

Articles of

Incorporation, any resolution which has been adopted by

the

Board of

Directors providing

for

the

issuance of

a class or

series of

stock or

any agreement

between the Company and any national securities exchange.

ARTICLE XI

Amendment

The Company may amend these Articles of

Incorporation if approved by

each

voting group entitled to vote thereon by


all

the

votes entitled to be

cast by

that voting group at

any regular meeting or

special meeting duly called

for

that

purpose in the

manner prescribed by

its Bylaw. s,

provided, however, that ArticleX may

not be

repealed or

amended in any respect unless such action is approved by

at

least a

ninety-five percent (95%) vote of

the outstanding Voting Stock beneficially owned by

shareholders other than any Major Stockholder, and provided further, that the

board of

Directors may, without shareholder approval, amend these Articles ( i) to the

extent

permitted under the Washington Business Corporation Act or

( ii)

as

necessary to

designate

the

preferences, limitations, and relative rights of

a class or

series of

shares of

the Company prior to issuance of

any shares in that class or

series.

ARTICLE XII

Limitation of

Liability

-'~.;,;=.~

A director ofthe Company shall

not

be

personally liable to the Company or

its

sharehoW~ rs

for

monetary damages for

conduct as

a director ("

Protected Conduct").

However, Protected Conduct shall exclude ( i) acts or

omissions which involve intentional

misconduct by

the

director or

a knowing violation of

law by

the

director, (

ii) any conduct

violating Section 23B. 08.31O of

the

Revised Code of

Washington, and (iii), 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 Washington law is amended to

authorize corporate action further eliminating or

limiting

the

personal liability of

directors, then the

liability of

a director of

the

Company shall be

eliminated or

limited to

the

fullest extent permitted by

Washington law, as

so

amended. Any repeal or

modification of

this Article XII by

the

shareholders of

the

Company shall

not

adversely

- 11

-

CONFIDENTIAL


affect any right or

protection of

a director ofthe Company existing at

the

time of

such

repeal or

modification.

ARTICLE XIII

The street address of

the

registered office of

the

Company is:

1201 Third Avenue

15th Floor


and the

name ofthe registered agent at

that address is:

Marc R.

Kittner

ARTICLE XIV

Special Meetings of

Shareholders

Special meetings of

the

shareholders for

any purpose or

purposes, unless otherwise

prescribed by

statute, may be

called by

the board of

directors or

by

any other person or

persons authorized to do

so

in the

Company's Bylaws. Notwithstanding RCW

23B. 07.020( 1)

( b)

or

any other provision in these Articles or

the

Company's Bylaws, a

special meeting of

the

shareholders may be called by

the

shareholders only if the

holders

of

at

least twenty- five percent of

all

the

votes to be

cast on

any issue proposed to be

considered at

the

proposed special meeting sign, date and deliver to the

Company's

secretary

one

or

more written demands

for

the

meeting describing

tile purpose or

purposes for

which it is to be

held. .~~

~ ATE. D at

Seattle, Washington, on

the 02g!b day of

October, 1999.

:~


- 12-

.. ' .-•. ,

••.

t...... !

CONFIDENTIAL


. . .. ., ..

~.

CERTIFICATE OF

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF


ce

T

2

:~-

1000

t, ~. LJ. JJ

Pursuant to the

provisions ofRCW 23B.

IO.

070 of

the

Washington Business

Corporation Act, Washington Mutual, Inc., a Washington corporation ( the

"Company"),

hereby certifies that it has amended and restated its

articles of

incorporation:

FIRST: The name of

the Company is:


SECOND: The Amended and Restated Articles ofIncorporation are hereby

adopted by

the

Company and supersede the

Restated Articles of

Incorporation of

the

Company, as

amended, and contain the following amendments to the

Articles of

Incorporation, none of

which require shareholder approval:

1.

The Restated Articles ofIncorporation are amended and restated to read in

their entirety as

set

forth in the

Amended and Restated Articles of

Incorporation, attached

hereto as

Exhibit A.

2.

The amendments do

not provide for

an

exchange, reclassification or

cancellation of

any issued shares. _~~~

THIRD: At

a duly called meeting of

the board of

directors of

the Company,

held on Qctober 19, 1999,

the

foregoing amendments to the

Articles of

Incorporation

were duly:approved and adopted by

the

board of

directors

DATED this ~ day of

October, 1999.


By:~ it~

Kerry K.

Kil! inger

President, Chairman and Chief Executive Officer

<::

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CONFIDENTIAL


Exhibit A

(..

