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Exhibit 10.2

RESTATED TAX MATTERS AGREEMENT

by and among

GENERAL ELECTRIC COMPANY, GENERAL ELECTRIC CAPITAL CORPORATION, GE FINANCIAL
ASSURANCE HOLDINGS, INC., GEI, INC.,

and

GENWORTH FINANCIAL, INC.

Dated as of

February 1, 2006

 

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Section 1.

   Definitions    2

Section 2.

   Filing of Tax Returns    5

Section 3.

   Indemnification by GE    6

Section 4.

   Indemnification by Genworth    7

Section 5.

   Tax Sharing Payments    8

Section 6.

   Control    9

Section 7.

   Refunds    9

Section 8.

   Section 338 Elections    10

Section 9.

   Tax Benefit Payments    11

Section 10.

   Subordination    17

Section 11.

   Other Tax Sharing Agreements    17

Section 12.

   Interest    17

Section 13.

   Adjustments    18

Section 14.

   No Duplicative Payments    20

Section 15.

   Tax Cooperation    20

Section 16.

   Resolution of Disputes    21

Section 17.

   Survival    21

Section 18.

   Amendment    21

Section 19.

   Transfer and Similar Taxes    21

Section 20.

   Additional Provisions    21

 

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TAX MATTERS AGREEMENT

This Agreement is made this 1st day of February, 2006 among the General Electric
Company, a New York corporation (“GE”), General Electric Capital Corporation, a
Delaware corporation (“GECC”), GEI, Inc., a Delaware corporation (“GEI”), GE
Financial Assurance Holdings, Inc., a Delaware corporation (“GEFAHI”, and
collectively with GE, GEI, and GECC, the “GE Parties”), and Genworth Financial,
Inc., a Delaware corporation (“Genworth”).

A. Pursuant to the Master Agreement dated as of May 24th, 2004 among the GE
Parties and Genworth (the “Master Agreement”), Genworth has, on the terms set
forth in the Master Agreement, acquired (the “Acquisition”), directly or
indirectly, all the outstanding shares of stock of GNA Corporation, Inc., a
Washington corporation (“GNA”), and certain other Subsidiaries of GE (GNA and
such other Subsidiaries, together with Genworth, the “Genworth Companies”) in a
transaction that constituted (as to certain of such Genworth Companies) a
qualified stock purchase within the meaning of Section 338(d)(3) of the Code.

B. Prior to the Transaction, GE and certain of the Genworth Companies had been
members of an affiliated group of corporations of which GE is the common parent
(the “GE Affiliated Group”) within the meaning of Section 1504(a) of the Code,
and the members of the GE Affiliated Group had filed United States federal
income tax returns on a consolidated basis (the “GE Consolidated Returns”)
pursuant to Section 1501 of the Code.

C. Prior to the Transaction, certain of GE and its Affiliates had joined in the
filing of certain combined, consolidated, or other similar United States state,
local, or other governmental or foreign income or franchise tax returns (the “GE
Combined Returns”), and each group that filed such a return that included any
Genworth Company and at least one of GE or a non-Genworth Affiliate of GE is
designated a “Combined Group.”

D. GEFAHI and certain of its Subsidiaries have entered into a Tax Allocation
Agreement effective November 5, 1997 and supplemented and modified effective
December 4, 2001 (the “GEFAHI Tax Allocation Agreement”).

E. General Electric Capital Assurance Corporation, a Delaware corporation
(“GECA”), which was a wholly owned indirect subsidiary of GEFAHI, and the
Subsidiaries of GECA prior to the Transaction that were domestic life insurance
companies, including Union Fidelity Life Insurance Company, an Illinois
corporation (“UFLIC”), had been treated as members of an affiliated group of
life insurance companies of which GECA was the common parent (the “GECA
Affiliated Group”) pursuant to Section 1504(c)(1) of the Code, and the members
of the GECA Affiliated Group had filed United States federal income tax returns
on a consolidated basis for Taxable Years ending on or before December 31, 2003
(the “GECA Consolidated Returns”) pursuant to Section 1501 of the Code.

F. GECA, UFLIC, and the other Subsidiaries of GECA that are domestic life
insurance companies have entered into a Tax Allocation Agreement effective
December 31, 1995 and amended as of December 31, 2001 (the “GECA Tax Allocation
Agreement”).

G. GECC and certain of the Subsidiaries of GECC have entered into a Federal
Income Tax Allocation Agreement effective June 1, 2001 (the “GECC Tax Allocation
Agreement”).

H. As a consequence of the Acquisition and the Initial Public Offering, the
Genworth Companies that had been members of the GE Affiliated Group are no
longer be members of the GE Affiliated Group, certain Genworth Companies are no
longer members of a Combined Group, and UFLIC is no longer be a member of the
GECA Affiliated Group.

I. The GE Affiliated Group has received a private letter ruling (the “Ruling”)
from the IRS dated October 6, 2003, based on submissions dated August 7,
2003, August 29, 2003, and September 24, 2003 (the “Submissions”) with respect
to the Acquisition.

