Exhibit 10.4

 

This LIABILITY AND PORTFOLIO MANAGEMENT AGREEMENT, dated as of January 1, 2004
(this “Agreement”), between TRINITY FUNDING COMPANY, LLC, a New York limited
liability company (the “Company”) and GENWORTH FINANCIAL ASSET MANAGEMENT, LLC,
a Virginia limited liability company (the “Manager” and together with the
Company, the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, FGIC MRCA Corp. (“MRCA Corp.”) and the Company entered into that
certain Investment Administration Agreement, dated as of April 4, 1995 (as
subsequently amended, the “Investment Administration Agreement”); and

 

WHEREAS, the Manager is an investment adviser registered with the United States
Securities and Exchange Commission that will be engaged by the Company to
provide the services described herein; and

 

WHEREAS, MRCA Corp. has provided the Company a written notice of resignation
pursuant to Section 3.05 of the Investment Administration Agreement and the
Company, by executing this Agreement, accepts such resignation and waives the
requirement for sixty (60) days’ notice thereof; and

 

WHEREAS, the Investment Administration Agreement will be terminated and replaced
by this Agreement; and

 

WHEREAS, the Manager and the Company wish to establish and define certain
obligations set forth in Exhibit C and Exhibit D (the “Listed Obligations”) that
the Manager is required to undertake in connection with the services it will
provide to the Company under this Agreement;

 

NOW, THEREFORE, in consideration of the mutual promises made herein and upon the
terms and subject to the conditions set forth herein, the Parties hereby agree
as follows:

 

ARTICLE I

Definitions

 

SECTION 1.01.      Terms Defined in the Security Agreement.  Capitalized terms
used in this Agreement that are not defined herein shall have the respective
meanings specified in the Collateral Trust and Security Agreement, dated as of
April 4, 1995, among the Company, General Electric Capital Corporation (“GE
Capital”), as LOC Agent, and Bankers Trust Company (predecessor-in-interest to
Deutsche Bank Trust Company Americas), as Security Trustee (as amended, the
“Security Agreement”).

 

SECTION 1.02.      Terms Defined in this Agreement.  As used in this Agreement,
the following capitalized terms have the following meanings:

 

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“Accounts” shall have the meaning specified in Section 2.01.

 

“Agreement” means this Liability and Portfolio Management Agreement, including
all provisions of the Security Agreement incorporated by reference herein, which
shall have the same effect as if those provisions were set forth in full herein.

 

“Company” shall have the meaning specified in the preamble of this Agreement.

 

“Cure Period” means (i) with respect to the Listed Obligations set forth in
Exhibit C, the respective cure periods set forth therein, and (ii) with respect
to Listed Obligations in Exhibit D or other obligations set forth in this
Agreement that do not appear in Exhibit C, one hundred twenty (120) days during
the initial term of this Agreement and sixty (60) days thereafter; in each case
such Cure Period to commence upon receipt of notice by the Manager from any
party to a Contract entitled to give notice of default GE Capital or the
Company.

 

“Designee” shall have the meaning specified in Section 4.05(b).

 

“Dispute Resolution” shall have the meaning specified in Section 4.05(b).

 

“Failure Notice Recipients” shall have the meaning specified in Section 4.05(b)
or such other recipients as are designated from time to time.

 

“Final Cure Period” shall have the meaning specified in Section 4.05(b).

 

“GE Capital” shall have the meaning specified in Section 1.01.

 

“Impossibility” shall have the meaning specified in Section 4.05(b).

 

“Indemnified Party” shall have the meaning specified in Section 2.12.

 

“Investment Administration Agreement” shall have the meaning specified in the
first recital of this Agreement.

 

“Listed Obligations” shall have the meaning specified in the fifth recital of
this Agreement.

 

“Management Fee” shall have the meaning specified in Section 2.06.

 

“Manager” shall have the meaning specified in the preamble to this Agreement.

 

“Maximum Permitted Program Size” shall have the meaning specified in
Section 2.06.

 

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“MCRA Corp.” shall have the meaning specified in the first recital of this
Agreement.

 

“Notice of Failure” shall have the meaning specified in Section 4.05(b).

 

“Operating Costs” shall have the meaning specified in Section 2.07(b).

 

“Operations, Procedures and Controls Manual” means the Operations, Procedures
and Controls Manual of the Company dated as of July 2, 2003, as the same may be
amended from time to time.  The Rating Agencies shall receive notice and a copy
of any amendments or modifications to the Operations, Procedures and Controls
Manual on a biennial basis.

 

“Parties” shall have the meaning specified in the preamble to this Agreement.

 

“Permitted Investments Amendment” means an amendment to the Security Agreement
which allows the Company to purchase debt issued by GE Capital without limit,
subject to (i) the provision by GE Capital of a full and irrevocable guarantee
of the Company’s payment obligations under the Contracts and Hedge Contracts,
(ii) GE Capital’s being rated at least “AAA”/”Aaa” by the Rating Agencies, and
(iii) the retirement in full of the outstanding Preferred Securities issued by
the Company.

 

“Policy 5.0” means the policy which sets forth certain risk management
guidelines that the Company is required to observe, as the same may be amended
from time to time by the Company with the approval of GE Capital.  The Rating
Agencies shall receive notice and copy of any amendments or modifications to
Policy 5.0 on a quarterly basis.

 

“Policy 6.0” means the policy which sets forth certain risk management
parameters that the Company is required to observe, as the same may be amended
from time to time by the Company with the approval of GE Capital.  The Rating
Agencies shall receive notice and copy of any amendments or modifications to
Policy 6.0 on a quarterly basis.

 

“Portfolio” shall have the meaning specified in Section 2.01.

 

“Remediation Plan” shall have the meaning specified in Section 4.05(b).

 

“Security Agreement” shall have the meaning specified in Section 1.01.

 

“Senior Management” shall have the meaning specified in Section 4.05(b).

 

“Submission” shall have the meaning specified in Section 4.05(b).

 

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SECTION 1.03.      Other Definitional Provisions.  Section 1.02 of the Security
Agreement is incorporated herein by reference.

 

ARTICLE II

Engagement; Powers and Duties

 

SECTION 2.01.      Engagement of Manager.

 

(a)           The Company hereby retains the Manager:

 

(i)            to advise the Company as to the investment of its Assets,
including recommending specific Permitted Investments (and if applicable,
Qualified Investments) and Hedge Contracts to the Company;

 

(ii)           to administer the Company’s Assets maintained in the Facility
Account, the Collateral Accounts, if any, and the LOC Reimbursement Account and
such other accounts as the Company may maintain from time to time (the
“Accounts”), which are identified (to the extent established by the effective
date hereof) by account number in Exhibit A, as the same may be amended from
time to time, with such deposits thereto and withdrawals therefrom as are from
time to time permitted under the Security Agreement;

 

(iii)          for as long as the revocable power of attorney granted pursuant
to Section 2.02 is in effect, to arrange the purchase and sale through
registered broker-dealers of bonds, pass-through certificates, stocks, and other
securities relating to the Accounts;

 

(iv)          for as long as the revocable power of attorney granted pursuant to
Section 2.02 is in effect, to arrange the purchase and sale and otherwise to
effect transactions in Hedge Contracts relating to the Accounts;

 

(v)           to advise the Company in the issuance of and to assist the Company
in the preparation of (and, for so long as the revocable power of attorney
granted pursuant to Section 2.02 is in effect, to execute and to deliver on
behalf of the Company) Investment Orders and Disposition Orders, as may be
required from time to time pursuant to the terms of Sections 2.04 and 2.05 of
the Security Agreement;

 

(vi)          to prepare reports and to perform valuation tests as specified in
Section 2.06 of the Security Agreement;

 

(vii)         to take such action as is necessary and proper on behalf of the
Company for the preservation of Company Collateral pursuant to Section 2.07 of
the Security Agreement;

 

(viii)        to assist the Company in the preparation and filing of financing
statements or amendments of financing statements, as may be required in
connection with

 

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any change in the Company’s name or location as contemplated by Section 2.08 of
the Security Agreement;

 

(ix)           to advise the Company in the granting or effecting of and to
assist the Company in the preparation of (and, for so long as the revocable
power of attorney granted pursuant to Section 2.02 is in effect, to execute and
to deliver on behalf of the Company) any consents, waivers, extensions, or
modifications in respect of any item of Company Collateral as contemplated by
Section 2.10 of the Security Agreement;

 

(x)            to advise the Company in the delivery of and to assist the
Company in the preparation of (and, for so long as the revocable power of
attorney granted pursuant to Section 2.02 is in effect, to execute and to
deliver on behalf of the Company) any instrument of transfer or release in
respect of any item of Company Collateral as contemplated by Section 2.11 of the
Security Agreement;