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF


Pursuant to the provisions ofRCW 23B. 1O.070 of

the Washington Business

Corporation Act, Washington Mutual, Inc., a Washington corporation, hereby restates

its

Articles ofIncorporation as now and heretofore amended:

ARTICLE I

Name

The name of

this corporation

is:


ARTICLE II

Capital Stock

A.

Issuance of

and Payment for

Stock. The total number of

shares of

capital

stock which the

Company has authority to issue is 1,610,000,000 shares of

which

1,600,000,000 shares shall be shares of

common stock with no

pa

r

value

pe

r

share and

10,000,000 shares shall be

shares of

preferred stock with no

par value per share. The

shares may be issued by

the

Company from time to time as

approveCfby

its Board of

Directors without the

approval of

the

shareholders. The consideration for

issuance of

the

shares sh.

all

b~ paid in full before their issuance. Neither promissory notes nor the

promise ofruture services shall constitute payment or

part payment for

the issuance of

shares of

the

Company. The consideration for

the

shares shall be

cash, tangible or

intangible property, labor or

services actually performed for

the Company or

any

combination of

the

foregoing. In the

absence of

actual fraud in the

transaction, the

value

dfsuch property, labor or

services, as

determined by

the

Board of

Directors of

the

Company, shall be conclusive. Upon payment of

such consideration, such shares shall be

deemed to be

fully paid and non- assessable.

B.

Voting by

Class or

Series. Except as

expressly provided in these Articles or

in any resolutions of

the

Board of


terms of

any

- 1 -

-,',

"". . ..'

CONFIDENTIAL


series of

preferred stock, no

holders of

any class or

series of

capital stock shall have any

right to vote as

a separate class or

series or

to vote more than one vote per

s4are.

Notwithstanding

the

foregoing,

the

restriction on voting separately by

class or

series shall

not

apply to the

extent that applicable law requires such voting, nor

shall this restriction

apply to any amendment to these Articles which would adversely change

the

specific

terms of

any class or

series of

capital stock as

set

forth in th

is

Article II

or

in any

resolution of

the Board of


terms of

any series

of

preferred stock. For

purposes of

the

preceding sentence, an

amendment which

increases the

number of


any class or

series of

capital stock, or

substitutes

the

surviving institution in a merger or

consolidation

for

the Company, shall

not

be

such an

adverse change.

C.

Common Stock. On matters on

which holders of

common stock are entitled

to vote, each holder of

shares of

common stock shall be

entitled to one vote for

each share

held by

such holder.

Whenever there shall have been paid, or

declared and

set

aside

for

payment, to the

holders of

the


any class of

stock having preference over the

common stock as

to the

payment of

dividends,

the

full amount of

dividends and of

sinking fund or

retirement fund or

other retirement payments, if any, to which such

holders are respectively entitled in preference to the

common stock, then dividends may

be paid on

the common stock and on any class or

series of

stock entitled to participate

therewith as

to dividends, out

of

any assets legally available for

the

payment of

dividends;

but

only when and as

declared by

the

Board of

Directors.

In the

event of

any liquidation, dissolution or

winding up

of

the Company, after

there shall have been paid to or

set

aside for

the

holders of

any class having preferences

over

the common stock in the event ofliquidation, dissolution or

winding up ofthe full

preferential amounts to which they are respectively entitled, the

hol~ ofthe common

stock, and of

any class or

series of

stock entitled to participate therewith, in whole or

in

part, as

to distribution of

assets, shall be

entitled, after payment or

provision for

payment

of

all

del5ts--andliabilities of

the

Company, to receive pro rata the

remaining assets of

the

Company available

for

distribution, in cash or

in kind.

Each share of

common stock shall have the same relative rights as

and be

identical

in all respects with

all

the

other shares of

common stock.

D.

Preferred Stock. The authorized Preferred Stock shall be

comprised of

10,000,000 shares no

par

value per

share. TheBoard of

Directors ofthe Company is

authorized by

resolution or

resolutions from time to time adopted, to provide

for

the

issuance of

preferred stock in one or

more additional series by

designating and

establishing the terms of

such a series. With respect to any such series, the

Board of

- 2 -

CONFIDENTIAL


..

...

' ........... \.