 

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J. The GE Parties and Genworth entered into that certain Tax Matters Agreement
(“Original Tax Matters Agreement”) dated as of May 24, 2004. Under the Original
Tax Matters Agreement, the parties made certain covenants with respect to tax
matters and allocated the liability for certain United States and foreign
federal, state, local, and other taxes that may be owed to or asserted by United
States or foreign federal, state, local, or other governmental taxing
authorities, and provided for the allocation of any Tax benefits which have and
may arise as a result of any Section 338 Election.

K. In order to clarify, to simplify the administration of, and to provide for
the settlement of certain provisions of the Original Tax Matters Agreement,
including, without limitation, Section 13(b) of the Original Tax Matters
Agreement relating to the obligations of GEFAHI and Genworth to make certain
payments to each other in respect of the Life/Non-Life Election, the parties to
this Agreement desire to replace the Original Tax Matters Agreement and the
parties hereto intend that this Restated Tax Matters Agreement will supercede
the Original Tax Matters agreement in all respects.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises,
covenants, and conditions contained in this Agreement, the parties to this
Agreement agree as follows:

SECTION 1. Definitions. The term “Acceleration Event” means (1) as to Genworth,
that any Person or group of Persons acting in concert (other than GE and its
Affiliates) acquires Effective Control of Genworth, and (2) as to any Subsidiary
of Genworth, that (i) any Person or group of Persons acting in concert (other
than Genworth and its Affiliates) acquires Effective Control of such Subsidiary
of Genworth, or (ii) Genworth and its Affiliates otherwise cease to have
Effective Control of such Subsidiary of Genworth; provided, however, that in no
event shall a sale of stock of Genworth by GE or its Affiliates be treated as
constituting an Acceleration Event.

(a) The term “Acceleration Fraction” has the meaning specified in Section
9(d)(2).

(b) The term “Acquisition” has the meaning specified in Recital A of this
Agreement.

(c) The term “Adjustment Payment” has the meaning specified in Section 13 of
this Agreement.

(d) The term “Affiliate” has the meaning specified in Section 1.1 of the Master
Agreement.

(e) The term “After-Tax Basis” means that, in determining the amount of the
payment necessary to indemnify any party against, or reimburse any party for,
Liabilities, the amount of such Liabilities will be determined net of any
reduction in Tax derived by the indemnified party as the result of sustaining or
paying such Liabilities, and the amount of such indemnification payment will be
increased (i.e., “grossed up”) by the amount necessary to satisfy any income or
franchise Tax liabilities incurred by the indemnified party as a result of its
receipt of, or right to receive, such indemnification payment (as so increased),
so that the indemnified party is put in the same net after-Tax economic position
(taking into account all amounts payable under Section 9 and all other relevant
facts and circumstances) as if it had not incurred such Liabilities, in each
case without taking into account any impact on the tax basis that an indemnified
party has in its assets.

(f) The term “Agreement” means this Restated Tax Matters Agreement.

(g) The term “Brookfield” means Brookfield Life Insurance Co., Ltd., a Bermuda
corporation.

(h) The term “Brookfield Stock Purchase Agreement” means the Stock Purchase
Agreement, dated as of June 26, 2003, made among Brookfield, GECC, GE Capital
Asia Investments, a Delaware corporation, GEFAHI, and American International
Reinsurance Company, Ltd., a Bermuda company.

(i) The term “Brookfield Taxes” means the excess (if any) of (1) the actual Tax
liability of Brookfield for the Taxable Year ending December 31, 2003, over
(2) the sum of (i) the amount of such Tax liability determined without regard to
the sale of the GEFA-Japan Shares pursuant to the Brookfield Stock Purchase
Agreement, and (ii) $200 million.

(j) The term “Closing” has the meaning specified in Section 3.1 of the Master
Agreement.

 

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(k) The term “Closing Date” has the meaning specified in Section 3.1 of the
Master Agreement.

(l) The term “Code” means the Internal Revenue Code of 1986, as amended.

(m) The term “Combined Group” has the meaning specified in Recital C of this
Agreement.

(n) The term “Delayed Transfer Assets” has the meaning specified in Section 1.1
of the Master Agreement.

(o) The term “Delayed Transfer Liabilities” has the meaning specified in
Section 1.1 of the Master Agreement.

(p) The term “Effective Control” means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a business enterprise, whether through the ownership of voting stock, the use of
a voting trust, contractual arrangements, or otherwise.

(q) The term “Election Statement” has the meaning specified in Section 8(c)(2)
of this Agreement.

(r) The term “Final Allocation Schedule” has the meaning specified in
Section 8(b) of this Agreement.

(s) The term “Final Date” means the last date on which Genworth may be required
to make a Tax Benefit Payment pursuant to Section 9(a).

(t) The term “Final Determination” means a final “determination” as defined in
Section 1313(a) of the Code or any other event (including the execution of a
Form 870-AD) which finally and conclusively establishes the amount of any
liability for Tax.

(u) The term “GE” has the meaning specified in the Preamble of this Agreement.

(v) The term “GE Affiliated Group” has the meaning specified in Recital B of
this Agreement.

(w) The term “GE Combined Returns” has the meaning specified in Recital C of
this Agreement.

