Exhibit 10.1

CONFIDENTIAL TREATMENT REQUESTED. INFORMATION FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED IS OMITTED AND NOTED WTH “***”. AN UNREDACTED VERSION OF THIS
DOCUMENT HAS BEEN PROVIDED TO THE SECURITIES AND EXCHANGE COMMISSION.

 

LOGO [g54689img01.jpg] Master Confirmation of OTC ASAP Minus (VWAP Pricing)

 

Date:

   May 17, 2007    ML Ref:  l    

To:

  

Genworth Financial, Inc. (“Counterparty”)

6620 West Broad Street

Richmond, Virginia 23230

  

Attention:

   Gary Prizzia   

From:

  

Merrill Lynch International (“MLI”)

Merrill Lynch Financial Centre

2 King Edward Street

London EC1A 1HQ

  

Dear Sir / Madam:

The purpose of this letter agreement (the “Master Confirmation”) and each
supplemental confirmation substantially in the form attached hereto as Exhibit A
(each, a “Supplemental Confirmation” and the Supplemental Confirmations,
together with the Master Confirmation, this “Confirmation”) is to confirm the
terms and conditions of each of the above-referenced transactions entered into
between Counterparty and MLI through its agent Merrill Lynch, Pierce, Fenner &
Smith Incorporated (“MLPF&S” or “Agent”) on the respective Trade Dates specified
in the Supplemental Confirmations (each, a “Transaction” and collectively, the
“Transactions”). This Confirmation constitutes a “Confirmation” both on behalf
of MLI, as referred to in the ISDA Master Agreement specified below, and on
behalf of MLPF&S, as agent of MLI.

The definitions and provisions contained in the 2000 ISDA Definitions (the “Swap
Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “Equity
Definitions” and, together with the Swap Definitions, the “Definitions”), in
each case as published by the International Swaps and Derivatives Association,
Inc., are incorporated into this Confirmation. In the event of any inconsistency
between the Swap Definitions and the Equity Definitions, the Equity Definitions
will govern, in the event of any inconsistency between the Definitions and the
Master Confirmation, the Master Confirmation will govern, and in the event of
any inconsistency between the Master Confirmation and any Supplemental
Confirmation, the Supplemental Confirmation will govern. References herein to
any “Transaction” shall be deemed to be references to a “Share Forward
Transaction” for purposes of the Equity Definitions and a “Swap Transaction” for
the purposes of the Swap Definitions.

This Confirmation evidences a complete binding agreement between you and us as
to the terms of the Transactions to which this Confirmation relates. This
Confirmation (notwithstanding anything to the contrary herein), shall be subject
to an agreement in the 1992 form of the ISDA Master Agreement (Multicurrency
Cross Border) (the “Master Agreement” or “Agreement”) as if we had executed an
agreement in such form (but without any Schedule and with elections specified in
the “ISDA Master Agreement” Section of the Master Confirmation) on the Trade
Date of the first such Transaction between us. In the event of any inconsistency
between the provisions of that agreement and this Confirmation, this
Confirmation will prevail for the purpose of each Transaction.

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The terms of each Transaction to which the Master Confirmation relates are as
follows:

 

General Terms:   

Trade:

   With respect to each Transaction, Counterparty, subject to the terms and
conditions and in reliance upon the representations and warranties set forth
herein, will purchase from MLI Shares in an amount equal to the Number of Shares
(such Shares, the “Repurchase Shares”). On the Initial Settlement Date, (A)
Counterparty will make an initial payment for the Repurchase Shares by
delivering an amount equal to the Initial Settlement Amount by wire transfer of
immediately available funds to an account designated by MLI and (B) MLI will
deliver the Repurchase Shares to Counterparty. The parties understand and agree
that the delivery of the Repurchase Shares by or on behalf of MLI upon the
payment of the Initial Settlement Amount by Counterparty is irrevocable and that
as of the Initial Settlement Date Counterparty shall be the sole beneficial
owner of the Repurchase Shares for all purposes. The parties further understand
and agree that the terms and conditions of each Transaction will have the effect
of increasing or decreasing the purchase price for the Repurchase Shares to an
amount greater than or less than the Initial Settlement Amount.

Trade Date:

   For each Transaction, as set forth in the corresponding Supplemental
Confirmation.

Buyer:

   MLI

Seller:

   Counterparty

Shares:

   Shares of Class A Common Stock, par value USD 0.001 per share, of
Counterparty (Symbol: GNW)

Number of Shares:

   For each Transaction, as set forth in the Supplemental Confirmation.

Initial Share Price:

   For each Transaction, as set forth in the Supplemental Confirmation.

Initial Settlement Amount:

   The product of the Number of Shares and the Initial Share Price.

Initial Settlement Date:

   The Exchange Business Day immediately following the Trade Date.

Forward Price:

   Initial Share Price

Exchange:

   NYSE

Related Exchange(s):

   All Exchanges

Market Disruption Event:

   The definition of “Market Disruption Event” in Section 6.3(a) of the Equity
Definitions is hereby amended by replacing the words “at any time during the
one-hour period that ends at the relevant Valuation Time” in the third line
thereof with the words “at any time on any Scheduled Trading Day during the
Valuation Period or” after the word “material”. Valuation:   

Valuation Period:

   For each Transaction, each Scheduled Trading Day from and including the
Initial Settlement Date up to and including the Valuation Date; provided, that
with respect to each Suspension Event (if any) affecting such Scheduled Trading
Days, MLI may, by written notice to Counterparty (which notice shall

 

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   not specify the reason for MLI’s election to suspend the Valuation Period),
exclude the Scheduled Trading Day(s) on which such Suspension Event has occurred
(such days, “Suspension Event Days”) and extend the Valuation Date by the total
number of such Suspension Event Days; provided, further, that notwithstanding
anything to the contrary in the Equity Definitions, to the extent that any
Scheduled Trading Days in the Valuation Period are Disrupted Days, the
Calculation Agent may exclude such Disrupted Days and extend the Valuation Date
by the number of such Disrupted Days (in addition to any Suspension Event Days,
without duplication).

Suspension Event:

   Each and every one of the following events: (i) MLI concludes, in its sole
discretion, that Counterparty will be engaged in a distribution of the Shares
for purposes of Regulation M or that the “restricted period” in respect of such
distribution has not yet been completed; (ii) MLI commercially reasonably
concludes, that it is appropriate with respect to any legal, regulatory or
self-regulatory requirements, for it to refrain from purchasing Shares during
any part of the Valuation Period; or (iii) Counterparty is subject to a
third-party tender offer.