Directors is authorized to fix

and

state the

voting powers, designations, preferences and

relative, participating, optional or

other special right of

the shares of

each s\

lch

series and

the

qualifications, limitations and restrictions thereon, including, but

not

limited to,

determination of

any of

the

following:

( 1)

The distinctive serial designation and the

number of

shares

constituting such series;

( 2)

The dividend rates or

the

amount of

dividends to be

paid on

the

shares of

such series, whether dividends shall be

cumulative and, if so,

from which date

or

dates, the payment date or

dates for

dividends, and the participating or

other special

rights, if any, with respect to dividends;

( 3)

The voting powers, full, special or

limited, if any, of

shares of

such

series;

( 4)

Whether the

shares of


redeemable and, if so,

the

price or

prices at

which, and the terms and conditions on

which, such shares may be

redeemed;

( 5)

The amount or

amounts payable upon the

shares of

such series in the

event of

voluntary or


winding up

of

the Company;

( 6)

Whether the shares of


entitled to the benefit of

a

sinking or

retirement fund to be

applied to the purchase or

redemption of

such shares, and

if so

entitled, the

amount of

such fund and the

manner of

its

application, including the

price or

prices at

which such shares may be

redeemed or

purchased through the

application of

such fund;

-

( 7)

Whether the

shares of


convertible into, or

exchangeable for, shares of

any other class or

classes or

of

any other series of

the same or

any other class or

classes of

stock of

the

Company and, if so

convertible or

exchangeable,

the

conversion price or

prices, or

the

rate of

exchange, and the

adjustments thereof, if any,

at

which such conversion or

exchange may be made, and any other terms and conditions

of

such conversion or

exchange; and

( 8)

Whether the

shares of

such series which are redeemed or

converted

shall have the

status of

authorized but

unissued shares of

serial preferred stock and

whether such shares may be

reissued as

shares of

the

same or

any other series of

serial

Preferred Stock.

Each share of

each series of

preferred stock shall have the same relative rights as

and be

identical in all

respects with

all

the

other shares of

the

same series.

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While the foregoing authorizes the Board of

Directors, in establishi, ng

the

terms of

a series of

Preferred Stock, to permit holders ofthat series of

PreferredStQ(~.. k

to elect

separately one or

more directors, in no

event shall the

total number of

directors separately

elected by

holders of

one or

more series of

Preferred Stock equal or

exceed fifty percent

(50%) of

the

total number of

authorized directors.

ARTICLE

III

Preemptive Rights

The shareholders ofthe Company shall have no

preemptive rights to acquire

additional shares of

the

Company.

ARTICLE IVBoard o

f

Directors

The Company shall be managed by

a Board of

Directors. The number of

directors

shall be stated in the Company's Bylaws, provided, however, that such number shall be

not

less than five ( 5).

There shall be

three classes of

elected directors designated as

Class

1,

Class 2,

and Class 3 directors. Each class shall contain one- third of

the

total number of

directors, as

near as

may be.

The terms ofthe Class 1 directors shall expire at

the

first

annual shareholders' meeting after their election. The terms of

the

Class 2 directors shall

expire at

the

second annual shareholders' meeting after their election. The terms of

the


the

third annual shareholders' meeting after their election.

At

each annual shareholders' meeting held thereafter, directors shall be

chosen for

a term

of

three years to succeed those whose terms expire. A vacancy on

the Board of

Directors

may be

filled by

the

Board in accordance with

the

applicable provis~ ons of

the

Company's Bylaws. A director elected to fill

a vacancy shall be

eleCted for

a term of

office continuing only until the

next election. of

directors by

shareholders.

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ARTICLE V

Removal of

Directors

Any director may be

removed by

the

shareholders only with good cause and in

accordance with the

applicable provisions ofthe Company's Bylaws.

ARTICLE VI

Cumulative Voting

The right to cumulate votes in the

election of

directors shall no

t

exist with respect

to shares of

stock of

the

Company.

ARTICLE VII

Bylaws

The Board of

Directors has the power to adopt, amend or

repeal the Bylaws of

the

Company, subject to the

concurrent power ofthe shareholders, by

at

least two- thirds

affirmative vote of

the

shares of

the

Company entitled to vote thereon, to adopt, amend or

repeal

the

Bylaws.

ARTICLE VIII

Shareholder Vote Required to Approve Substantial Business Transaction

If pursuant to the

Washington Business Corpotations Act the .company's

shareholders

are required to approve a plan of

merger, share exchang~,-" or

other

disposition of

all,

or

substantially all

of

the

Company's property, otherwise than in the

usual and ~~ gular course of

business (each of

the foregoing, a " Substantial Business

Transaction"), then ( a)

if two- thirds of

the

directors vote to recommend the

Substantial

Business Transaction to the

shareholders, the Substantial Business Transaction shall be

approved by

each voting group entitled to vote thereon by


all

votes

entitled to be

cast by

that group; ( b)

in all

other cases where a shareholder vote is required

by

the

Washington Business Corporation Act, such Act, as

it may be amended, shall

control.