 

(xi)           to notify the Security Trustee and other specified parties as may
be required from time to time, pursuant to the terms of the Security Agreement,
of a Credit Event or a Program Event of Default;

 

(xii)          to advise the Company as to the allocation of Company Collateral
to particular Contracts pursuant to Article V of the Security Agreement and the
terms of the relevant Contract;

 

(xiii)         to notify the Security Trustee as may be required from time to
time, pursuant to the terms of the Security Agreement, of an LOC Draw Event;

 

(xiv)        to designate persons who are registered representatives of a
registered broker-dealer which is a member of the National Association of
Securities Dealers to execute and deliver Contracts on behalf of the Company in
their capacity as such pursuant to a power of attorney granted by the Company
from time to time to registered representatives designated and notified to the
Company by the Manager from time to time;

 

(xv)         to engage a registered broker-dealer which is a member of the
National Association of Securities Dealers to assist the Company in connection
with the offering, issuance and sale of Contracts and, in connection therewith,
to make such other arrangements with such broker-dealer as may be necessary or
advisable to ensure that such broker-dealer supervises its registered
representatives who will effect such transactions and takes responsibility for
such offering, issuance and sale; and

 

(xvi)        to take any other action deemed necessary or advisable to write 
Contracts on behalf of the Company, subject to the limitations set forth in the
Security Agreement.

 

The Manager shall administer all of the Company’s Assets in the Accounts (all of
such Assets together, the “Portfolio”) in accordance with the terms and
conditions and shall

 

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otherwise observe in all material respects the requirements of the Security
Agreement and other Program Documents, the Operations, Procedures and Controls
Manual, Policy 5.0 and Policy 6.0, this Agreement and all other documents,
policies, laws and regulations applicable to the Company from time to time.  The
Company shall provide copies of the Security Agreement, the Operations,
Procedures and Controls Manual, Policy 5.0 and Policy 6.0 to the Manager no
later than the time that this Agreement is entered into and shall provide copies
of all amendments, supplements and revisions to such documents as soon as they
are available to the Company.

 

(b)           Performance.  The Parties hereby agree that the Manager shall
perform the specific Listed Obligations set forth in Exhibit C and Exhibit D
during the term of this Agreement and, subject to Section 2.10, such other
functions as are set forth in this Agreement or as are generally required to
operate the business of the Company in accordance with applicable laws,
regulations, documents and Company policy.  The Manager acknowledges that it
will take all reasonable steps to continue to conduct the business of the
Company in a manner substantially similar to that in which it had been conducted
prior to the Parties’ entry into this Agreement and in a manner reasonably
satisfactory to the Company.  The Manager shall perform its duties pursuant to
this Agreement (i) exercising the same diligence and care applied to manage its
own property; (ii) consistent with the practices used by it (and its Affiliates)
to manage portfolios of similar assets for other customers and (iii) consistent
with the diligence and care applied by other professional managers of similar
stature.  Notwithstanding the foregoing, if the Company does not consent,
affirmatively or otherwise, to any proposed action by the Manager pursuant to
this Section 2.01(b), the Manager’s failure to take such proposed action shall
not be deemed a breach of its standard of care hereunder.

 

SECTION 2.02.      Power of Attorney.  The Company hereby provides the Manager
with a revocable power of attorney with full power and authority:

 

(i)            to evaluate and appraise the Portfolio;

 

(ii)           to arrange the purchase and sale through registered
broker-dealers of bonds, pass-through certificates, stocks, and other securities
in connection with making Investments for the Portfolio;

 

(iii)          to arrange the purchase and sale and otherwise to effect
transactions in Hedge Contracts in connection with making Investments for the
Portfolio through registered broker-dealers;

 

(iv)          to execute and to deliver on behalf of the Company any Investment
Orders and Disposition Orders, as may be required from time to time pursuant to
the terms of Section 2.04 and 2.05 of the Security Agreement;

 

(v)           to execute and to deliver on behalf of the Company any consents,
waivers, extensions, or modifications in respect of any item of Company
Collateral as contemplated by Section 2.10 of the Security Agreement;

 

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(vi)          to execute and to deliver on behalf of the Company any instrument
of transfer or release in respect of any item of Company Collateral;

 

(vii)         to engage a broker-dealer acceptable to the Company to assist the
Company in the origination, issuance and sale of Contracts in accordance with
all applicable securities laws and regulations; and

 

(viii)        subject to the limitations set forth in the Operations, Procedures
and Controls Manual, Policy 5.0 and Policy 6.0, to take any other action,
including executing agreements and any other documents on behalf of the Company
that the Manager deems necessary or advisable to purchase, sell, or otherwise
effect investment transactions relating to the Portfolio.

 

All Investments made, and transactions entered into, by the Manager on behalf of
the Company shall be entered into in the name of the Company.  All actions
contemplated above shall be performed in accordance with applicable laws,
regulations, documents and applicable Company policy.  The Manager shall not be
under an obligation to keep the Portfolio fully invested if, in its sole
discretion, it shall determine that market and/or economic conditions make it
imprudent or disadvantageous to do so at any time or funds should be made
available for distributions and other payments pursuant to the Security
Agreement.  The Company represents that it has the authority to make the
appointment set forth in this paragraph.  In the event the Manager fails to
perform a Listed Obligation and this Agreement is terminated pursuant to
Section 4.05(a) or (b), or if this Agreement is terminated pursuant to Sections
4.05(c) or (d), this power of attorney may be revoked by the Company by written
notice to the Manager.

 

SECTION 2.03.      Valuation.  The Manager shall value the Portfolio from time
to time as required by Section 2.06 of the Security Agreement in order to
prepare the reports required thereunder, using the portfolio valuation methods
set forth in the Market Valuation Addendum attached as Schedule 1.01 to the
Security Agreement, in order to determine whether a Coverage Shortfall, a
Program Shortfall or a Net Worth Deficit has occurred and is continuing and
whether the Market Sensitivity Limit has been exceeded.  The Manager shall also
value Qualified Investments on deposit in Allocated Collateral Accounts as
required under the terms of each such Allocated Collateral Contract.

 

SECTION 2.04.      Reports.  As more particularly specified in the applicable
Program Documents and in Exhibit C and Exhibit D, the Manager shall:

 

(a)           prepare the Company’s annual financial statements and, unless
otherwise specified by the Company, arrange to have such statements audited by a
firm of independent accountants acceptable to the Company and GE Capital;

 

(b)           timely prepare and provide to the Security Trustee, the Company
and the Rating Agencies such reports as are required to be provided to each of
such Persons pursuant to Section 2.06 of the Security Agreement and in
accordance with Exhibit 2.06 of the Security Agreement;

 

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(c)           give prompt written notice to the Company, the Security Trustee,
the Broker-Dealers and the Rating Agencies of (i) the existence of a Coverage
Shortfall, Program Shortfall, or Net Worth Deficit or (ii) the exceeding of a
Market Sensitivity Limit; and

 

(d)           notify the Company and GE Capital immediately upon learning of any
Credit Event, Program Event of Default or other material default or breach of
the Listed Obligations set forth in Exhibit C.

 

SECTION 2.05.      Confidential Relationships.  All information and
recommendations furnished by the Manager to the Company shall be treated by the
Company as confidential.  The Manager shall, in turn, treat as confidential all
information concerning the affairs of the Company.  Nothing in this Section 2.05
shall be deemed to preclude any such information or recommendations from being
disclosed by either Party to such Party’s Affiliates or to the directors,
officers, employees, representatives, agents, or advisers of such Affiliates, or
pursuant to applicable law, regulation or court order; provided, that any such
recipients are advised of the confidential nature of such information or
recommendations.

 

SECTION 2.06.      Fees.  The Company hereby agrees to pay to the Manager a fee
(the “Management Fee”) at an annual rate of sixteen and one-half (16.5) basis
points (0.165%) of the Maximum Permitted Program Size of the Company as of the
date hereof, payable monthly; provided, however, that the Management Fee shall
be pro rated to the date of termination in the event the Agreement is terminated
pursuant to Article IV.  For the purposes hereof, “Maximum Permitted Program
Size” means six billion dollars ($6,000,000,000) or such larger amount as shall
be approved in writing by GE Capital.  In no event shall the Management Fee that
is payable to the Manager be an amount less than nine million, nine hundred
sixty thousand dollars ($9,960,000) per annum, pro rated to reflect the period
of time during which this Agreement was in effect during each year.

 

SECTION 2.07.      Expenses Reimbursed.

 

(a)           The Company shall reimburse the Manager for all out-of-pocket
expenses incurred and approved pursuant to Section 2.09(e) in connection with
the performance of its duties hereunder, except for any expenses arising out of
the Manager’s willful misfeasance, bad faith, gross negligence in the
performance of or reckless disregard of its obligations and duties hereunder.