Exclusion Mechanics:

   With respect to each Suspension Event Day and Disrupted Day (each, an
“Exclusion Day”), the Calculation Agent must determine whether (i) such
Exclusion Day should be excluded in full, in which case such Exclusion Day shall
not be included for purposes of determining the Settlement Price, or (ii) such
Exclusion Day should only be partially excluded, in which case the VWAP Price
for such Exclusion Day shall be determined by the Calculation Agent based on
Rule 10b-18 eligible transactions in the Shares on such Exclusion Day effected
during the portion of the Scheduled Trading Day unaffected by such event or
events, and the weighting of the VWAP Prices for the relevant Scheduled Trading
Days during the Valuation Period shall be adjusted by the Calculation Agent for
purposes of determining the Settlement Price. If a Disrupted Day occurs during
the Valuation Period, and each of the nine immediately following Scheduled
Trading Days is a Disrupted Day, then the Calculation Agent may either (i)
determine the VWAP Price for such ninth Scheduled Trading Day and adjust the
weighting of the VWAP Prices for the relevant Scheduled Trading Days during the
Valuation Period as it deems appropriate for purposes of determining the
Settlement Price based on, among other factors, the duration of any Market
Disruption Event and the volume, historical trading patterns and price of the
Shares or (ii) disregard such day for purposes of determining the Settlement
Price and further postpone the Valuation Date, in either case, as it deems
appropriate to determine the VWAP Price. In the event that there are Exclusion
Days arising from a Suspension Event described in Clause (i) or (iii) under
“Suspension Event” above, then MLI shall not purchase Shares in connection with
the relevant transaction during each such Exclusion Day that is fully excluded
and during each portion of a partially excluded Exclusion Day that is affected
by such Suspension Event.

Valuation Date

   For each Transaction, as set forth in the Supplemental Confirmation (as the
same may be postponed in accordance with the provisions hereof). Settlement
Terms:   

Settlement Currency:

   USD

Settlement Method Election:

   Applicable; provided that (a) Section 7.1 of the Equity Definitions is hereby
amended by deleting the word “Physical” in the sixth line thereof and replacing
it with the words “Net Share” and deleting the word “Physical” in the last line
thereof and replacing it with the words “Net Share”.

 

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Electing Party:    Counterparty Cash Settlement:    If the Forward Cash
Settlement Amount is a positive number and Counterparty elects Cash Settlement
by notice to MLI no later than the Settlement Method Election Date, Counterparty
shall pay to MLI an amount in cash equal to the Forward Cash Settlement Amount.
Cash Settlement cannot apply in lieu of any Net Share Settlement Shares due by
MLI. Settlement Method Election Date:    The 3rd Scheduled Trading Day
immediately preceding the Valuation Date. Cash Settlement Payment Date:    Five
Currency Business Days following the Valuation Date
Forward Cash Settlement Amount:    Notwithstanding Section 8.5 of the Equity
Definitions, an amount in the Settlement Currency equal to the sum of (a) the
Number of Shares multiplied by an amount equal to (i) the Settlement Price minus
(ii) the Forward Price plus (b) the Aggregate Adjustment Amount. Settlement
Price:    The arithmetic mean of the VWAP Prices of the Shares for each
Scheduled Trading Day in the Valuation Period minus the Settlement Price
Adjustment Amount. Settlement Price Adjustment Amount:    For each Transaction,
as set forth in the Supplemental Confirmation. VWAP Price:    The daily volume
weighted average price per Share traded on the NYSE under the GNW ticker for
such Scheduled Trading Day as reported on Bloomberg Page “GNW.N <Equity> AQR
SEC” (or any successor thereto) (an example of such Bloomberg Page is attached
as Exhibit ), or, in the event such price is not so reported on such Scheduled
Trading Day, as reasonably determined by the Calculation Agent. For the purpose
of calculating the VWAP Price, the Calculation Agent will include only those
trades which are reported during the period of time during which Counterparty
could purchase its own shares under Rule 10b-18(b)(2) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to the
conditions of Rule 10b-18(b)(3) and (b)(4) under the Exchange Act. Net Share
Settlement:   

Net Share Settlement:

   Counterparty shall, unless it elects Cash Settlement in accordance with the
procedures described above, satisfy any obligation that it has to pay the
Forward Cash Settlement Amount by causing to be delivered the lesser of (i) Net
Share Settlement Shares or (ii) the Reserved Shares. MLI shall satisfy any
obligation that it has to pay the Forward Cash Settlement Amount by causing Net
Share Settlement Shares to be delivered to Counterparty.

Net Share Settlement Shares:

   In the event that Counterparty elects to deliver Shares registered under the
Securities Act and an accompanying prospectus and prospectuses for MLI or one of
its affiliates to use in connection with its sales of such Shares, such number
of Shares specified by MLI by written notice to Counterparty (“Registered Net
Share Settlement Notice”). It is understood and agreed that such number of Net
Settlement Shares shall be exactly the number of Shares sold by or on behalf of
MLI to receive (net of costs and expenses attributable to

 

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   such sales) an amount in cash equal to the Forward Cash Settlement Amount.
Such Net Settlement Shares shall additionally be subject to the section titled
“Registration” below. In the event that MLI is obligated to deliver Shares to
Counterparty, the number of Net Settlement Shares shall be equal to the quotient
obtained by dividing the Forward Cash Settlement Amount by the average purchase
price paid by MLI to acquire such Shares with the delivery number rounded to the
nearest whole Share.    In the event that Counterparty elects not to deliver
Shares registered under the Securities Act or is not able to do so, such number
of Shares as determined by MLI to equal in value the Forward Cash Settlement
Amount. It is understood and agreed that MLI shall determine the value of such
Shares by applying a commercially reasonable discount (with such discount not to
exceed 1%). Such Net Settlement Shares shall additionally be subject to the
section titled “Private Placement” below.

Net Share Settlement Date:

   With respect to Net Share Settlement Shares that are registered under the
Securities Act as contemplated under the first paragraph under “Net Share
Settlement Shares” above, the later of (i) the Exchange Business Day immediately
following the date of the Registered Net Share Settlement Notice and (ii) the
third Exchange Business Day immediately following the Valuation Date.   
Otherwise, the third Exchange Business Day immediately following the Valuation
Date.    In the event that MLI determines for legal, regulatory or trade
execution purposes that with respect to a payment by Counterparty of Net Share
Settlement Shares or Reserved Shares, there should be more than one Net Share
Settlement Date, MLI shall so notify Counterparty no later than the Exchange
Business Day immediately preceding the day that would otherwise be the sole Net
Share Settlement Date (the “First Net Share Settlement Date”). It is understood
and agreed that while such notice need not specify the exact dates in addition
to the First Exchange Business Day that shall be additional Net Share Settlement
Dates (the “Additional Net Share Settlement Dates”) or the number of Net Share
Settlement Shares to be delivered on any date other than the First Net Share
Settlement Date, each Additional Net Share Settlement Date and the number of
Shares to be delivered on such date shall be notified to Counterparty no later
than the Exchange Business Day immediately preceding such Additional Net Share
Settlement Date.

Reserved Shares:

   Initially, 17,000,000 Shares; the Reserved Shares may be increased or
decreased in a Supplemental Confirmation. Share Adjustments:   

Method of Adjustment:

   Calculation Agent Adjustment; provided, however, that an Extraordinary
Dividend Event occurring with respect to a Transaction shall not constitute a
Potential Adjustment Event, but shall be an Additional Termination Event under
the Agreement with respect to such Transaction, with such Transaction being an
Affected Transaction and Counterparty being the sole Affected Party.