(x) The term “GE Combined Taxes” has the meaning specified in Section 2 (a)(1)
of this Agreement.

(y) The term “GE Consolidated Returns” has the meaning specified in Recital B of
this Agreement.

(z) The term “GE Consolidated Taxes” has the meaning specified in
Section 2(a)(1) of this Agreement.

(aa) The term “GE Parties” has the meaning specified in the Preamble of this
Agreement.

(bb) The term “GE Tax Services” has the meaning specified in Section 15(b) of
this Agreement.

(cc) The term “GECA” has the meaning specified in Recital E of this Agreement.

(dd) The term “GECA Affiliated Group” has the meaning specified in Recital E of
this Agreement.

(ee) The term “GECA Consolidated Returns” has the meaning specified in Recital E
of this Agreement.

(ff) The term “GECA Tax Allocation Agreement” has the meaning specified in
Recital F of this Agreement.

(gg) The term “GECC” has the meaning specified in the Preamble of this
Agreement.

(hh) The term “GECC Tax Allocation Agreement” has the meaning specified in
Recital G of this Agreement.

(ii) The term “GEFA-Japan Shares” has the meaning specified in the Preliminary
Statements of the Brookfield Stock Purchase Agreement.

(jj) The term “GEFAHI” has the meaning specified in the Preamble of this
Agreement.

(kk) The term “GEFAHI Tax Allocation Agreement” has the meaning specified in
Recital D of this Agreement.

(ll) The term “GEI” has the meaning specified in the Preamble of this Agreement.

 

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(mm) The term “Genworth” has the meaning specified in the Preamble of this
Agreement.

(nn) The term “Genworth Asset” has the meaning specified in Section 2.2(a) of
the Master Agreement.

(oo) The term “Genworth Business” has the meaning specified in Section 1.1 of
the Master Agreement.

(pp) The term “Genworth Companies” has the meaning specified in Recital A of
this Agreement.

(qq) The term “Genworth Tax Services” has the meaning specified in Section 15(b)
of this Agreement.

(rr) The term “GNA” has the meaning specified in Recital A of this Agreement.

(ss) The term “Initial Public Offering” has the meaning specified in Section 1.1
of the Master Agreement.

(tt) The term “IRS” has the meaning specified in Section 1.1 of the Master
Agreement.

(uu) The term “IPO Date” means the date of closing of the Initial Public
Offering.

(vv) The term “Life/Non-Life Election” has the meaning specified in Section
2(a)(4).

(ww) The term “Liabilities” has the meaning specified in Section 1.1 of the
Master Agreement.

(xx) The term “Master Agreement” has the meaning specified in Recital A of this
Agreement.

(yy) The term “Original Tax Matters Agreement” has the meaning specified in
Recital J of this Agreement.

(zz) The term “Outstanding Obligations” has the meaning specified in Section 10
of this Agreement.

(aaa) The term “Person” has the meaning specified in Section 1.1 of the Master
Agreement.

(bbb) The term “Reinsurance Agreements” has the meaning specified in Section 1.1
of the Master Agreement.

(ccc) The term “Reinsurance Transaction” means any reinsurance transaction
pursuant to the Reinsurance Agreements, which, for the avoidance of doubt, does
not include any deemed reinsurance transaction resulting from any Section 338
Election.

(ddd) The term “Ruling” has the meaning specified in Recital I of this
Agreement.

(eee) The term “Section 12 Rate” means the rate specified in Section 12,
compounded on a daily basis.

(fff) The term “Schedule B Date” means April 15, June 15, September 15, and
December 15.

(ggg) Unless otherwise specified, the term “Section” means a section of this
Agreement.

(hhh) The term “Section 338 Election” means any election under Section 338(g) or
(h)(10) of the Code (or any successor provision) or any comparable provision of
state, local, or other governmental income or franchise tax law made pursuant to
Section 8 of this Agreement.

(iii) The term “Section 338 Sale Return” means each Tax Return with respect to a
Taxable Year that includes a deemed asset sale pursuant to a Section 338
Election, including any such Tax Return that is a consolidated return pursuant
to Treas. Reg. § 1.338-10(a)(1).

(jjj) The term “Separation” has the meaning specified in Section 1.1 of the
Master Agreement.

(kkk) The term “Submissions” has the meaning specified in Recital I of this
Agreement.

(lll) The term “Subsidiary” has the meaning specified in Section 1.1 of the
Master Agreement.

(mmm) The term “Tax” has the meaning specified in Section 1.1 of the Master
Agreement.

(nnn) The term “Tax Attribute” means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, alternative minimum tax credit, or
other item (or carryforward or carryback thereof) which could reduce any Tax.

 

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(ooo) The term “Tax Benefit Payment” has the meaning specified in Section
9(a)(2).

(ppp) The term “Tax Return” has the meaning specified in Section 1.1 of the
Master Agreement.

(qqq) The term “Taxable Year” means a taxable year as defined in Section 441(b)
of the Code (and thus may include a period of less than 12 months for which a
return is made).

(rrr) The term “Taxing Authority” has the meaning specified in Section 1.1 of
the Master Agreement.