 

(b)           The Company shall reimburse the Manager for all appropriate
Operating Costs of the Company.  Such reimbursement shall be made, upon receipt
by the Company from the Manager of a schedule detailing Operating Costs
(substantially in the form of Exhibit B hereof), within thirty (30) days
following the end of each quarter.  For the purposes hereof, “Operating Costs”
means all costs incurred by the Manager in connection with the performance of
its obligations under this Agreement that have been submitted and approved in
writing as part of the annual budget approval process

 

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described in Section 2.09(e).  For the avoidance of doubt, it is hereby agreed
that certain expenses will not be paid by the Manager and do not constitute
reimbursable Operating Costs.  Such expenses, which are directly attributable to
the Company, include fees payable to: (i) each rating agency that assigns a
rating to the Company, (ii) external auditors of the Company, (iii) external
legal counsel engaged by the Company for services rendered thereto and not in
connection with duties of the Manager which are unrelated to the management
services it renders to the Company, (iv) certain third-party providers of
accounting services to the Company, (v) providers of credit research services
required by the Company and (vi) any provider of goods or services for costs
incurred in connection with requirements imposed by regulatory authorities, the
applicable rating agencies, or any applicable law, rule, regulation,
administrative interpretation, ordinance, code issued by a Governmental
Authority or regulatory body, or any order, writ, injunction, directive,
judgment or decree of a court of competent jurisdiction; each such expense shall
be paid by the Company.

 

SECTION 2.08.      Execution of Securities Transactions.

 

(a)           In connection with the offering and sale of Contracts, the Manager
shall engage a registered broker-dealer approved by the Company that provides
services with respect to the origination, issuance and sale of Contracts that
the Manager believes to be of value.  The Company shall pay all costs associated
with the retention of such broker-dealer.

 

(b)           Except as otherwise specifically directed by the Company, the
Manager shall have complete discretion to select any registered broker-dealer in
all securities transactions affecting the Portfolio not described in
Section 2.08(a).  The Manager is expressly authorized to select such
brokers-dealers who provide brokerage and research services that the Manager
believes to be of value.  The Manager is expressly authorized to pay from the
Assets in the Portfolio commissions on such transactions in amounts that the
Manager determines in good faith to be reasonable in relation to the value of
such brokerage and research services, viewed in terms either of the particular
transaction or the overall responsibilities of the Manager with respect to the
Portfolio.

 

SECTION 2.09.      Administrative Responsibilities.  The Manager shall have the
following administrative responsibilities:

 

(a)           The Manager shall submit the budget for reimbursable Operating
Costs to the Company and GE Capital by no later than January 31 of each year and
such budget shall be approved by the Manager of Finance of Corporate Treasury
and Global Funding Operations (or such other representative as shall be
designated from time to time in a notice to the Manager executed by the Company
and GE Capital) by February 15 of such year.  Operating Costs incurred in excess
of the aggregate amounts approved in the annual budget must be separately
approved by the Company and GE Capital in order to be considered for
reimbursement.

 

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(b)           Custody of the Assets comprising the Portfolio will be maintained
by the Security Trustee as specified in Article II of the Security Agreement. 
The Manager shall not have custody of any of the Assets in the Portfolio.

 

(c)           The Manager shall keep such books and records relating to all
transactions that it effects pursuant to this Agreement, including without
limitation all books and records necessary (in addition to books and records
available from the Security Trustee pursuant to Section 2.09(c) or otherwise)
for preparing the reports required by Section 2.04.

 

(d)           The Manager on behalf of the Company shall instruct the Security
Trustee:  (i) to send copies of all statements relating to the Accounts to the
Manager; (ii) to permit the Manager, on behalf of the Company, to inspect the
Company Collateral in the possession or otherwise under the control of the
Security Trustee and the books and records maintained by the Security Trustee
relating thereto (and to allow the Manager to make extracts and copies thereof)
as the Manager may reasonably request pursuant to Section 2.03(b) of the
Security Agreement; and (iii) to report to the Manager, concurrently with
reporting to the Company pursuant to Section 2.03(a) of the Security Agreement,
any failure on the part of the Security Trustee to hold the Company Collateral
as provided in Section 2.03(a) of the Security Agreement.

 

(e)           For the avoidance of doubt, the Manager shall provide no services
to the Company in respect of tax planning or tax compliance of any kind.

 

(f)            The Manager shall submit presentations relating to the offering
of Contracts to the Company and GE Capital for approval prior to external use.

 

(g)           The Manager shall maintain its status as an “investment adviser”
under the Investment Advisers Act of 1940, as amended, and shall follow all
applicable laws and regulations relating to its status as such and to its
performance hereunder, including all applicable laws and regulations relating to
bidding for Contracts.

 

SECTION 2.10.      Other Duties as Reasonably Requested.  The Manager shall also
perform such other duties or shall modify existing duties as the Company may
reasonably request or that the Manager shall recommend to the Company from time
to time relating to the management of a business involved in the issuance of
guaranteed investment contracts and similar debt obligations issued by providers
rated “AAA”/”Aaa” and the management of the proceeds of the issuance of such
contracts and obligations.  If any additional or modified duties are required of
Manager under this Agreement, Manager shall have the reasonable time and
opportunity to procure such additional resources as may, in Manager’s good faith
judgment, be required to perform such duties.  Manager also agrees that it will
cease to perform the requirements of certain obligations specified hereunder if
the Company so directs in writing.  Any such changes or additions shall be
deemed for all purposes to be amendments or supplements to this Agreement.  The
Company shall pay such costs as have been mutually agreed to by the Parties and
as may from time to time be required to enable the Manager to perform any
additional or

 

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changed Listed Obligations contemplated herein and other obligations not listed
in this Agreement for which additional resources are required or additional
costs are reasonably incurred by the Manager.

 

SECTION 2.11.      Limitation of Liability.  Neither the Manager nor any of its
Affiliates nor any of their respective directors, officers, or employees shall
be liable to the Company for any error of judgment or mistake of law or for any
loss arising out of any Investment, Hedge Contract, or any other commitment of
funds on behalf of the Company or for any act or omission in the administration
of the Portfolio except for willful misfeasance, bad faith, gross negligence in
the performance of or reckless disregard of its obligations and duties
hereunder, other than as may be provided under applicable law.

 

SECTION 2.12.      Indemnification.  (a) The Company shall (i) indemnify and
hold harmless the Manager and any Affiliate of the Manager and each of their
respective directors, officers, employees and agents (each, an “Indemnified
Party”) from and against all losses, claims, damages, expenses or liabilities to
which such Indemnified Party may become subject (except in respect of the
broker-dealer engaged by the Manager in respect of placement of Contracts, which
shall be the sole liability of the Manager), insofar as such losses, claims,
damages, expenses or liabilities (or actions, suits or proceedings including any
inquiry or investigation or claims in respect thereof) arise out of, in any way
relate to, or result from the transactions contemplated by, this Agreement, and
(ii) reimburse each of the Indemnified Parties upon its demand for any
reasonable legal or other expenses incurred in connection with investigating,
preparing to defend or defending any such loss, claim, damage, liability, action
or claim, in each case only to the extent that funds are available therefor in
accordance with the Security Agreement; provided, however, that none of the
Indemnified Parties shall have the right to be so indemnified hereunder for
losses, claims, damages, expenses or liabilities to the extent resulting from
its own negligence or willful misconduct or for losses, claims, damages,
expenses or liabilities that it is required to pay to any broker-dealer that it
has engaged in connection with the Contracts or other liabilities.  If any
action is brought against an Indemnified Party indemnified or intended to be
indemnified pursuant to this Section 2.12, the Company shall, if requested by
such Indemnified Party, resist and defend such action, suit or proceeding or
cause the same to be resisted and defended by counsel reasonably satisfactory to
such Indemnified Party, but shall not be empowered to compromise or settle such
action, suit or proceeding unless such Indemnified Party has been fully
indemnified for any loss, claim, damage, expense or liability it thereby
suffers.  Each Indemnified Party shall, unless the Indemnified Party has made
the request described in the preceding sentence and such request has been
complied with, have the right to employ its own counsel to investigate and
control the defense of any matter covered by such indemnity and the reasonable
fees and expenses of such counsel shall be at the expense of the Company.  Any
obligations of the Company pursuant to this Section 2.12 are Deferred Expenses
and the Manager shall have recourse solely to the LOC Reimbursement Account for
such obligations of the Company (and not to any other assets of the Company) and
shall be paid in the priority specified in the applicable

 

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sections of Article VII of the Security Agreement.  The Manager hereby expressly
consents to such limited recourse to the LOC Reimbursement Account and to such
priorities of distributions set forth in Article VII of the Security Agreement.