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ARTICLE IX

Indemnification

The Company shall indemnify any individual made a party to a proceeding

because that individual is or

was a director of

the

Company and shall advance or,

reimburse the

reasonable expenses incurred by

such individual in advance of

final

disposition of

the

proceeding, without regard to the

limitations in RCW 23B. 08.510

through 23B. 08.550 of

the Washington Business Corporation Act, or

any other limitation

that may hereafter be

enacted to the

extent such limitation may be

disregarded if

authorized by

the

articles of

incorporation, to the full extent and under all

circumstances

permitted by

applicable law.

ARTICLE X

Business Combinations

A.

For the

purposes of

this Article X:

( 1)

The terms " Affiliate" and "Associate" shall have

the

meanings

attached to them by

Rule 12b-2 under the


1934, as

amended,

or

any similar successor rule.

( 2)

The term " beneficial owner" and correlative terms shall have the

meaning as

set

forth in Rule 13d-3 under the


1934, as

amended, or

any similar successor rule. Without limitation and in addition to the

foregoing, any shares of

Voting Stock of

the

Company which any Major Stockholder has

the right to vote or

to acquire ( i) pursuant to any agreement, ( ii)

by

reason of

tenders of

shares by

shareholders of

the Company in connection with or

pursuifrrto a tender offer

made by

such Major Stockholder (whether or

not

any tenders have been accepted, but

excluding tenders which have been rejected), or

(

iii) upon

the

exercise of

conversion

rights, warrants, options or

otherwise, shall be deemed "beneficially owned" by

such

Major Stockholder.

( 3)

The term " Business Combination" shall mean:

( a)

any merger or

consolidation (whether in a single transaction

or

a series of

related transactions, including a series of

separate transactions with a Major

Stockholder, any Affiliate or

Associate thereof or

any Person acting in concert therewith)

of

the

Company or

any Subsidiary with or

into a Major Stockholder or

of

a Major

Stockholder into the Company or

a Subsidiary;

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( b)

any sale, lease, exchange, transfer, distributionto

stockholders or

other disposition, including without limitation, a mortgage, eledge or

any

other security device, to or

with a Major Stockholder by

the

Company or

any of

its


a series of

related transactions) of

all,

substantially

all

or

an

y

Substantial Part ofthe assets ofthe Company or

a Subsidiary (including,

without limitation, any securities of

a Subsidiary);

( c)

the

purchase, exchange, lease or

other acquisition by

the

Company or

any of

its


a series of

related

transactions) of

all,

substantiallya

ll

or


the

assets or

business of

a

Major Stockholder;

( d)

the

issuance of

any securities, or

of

any rights, warrants or

options to acquire any securities, ofthe Company or

a Subsidiary to a Major Stockholder

or

the

acquisition by

the

Company or

a Subsidiary of

any securities, or

of

any rights,

warrants or


a Major Stockholder;

( e)

any reclassification of

Voting Stock, recapitalization or

other

transaction (othe! than a redemption in accordance with the

terms of

the security

redeemed) which has

the

effect, directly or

indirectly, of

increasing

the

proportionate

amount of

Voting Stock ofthe Company or

any Subsidiary which is beneficially owned

by

a Major Stockholder, or

any partial or

complete liquidation, spin off, split

off

or

split

up

of

the Company or

any Subsidiary; provided, however, that this Section A(

3)(

e)

shall

not

relate to any transaction of

the

types specified herein that

ha

s

been approved by

a

majority of

the

Continuing Directors; and

( f) any agreement, contract or

other arrangement providing for

any of

the

transactions described herein.

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( 4)

The term " Continuing Director" shall mean ( i) a person who was a

member of

the

Board of

Directors of

the

Company immediately prior to the time that any

then- existirrg Major Stockholder became a Major Stockholder, or

(

ii) a person designated

(before initially becoming a director) as

a Continuing Director by

a majority of

the

then

Continuing Directors. All references to a vote of

the

Continuing Directors shall mean a

vote of

the

total number of


( 5)

The term " Major Stockholder" shall mean any Person which,

together with its

Affiliates and Associates and any Person acting in concert therewith, is

the

beneficial owner of

five percent (5%) or

more of

the votes held by

the

holders of

the


the Voting Stock of

the Company, and any Affiliate or

Associate of

a Major Stockholder, including a Person acting in concert therewith. The term " Major

Stockholder" shall not include a Subsidiary.