(sss) The term “Transaction” means (1) the Separation; (2) any transfer of
assets or assumption of liabilities pursuant to Section 3.2(c), (e), or (i) of
the Master Agreement; (3) any other transfer of assets or assumption of
liabilities pursuant to the Transaction Documents (including any deemed transfer
of assets or assumption of liabilities as the result of any Section 338
Election) that was (i) completed on or before the Closing Date, and (ii) made
other than in the ordinary course of business; and (4) any transfer of Delayed
Transfer Assets or assumption of Delayed Transfer Liabilities, provided,
however, that the term “Transaction” will in no event include any Reinsurance
Transaction (but will include any dividend paid in connection with a Reinsurance
Transaction).

(ttt) The term “Transaction Documents” has the meaning specified in Section 3.2
of the Master Agreement.

(uuu) The term “Transaction Taxes” means for any Taxable Year the amount of
Taxes incurred by the Genworth Companies that (1) result from the Transactions
that occur in such Taxable Year, and (2) are payable with respect to such
Taxable Year.

(vvv) The term “Transfer Documents” has the meaning specified in Section 3.4 of
the Master Agreement.

(www) The term “Transition Services Agreement” has the meaning specified in
Section 1.1 of the Master Agreement.

(xxx) The term “UFLIC” has the meaning specified in Recital E of this Agreement.

(yyy) Unless the context otherwise requires, references in this Agreement to any
Person include the successors and assigns of such Person, and any references in
this Agreement to the “GECC Tax Allocation Agreement” will include any successor
or supplemental agreement reasonably acceptable to GE entered into in connection
with any election made pursuant to Section 2(a)(4).

SECTION 2. Filing of tax returns. (a) (1) GE will prepare (or cause to be
prepared) and file (or cause to be filed) all necessary GE consolidated Returns
for all Taxable Years (whether ending before, on, or after the Closing Date),
all necessary GE Combined Returns for all Taxable Years (whether ending before,
on, or after the Closing Date), and each Section 338 Sale Return. GE will pay
(i) any Taxes (“GE Consolidated Taxes”) with respect to such GE Consolidated
Returns, (ii) any Taxes (“GE Combined Taxes”) with respect to such GE Combined
Returns, and (iii) any Transaction Taxes. Genworth will pay all Taxes (other
than Transaction Taxes) with respect to each Section 338 Sale Return (other than
a GE Consolidated Return or GE Combined Return).

(2) As promptly as reasonably practicable (and, in any event, no later than
March 31, 2005), Genworth will provide GE with the necessary information
relating to the Genworth Companies for GE to prepare such Tax Returns and to pay
such GE Consolidated Taxes, GE Combined Taxes, and Transaction Taxes. Subject to
Section 2(a)(4), such information will be prepared by Genworth in a manner
consistent with past practice, and will be subject to review, adjustment, and
approval by GE, which approval may not be unreasonably withheld.

(3) Subject to Section 2(a)(1), Genworth will have the right to be kept informed
of, to consult with GE regarding, and to participate in, preparing and filing
any Tax Returns described in Section 2(a)(1) to the extent that they may affect
Genworth. Except for any gain, loss, or other item resulting directly from a
Transaction, each item on each Section 338 Sale Return (other than a GE
Consolidated Return or a GE Combined Return) will be subject to review,
adjustment, and approval by Genworth, which approval may not be unreasonably
withheld. If Genworth proposes an adjustment to any Genworth item (other than
any

 

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gain, loss, or other such item resulting directly from a Transaction) on a GE
Consolidated Return or a GE Combined Return, and GE unreasonably declines to
accept such proposal, then each amount payable pursuant to this Agreement
(including Section 5), the GEFAHI Tax Allocation Agreement, the GECC Tax
Allocation Agreement, and the GECA Tax Allocation Agreement will be determined
as if such proposal had been accepted. For purposes of this Section 2 and
Section 6, a failure to accept or to approve is unreasonable only if the
proposal is reasonably expected (i) to result in lower aggregate Taxes of GE and
Genworth and their Affiliates on a present value basis, and (ii) to have no
adverse effect on GE and Genworth and their Affiliates (as determined on a
combined basis) under generally accepted accounting principles.

(4) At GE’s request, Genworth will cooperate fully, and will cause the Genworth
Companies to cooperate fully, in the making of an election under
Section 1504(c)(2) of the Code and Treasury Regulation Section 1.1502-47 (a
“Life/Non-Life Election”) with respect to a Taxable Year ending after
December 31, 2003, in a timely and valid manner. GE will determine the time and
manner for preparing and filing all documents required in connection with any
such election, and Genworth will cooperate fully, and will cause Genworth
Companies to cooperate fully, in preparing, executing and filing all such
documents. Genworth will use its best efforts to obtain any regulatory approvals
necessary in connection with such election as soon as practicable after the date
hereof.

(b) (1) Except as provided in Section 2(a), Genworth will prepare (or cause to
be prepared) and file (or cause to be filed) all necessary United States
federal, state, local, and other governmental and foreign Tax Returns with
respect to the Genworth Companies for all Taxable Years (whether ending before,
on, or after the Closing Date). Genworth will pay (or cause to be paid) any
Taxes due with respect to such Tax Returns.