 

ARTICLE III

Representations and Warranties

 

SECTION 3.01.      Valid Existence; Authorization; Enforceability.  Each of the
Parties represents and warrant to the other as follows:

 

(a)           such Party is a limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite power, legal right and authority to execute
and deliver this Agreement and all other documents to be executed and delivered
by such Party in connection herewith and to perform its obligations hereunder
and thereunder; and

 

(b)           this Agreement and all the documents to be executed and delivered
by such Party in connection herewith and therewith has been duly authorized by
all necessary actions on the part of such Party.

 

ARTICLE IV

Miscellaneous Provisions

 

SECTION 4.01.      No Assignment Without Consent.  This Agreement, and the
obligations and rights arising under this Agreement, may not be assigned or
otherwise transferred by either Party (including any assignment or transfer in
connection with any Person succeeding to any part of the business of either
Party) without the prior written consent of the other Party and without
obtaining Rating Agency Confirmation.

 

SECTION 4.02.      Counterparts.  This Agreement may be executed in one or more
counterparts and, as so executed, shall constitute one agreement binding upon
the Parties.

 

SECTION 4.03.      No Third Party Beneficiaries.  Nothing expressed or implied
in this Agreement is intended or shall be construed to confer upon any person
(other than the Parties and their permitted assigns), any right, remedy or claim
by reason of this Agreement or any term hereof, and all terms contained herein
shall be for the sole and exclusive benefit of the Parties and their successors
and permitted assigns.

 

SECTION 4.04.      Interpretation.  The headings of the Articles and Sections
hereof are for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.

 

12

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SECTION 4.05.      Term; Termination.

 

(a)           The Manager’s appointment hereunder shall continue in effect for
an initial term commencing on the date hereof and ending on December 31, 2006,
with extensions for additional one (1) year periods commencing automatically
upon each anniversary thereof, unless either Party notifies the other Party in
writing at least ninety (90) days before such anniversary that such extension
shall not be effective.

 

(b)           If the Manager fails to perform any of its obligations set forth
in this Agreement, Exhibit C or Exhibit D, the Manager (or if the failure is
first discovered by the Company, then the Company) shall give prompt written
notice (such notice, a “Notice of Failure”) to the persons identified in Exhibit
E (the “Failure Notice Recipients”) specifying the nature of the failure;
provided that in the event the Manager fails to perform any of its obligations
set forth in Exhibit C, the Company shall give prompt written notice of such
failure to the Rating Agencies in addition to the Failure Notice Recipients.  In
the event such Notice of Failure is given, then either the Manager or the
Company may elect to submit the matter for review (a “Submission”) and
resolution (“Dispute Resolution”), which may include the establishment of a plan
of remediation (a “Remediation Plan”), to (i) with respect to the Manager, the
Business Leader of the Retirement Income and Investment Segment of Genworth
Financial, Inc. (or such person or persons as such Business Leader may
designate) and (ii) with respect to the Company, the Senior Vice President –
Corporate Treasury and Global Funding Operation of GE Capital (or such person or
persons as such Senior Vice President may designate) ((i) and (ii) together,
“Senior Management”).  The Manager and the Company agree (x) to cooperate in
good faith and in a reasonable manner to reach an agreement with respect to any
Remediation Plan; (y) to be bound by the results of any such Dispute Resolution
agreed to by Senior Management including any Remediation Plan (the timing and
content of which shall be at the sole discretion of Senior Management) and (z)
that the Manager will implement any such Remediation Plan within the period
mandated by Senior Management (the “Final Cure Period”).  The result of any such
Dispute Resolution shall be in writing signed by Senior Management, shall be
deemed part of this Agreement and, with the respect to the failure involved,
shall supersede any conflicting or different terms of this Agreement. The Chief
Operating Officer of Manager’s Capital Markets Group responsible for management
of the Company or a person designated by such officer (a “Designee”) shall
provide to the Rating Agencies notice and a copy of any Remediation Plan
resulting from a Dispute Resolution that is deemed by such officer or Designee
to have a potential adverse effect on the ratings of the Company.  The Manager
shall identify such officer or Designee in the appropriate periodic risk reports
submitted to the Rating Agencies.

 

If Senior Management fails to reach an agreement with respect to a Dispute
Resolution and the Cure Period has not expired, the matter in dispute shall be
resolved solely and exclusively in accordance with the arbitration procedures
set forth in Exhibit F.

 

13

--------------------------------------------------------------------------------

 

If (i) Senior Management or an arbitral tribunal described in Exhibit F fails to
reach agreement with respect to a Dispute Resolution and the Cure Period has
expired or (ii) the Manager fails to correct the failure by the end of the
applicable Final Cure Period, then this Agreement may, subject to
Section 4.05(e), be terminated by the Company upon two (2) Business Days’ prior
written notice to the Manager and each Failure Notice Recipient specifying the
basis for and the effective date of the termination.

 

Notwithstanding the foregoing, the payment obligations of the Company during the
initial term of this Agreement shall not be terminated if any such failure and
the continuation thereof are caused by Impossibility.  For the purposes hereof
“Impossibility” means loss or malfunction of electric power, transportation or
communication services; general inability to obtain or retain labor, material,
equipment or transportation, or a delay in mails or services; the Company’s, GE
Capital’s or their Affiliates’ (i) failure to take an action on which the
Manager’s performance of an obligation or any Listed Obligation depends or (ii)
taking an action which renders the Manager’s performance of an obligation or any
Listed Obligation impossible; governmental or exchange action, statute,
ordinance, ruling, regulation, administrative interpretation or directive; acts
of terror, vandalism, explosions, tornados, acts of God or public enemy, acts of
any civil or military authority, revolutions, insurrections, strike, emergency,
riots or civil commotions, freezes, fires, floods, embargoes, wars, sabotage,
explosions or other unforeseen or unexpected occurrences, which unforeseen or
unexpected occurrences render the performance of any obligations by the Manager
impossible.  In the event of any such occurrence, the Manager shall use all
reasonable efforts to remediate the disruption and resume its performance of the
obligations.

 

(c)           The Company shall have the right, by giving the Manager thirty
(30) Business Days’ prior written notice, to terminate this Agreement at an
earlier time than that specified in Section 4.05(a) in the event of continuing
non-performance by the Manager due to Impossibility of any obligation hereunder
beyond the applicable Cure Period or Final Cure Period, or if the Company
liquidates all or substantially all of the Assets of the Company held in the
Facility Account and substitutes therefor the debt of GE Capital pursuant to the
terms of the Permitted Investments Amendment.  Upon termination of this
Agreement pursuant to this Section 4.05(c), the Manager shall be paid a
termination fee by the Company equal to the product of (i) sixteen and one-half
(16.5) basis points (0.165%), multiplied by (ii) the Maximum Permitted Program
Size, multiplied by (iii) the percentage derived by dividing the number of days
remaining in the initial term by 365.  In addition, the termination fee shall
include any actual cost incurred and agreed upon and reasonably associated with
terminating the operations set forth in this Agreement, including but not
limited to employment severance costs as determined by the standard practices of
the Manager.

 

(d)           The Manager may resign upon not less than ninety (90) days’ prior
written notice to the Company.

 

(e)           Notwithstanding any provision to the contrary, including the
expiration of any term of this Agreement, so long as the Portfolio is still
outstanding, this

 

14

--------------------------------------------------------------------------------

 

Agreement shall remain in full force and effect and no termination or
resignation of the Manager shall be effective until the Company has entered into
an agreement with a successor manager.  Upon receiving a notice of resignation
from the Manager, the Company shall use its best efforts to enter into such an
agreement unless it elects to terminate this Agreement as provided in
Section 4.05(c) above.  Except as set forth in Exhibit F, nothing in this
Agreement shall be deemed a waiver of any Party’s rights to pursue remedies at
law or in equity, which shall be available in accordance with applicable law in
addition to any remedies provided for in this Agreement.

 

SECTION 4.06.      Independent Contractor.    The Manager is being engaged
pursuant to this Agreement as an independent contractor and the Parties
expressly disclaim any intention to enter into a joint venture, partnership, or
any other form of association pursuant to this Agreement.

 

SECTION 4.07.      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE RULES OF CONFLICTS OF LAWS OF THE STATE OF NEW YORK OR ANY
OTHER JURISDICTION.

 

SECTION 4.08.      Notices.  All notices, instructions, and advice with respect
to any transactions or other matters contemplated by this Agreement shall be
deemed duly given only when actually received at such Party’s principal place of
business as set forth below.  Return receipt or courier record of delivery shall
be deemed conclusive evidence of receipt.  Notices may be made by fax or other
electronic means shall be deemed given upon electronic evidence of receipt at
applicable recipient’s fax or computer station.  A copy of all notices given
shall be provided to GE Capital.