Extraordinary Dividends:

   Each dividend or distribution payment (other than any dividend or
distribution of the type described in Section 11.2(e)(i) or Section
11.2(e)(ii)(A) or (B) of the Equity Definitions) having an ex-dividend date
during the Valuation Period, other than the payment of the Ordinary Dividend
Amount on each

 

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   Scheduled Dividend Date. For the avoidance of doubt, the rescheduling of a
Scheduled Dividend Date to an earlier date shall result in an Ordinary Dividend
Amount payable on such rescheduled day becoming an Extraordinary Dividend.

Ordinary Dividend Amount:

   For each Transaction, as set forth in the Supplemental Confirmation.

Scheduled Dividend Dates:

   For each Transaction, as set forth in the Supplemental Confirmation.
Extraordinary Events:   

Consequences of Merger Events:

  

Share-for-Share:

   Modified Calculation Agent Adjustment, provided that none of expected
dividends, stock loan rate or volatility shall be considered in determining any
adjustment.

Share-for-Other:

   Cancellation and Payment; provided that none of expected dividends, stock
loan rate or volatility shall be considered in determining the Cancellation
Amount.

Share-for-Combined:

   Component Adjustment

Determining Party:

   MLI

Consequences of Tender Offers:

  

Share-for-Share:

   Modified Calculation Agent Adjustment, provided that none of expected
dividends, stock loan rate or volatility shall be considered in determining any
adjustment.

Share-for-Other:

   Cancellation and Payment; provided that none of expected dividends, stock
loan rate or volatility shall be considered in determining the Cancellation
Amount.

Share-for-Combined:

   Component Adjustment

Determining Party:

   MLI

New Shares:

   The definition of “New Shares” in Section 12.1 of the Equity Definitions
shall be amended by inserting at the beginning of subsection (i) the following:
“(i) where the Exchange is located in the United States, publicly quoted, traded
or listed on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ Stock Market LLC (or their respective successors) or otherwise,”.

Announcement Event:

   If an Announcement Event occurs, the Calculation Agent will determine in good
faith and in a commercially reasonable manner the economic effect of the
Announcement Event on the theoretical value of the Transaction (provided that
none of expected dividends, stock loan rate or volatility shall be considered in
determining such value) from the Announcement Date to the Valuation Date. If
such economic effect is material, the Calculation Agent will adjust the terms of
the Transaction to reflect such economic effect. “Announcement Event” shall mean
the occurrence of the Announcement Date of a Merger Event or Tender Offer.

 

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Nationalization, Insolvency or Delisting:    Cancellation and Payment; provided
that none of expected dividends, stock loan rate or volatility shall be
considered in determining the Cancellation Amount; and provided further, that in
addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it
shall also constitute a Delisting if the Exchange is located in the United
States and the Shares are not immediately re-listed, re-traded or re-quoted on
any of the New York Stock Exchange, the American Stock Exchange or The NASDAQ
National Market (or their respective successors); and if the Shares are
immediately re-listed, re-traded or re-quoted on any such exchange or quotation
system, such exchange or quotation system shall be deemed to be the Exchange.

Determining Party:

   MLI

Additional Disruption Events:

  

Change in Law:

   Applicable; provided that none of expected dividends, stock loan rate or
volatility shall be considered in determining the Cancellation Amount.

Insolvency Filing:

   Applicable; provided that none of expected dividends, stock loan rate or
volatility shall be considered in determining the Cancellation Amount.

Determining Party;

   MLI Non-Reliance/Agreements and Acknowledgements Regarding Hedging
Activities/Additional Acknowledgements:    Applicable

Other Share Deliveries in Lieu of Cash Payment:

If Counterparty would be obligated to pay cash to MLI pursuant to the terms of
this Agreement for any reason without having had the right (other than pursuant
to this paragraph) to elect to deliver Shares in satisfaction of such payment
obligation, then Counterparty may elect that Counterparty deliver to MLI a
number of Shares having an equivalent value (such number of Shares to be
delivered to be determined by the Calculation Agent acting in a commercially
reasonable manner and taking into account relevant factors, including whether or
not the Shares are subject to legal or other restrictions on transfer and the
costs and expenses associated with disposing of such Shares). Settlement
relating to any delivery of Shares pursuant to this paragraph shall occur within
a reasonable period of time.

If MLI would be obligated to pay cash to Counterparty pursuant to the terms of
the Agreement for any reason without having had the right (other than pursuant
to this paragraph) to elect to deliver Shares in satisfaction of such payment
obligation, then Counterparty may elect that MLI deliver to Counterparty a
number of Shares having an equivalent value to such obligation (such number of
Shares to be delivered to be determined by the Calculation Agent acting in a
commercially reasonable manner and taking into account relevant factors,
including whether or not the Shares are subject to legal or other restrictions
on transfer and the costs and expenses associated with disposing of such
Shares). Settlement relating to any delivery of Shares pursuant to this
paragraph shall occur within a reasonable period of time. In connection with any
such election to receive Shares instead of cash, Counterparty shall confirm that
it is not in possession of material non-public information regarding the Shares
or Counterparty.

 

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Registration:

Counterparty hereby agrees that if, in the good faith reasonable judgment of
MLI, any Shares (x) acquired by MLI from Counterparty or (y) for the purpose of
hedging its obligations pursuant to any Transaction cannot be sold in the public
market by MLI without registration under the Securities Act (other than Net
Share Settlement Shares delivered pursuant to the second paragraph of “Net Share
Settlement Shares” above), Counterparty shall, at its election, in order to
allow MLI to sell such Shares in a registered offering, make available to MLI an
effective registration statement under the Securities Act and enter into an
agreement, in form and substance reasonably satisfactory to MLI, substantially
in the form of an underwriting agreement for a registered secondary offering
including providing for reasonable access to Counterparty to allow for a due
diligence investigation. The section “Private Placement” below shall apply at
the election of Counterparty with respect to the Shares to be sold (such Shares,
as well as the Shares described in the second paragraph under “Net Share
Settlement Shares” above, the “Private Shares”).

Private Placement:

In order to allow MLI to sell Private Shares in a private placement,
Counterparty agrees to enter into a private placement agreement substantially
similar to private placement purchase agreements customary for private
placements of equity securities, in form and substance reasonably satisfactory
to MLI (in which case, the Calculation Agent shall apply a commercially
reasonable discount to the sale of such Shares (with such discount not to exceed
1% of the value of such Shares)), or purchase such Shares from MLI at the
Closing Price on such Exchange Business Days, and in the amounts, requested by
MLI.

Additional Agreements, Representations and Covenants of Counterparty, Etc.:

 

Compliance with Securities Laws:   

Each party represents and agrees that it has complied, and will comply, in
connection with each Transaction and all related or contemporaneous sales and
purchases of Shares, with the applicable provisions of the Securities Act, and
the Exchange Act, and the rules and regulations each thereunder, including,
without limitation, Rule 10b-5 and Regulation M under the Exchange Act; provided
that each party shall be entitled to rely conclusively on any information
communicated by the other party concerning such other party’s market activities.

 

Each party further represents and warrants that if such party (“X”) purchases
any Shares from the other party pursuant to any Transaction, such purchase(s)
will comply in all material respects with (i) all laws and regulations
applicable to X and (ii) all contractual obligations of X.