(2) Promptly, but no later than 180 days after the Closing Date (and, in any
event, no later than 30 days prior to the due date (without extensions) of the
relevant Tax Return), GE will provide Genworth with the necessary information
relating to UFLIC for Genworth to prepare such Tax Returns and to pay such
Taxes. Such information will be prepared in a manner consistent with past
practice, and will be subject to review, adjustment, and approval by Genworth,
which approval may not be unreasonably withheld.

SECTION 3. Indemnification by GE. (a) (1) subject to receipt of, and except for,
the tax sharing payments required to be made to GE under Section 5, GE will
indemnify and hold harmless on an After-Tax Basis the Genworth Companies, and
each other Affiliate of Genworth, from and against, and reimburse each such
Person for, any Liabilities with respect to (i) GE Consolidated Taxes for all
Taxable Years (whether ending before, on, or after the Closing Date), including
any such Liabilities with respect to any liability for such GE Consolidated
Taxes pursuant to Treas. Reg. § 1.1502-6, (ii) GE Combined Taxes for all Taxable
Years (whether ending before, on, or after the Closing Date), including any such
Liabilities with respect to any liability for GE Combined Taxes pursuant to any
provision comparable to Treas. Reg. § 1.1502-6, (iii) Transaction Taxes, (iv)
any interest or Tax penalties incurred by a Genworth Company as a result of, or
in connection with, taking a Tax position that such Genworth Company is required
to take pursuant to this Agreement (but any such interest will be indemnified
under this Section 3 only to the extent that it does not duplicate interest
otherwise paid by GE to Genworth under other provisions hereof), and (v) any
Brookfield Taxes.

(2) (i) For purposes of the definition of Transaction Taxes in Section 1(ttt),
the amount of Taxes incurred by any Genworth Company that result from the
Transactions that occur in any Taxable Year will be equal to (A) the actual Tax
liability of such Genworth Company for such Taxable Year, reduced by (B) the Tax
liability of such Genworth Company for such Taxable Year determined as if none
of such Transactions had occurred.

(ii) For purposes of Section 3(a)(2)(i), (A) in the case of any Tax governed by
Section 5 of this Agreement, the GECA Tax Allocation Agreement, the GEFAHI Tax
Allocation Agreement, or the GECC Tax Allocation Agreement, the Tax liability of
any Genworth Company that is a member of the GECA Affiliated Group (except as
provided in Section 3(a)(2)(ii)(C)) will be deemed to be equal to the liability
allocated to such Genworth Company pursuant to the GECA Tax Allocation
Agreement, the Tax liability of any Genworth Company that is a party to the
GEFAHI Tax Allocation Agreement will be deemed to be

 

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equal to the liability allocated to such Genworth Company pursuant to the GEFAHI
Tax Allocation Agreement, the Tax liability of any Genworth Company that is a
party to the GECC Tax Allocation Agreement will be deemed to be equal to the
liability allocated to such Genworth Company pursuant to the GECC Tax Allocation
Agreement, and the Tax liability of any other Genworth Company that is a member
of the GE Consolidated Group will be deemed to be equal to the liability
allocated to such Genworth Company pursuant to Section 5 of this Agreement, in
the case of each such tax allocation agreement, as it may be modified by the
third proviso in Section 11; (B) in the case of each such Genworth Company, the
amount determined under Section 3(a)(2)(i) in respect of Taxes to which
Section 3(a)(2)(ii)(A) applies will (as the result of the proviso in
Section 5(a) and the second proviso in Section 11) be equal to zero; (C) the
federal income Tax liability of GECA for any Taxable Year (other than a Taxable
Year for which a Life/Non-Life Election is in effect) will be equal to the
excess (if any) of (1) the consolidated federal income Tax liability of the GECA
Affiliated Group, over (2) the aggregate amount of such liability allocated to
other members of the GECA Affiliated Group pursuant to the GECA Tax Allocation
Agreement; and (D) in respect of Florida or Illinois income Tax Returns of
Genworth Companies that are insurance companies, the income Tax liability will
be decreased in an amount equal to any reduction in Florida or Illinois premium,
retaliatory, or similar Tax liability that the Genworth Company obtains or would
obtain as a result of the income Tax liability, in each case, the calculation to
be made with and without taking into account the Transactions and the
Section 338 Elections.

(b) GE will indemnify and hold harmless on an After-Tax Basis the Genworth
Companies and each other Affiliate of Genworth from and against, and reimburse
each such Person for, any Liabilities that such Person may at any time suffer or
incur, or become subject to, as a result of or in connection with any failure by
GE or any Affiliate of GE to perform any of its covenants or agreements under
this Agreement.