 

If to the Manager:

 

Genworth Financial Asset Management, LLC
6620 West Broad Street
Richmond, Virginia  23230
Attention:  Pamela Schutz
Phone:  (804) 291-6533
Fax:  (804) 281-6165
E-mail:  pamela.schutz@ge.com

 

with a copy to:

 

335 Madison Avenue, Mezz4
New York, New York  10017
Attention:  Shailesh Shah
Phone:  (212) 389-2575

Fax:  (212) 389-2591
E-mail:  shailesh.shah@ge.com

 

15

--------------------------------------------------------------------------------

 

If to the Company:

 

Trinity Funding Company, LLC
335 Madison Avenue
Mezz4
New York, New York  10017
Attention:  Shailesh Shah
Phone:  (212) 389-2575
Fax:  (212) 389-2591
E-mail:  shailesh.shah@ge.com

 

If to General Electric Capital Corporation:

 

General Electric Capital Corporation
260 Long Ridge Road
Stamford, Connecticut  06927
Attention:  Senior Vice President – Corporate

Treasury and Global Funding Corporation

Phone:  (203) 961-5077
Fax:  (203) 357-3490
E-mail:  alan.green1@ge.com

 

SECTION 4.09.      Entire Agreement; All Amendments in Writing.  (a) This
Agreement embodies the entire understanding of the Parties concerning the
subject matter hereof and supersedes any and all other previous agreements,
written or oral, concerning the same subject matter.

 

(b)           The Parties may at any time and from time to time agree to any
amendment or modification of any provision of this Agreement to cure any
mistake, ambiguity, defect or inconsistency or to correct any manifest error or
to correct any error of formal, minor or technical nature.  The Rating Agencies
shall be given written notice of any amendment under this Section 4.09(b) not
less than fifteen (15) days prior to the effective date thereof.

 

(c)           The Parties may at any time and from time to time agree to any
amendment or modification of any provision of this Agreement other than any
amendment or modification provided for in Section 4.09(b); provided that, in
each case, a Rating Agency Confirmation shall be obtained prior to the
effectiveness of such amendment or modification.

 

(d)           Any amendment to any provision of the Security Agreement that is
incorporated by reference in this Agreement (including, without limitation, any
amendment to any of the capitalized terms incorporated by reference herein), so
long as such amendment is made as permitted under the terms of the Security
Agreement, shall constitute an amendment to this Agreement unless the Parties
agree in writing that such amendment shall not be effective under this
Agreement.

 

16

--------------------------------------------------------------------------------

 

SECTION 4.10.      Waiver.  No waiver of any provision of this Agreement nor
consent to any departure therefrom shall in any event be effective unless the
same shall be in writing and signed by the Party from whom such waiver or
consent is sought, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.  The Party
seeking such waiver or consent shall promptly deliver a copy thereof to the
Rating Agencies.

 

SECTION 4.11.      Further Assurances.  Each Party hereby agrees to execute and
deliver such additional documents, instruments or agreements as may be
reasonably necessary and appropriate to effectuate the purposes of this
Agreement.

 

SECTION 4.12.      Successors and Assigns.  This Agreement shall be binding upon
the Parties and their respective successors and assigns.

 

SECTION 4.13.      Severability.  Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.  If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.

 

SECTION 4.14.      Limited Recourse.  The obligations of the Company under this
Agreement are solely the obligations of the Company.  No recourse shall be had
for any obligation or claim arising out of or based upon this Agreement against
any Member, manager, officer organizer, agent or employee of the Company or any
shareholder, officer, director, employee, agent or incorporator of any Member. 
Any accrued obligations owing by the Company shall be payable by the Company
solely to the extent that funds are available therefor form time to time in
accordance with the provisions of Article VII of the Security Agreement (and
such accrued obligations shall not be extinguished until paid in full.)

 

SECTION 4.15.      Termination of the Investment Administration Agreement;
Release.  Effective as of the date hereof, the Company does hereby, for itself
and its successors and assigns, waive the sixty (60) days’ notice requirement of
Section 3.05 of the Investment Administration Agreement and accepts the
resignation of MRCA Corp. as the Portfolio Adviser thereunder and fully and
unconditionally release and forever discharge MRCA Corp. (and any officer,
director, employee or agent of MRCA Corp.) from any and all present and future
(i) obligations and liabilities under the Investment Administration Agreement
and (ii) causes of action, suits, claims, demands, liabilities and obligations
whatsoever, whether at law or in equity, arising from or related to the
Investment Administration Agreement, arising from and after the date hereof.

 

[Signature Page Follows]

 

17

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

 

 

TRINITY FUNDING COMPANY, LLC,

 

a New York limited liability company

 

 

 

 

By:

IC FUNDING CORP.,

 

 

a Delaware corporation,

 

 

as its Controlling Common Member

 

 

 

By:

/s/ Alan M. Green

 

 

 

Name: Alan M. Green

 

 

Title: Vice President

 

 

 

GENWORTH FINANCIAL ASSET MANAGEMENT, LLC

 

 

 

By:

/s/ Kelly L. Groh

 

 

 

Name: Kelly L. Groh

 

 

Title: Senior Vice President and Chief Financial Officer

 

ACKNOWLEDGED AND CONSENTED TO BY:

 

 

 

 

 

FGIC MRCA CORP.

 

 

 

 

 

 

 

 

By:

/s/ Shailesh Shah

 

 

 

 

Name: Shailesh Shah

 

 

 

Title: Vice President

 

 

 

 

 

AGREED AND ACCEPTED BY:

 

 

 

 

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

 

 

 

 

 

 

 

By:

 /s/ Dennis R. Sweeney

 

 

 

 

Name: Dennis R. Sweeney

 

 

 

Title: Vice President

 

 

 

[LIABILITY AND PORTFOLIO MANAGEMENT
AGREEMENT (TRINITY)]

 

--------------------------------------------------------------------------------

 

Exhibit A

 

Accounts Comprising the Portfolio

 

Account

 

Custodian Bank

 

Account Number

 

 

 

 

 

Facility Account

 

Deutsche Bank Trust
Company Americas,
New York, NY

 

091778

 

 

 

 

 

LOC Reimbursement Account

 

Deutsche Bank Trust
Company Americas,
New York, NY

 

14486

 

 

 

 

 

                       Account

 

Deutsche Bank Trust
Company Americas,
New York, NY

 

 

 

A-1

--------------------------------------------------------------------------------

 

Exhibit B

 

Form of Schedule of Operating Costs

 

Operating Costs for the first calendar year, commencing on January 1, 2004,
shall be $[                    ] and thereafter shall be equal to [   ]% of the
Operating Costs of the Manager, subject to the Company’s approval, as provided
in Section 2.07(b) and shall consist of the following (allocated [   ]% with
respect to the Company):

 

 

 

2004

 

2004

 

CMS

 

1Q

 

2Q

 

3Q

 

4Q

 

TY

 

 

 

 

 

 

 

 

 

 

 

 

 

Comp & Benefits:

 

 

 

 

 

 

 

 

 

 

 

Salaries

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Savings Plan 401k

 

 

 

 

 

 

 

 

 

 

 

Bonuses

 

 

 

 

 

 

 

 

 

 

 

Employee Insurance

 

 

 

 

 

 

 

 

 

 

 

Payroll Taxes

 

 

 

 

 

 

 

 

 

 

 

Total Comp & Benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase Base:

 

 

 

 

 

 

 

 

 

 

 

Travel & Living Expenses

 

 

 

 

 

 

 

 

 

 

 

Business Meetings

 

 

 

 

 

 

 

 

 

 

 

Education

 

 

 

 

 

 

 

 

 

 

 

Employment Fees

 

 

 

 

 

 

 

 

 

 

 

Tuition Reimbursement

 

 

 

 

 

 

 

 

 

 

 

Relocation Maintenance

 

 

 

 

 

 

 

 

 

 

 

Dues & Associations

 

 

 

 

 

 

 

 

 

 

 

Consulting Fees

 

 

 

 

 

 

 

 

 

 

 

Outside Services

 

 

 

 

 

 

 

 

 

 

 

Rent/ Utilities

 

 

 

 

 

 

 

 

 

 

 

Legal Fees

 

 

 

 

 

 

 

 

 

 

 

Audit Fees

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

 

 

 

 

 

 

 

 

 

Telephone/Cellular

 

 

 

 

 

 

 

 

 

 

 

Printing & Office Supplies

 

 

 

 

 

 

 

 

 

 

 

Postage\Courier Service

 