 

Each party acknowledges that the offer and sale of each Transaction to it is
intended to be exempt from registration under the Securities Act by virtue of
Section 4(2) thereof and the provisions of Regulation D thereunder (“Regulation
D”). Accordingly, each party represents and warrants to the other that (i) it
has the financial ability to bear the economic risk of its investment in each
Transaction and is able to bear a total loss of its investment, (ii) it is an
“accredited investor” as that term is defined under Regulation D, (iii) it will
purchase each Transaction for investment and not with a view to the distribution
or resale thereof, and (iv) the disposition of each Transaction is restricted
under this Confirmation, the Securities Act and state securities laws.

   Counterparty represents and warrants as of the date hereof and each Trade
Date that:    (a) each of its filings under the Exchange Act that are required
to be filed from and including the ending date of Counterparty’s most recent
prior

 

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   fiscal year have been filed, and that, as of the respective dates thereof and
hereof, there is no misstatement of material fact contained therein or omission
of a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading;    (b) Counterparty is not in possession of material non-public
information regarding the Shares or Counterparty;    (c) Counterparty is not
entering into any Transaction to facilitate a distribution of the Shares or in
connection with a future distribution of securities;    (d) Counterparty is not
entering into this Confirmation or any Transaction to create actual or apparent
trading activity in the Shares (or any security convertible into or exchangeable
for Shares) or to manipulate the price of the Shares (or any security
convertible into or exchangeable for Shares);    (e) Counterparty is entering
into each Transaction in good faith and not as part of a plan or scheme to evade
the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”); it is
the intent of the parties that each Transaction comply with the requirements of
Rule l0b5-l(c)(1)(i)(A) and (B) and each Transaction shall be interpreted to
comply with the requirements of Rule 10b5-l(c) (the “Plan”); Counterparty will
not seek to control or influence MLI or MLPF&S to make “purchases or sales”
(within the meaning of Rule 10b5-1(c)(l)(i)(B)(3)) under any Transaction,
including, without limitation, any decision to enter into any hedging
transactions; Counterparty represents and warrants that it has consulted with
its own advisors as to the legal aspects of its adoption and implementation of
each Transaction under Rule 10b5-1;    (f) Neither it nor any “affiliated
purchaser” (as defined in Rule 10b-18 under the Exchange Act) has made any
purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under the
Exchange Act during the four full calendar weeks immediately preceding the
applicable Trade Date;   

(g) The purchase or writing of each Transaction will not violate Rule 13e-1 or
Rule 13e-4 under the Exchange Act, and Counterparty is not entering into any
Transaction in anticipation of, or in connection with, or to facilitate a
self-tender offer or a third-party tender offer;

 

(h) Each Transaction is consistent with the publicly announced program of
Counterparty to repurchase, from time to time, Shares (the “Repurchase
Program”); and

 

(i) Counterparty has full power and authority to undertake the Repurchase
Program, and the Repurchase Program has been duly authorized and remains valid.

   MLI represents and warrants, at all times beginning on the date of this
Master Confirmation through and including the Valuation Date, that:    (a) MLI
is not entering into this Confirmation or any Transaction to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to manipulate the price of the Shares (or any
security convertible into or exchangeable for Shares);

 

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   (b) MLI has implemented reasonable policies and procedures, taking into
consideration the nature of its business, to ensure that individuals making
decisions to purchase Shares in connection with the Transactions would not
violate laws prohibiting trading on the basis of material non-public information
concerning Counterparty or the Shares at all relevant times.    Counterparty
covenants and agrees that:    (a) during the term of each Transaction to
promptly notify MLI telephonically (which oral communication shall be promptly
confirmed by telecopy to MLI) if Counterparty determines that as a result of an
acquisition or other business transaction or for any other reason Counterparty
will be engaged in a distribution of Shares or other securities for which the
Shares are a reference security for purposes of Rule 102 of Regulation M under
the Exchange Act and to promptly notify MLI by telecopy of the period commencing
on the date that is one (1) business day before the commencement of such
distribution and ending on the day on which Counterparty completes the
distribution (the “Distribution Period”); for the purposes of this Confirmation,
the “term” of a Transaction shall not be considered to have been completed until
all Shares required to be transferred to party hereto have been duly transferred
and all cash amounts required to be paid to a party hereto have been duly paid;
   (b) without the prior written consent of MLI, neither Counterparty nor any
“affiliated purchaser” (as such term is defined in Rule 10b-18 under the
Exchange Act) will acquire Shares (or equivalent interests or securities
exchangeable, convertible or exercisable into Shares) or be a party to any
repurchase or similar agreements pursuant to which a valuation, averaging or
hedging period or similar such period overlaps or potentially overlaps with the
term of any Transaction, other than (i) any acquisition of Shares (or any
security convertible into or exchangeable for Shares) by Counterparty from
holders of awards granted under Counterparty’s stock incentive plans, in
connection with vesting, exercise, settlement, expiration or termination of such
awards (or Counterparty being a party to a repurchase or similar agreement for
such purpose), (ii) any acquisition of Shares (or any securities convertible
into or exchangeable for Shares) by any “affiliated purchaser” (as such term is
defined in Rule 10b-18 under the Exchange Act) of Counterparty pursuant to
awards granted under Counterparty’s stock incentive plans or pursuant to
Counterparty’s share purchase, 401(k) plan(s) or similar plans, (iii) any
acquisition of Shares (or any securities convertible into or exchangeable for
Shares) by Counterparty in a private transaction from any director or employee
of Counterparty, (iv) any acquisition of Shares (or any securities convertible
into or exchangeable for Shares) by directors or officers of Counterparty
subject to the reporting requirements of Section 16(a) and the substantive
provisions of Section 16(b) of the Exchange Act, (v) repurchases by Counterparty
that will be “Rule 10b-18 purchases” within the meaning specified in Rule 10b-18
under the Exchange Act through MLPF&S in amounts agreed to by the parties hereto
after taking into consideration the Number of Shares and Valuation Date of any
Transactions hereunder, and (vi) those transactions already disclosed in writing
to MLI; and

 

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(c) Counterparty shall report each Transaction as required in any applicable
report filed by Counterparty pursuant to the Exchange Act in compliance with
Regulation S-K and/or Regulation S-B under the Exchange Act, as applicable.

 

Counterparty acknowledges and agrees that:

 

(a) In connection with each Transaction, MLI will engage in customary hedging
activities in its sole discretion and for its own account and that such
activities may involve sales or purchases at an average price that may be
greater than, or less than, the price paid by Counterparty under the terms of
such Transaction; and

 

(b) Notwithstanding the generality of Section 13.1 of the Equity Definitions,
MLI is not making any representations or warranties with respect to the
treatment of any Transaction under FASB Statements 133 as amended or 150, EITF
00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity
Project.

 

MLI covenants and agrees that notwithstanding anything in the foregoing to the
contrary, MLI will purchase any Shares acquired in connection with any
Transaction (including without limitation Shares acquired to close out a related
stock borrow position), and all Shares delivered to Counterparty shall have been
acquired, in a manner that complies with the limitations set forth in clauses
(b)(2), (b)(3), (b)(4) and (c) of Rule 10b-18 under the Exchange Act, as if such
rule could be applied to such purchases.