(c) Genworth will notify GE in writing within 30 days after receipt of any
written communication to or by the Genworth Companies or any other Affiliate of
Genworth from or with any Taxing Authority concerning Taxes for which
indemnification may be claimed from GE pursuant to the provisions of this
Section 3. In addition, Genworth will notify GE in writing at least 15 days
prior to the date on which Genworth, or any Affiliate of Genworth, intends to
make a payment of any Taxes that are indemnifiable by GE pursuant to the
provisions of this Section 3. GE will notify Genworth in writing within 30 days
after receipt of any written communication to or by GE or any Affiliate of GE
from or with any Taxing Authority concerning Taxes owed by any Genworth Company
or any Taxes for which indemnification may be claimed from Genworth pursuant to
the provisions of Section 4. In addition, GE will notify Genworth in writing at
least 15 days prior to the date on which GE, or any Affiliate of GE, intends to
make a payment of any Taxes that are indemnifiable by Genworth pursuant to the
provisions of Section 4. The failure by a party to notify another pursuant to
this Section 3(c) or pursuant to any other provision of this Agreement will not
constitute a waiver of any claim to indemnification under this Agreement in the
absence of and except to the extent of material prejudice to the indemnifying
party.

(d) Indemnification payments under this Section 3 will be made in immediately
available funds within 30 days after receipt by GE of a written request
therefor.

SECTION 4. Indemnification by Genworth. (a) Subject to receipt of, and except
for, tax sharing payments from (or on behalf of) UFLIC pursuant to the GECA Tax
Allocation Agreement (insofar as such GECA Tax Allocation Agreement remains in
effect as to UFLIC pursuant to Section 11), Genworth will indemnify and hold
harmless on an After-Tax Basis GE and each Affiliate of GE from and against, and
reimburse each such Person for, any Liabilities (except for any Transaction
Taxes, determined, for purposes of this parenthetical exception, without regard
to Section 3(a)(2)(ii)(A) and (B), and except for any Liabilities described in
Section 3(a)(1)(i), (ii), (iv), or (v)) with respect to (i) United States
federal income Taxes of the GECA Affiliated Group for all Taxable Years (whether
ending before, on, or after the Closing Date), including any such Liabilities
with respect to any liability for such Taxes pursuant to Treas. Reg. § 1.1502-6,
and (ii) United States federal, state, local, or other governmental or foreign
income or franchise Taxes imposed on any Genworth Company for any Taxable Year
(whether beginning before, on, or after the Closing Date).

 

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(b) Genworth will indemnify and hold harmless on an After-Tax Basis GE and each
Affiliate of GE from and against, and reimburse each such Person for, any
Liabilities that any such Person may at any time suffer or incur, or become
subject to, as a result of or in connection with the failure by Genworth or any
Affiliate of Genworth to perform any of its covenants or agreements under this
Agreement.

(c) Indemnification payments under Section 4(a) or (b) will be made in
immediately available funds within 30 days after receipt by Genworth of a
written request therefor.

(d) Notwithstanding Section 13(b)(4), GEFAHI shall not be required to make any
payments to Genworth, and Genworth shall be required to repay to GEFAHI any
payments described in Section 13(b)(4) previously made by GEFAHI to Genworth,
if, when and to the extent that (i) the amount of the loss carried back exceeds
$250 million, and (ii) GE reasonably determines that as a result of the carry
back of the portion of such loss that exceeds $250 million, GE will not realize
a net benefit, or will realize a reduced benefit (taking into account any
expense incurred by GE in securing any related benefit) from any Tax Attribute
it would otherwise have realized had such portion of such loss that exceeds $250
million not been carried back. In making the determination whether the amount of
the loss carried back exceeds the $250 million threshold, the amount of the loss
carried back shall not include any capital loss described in the final sentence
of Section 13(b)(4).

SECTION 5. Tax Sharing Payments. (a) If any Genworth Company (other than any
Genworth Company that is a party to the GEFAHI Tax Allocation Agreement or the
GECC Tax Allocation Agreement for such Taxable Year) is included in the GE
Consolidated Return for any Taxable Year ending on or after December 31, 2003,
then Genworth will make a tax sharing payment to GE (or, notwithstanding Section
7(a), GE will make a tax sharing payment to Genworth) for such Taxable Year
determined in a manner consistent with tax sharing practices existing as of May
24, 2004 (as determined in the reasonable discretion of GE); provided, however,
that any amount payable pursuant to such existing tax sharing practices will be
determined for all purposes of this Section 5 without taking into account any
Transaction Taxes (determined for purposes of this proviso without regard to
Section 3(a)(2)(ii)(A) and (B)).

(b) Notwithstanding Section 7(a), if any Genworth Company (other than any
Genworth Company that was a party to the GEFAHI Tax Allocation Agreement or the
GECC Tax Allocation Agreement for such Taxable Year) is included in the GE
Consolidated Return for any Taxable Year (whether ending before, on, or after
the Closing Date), and if any adjustment is made, as the result of any amended
return, audit, or otherwise, to any income, deduction, or other item of such
Genworth Company for such Taxable Year, then Genworth will make a payment to GE
(or GE will make a payment to Genworth) in accordance with existing tax sharing
practices as of May 24, 2004 (as determined in the reasonable discretion of GE)
; provided, however, that no amount will be payable by or to any Genworth
Company pursuant to such existing tax sharing practices in respect of any
adjustment, as a result of an amended return, audit or otherwise, at any time
from and after the date of this Agreement, to the federal income tax treatment
to any Genworth Company of any Reinsurance Transaction to the extent (but only
to the extent) there is a corresponding and related offsetting adjustment to
UFLIC. Such payment will be made in immediately available funds within 30 days
after such adjustment becomes final together with interest at the rate
applicable to underpayments or overpayments of Tax, as the case may be, from
(but not including) the due date (without extensions) of the GE Consolidated
Return for such Taxable Year to (and including) the date such payment is
actually made; provided, however, that in the case of any such adjustment for
any Taxable Year that results from the carryback of any net operating loss or
other Tax Attribute from any subsequent Taxable Year, such payment will be made
together with interest at the rate applicable to underpayments or overpayments
of Tax, as the case may be, from (but not including) the date on which the
relevant Tax Return is filed for such subsequent Taxable Year to (and including)
the date such payment is actually made.