 

 

 

 

 

 

 

 

 

 

Subscriptions

 

 

 

 

 

 

 

 

 

 

 

Information Services

 

 

 

 

 

 

 

 

 

 

 

Advertising / Marketing

 

 

 

 

 

 

 

 

 

 

 

Temporary Help

 

 

 

 

 

 

 

 

 

 

 

Equipment Maintenance

 

 

 

 

 

 

 

 

 

 

 

Hardware Expense

 

 

 

 

 

 

 

 

 

 

 

Software Expense

 

 

 

 

 

 

 

 

 

 

 

Fiscal Agent Fees

 

 

 

 

 

 

 

 

 

 

 

Investment Fees

 

 

 

 

 

 

 

 

 

 

 

Organizational Misc

 

 

 

 

 

 

 

 

 

 

 

Total Purchase Base

 

 

 

 

 

 

 

 

 

 

 

Total Controllable

 

 

 

 

 

 

 

 

 

 

 

 

B-1

--------------------------------------------------------------------------------

 

 

 

2004

 

2004

 

CMS

 

1Q

 

2Q

 

3Q

 

4Q

 

TY

 

 

 

 

 

 

 

 

 

 

 

 

 

Other:

 

 

 

 

 

 

 

 

 

 

 

Property Insurance

 

 

 

 

 

 

 

 

 

 

 

Corporate Assessments

 

 

 

 

 

 

 

 

 

 

 

Total Other

 

 

 

 

 

 

 

 

 

 

 

SG&A Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rating Agency Fee

 

 

 

 

 

 

 

 

 

 

 

Loss On Other Assets

 

 

 

 

 

 

 

 

 

 

 

Insurance And Licensing

 

 

 

 

 

 

 

 

 

 

 

State And Local Taxes

 

 

 

 

 

 

 

 

 

 

 

Goodwill Amortization

 

 

 

 

 

 

 

 

 

 

 

Change in DAC

 

 

 

 

 

 

 

 

 

 

 

Ceding Commission

 

 

 

 

 

 

 

 

 

 

 

Non-SG&A Expenses

 

 

 

 

 

 

 

 

 

 

 

Op & Admin Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

Total Direct Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker Fees Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Expenses

 

 

 

 

 

 

 

 

 

 

 

(including Broker Fees)

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

B-2

--------------------------------------------------------------------------------

 

Exhibit C

 

Priority Manager Functions

 

LISTED OBLIGATION

 

CURE PERIOD

 

 

 

Payments

 

 

 

 

 

Manager shall cause payments to be made as required under any Contracts, Hedge
Contracts or other agreement to which the Company is a party.

 

Five (5) Business Days from the date a notice of nonpayment received by Manager
under the applicable Contract, Hedge Contract or agreement (or such shorter
period as exists prior to such nonpayment being an actionable default
thereunder); provided, however, that if the Manager or the Company gives notice
to the other party requesting Dispute Resolution within one (1) Business Day of
notice, the cure period hereunder shall be extended by three (3) Business Days
from the date the notice of nonpayment is received (it being understood that in
no event shall this section supersede the contractual payment obligations in the
respective Contracts or Hedge Contracts).

 

 

 

Risk Matters

 

 

 

 

 

Manager shall comply with all requirements of GE Capital’s Policy 5.0 and 6.0
relating to the Company and related “strike zones,” as such policies and strike
zones are amended from time to time, and all requirements relating to Permitted
Investments and the portfolio in the Security Agreement; provided, that in the
event that a trigger has been tripped under Policy 6.0 by virtue of a change in
the market or pursuant to the action of a rating agency, GE Capital shall
provide direction on remediation on a case-by-case basis if not otherwise
provided for in Policy 6.0 and, if the Manager takes the appropriate corrective
action (whether as prescribed by the Policy or as directed by GE Capital), no
failure to perform an obligation under this Agreement shall be deemed to have
occurred.

 

Five (5) Business Days.

 

 

 

RATING AGENCY REQUIREMENTS

 

 

 

 

 

Manager shall prepare all reports on the dates specified by each rating agency
currently rating obligations of the Company and shall meet all requirements
specified by any such agency for continuation or reinstatement of their highest
long-term and short-term ratings.

 

Thirty (30) days or such shorter or longer period as is specified for compliance
by the rating agencies.

 

C-1

--------------------------------------------------------------------------------

 

LISTED OBLIGATION

 

CURE PERIOD

 

 

 

Financial Reporting

 

 

 

 

 

Manager shall comply with Section 2.04 hereof and the Listed Obligations and
shall prepare all reports relating to the Company as are necessary or desirable
for compliance with the Sarbanes-Oxley Act of 2002 and any other financial
reporting requirements of the Company under applicable law and external
regulation.

 

Thirty (30) days or such shorter or longer period as is specified by the
applicable accounting firm or regulatory body to allow for compliance with the
applicable regulatory or disclosure requirement.

 

 

 

Legal Compliance

 

 

 

 

 

Manager shall prepare disclosure documentation annually or more frequently as is
necessary or desirable in connection with its offering of Contracts and
Preferred Securities and shall otherwise comply with the requirements of
contracts to which it is a party, and all applicable laws and regulations.

 

Thirty (30) days or such other period as is specified in the applicable
agreement or regulation or as is directed by the applicable regulatory body.

 

C-2

--------------------------------------------------------------------------------

 

Exhibit D

 

Listed Obligations

 

Business

 

•                                          Manager will use its best efforts to
maintain an Average Program Size of thirteen billion dollars ($13,000,000,000)
or such other amount reasonably specified by the Company from time to time for
the combined portfolios of the Company and Trinity Funding Company, LLC.  For
the purposes hereof, the term “Average” means a rolling 3-month average of
end-of-day balances, computed daily.

 

•                                          Manager will review the Portfolio
Quality Review with GE Capital on a monthly basis on such dates as Manager and
GE Capital shall agree to in advance.

 

Compliance/Legal

 

•                                          Manager will maintain the corporate
and limited liability company minutebooks and records of the Company and its
non-controlling common members and any successors thereto, and take all actions
required to maintain their valid existence and good standing in the
jurisdictions in which they are organized or qualified.

 

•                                          Manager will comply with applicable
law in respect of the Company’s issuance of Contracts and Preferred Securities,
including with respect to rules promulgated under federal securities laws that
restrict certain forms of advertising and solicitation.

 

•                                          Manager will prepare updated versions
of the Confidential Information Memorandum of the Company (i) on an annual basis
to reflect then-current audited financial information of the Company or (ii) at
such other times as may be required by the Company.

 

•                                          Manager will, as required from time
to time, prepare updated versions of the Private Placement Memorandum of the
Company relating to the Company’s issuance of Preferred Securities.

 

•                                          Manager will use its best efforts to
take all actions required in connection with obtaining the appropriate authority
with respect to the extension of the Liquidity Commitment and/or the Letter of
Credit commitment and any required increase of the Liquidity Commitment and/or
the Letter of Credit commitment (it being understood that no failure to perform
a Listed Obligation shall be deemed to have occurred if either such commitment
is not extended or increased after a request has been submitted).

 

•                                          Manager will consult with and obtain
approval from the Company in connection with proposed material modifications to
the terms or the form of Contracts.

 

D-1

--------------------------------------------------------------------------------

 

•                                          Manager will maintain its status as
an “investment adviser” under the Investment Advisers Act of 1940, as amended,
and will take all reasonable steps to comply with all applicable laws and
regulations relating to its status as such.

 

•                                          Manager will cause its legal staff to
draft and prepare all Contracts, Hedge Contracts and other contracts entered
into by the Company.  The in-house counsel of Manager may, to the extent
required, engage outside counsel in connection with the preparation of such
contracts if such engagement is approved verbally or in writing by the General
Counsel – Treasury Operation of GE Capital and otherwise approved under
Section 2.09.  Nothing in this Agreement will preclude Manager from engaging its
own outside counsel for any purpose it deems necessary or advisable, and Manager
need not obtain any separate approval therefor.

 

•                                          Manager will comply with all
applicable laws and all applicable policies and procedures as the same may be
provided to Manager by the Company, including but not limited to the USA Patriot
Act and Anti-Money Laundering policies and laws.

 

•                                          Manager will take all reasonable
actions required to assist the Company or GE Capital in connection with changes
to the corporate structure of the Company and its common members.

 

•                                          Manager will take all reasonable
steps to provide prompt responses to GE Capital in connection with requests from
regulatory or other governmental authorities for documentation or data relating
to the operation of the Company.

 

•                                          Manager will comply with all
applicable laws, regulations, policies, management procedures and other
requirements of the Company, GE Capital and Genworth, including but not limited
to the GE Capital Information Security Procedure and, to the extent applicable,
the policies contained in “Integrity:  The Spirit and the Letter of Our
Commitment.”