Account Details:

 

Account for payments to Counterparty:

    

Deutsche Bank Trust Company

New York, NY

ABA # 021001033

FAO: Genworth Financial, Inc.

A/C: 50275133

Account for payment to MLI:

    

JP Morgan Chase Bank, New York

ABA# 021000021

FAO: MLI Equity Derivatives

A/C: 066213118

 

Bankruptcy Rights:    In the event of Counterparty’s bankruptcy, MLI’s rights in
connection with any Transaction shall not exceed those rights held by common
shareholders. For the avoidance of doubt, the parties acknowledge and agree that
MLI’s rights with respect to any other claim arising from any Transaction prior
to Counterparty’s bankruptcy shall remain in full force and effect and shall not
be otherwise abridged or modified in connection herewith. Set-Off:    The
Set-off provisions in the Agreement shall not apply with respect to any
Transaction; provided, however Set-off shall apply with respect to this
Agreement or any other ISDA Master Agreement between the parties where there are
delivery obligations of Shares on any day by Counterparty, on the one hand, and
MLI, on the other hand, with the resulting Share delivery obligation of a party
upon such Set-off being rounded down to the nearest number of whole Shares.

 

11

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Collateral:    None. Transfer:    Counterparty may transfer any of its rights or
delegate its obligations under any Transaction with the prior written consent of
MLI. MLI may assign and delegate its rights and obligations under any
Transaction (the “Transferred Obligations”) to any subsidiary of Merrill Lynch &
Co., Inc. (the “Assignee”) by notice specifying the effective date of such
transfer (“Effective Date”) and including an executed acceptance and assumption
by the Assignee of the Transferred Obligations; provided that (i) the
obligations of the Assignee shall be guaranteed by a guarantee of Merrill Lynch
& Co., Inc. in the form attached as Exhibit B; (ii) Counterparty will not, as a
result of such transfer, be required to pay to the Assignee an amount in respect
of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement (except in
respect of interest under Section 2(e), 6(d)(ii), or 6(e)) greater than the
amount in respect of which Counterparty would have been required to pay to MLI
in the absence of such transfer; (iii) such assignment and delegation will not
result in any adverse regulatory consequences to Counterparty; and (iv) the
Assignee will not, as a result of such transfer, be required to withhold or
deduct on account of a Tax under Section 2(d)(i) of the Agreement (except in
respect of interest under Section 2(e), 6(d)(ii), or 6(e)) an amount in excess
of that which MLI would have been required to withhold or deduct in the absence
of such transfer, unless the Assignee would be required to make additional
payments pursuant to Section 2(d)(i)(4) of the Agreement corresponding to such
excess. On the Effective Date, (a) MLI shall be released from all obligations
and liabilities arising under the Transferred Obligations; and (b) if MLI has
not assigned and delegated its rights and obligations under the Agreement and
all Transactions thereunder, the Transferred Obligations shall cease to be a
Transaction under the Agreement and shall be deemed to be a Transaction under
the master agreement, if any, between Assignee and Counterparty, provided that,
if at such time Assignee and Counterparty have not entered into a master
agreement, Assignee and Counterparty shall be deemed to have entered into an
ISDA form of Master Agreement (Multicurrency-Cross Border) and Schedule
substantially in the form of the Agreement but amended to reflect the name of
the Assignee and the address for notices and any amended representations under
Part 2 of the Agreement as may be specified in the notice of transfer.
Regulation:    MLI is regulated by The Securities and Futures Authority Limited
and has entered into each Transaction as principal. Indemnity:    Each party
hereto (as applicable, the “Indemnifying Party”) agrees to indemnify the other
party, its Affiliates and their respective directors, officers, agents and
controlling parties (each such person being an “Indemnified Party”) from and
against any and all losses, claims, damages and liabilities, joint and several,
to which such Indemnified Party may become subject because of the untruth of any
representation by the Indemnifying Party or a breach by the Indemnifying Party
of any agreement or covenant under this Confirmation, in the Agreement, the Plan
or any other agreement relating to the Agreement or any Transaction and will
reimburse any Indemnified Party for all reasonable expenses (including
reasonable legal fees and expenses) as they are incurred in connection with the
investigation of, preparation for, or defense of, any pending or threatened
claim or any action or proceeding arising therefrom, whether or not such
Indemnified Party is a party thereto.    An Indemnifying Party will not be
liable under this provision to the extent that any loss, claim, damage,
liability or expense results from the Indemnified Party’s gross negligence
and/or willful misconduct.

 

12

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ISDA Master Agreement

With respect to the Agreement, MLI and Counterparty each agree as follows:

Specified Entities:

(i) in relation to MLI, for the purposes of:

 

Section 5(a)(v):   not applicable Section 5(a)(vi):   not applicable
Section 5(a)(vii):   not applicable Section 5(b)(iv):   not applicable

and (ii) in relation to Counterparty, for the purposes of:

 

Section 5(a)(v):   not applicable Section 5(a)(vi):   not applicable
Section 5(a)(vii):   not applicable Section 5(b)(iv):   not applicable

“Specified Transaction” will have the meaning specified in Section 14 of the
Agreement.

The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the Agreement
will not apply to MLI and Counterparty.

The “Automatic Early Termination” provision of Section 6(a) of the Agreement
will not apply to MLI or to Counterparty.

Payments on Early Termination for the purpose of Section 6(e) of the Agreement:
(i) Market Quotation shall apply; and (ii) the Second Method shall apply
provided that none of expected dividends, stock loan rate or volatility shall be
considered in determining the Settlement Amount.

“Termination Currency” means USD.

Tax Representations:

 

  (I) For the purpose of Section 3(e) of the Agreement, each party represents to
the other party that it is not required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of any Tax
from any payment (other than interest under Section 2(e), 6(d)(ii), or 6(e) of
the Agreement) to be made by it to the other party under the Agreement. In
making this representation, each party may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f) of the
Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i)
or 4(a)(iii) of the Agreement, and the accuracy and effectiveness of any
document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of
the Agreement, and (iii) the satisfaction of the agreement of the other party
contained in Section 4(d) of the Agreement; provided that it will not be a
breach of this representation where reliance is placed on clause (ii) above and
the other party does not deliver a form or document under Section 4(a)(iii) of
the Agreement by reason of material prejudice to its legal or commercial
position.

 

  (II) For the purpose of Section 3(f) of the Agreement, each party makes the
following representations to the other party:

 

  (i) MLI represents that it is a company organized under the laws of England
and Wales.

 

  (ii) Counterparty represents that it is a corporation incorporated under the
laws of the State of Delaware.

 

13

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Delivery Requirements: For the purpose of Sections 3(d), 4(a)(i) and (ii) of the
Agreement, each party agrees to deliver the following documents:

Tax forms, documents or certificates to be delivered are:

Each party agrees to complete (accurately and in a manner reasonably
satisfactory to the other party), execute, and deliver to the other party,
United States Internal Revenue Service Form W-9 or W-8 BEN, or any successor of
such form(s): (i) before the first payment date under this agreement;
(ii) promptly upon reasonable demand by the other party; and (iii) promptly upon
learning that any such form(s) previously provided by the other party has become
obsolete or incorrect.