(c) Genworth will make estimated payments with respect to all amounts due
pursuant to Section 5(a) in a manner consistent with the principles of
Section 6655 of the Code. At least three business days prior to the date on
which GE intends to file the GE Consolidated Return for such Taxable Year (but
in no event prior to the fifth day after Genworth receives notice of such
intention), Genworth will pay to GE any excess of (1) the amount due under
Section 5(a) in respect of such Genworth Company for such Taxable Year, over

 

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(2) the amount of such estimated payments for such Taxable Year, or GE will pay
to Genworth an amount equal to any excess of the amount described in
subparagraph (2) over the amount described in subparagraph (1). Any such payment
will be made in immediately available funds together with interest at the
Section 12 Rate from (but not including) the due date (without extensions) of
the GE Consolidated Return for such Taxable Year to (and including) the date on
which such payment is actually made.

(d) Nothing in this Section 5 will require Genworth to make any payment to GE
(or GE to make any payment to Genworth) that would duplicate any amount
previously paid in accordance with existing tax sharing practices.

(e) The provisions of Section 5(a), (b), (c), and (d) will apply, mutatis
mutandis, with respect to any Genworth Company included in any GE Combined
Return.

SECTION 6. Control. (a) Except as provided in Section 6(b) and Section 13(b)(4),
GE will have the exclusive right to file any amended Tax Returns and to control
any audit or other administrative or judicial proceeding with respect to GE
Consolidated Taxes, GE Combined Taxes, Transaction Taxes and/or the allocation
shown on the Final Allocation Schedule, and the portion of any other audit or
other administrative or judicial proceeding regarding any other matter that may
result in any Tax liability with respect to which GE provides indemnification
under this Agreement; provided, however, that (1) GE will not settle any such
proceeding in a manner that would materially adversely affect Genworth without
the consent of Genworth, which consent may not be unreasonably withheld, and (2)
if GE unreasonably fails to accept a proposal by Genworth to file an amended Tax
Return, then each amount payable pursuant to this Agreement will be determined
as if such proposal had been accepted.

(b) Genworth will have the exclusive right to file any amended Tax Returns and
to control any audit or other administrative or judicial proceeding with respect
to any Tax liability of Brookfield; provided, however, that (1) Genworth will
not settle any such proceeding in a manner that would materially adversely
affect GE without the consent of GE, which consent may not be unreasonably
withheld, and (2) if Genworth unreasonably fails to accept a proposal by GE to
file an amended Tax Return, then each amount payable pursuant to this Agreement
will be determined as if such proposal had been accepted.

(c) Subject to Section 6(a), GE will keep Genworth informed of, consult with
Genworth regarding, and permit Genworth to participate in, any such filing,
audit, or other judicial or administrative proceeding that may affect Genworth
or any Affiliate of Genworth.

(d) Except as otherwise provided in Section 6(a) and (b), Genworth will have the
exclusive right to control any audit or other administrative or judicial
proceeding with respect to the Tax liability of the Genworth Companies.

(e) Subject to Section 6(d), Genworth will keep GE informed of, consult with GE
regarding, and permit GE to participate in, any such filing, audit, or other
judicial or administrative proceeding that may affect GE or any Affiliate of GE.

SECTION 7. Refunds. (a) (1) GE will be entitled to any refunds (including
interest paid therewith) in respect of any GE Consolidated Taxes for any Taxable
Year (whether ending before, on, or after the Closing Date), any GE Combined
Taxes for any Taxable Year (whether ending before, on, or after the Closing
Date), any Transaction Taxes, and any other Tax liability with respect to which
GE provides indemnification under this Agreement.

(2) UFLIC will be entitled to any amount payable to UFLIC in respect of any
refunds, carrybacks, adjustments, or other items (including interest paid
therewith) pursuant to the GECA Tax Allocation Agreement for any Taxable Year.

(b) Except as provided in Section 7(a), Genworth will be entitled to any refunds
(including interest paid therewith) in respect of any United States federal,
state, local, or other governmental or foreign Tax liability of the Genworth
Companies.

 

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(c) Notwithstanding Section 7(a) and (b), the disposition of any refund
described in the final proviso of Section 11 or Section 13(b)(4) shall be
governed by the final proviso of Section 11 or Section 13(b)(4), as the case may
be.