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( 6)

The term " other consideration to be

received" shall include, without

limitation, Voting Stock retained by

the

Company's existing shareholders iJ;

l... th

e

event of

a Business Combination which is a merger or

consolidation in which the Company is the

surviving corporation.

( 7)

The term " Person" shall mean any individual, corporation,

partnership or

other person, group or

entity (other than the

Company, any Subsidiary or

a

trustee holding stock for

the

benefit of

employees of

the

Company or

its

Subsidiaries, or

anyone of

them, pursuant to one or

more employee benefit plans or

arrangements).

When two or

more persons act

as

a partnership, limited partnership, syndicate, association

or

other group for

the

purpose of

acquiring, holding or

disposing of

shares of

stock, such

partnerships, syndicate, association or

group will be deemed a "Person."

( 8)

The term "Subsidiary" shall mean any business entity fifty percent

(50%) or

more of

which is beneficially owned by

the

Company.

( 9)

The term "Substantial Part," as

used in reference to the

assets of

the

Company or

any Subsidiary or

of

any Major Stockholder means assets having a value of

more than five percent (5%) of

the total consolidated assets ofthe Company and its

Subsidiaries as

of

the

end ofthe Company's most recent fiscal year ending prior to the

time

the

determination is made.

(10) The term "Voting Stock" shall mean the stock or

other securities

entitled to vote upon any action to be taken in connection with any Business Combination

or

entitled to vote generally in the

election of

directors, including stock or

other securities

convertible into Voting Stock.

B.

Notwithstanding any other provisions ofthese Articles ofIncorporation and

except as

set

forth in Section C of

this Article X,

neither

the Comp~~ nor any Subsidiary

shall be a party to a Business Combination unless:

. ( 1)


the

Board of

Directors

of

the Company prior to the Major Stockholder involved in the

Business Combination

becoming such; or

( 2)

The Major Stockholder involved in the

Business Combination sought

and obtained the

unanimous prior approval ofthe Board of

Directors to become a Mttior

Stockholder and the Business Combination was approved by

a majority ofthe Continuing

Directors; or

( 3)


at

least eighty percent

(80%) of

the

Continuing Directors ofthe Company; or

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( 4)


at

least ninety-five

percent (95%) of

the

outstanding Voting Stock beneficially owned by

share) lOlders other

than any Major Stockholder. ..

C.

The approval requirements of

Section B shall not

apply if:

( l) The Business Combination is approved by

at

least the

majority vote

of

the shares of

the

Voting Stock and the

majority vote of

the

shares of

the Voting Stock


shareholders other than any Major Stockholder; and

( 2)

All

ofthe following conditions

are satisfied:

( a)

The aggregate of

the

cash and the

fair market value of

other

consideration to be

received per share ( as

adjusted for

stock splits, stock dividends,

reclassification of

shares into a lesser number and similar events) by

holders of

the

common stock ofthe Company in the

Business Combination is not less than the higher of

( i) the

highest per

share price (including brokerage commissions, soliciting dealers' fees,

dealer- management compensation, and other expenses, including, but not limited to,

costs

of

newspaper advertisements, printing expenses and attorneys' fees) paid by

the Major

Stockholder in acquiring any of

the

Company's common stock; or

( ii)

an amount which

bears the same or

a greater percentage relationship to the market price of

the Company's

common stock immediately prior to the

announcement of

such Business Combination as

the

highest per share price determined in ( i) above bears to the market price of

the

Company's common stock immediately prior to the commencement of

acquisition of

the

Company's common stock by

such Major Stockholder, but in no

event in excess of

two

times

the

highest

per

share price determined in ( i) above; and

( b)

The consideration to be

received in such Business

Combination by

holders of

the

common stock of

the

Company shall be, except to the

extent that a stockholder agrees otherwise as

to all

or

a part of

his

or

he

r

shares, in the

same form and of

the

same kind as

paid by

the

Major Stockholder in acquiring his Voting

Stock. ,

( c)

After becoming a Major Stockholder and prior to the

consummation of

such Business Combination, ( i) such Major Stockholder shall not

have

acquired any newly issued shares of

capital stock, directly or

indirectly, from the

Company or

a Subsidiary (except upon conversion of

convertible securities acquired by

it

prior to becoming a Major Stockholder or

upon compliance with the

provisions of

this

Article X or

as

a result of

a pro rata stock dividend or

stock split), and ( ii) such Major

Stockholder shall not

have received the

benefit, directly or

indirectly (except

proportionately as a shareholder), of

any loans, advances, guarantees, pledges or

other

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