Other documents to be delivered:

 

Party Required to Deliver Document

  

Document Required to be Delivered

  

When Required

   Covered by
Section 3(d)
Representation Counterparty    Evidence of the authority and true signatures of
each official or representative signing this Confirmation    Upon or before
execution and delivery of this Confirmation    Yes Counterparty    Copy of the
resolution of the Board of Directors or equivalent document authorizing the
execution and delivery of this Confirmation    Upon or before execution and
delivery of this Confirmation    Yes Each party    Executed Supplemental
Confirmation, substantially in the form of Exhibit A hereto, in respect of each
Transaction    On or before the corresponding Trade Date    Yes MLI    Guarantee
of its Credit Support Provider, substantially in the form of Exhibit B attached
hereto, together with evidence of the authority and true signatures of the
signatories, if applicable    Upon or before execution and delivery of this
Confirmation    Yes

Addresses for Notices: For the purpose of Section 12(a) of the Agreement:

Address for notices or communications to MLI:

 

Address:    Merrill Lynch International       Merrill Lynch Financial Centre   
   2 King Edward Street, London EC1A 1HQ       Attention: Manager, Fixed Income
Settlements       Facsimile No.: +44 207 995 2004 Telephone No.: +44 207 995
3769

(For all purposes)

Additionally, a copy of all notices pursuant to Sections 5, 6, and 7 as well as
any changes to Counterparty’s address, telephone number or facsimile number
should be sent to:

Address: GMI Counsel

Merrill Lynch World Headquarters

4 World Financial Center, 5th Floor

New York, New York 10080

Attention: Global Equity Derivatives

Facsimile No.: 212 449-6576 Telephone No.: 212 449-6309

 

14

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Address for notices or communications to Counterparty for all purposes:

Genworth Financial, Inc.

Treasury, 4th Floor, Building 1

6620 West Broad Street

Richmond, VA 23230

Phone: 804-662-2222

Fax: 804-662-7777

Attention: Robert W. McNutt, Assistant Treasurer

Process Agent: For the purpose of Section 13(c) of the Agreement, MLI appoints
as its process agent:

Merrill Lynch, Pierce, Fenner & Smith Incorporated

222 Broadway, 16th Floor

New York, NY 10038

Attention: Litigation Department

Counterparty does not appoint a Process Agent.

Multibranch Party. For the purpose of Section 10(c) of the Agreement: Neither
MLI nor Counterparty is a Multibranch Party.

Calculation Agent. The Calculation Agent is MLI, whose judgments, determinations
and calculations in each Transaction and any related hedging transaction between
the parties shall be made in good faith and in a commercially reasonable manner.
MLI, whether acting as Calculation Agent or Determining Party, agrees that, if
Counterparty requests, MLI will provide to Counterparty any related calculations
or support for a decision made hereunder by MLI as Calculation Agent or
Determining Agent.

Credit Support Document.

MLI: Guarantee of ML&Co in the form attached hereto as Exhibit B.

Counterparty: Not Applicable

Credit Support Provider.

With respect to MLI: Merrill Lynch and Co. and with respect to Counterparty, Not
Applicable.

Governing Law. This Confirmation will be governed by, and construed in
accordance with, the laws of the State of New York.

Netting of Payments. The provisions of Section 2(c) of the Agreement shall not
be applicable to each Transaction; provided, however, that with respect to this
Agreement or any other ISDA Master Agreement between the parties, any Share
delivery obligations on any day of Counterparty, on the one hand, and MLI, on
the other hand, shall be netted. The resulting Share delivery obligation of a
party upon such netting shall be rounded down to the nearest number of whole
Shares, such that neither party shall be required to deliver any fractional
Shares.

 

15

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Accuracy of Specified Information. Section 3(d) of the Agreement is hereby
amended by adding in the third line thereof after the word “respect” and before
the period the words “or, in the case of audited or unaudited financial
statements or balance sheets, a fair presentation of the financial condition of
the relevant person.”

Basic Representations. Section 3(a) of the Agreement is hereby amended by the
deletion of “and” at the end of Section 3(a)(iv); the substitution of a
semicolon for the period at the end of Section 3(a)(v) and the addition of
Sections 3(a)(vi), as follows:

Eligible Contract Participant; Line of Business. It is an “eligible contract
participant” as defined in the Commodity Futures Modernization Act of 2000, and
it has entered into this Confirmation and each Transaction in connection with
its business or a line of business (including financial intermediation), or the
financing of its business.

Amendment of Section 3(a)(iii). Section 3(a)(iii) of the Agreement is modified
to read as follows:

No Violation or Conflict. Such execution, delivery and performance do not
materially violate or conflict with any law known by it to be applicable to it,
any provision of its constitutional documents, any order or judgment of any
court or agency of government applicable to it or any of its assets or any
material contractual restriction relating to Specified Indebtedness binding on
or affecting it or any of its assets.

Amendment of Section 3(a)(iv). Section 3(a)(iv) of the Agreement is modified by
inserting the following at the beginning thereof:

“To such party’s best knowledge,”

Additional Representations:

Counterparty Representations. As of the date hereof and each Trade Date,
Counterparty represents and warrants that it: (i) has such knowledge and
experience in financial and business affairs as to be capable of evaluating the
merits and risks of entering into each Transaction; (ii) has consulted with its
own legal, financial, accounting and tax advisors in connection with each
Transaction; and (iii) is entering into each Transaction for a bona fide
business purpose to hedge or repurchase Shares.

As of the date hereof and each Trade Date, Counterparty represents and warrants
that it is not and has not been the subject of any civil proceeding of a
judicial or administrative body of competent jurisdiction that could reasonably
be expected to impair materially Counterparty’s ability to perform its
obligations hereunder.

As of the date hereof and each Trade Date, Counterparty is not insolvent.

Acknowledgements:

(1) The parties acknowledge and agree that there are no other representations,
agreements or other undertakings of the parties in relation to any Transaction,
except as set forth in this Confirmation and the Master Agreement.

(2) The parties hereto intend for:

(a) each Transaction to be a “securities contract” as defined in Section 741(7)
of Title 11 of the United States Code (the “Bankruptcy Code”), qualifying for
the protections under Section 555 of the Bankruptcy Code;

(b) a party’s right to liquidate each Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a “contractual right” as defined in the
Bankruptcy Code;

 

16

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(c) all payments for, under or in connection with each Transaction, all payments
for the Shares and the transfer of such Shares to constitute “settlement
payments” as defined in the Bankruptcy Code.

Amendment of Section 6(d)(ii). Section 6(d)(ii) of the Agreement is modified by
deleting the words “on the day” in the second line thereof and substituting
therefor “on the day that is three Local Business Days after the day”.
Section 6(d)(ii) is further modified by deleting the words “two Local Business
Days” in the fourth line thereof and substituting therefor “three Local Business
Days.”

Amendment of Definition of Reference Market-Makers. The definition of “Reference
Market-Makers” in Section 14 is hereby amended by adding in clause (a) after the
word “credit” and before the word “and” the words “or to enter into transactions
similar in nature to Transactions”.

