"WMB will use a portion of the proceeds it receives in connection with the offering for general corporate purposes which may include dividend payments to its ultimate parent, WMI. In turn, WMI intends to use the proceeds of any such dividend payments to repurchase shares of its common stock and for general corporate purposes. Such repurchases will be effected in accordance with WMI’s existing common stock repurchase program, which may include accelerated share repurchase. WMB has received confirmation from the Office of Thrift Supervision (the “OTS”) that the Company Preferred Securities are eligible for treatment as core capital of WMB under the OTS’ applicable regulatory capital regulations and intends to treat the Company Preferred Securities accordingly. If the OTS so directs following the occurrence of an Exchange Event (defined below), each WaMu Cayman Preferred Security and each Trust Security will be automatically exchanged for a like amount of depositary shares representing a 1/1000th of a share of specified classes of preferred stock (the “WMI Preferred Stock”) of WMI. “Exchange Event” means (a) WMB becoming “undercapitalized” under the OTS’ “prompt corrective action” regulations, (b) WMB being placed into conservatorship or receivership or (c) the OTS, in its sole discretion, directing such exchange in anticipation of WMB becoming “undercapitalized” 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. In connection with the closing of the transactions described above, on March 7, 2006, WMI entered into a Replacement Capital Covenant (the “Covenant”) whereby WMI agreed for the benefit of specified debtholders that it would not repurchase or redeem the WaMu Cayman Preferred Securities, the Trust Securities, the Company Preferred Securities or the WMI Preferred Stock (including any depositary shares representing WMI Preferred Stock) unless such repurchase or redemption is made from proceeds of certain qualifying securities issuances and on other terms and conditions described in the Covenant. A copy of the Covenant is attached hereto as Exhibit 99.1 and is incorporated herein by reference. "
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