 

Liability/Contract Bidding Process

 

•                                          Manager shall ensure that
transactions in Contracts are effected in accordance with the following general
procedure: (i) a registered representative of a broker-dealer (each, a “GIC
Salesperson”) shall receive bid specifications (“Bid Specs”) provided by
prospective Contract customers or their agents (“Customers”); (ii) the GIC
Salesperson shall analyze the Bid Specs and respond to Customers, indicating to
such Customers, where appropriate, the requirements to maintain the Company’s
exemption from registration under the Investment Company Act of 1940, as
amended; (iii) the GIC Salesperson shall submit all Bid Specs for review and
comment to the designated member of the Manager’s legal staff and will note on
any bid acceptance form that is delivered to the Customer all appropriate

 

D-2

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comments received from the legal staff; (iv) the GIC Salesperson shall price
transactions in which the Company has an interest in bidding and communicate
such pricing to the applicable Customer; and (v) the Manager’s legal staff shall
provide counsel to the GIC Salesperson in connection with the preparation,
negotiation and closing of all Contracts for transactions that the Company wins.

 

Financial Controls

 

•                                          Manager will perform its accounting
responsibilities in compliance with GE Capital’s internal accounting policies
and U.S. GAAP.

 

•                                          Manager will maintain accounting
polices currently in place and all changes to accounting policies must be
approved in advance by GE Capital.  For new accounting standards, GE Capital
will provide Manager with the accounting policy to be adopted by the Company.

 

•                                          Manager will perform accounting in
accordance with FAS 133 and obtain approval from GE Capital for the following
FAS 133 activities:

 

•                  Changes to existing hedge documentation

•                  Changes in existing methodology used to assess and measure
hedge effectiveness

•                  Application of  “fair value” hedging as defined in FAS 133

•                  Economic hedges that do not qualify for FAS 133 hedge
treatment

 

•                                          Manager will provide a monthly
variance analysis of:

 

•                  Changes in the fair market value of derivatives

•                  Hedge ineffectiveness

•                  Amounts excluded from the measure of effectiveness

 

•                                          Manager will reconcile all general
ledger accounts in accordance with GE Capital’s account reconciliation
criteria.  Manager will provide a quarterly dashboard of account reconciliations
and open items (in an agreed upon format) on dates to be provided to Manager.

 

•                                          Manager is responsible for
establishing and maintaining a system of internal controls adequate to ensure
that Assets are appropriately safeguarded and that the financial statements and
related disclosures and schedules fairly present the financial condition of the
Company.

 

•                                          Manager and GE Capital will agree
upon and execute a plan to minimize profit and loss volatility associated with
FAS 133.

 

D-3

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•                                          Manager will deliver monthly
unaudited financial results including any adjustments to the monthly financials
to be included in the next month’s accounting period.  These financials should
include an explanation of significant items of variance to the Operating Plan. 
Such financial statements will be delivered within fifteen (15) days of the
close as defined by GE Capital.

 

•                                          Manager will deliver quarterly
unaudited financial reports and schedules in accordance with GE Capital’s
closing instructions.  Such financials statement will include variance and
profitability analysis suitable for the closing of the books.  Closing
instruction to be provided by the 15th of the month of the quarterly close.

 

•                                          Manager will provide the Company with
financial projections in accordance with GE Capital’s SI, SII and OP process. 
GE Capital will provide the Manager with SI, SII and OP timing and assumptions
where needed to make such forecasts.

 

•                                          Manager will deliver annual audited
financial statements (balance sheet and income statement) upon completion of the
annual audit by GE Capital’s external auditors.

 

•                                          Manager will conduct annual reviews
in compliance with applicable provisions of the Sarbanes-Oxley Act of 2002, in a
manner acceptable to GE Capital.

 

•                                          Manager will report detailed profit
and loss results and details of expenses within fifteen (15) days following the
end of each quarterly period, including comparisons of actual versus plan, in a
format reasonably agreeable to both parties.  Profit and loss reports will be
included in the monthly Portfolio Quality Review, substantially in the format
attached as Schedule I to this Exhibit D.

 

Risk

 

•                                          Manager will comply with the
Permitted Investments guidelines provided in Schedule 4.01(g) of the Security
Agreement.

 

•                                          Manager will value the Portfolio from
time to time, as required by Section 2.06 of the Security Agreement in order to
prepare the reports required by such Section of the Security Agreement, using
the portfolio valuation methods set forth in the Market Valuation Addendum
attached as Schedule 1.01 to the Security Agreement, in order to determine
whether a Coverage Shortfall, a Program Shortfall or a Net Worth Deficit has
occurred and is continuing and whether the Market Sensitivity Limit has been
exceeded.  The Manager shall also value Permitted Collateral investments on
deposit in Collateral Accounts as required under the terms of each
Collateralized Contract.

 

•                                          Manager will comply with all
applicable terms set forth in Policy 5.0 and Policy 6.0 and all “strike zones”
defined by GE Capital with respect to assets, liabilities

 

D-4

--------------------------------------------------------------------------------

 

and derivatives (as each may be amended from time to time by GE Capital). 
Manager will deliver the following reports on a monthly basis for monitoring
such compliance:

 

•                  Portfolio Quality Review

•                  Credit Limit Watch

•                  Credit Risk Rating

•                  Stop Loss

•                  Month End Credit

•                  Counterparty Exposure

 

•                                          Except as otherwise specified in this
Exhibit D, Manager will deliver risk reports to GE Capital on a monthly basis
and will include, at a minimum, the following:

 

•                  Portfolio Quality Review

•                  Supplemental Program Shortfall

•                  Liquidity Report (provided on a daily basis)

•                  Summary Hedge Analysis Report (provided on a daily basis)

•                  REM (electronic submission)

 

•                                          Manager will provide other available
reports required from time to time by GE Capital as they are requested.

 

•                                          Manager will participate, on a
monthly and quarterly basis, in in-force reviews with Genworth senior management
and GE Capital senior management.

 

•                                          Manager will from time to time
provide GE Capital with data feeds relating to the Portfolio, the content,
format and timing of the delivery of which feeds will be agreed upon by Manager
and GE Capital.

 

•                                          Manager will (i) comply with
applicable requirements as to hedge counterparty ratings, as set forth in the
Security Agreement and as provided in the applicable policies of GE Capital,
(ii) comply with the applicable requirements to provide information to GE
Capital with respect to hedge counterparty exposure, (iii) deliver a
Counterparty Exposure report for monitoring such compliance and (iv) comply with
such restrictions as to hedge counterparty that may from time to time be imposed
by GE Capital.

 

•                                          Manager will from time to time
provide GE Capital with such available additional risk analyses as GE Capital
may request, including but not limited to, stress tests and value at risk
analyses.  In each case, the content, format and timing of the delivery of such
analyses will be agreed upon, prior to delivery, by GE Capital and Manager.

 

D-5

--------------------------------------------------------------------------------

 

•                                          Manager will comply with all
applicable requirements relating to the Company’s maintenance of the
“AAA”/”Aaa”  ratings assigned thereto by the applicable rating agencies.

 

Customer

 

•                                          Manager will ensure delivery by mail
or e-mail, or will make available on the Company’s website, to the Company’s
customers in accordance with such customers’ respective Contracts, Customer
Statements in respect of customers’ investments with the Company.

 

•                                          Manager will ensure the timely
remittance of payments required under each Contract or other agreement of the
Company.

 

•                                          When requested by the Company and GE
Capital, Manager will deliver to the Company and GE Capital customer service
metrics (e.g., call volume by customer complaint type by date) and deal closing
customer survey results (if and to the extent the same is provided by
customers).

 

Information Technology

 

•                                          Manager will maintain the current
systems environment to fully support the business requirements and the services
to be performed under this Agreement for the Company.

 

Continuous Service (Disaster Recovery)

 

A disaster recovery site shall be maintained as follows:

 

•                                          Backup copies of critical servers
shall be maintained at an off-premises Disaster Recovery Site (locations to be
determined from time to time by the Parties hereto).  The critical servers are
as follows: Principia PAS server, Oracle Data Warehouse Server,  File Server,
Oracle GL Server, and FileNET CM Server.   In the event of a major disaster
where access to production servers and 335 Madison Avenue’s assets (or those of
a successor location from which the Company’s business is operated) is lost, 
service will be restored on the following schedule: PAS and Oracle Data
warehouse systems will be within twenty-four (24) hours.  GL and FileNET server
will be available within forty-eight (48) hours.  The Parties will work with GE
Capital Treasury on a best effort basis to establish and implement an adequate
Disaster Recovery plan.