Consent to Recording. Each party consents to the recording of the telephone
conversations of trading and marketing personnel of the parties and their
Affiliates in connection with this Confirmation. To the extent that one party
records telephone conversations (the “Recording Party”) and the other party does
not (the “Non-Recording Party”), the Recording Party shall in the event of any
dispute, make a complete and unedited copy of such party’s tape of the entire
day’s conversations with the Non-Recording Party’s personnel available to the
Non-Recording Party. The Recording Party’s tapes may be used by either party in
any forum in which a dispute is sought to be resolved and the Recording Party
will retain tapes for a consistent period of time in accordance with the
Recording Party’s policy unless one party notifies the other that a particular
transaction is under review and warrants further retention.

Disclosure/ Confidentiality. Each party hereby acknowledges and agrees that MLI
has authorized Counterparty to disclose this Confirmation and each Transaction
and any related hedging transaction between the parties to any and all persons.
The parties and Agent agree to treat the Valuation Date, Aggregate Adjustment
Amount, Ordinary Dividend Amount, Scheduled Dividend Dates, and Settlement Price
Adjustment Amount as set forth in any Supplemental Confirmation as confidential
and not to disclose them to any other person except as required by applicable
law or the regulations of an applicable securities exchange (in which case MLI
or Agent, as the case may be, shall inform Counterparty promptly of such
disclosure). Each party agrees that notwithstanding anything to the contrary in
this Confirmation, the confidentiality obligation of the preceding sentence
shall survive the termination of this Confirmation and the Transactions, and
shall remain in effect until the seventh anniversary of the date of this Master
Confirmation.

Severability. If any term, provision, covenant or condition of this
Confirmation, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable in whole or in part for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Confirmation had been executed with the invalid
or unenforceable provision eliminated, so long as this Confirmation as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter of this Confirmation and the deletion of
such portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in
Section 14 to the extent that it relates to, or is used in or in connection with
any such Section) shall be so held to be invalid or unenforceable.

Affected Parties. For purposes of Section 6(e) of the Agreement, each party
shall be deemed to be an Affected Party in connection with Illegality and any
Tax Event.

 

17

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Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Master Confirmation enclosed for that
purpose and returning it to us.

Very truly yours,

 

MERRILL LYNCH INTERNATIONAL By:  

/s/ William Morley

Name:   William Morley Title:   Senior Specialist, Equity Derivatives
Documentation Confirmed as of the date first above written: GENWORTH FINANCIAL,
INC. By:  

/s/ Gary T. Prizzia /s/ Robert W. McNutt

Name:   Gary T. Prizzia / Robert W. McNutt Title:   Vice President and Treasurer
/ Assistant Treasurer Acknowledged and agreed as to matters relating to the
Agent:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

solely in its capacity as Agent hereunder

By:  

/s/ Fran Jacobsen

Name:   Fran Jacobsen Title:   Vice President, Equity Derivatives Documentation

 

18

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EXHIBIT A

FORM OF SUPPLEMENTAL CONFIRMATION

LOGO [g54689img01.jpg]

Supplemental Confirmation of ASAP Minus (VWAP Pricing)

 

Date:    May 17, 2007    ML Ref: l     To:   

Genworth Financial, Inc. (“Counterparty”)

6620 West Broad Street

Richmond, Virginia 23230

   Attention:    Robert McNutt    From:   

Merrill Lynch International (“MLI”)

Merrill Lynch Financial Centre

2 King Edward Street

London EC1A 1HQ

  

Dear Sir / Madam:

Capitalized terms used herein, unless defined herein, have the meanings set
forth in the Master Confirmation of OTC ASAP Minus between Counterparty and MLI,
dated as of May 17, 2007.

The purpose of this Supplemental Confirmation is to confirm the terms and
conditions of a Transaction under the Master Confirmation.

The terms of the Transaction to which the Supplemental Confirmation relates are
as follows:

 

Trade Date:

  May 17, 2007    Initial Share Price:   USD $36.28    Valuation Date:   October
***, 2007    Number of Shares:   16,538,038    Aggregate Adjustment Amount:  
USD ***    Ordinary Dividend Amount:   USD ***    Scheduled Dividend Dates:  
***, 2007    Settlement Price Adjustment Amount:   USD ***   

 

19

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Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Supplemental Confirmation enclosed for
that purpose and returning it to us.

Very truly yours,

 

MERRILL LYNCH INTERNATIONAL By:  

/s/ William Morley

Name:   William Morley Title:   Senior Specialist, Equity Derivatives
Documentation Confirmed as of the date first above written: GENWORTH FINANCIAL,
INC. By:  

/s/ Gary T. Prizzia /s/ Robert W. McNutt

Name:   Gary T. Prizzia / Robert W. McNutt Title:   Vice President and Treasurer
/ Assistant Treasurer Acknowledged and agreed as to matters relating to the
Agent:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

solely in its capacity as Agent hereunder

By:  

/s/ Fran Jacobsen

Name:   Fran Jacobsen Title:   Vice President, Equity Derivatives Documentation

 

20

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EXHIBIT B

GUARANTEE OF MERRILL LYNCH & CO., INC.

FOR VALUE RECEIVED, receipt of which is hereby acknowledged, MERRILL LYNCH &
CO., INC., a corporation duly organized and existing under the laws of the State
of Delaware (“ML & Co.”), hereby unconditionally guarantees to Genworth
Financial, Inc. (the “Company”), the due and punctual payment of any and all
amounts payable by Merrill Lynch International, a company organized under the
laws of England and Wales (“MLI”), under the terms of the Master Confirmation of
OTC ASAP Minus (VWAP Pricing) between the Company and MLI, dated as of May 17,
2007 (with the Supplemental Confirmations thereto, the “Agreement”), including,
in case of default, interest on any amount due, when and as the same shall
become due and payable, whether on the scheduled payment dates, at maturity,
upon declaration of termination or otherwise, according to the terms thereof. In
case of the failure of MLI punctually to make any such payment, ML & Co. hereby
agrees to make such payment, or cause such payment to be made, promptly upon
demand made by the Company to ML & Co.; provided, however that delay by the
Company in giving such demand shall in no event affect ML & Co.’s obligations
under this Guarantee. This Guarantee shall remain in full force and effect or
shall be reinstated (as the case may be) if at any time any payment guaranteed
hereunder, in whole or in part, is rescinded or must otherwise be returned by
the Company upon the insolvency, bankruptcy or reorganization of MLI or
otherwise, all as though such payment had not been made. This is a guarantee of
payment in full, not collection.

ML & Co. hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Agreement; the
absence of any action to enforce the same; any waiver or consent by the Company
concerning any provisions thereof; the rendering of any judgment against MLI or
any action to enforce the same; or any other circumstances that might otherwise
constitute a legal or equitable discharge of a guarantor or a defense of a
guarantor. ML & Co. covenants that this guarantee will not be discharged except
by complete payment of the amounts payable under the Agreement. This Guarantee
shall continue to be effective if MLI merges or consolidates with or into
another entity, loses its separate legal identity or ceases to exist.

ML & Co. hereby waives diligence; presentment; protest; notice of protest,
acceleration, and dishonor; filing of claims with a court in the event of
insolvency or bankruptcy of MLI; all demands whatsoever, except as noted in the
first paragraph hereof; and any right to require a proceeding first against MLI.

ML & Co. hereby certifies and warrants that this Guarantee constitutes the valid
obligation of ML & Co. and complies with all applicable laws.

This Guarantee shall be governed by, and construed in accordance with, the laws
of the State of New York.

This Guarantee may be terminated at any time by notice by ML & Co. to the
Company given in accordance with the notice provisions of the Agreement,
effective upon receipt of such notice by the Company or such later date as may
be specified in such notice; provided, however, that this Guarantee shall
continue in full force and effect with respect to any obligation of MLI under
the Agreement entered into prior to the effectiveness of such notice of
termination.

This Guarantee becomes effective concurrent with the effectiveness of the
Agreement, according to its terms.

 

21

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IN WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in its
corporate name by its duly authorized representative.

 

MERRILL LYNCH & CO., INC.

By:

 

/s/    Patricia Kropiewnicki

Name:

 

Patricia Kropiewnicki

Title:

 

Designated Signatory

Date:

 

May 14, 2007

 

22

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LOGO [g54689img01.jpg]

COVER STATEMENT

CLIENT/COUNTERPARTY RELATIONSHIP

Dear Client/Counterparty:

Merrill Lynch is pleased to provide the attached statement of Generic Risks
Associated with Over-the-Counter Derivative Transactions under this Cover
Statement that concerns, among other things, the nature of our relationship with
you in the context of such transactions. This statement was developed for our
new and our ongoing client/counterparties in response to suggestions that OTC
derivative dealers consider taking steps to ensure that market participants
utilizing OTC derivatives understand their risk exposures and the nature of
their relationships with dealers before they enter into OTC derivative
transactions.

Merrill Lynch (“we”) are providing to you and your organization (“you”) the
attached statement of Generic Risks Associated with Over-the-Counter Derivative
Transactions in order to identify, in general terms, certain of the principal
risks associated with individually negotiated over-the-counter (“OTC”)
derivative transactions. The attached statement does not purport to identify the
nature of the specific market or other risks associated with a particular
transaction.

Before entering into an OTC derivative transaction, you should ensure that you
fully understand the terms of the transaction, relevant risk factors, the nature
and extent of your risk of loss and the nature of the contractual relationship
into which you are entering. You should also carefully evaluate whether the
transaction is appropriate for you in light of your experience, objectives,
financial resources, and other relevant circumstances and whether you have the
operational resources in place to monitor the associated risks and contractual
obligations over the term of the transaction. If you are acting as a financial
adviser or agent, you should evaluate these considerations in light of the
circumstances applicable to your principal and the scope of your authority.

If you believe you need assistance in evaluating and understanding the terms or
risks of a particular OTC derivative transaction, you should consult appropriate
advisers before entering into the transaction.

Unless we have expressly agreed in writing to act as your adviser with respect
to a particular OTC derivative transaction pursuant to terms and conditions
specifying the nature and scope of our advisory relationship, we are acting in
the capacity of an arm’s length contractual Counterparty to you in connection
with the transaction and not as your financial adviser or fiduciary.
Accordingly, unless we have so agreed to act as your adviser, you should not
regard transaction proposals, suggestions or other written or oral
communications from us as recommendations or advice or as expressing our view as
to whether a particular transaction is appropriate for you or meets your
financial objectives.

Finally, we and/or our affiliates may from time to time take proprietary
positions and/or make a market in instruments identical or economically related
to OTC derivative transactions entered into with you, or may have an investment
banking or other commercial relationship with and access to information from the
issuer(s) of securities, financial instruments, or other interests underlying
OTC derivative transactions entered into with you. We may also undertake
proprietary activities, including hedging transactions related to the initiation
or termination of an OTC derivative transaction with you, that may adversely
affect the market price, rate index or other market factor(s) underlying an OTC
derivative transaction entered into with you and consequently the value of the
transaction.

 

23

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LOGO [g54689img01.jpg]

A. GENERIC RISKS ASSOCIATED WITH

OVER-THE-COUNTER DERIVATIVE TRANSACTIONS

OTC derivative transactions, like other financial transactions, involve a
variety of significant risks. The specific risks presented by a particular OTC
derivative transaction necessarily depend upon the terms of the transaction and
your circumstances. In general, however, all OTC derivative transactions involve
some combination of market risk, credit risk, funding risk and operational risk.

Market risk is the risk that the value of a transaction will be adversely
affected by fluctuations in the level or volatility of or correlation or
relationship between one or more market prices, rates or indices or other market
factors or by illiquidity in the market for the relevant transaction or in a
related market.

Credit risk is the risk that a Counterparty will fail to perform its obligations
to you when due.

Funding risk is the risk that, as a result of mismatches or delays in the timing
of cash flows due from or to your counterparties in OTC derivative transactions
or related hedging, trading, collateral or other transactions, you or your
Counterparty will not have adequate cash available to fund current obligations.

Operational risk is the risk of loss to you arising from inadequacies in or
failures of your internal systems and controls for monitoring and quantifying
the risks and contractual obligations associated with OTC derivative
transactions, for recording and valuing OTC derivative and related transactions,
or for detecting human error, systems failure or management failure.

There may be other significant risks that you should consider based on the terms
of a specific transaction. Highly customized OTC derivative transactions in
particular may increase liquidity risk and introduce other significant risk
factors of a complex character. Highly leveraged transactions may experience
substantial gains or losses in value as a result of relatively small changes in
the value or level of an underlying or related market factor.

Because the price and other terms on which you may enter into or terminate an
OTC derivative transaction are individually negotiated, these may not represent
the best price or terms available to you from other sources.

In evaluating the risks and contractual obligations associated with a particular
OTC derivative transaction, you should also consider that an OTC derivative
transaction may be modified or terminated only by mutual consent of the original
parties and subject to agreement on individually negotiated terms. Accordingly,
it may not be possible for you to modify, terminate or offset your obligations
or your exposure to the risks associated with a transaction prior to its
scheduled termination date.

Similarly, while market makers and dealers generally quote prices or terms for
entering into or terminating OTC derivative transactions and provide indicative
or mid-market quotations with respect to outstanding OTC derivative
transactions, they are generally not contractually obligated to do so. In
addition, it may not be possible to obtain indicative or mid-market quotations
for an OTC derivative transaction from a market maker or dealer that is not a
Counterparty to the transaction. Consequently, it may also be difficult for you
to establish an independent value for an outstanding OTC derivative transaction.
You should not regard your Counterparty’s provision of a valuation or indicative
price at your request as an offer to enter into or terminate the relevant
transaction at that value or price, unless the value or price is identified by
Counterparty as firm or binding.

This brief statement does not purport to disclose all of the risks and other
material considerations associated with OTC derivative transactions. You should
not construe this generic disclosure statement as business, legal, tax or
accounting advice or as modifying applicable law. You should consult your own
business, legal, tax and accounting advisers with respect to proposed OTC
derivative transactions and you should refrain from entering into any OTC
derivative transaction unless you have fully understood the terms and risks of
the transaction, including the extent of your potential risk of loss.

 

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