 

D-6

--------------------------------------------------------------------------------

 

•                                          Software refreshes to synchronize the
DR systems with the production systems shall be done within twenty-four (24)
hours of the update of the production system to coincide with production system
updates.

 

•                                          Backups of the production PAS
database shall be copied to the DR PAS server nightly.

 

Data Management (Backups and Retention)

 

•                                          Full data backups are performed daily
on all production and Quality Assurance systems.

 

•                                          Full data backups of all Network
files are performed daily.

 

•                                          Backup tapes shall be stored offsite
at Iron Mountain.  Tapes are picked up by 10:30 a.m. daily.

 

•                                          An authorized list of personnel may
recall tapes from Iron Mountain (an agreement exists to deliver backup tapes to
any location, including the home of IT personnel).

 

•                                          Tapes shall be cycled on a rolling
eight (8) week rotation.  All Financial close and Month End tapes shall be
marked permanent and retained indefinitely.

 

Change Management:  Notification and Approval Process on Changes to IT
Infrastructure and Application Software

 

•                                          GE Capital Treasury shall have the
right to approve the Company’s Change Management Process.

 

•                                          All change requests shall be reported
to GE Capital Treasury on a weekly basis.

 

•                                          Emergency changes to the IT
Environment shall be reported to GE Capital Treasury as they occur.

 

•                                          In the event of a major System
Failure GE Capital Treasury shall be notified and required to approve required
changes.

 

Performance and Capacity Planning Reporting and Reviews

 

•                                          In general, monthly business reports
shall be available by 9:00 a.m. the last Business Day of the month.  The IT team
will communicate all exceptions by

 

D-7

--------------------------------------------------------------------------------

 

8:30 a.m. on the day such exceptions occur.  The communication will include the
anticipated delivery time.  The following performance tracking processes exist:

 

•                  Monthly report of nightly batch completion times.

•                  Monthly report of nightly batch completion times.

•                  Monthly report of exceptions and violations of the 9:00 a.m.
report delivery times and cures employed.

•                  Monthly report on system loading and projected performance
bottlenecks and issues and resolutions.

•                  Monthly report of license denials.

 

•                                          GE Capital Treasury shall perform a
quarterly review of systems and access rights to those systems.  IT shall
prepare the report to be reviewed, deliver a copy to GE Capital Treasury and
will remediate issues discovered.  An updated access matrix will be added to the
“CMS Operational Procedures and Controls” document quarterly.

 

Personnel

 

•                                          Manager will maintain a staff of
qualified employees sufficient to support the business requirements of the
Company and to perform the services required under this Agreement.

 

Other Obligations

 

•                                          Manager will comply in all material
respects with all other obligations provided under this Agreement.

 

D-8

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Schedule I

 

Format of P&L Included with
Monthly Portfolio Quality Review

 

CMS P&L ($millions)

 

Actual

 

Operating Plan

 

Variance from
Operating Plan

 

 

 

 

 

 

 

 

 

Net Revenue:

 

 

 

 

 

 

 

Trinity Gross Spread Income

 

$

 

 

$

 

 

$

 

 

Trinity Broker Fees Amortization

 

 

 

 

 

 

 

Trinity Hedge Ineffectiveness

 

 

 

 

 

 

 

Trinity Net Interest Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trinity Realized Gains (Losses)

 

 

 

 

 

 

 

Subtotal Trinity Net Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GE Book

 

 

 

 

 

 

 

Total CMS Net Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

CMSI

 

$

 

 

$

 

 

$

 

 

Trinity

 

 

 

 

 

 

 

MRCA

 

 

 

 

 

 

 

Total Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total CMS Pre-tax Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax (Benefit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Trinity Average Liability Balance

 

 

 

 

 

 

 

Core Spread (including Broker Fees)

 

 

 

 

 

 

 

Net Spread (Including Hedge Ineffectiveness)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Memo: Net Income Sharing

 

 

 

 

 

 

 

Genworth (Management Fee + GE Book)

 

 

 

 

 

 

 

GEI Other

 

 

 

 

 

 

 

 

D-9

--------------------------------------------------------------------------------

 

Exhibit E

 

Failure Notice Recipients

 

 

Recipient

 

Address

 

Telephone

 

Facsimile

 

 

 

 

 

 

 

Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

Pamela Schutz

 

6610 West Broad Street
Richmond, Virginia  23230

 

(804) 281-6533

 

(804) 281-6165

 

 

 

 

 

 

 

Kelly Groh

 

6610 West Broad Street
Richmond, Virginia  23230

 

(804) 281-6321

 

(804) 281-6310

 

 

 

 

 

 

 

Toni Ness

 

6610 West Broad Street
Richmond, Virginia  23230

 

(804) 289-3594

 

(804) 281-6005

 

 

 

 

 

 

 

Shailesh Shah

 

335 Madison Avenue
Mezz4
New York, New York  10017

 

(212) 389-2575

 

(212) 839-2591

 

 

 

 

 

 

 

Grant Lineberry

 

335 Madison Avenue
Mezz4
New York, New York  10017

 

(212) 389-2570

 

(212) 389-2591

 

 

 

 

 

 

 

Colin Burrell

 

335 Madison Avenue
Mezz4
New York, New York  10017

 

(212) 389-2640

 

(212) 389-2590

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

 

Kathy Cassidy

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 357-6199

 

(203) 585-1191

 

 

 

 

 

 

 

Brian Wenzel

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 357-6774

 

(203) 316-7601

 

 

 

 

 

 

 

Alan Green

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 961-5077

 

(203) 357-3490

 

 

 

 

 

 

 

Johan Fogelberg

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 357-6072

 

(203) 357-4975

 

 

 

 

 

 

 

Robert Ceske

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 602-8337

 

(203) 585-1361

 

 

E-1

--------------------------------------------------------------------------------

 

General Electric Capital Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

Kathy Cassidy

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 357-6199

 

(203) 585-1191

 

 

 

 

 

 

 

Brian Wenzel

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 357-6774

 

(203) 316-7601

 

 

 

 

 

 

 

Alan Green

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 961-5077

 

(203) 357-3490

 

 

 

 

 

 

 

Johan Fogelberg

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 357-6072

 

(203) 357-4975

 

 

 

 

 

 

 

Robert Ceske

 

201 High Ridge Road
Stamford, Connecticut  06927

 

(203) 602-8337

 

(203) 585-1361

 

E-2

--------------------------------------------------------------------------------

 

Exhibit F

 

Arbitration Procedures

 

If Senior Management fails to reach agreement with respect to a Dispute
Resolution within forty-five (45) days of a Submission and the Cure Period has
not expired, either Party may submit the matter to be finally resolved by
arbitration pursuant to the CPR Institute for Dispute Resolution (the “CPR”)
Rules for Non-Administered Arbitration as then in effect (the “CPR Arbitration
Rules”).  The Parties consent to a single, consolidated arbitration for all
known matters under dispute existing at the time of the arbitration and for
which arbitration is permitted.

 

The neutral organization for purposes of the CPR Arbitration Rules will be the
CPR.  The arbitral tribunal shall be composed of three arbitrators, of whom each
Party shall appoint one in accordance with the “screened” appointment procedure
provided in Rule 5.4 of the CPR Arbitration Rules.  The arbitration shall be
conducted in New York City.  Each Party shall be permitted to present its case,
witnesses and evidence, if any, in the presence of the other Party.  A written
transcript of the proceedings shall be made and furnished to the Parties.  The
arbitrators shall determine the matter in dispute in accordance with the law of
the State of New York, without giving effect to any conflict of law rules or
other rules that might render such law inapplicable or unavailable, and shall
apply this Agreement according to its terms, provided that the provisions
relating to arbitration shall be governed by the Federal Arbitration Act,
9 U.S.C. §§ 1 et seq.

 

The Parties agree to be bound by any award or order resulting from any
arbitration conducted in accordance with this provision and further agree that
judgment on any award or order resulting from an arbitration conducted under
this provision may be entered and enforced in any court having jurisdiction
thereof.

 

Except as expressly permitted by this Agreement, no Party will commence or
voluntarily participate in any court action or proceeding concerning a matter in
dispute, except (i) for enforcement, (ii) to restrict or vacate an arbitral
decision based on the grounds specified under applicable law, or (iii) for
interim relief as provided in paragraph (e) below.  For purposes of the
foregoing, the parties hereto submit to the non-exclusive jurisdiction of the
courts of the State of New York.

 

In addition to the authority otherwise conferred on the arbitral tribunal, the
tribunal shall have the authority to make such orders for interim relief,
including injunctive relief, as it may deem just and equitable.

 

Each Party will bear its own attorneys’ fees and costs incurred in connection
with the resolution of any matter in dispute in accordance with this provision.

 

F-1

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