SECTION 8. Section 338 Elections. (a) If GE determines in its sole and absolute
discretion that an election will be made under Section 338(g) of the Code,
Section 338(h)(10) of the Code, and/or any of the Treasury Regulations under
Section 338 with respect to any of the Genworth Companies for which such
election may properly be made, and/or that an election will be made under any
comparable provision of state, local, or other governmental income or franchise
tax law, then GE and Genworth will join in making, or Genworth will make, such
election in a timely and valid manner, including by filing any necessary Forms
8023 and 8883 and any necessary attachments and comparable state forms. Subject
to Section 8(b), GE will determine the time and manner for preparing and filing
all forms and documents required in connection with any such election, and
Genworth will cooperate fully in preparing and filing all such forms and
documents.

(b) The parties agree that the “aggregate deemed sale price” and “adjusted
grossed-up basis” (as such terms are defined in the regulations under
Section 338 of the Code) with respect to each Section 338 Election will be
determined by GE consistent with the principles of Section 338. Such aggregate
deemed sale price and adjusted grossed-up basis will initially be allocated as
indicated on the pro forma schedule attached hereto as Schedule A. Schedule A
also includes projections of the Tax Benefit Payments to be made on each
Schedule B Date under this Agreement (determined without regard to any items
shown on Schedule D attached hereto). As soon as practicable after the Closing,
but in no event later than ten days prior to the last date on which the first
Section 338 Election must be filed, GE will prepare a final tax allocation
schedule (the “Final Allocation Schedule”) in a manner consistent with the
principles applied and methodologies used in preparing Schedule A (and thus
without regard to any items shown on Schedule D attached hereto), but taking
into account (1) any difference between the actual fair market value as
determined by GE of the Genworth common stock and any other consideration
transferred at Closing and the estimated fair market value of such stock and
other consideration used in preparing Schedule A, and (2) any difference between
the value of any Genworth Asset as finally determined and the estimated value of
such Genworth Asset used in preparing Schedule A. GE will consult with Genworth
in the preparation of the Final Allocation Schedule, but GE will have the
exclusive right, subject to the principles of this paragraph and to Section 16,
to make all determinations relating thereto. The Final Allocation Schedule will
be attached hereto as Schedule B, and Schedule B will also include projections
as of each relevant Schedule B Date of the Tax Benefit Payments to be made under
this Agreement (which projections will be prepared in a manner consistent with
the principles applied and methodologies used in preparing the projections of
such Tax Benefit Payments included in Schedule A). Schedule B will thereafter be
adjusted to reflect any inaccuracy of any of the assumptions contained therein,
whether as a result of any change in fact or law, audit, amended return, or
otherwise; provided, however, that Schedule B will not be adjusted to reflect
any inaccuracy or change (i) relating to the assumed adequacy of the amount and
character of Genworth’s taxable income, (ii) relating to the projected tax rate,
(iii) to the extent attributable to Genworth’s breach of any covenant hereunder,
(iv) relating to any item shown on Schedule D attached hereto, (v) in the tax
basis of any asset of any Genworth Company (or any interest deduction) resulting
from any payment made pursuant to Section 9(b)(2) or (3) in any Taxable Year, or
(vi) in the tax basis of any asset of any Genworth Company resulting from any
compensation paid as described in Section 9(a)(1)(ii) in any Taxable Year. If
Genworth or any of its Affiliates receives notice that the allocations on
Schedule B may be examined, reviewed, or disputed by any Taxing Authority,
Genworth will promptly notify GE in writing to that effect. If GE or any of its
Affiliates receives notice that the allocations on Schedule B may be examined,
reviewed, or disputed by any Taxing Authority, GE will promptly notify Genworth
in writing to that effect. The total projected Tax Benefit Payments by Genworth
on Schedule B (as originally attached hereto or as adjusted under this
Section 8(b)) will not exceed $640 million.

(c) (1) GE and Genworth agree to treat the deemed transfer of insurance
contracts pursuant to each such Section 338 Election as a deemed assumption
reinsurance transaction for United States federal income tax purposes in
accordance with proposed Treas. Reg. § 1.338-11 (or any successor proposed or
final regulations).

 

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(2) If the combined federal income tax liability of GE and its Affiliates and
Genworth and its Affiliates is likely (in the reasonable judgment of GE) to be
reduced as the result of any election under Treas. Reg. § 1.848-2(g) with
respect to any Reinsurance Transaction (including any novation pursuant thereto)
or any deemed assumption reinsurance transaction described in Section 8(c), then
GE and Genworth will make (or cause to be made) any such election. Any such
election will be made by executing (or causing to be executed) an Election
Statement substantially in the form attached hereto as Annex A (in the case of
any Reinsurance Transaction) or Annex B (in the case of any deemed assumption
reinsurance transaction) prior to the earliest due date of any federal income
tax return to which a schedule must be attached pursuant to Treas. Reg.
§ 1.848-2(g)(8)(ii) in respect of such election (or on such earlier date as may
be requested by GE or Genworth). The parties will treat any such Election
Statements as addenda to the relevant reinsurance agreements (in the case of any
Reinsurance Transactions) or to this Agreement (in the case of any deemed
reinsurance transactions). No such election will be revoked without the express
prior written consent of both GE and Genworth.

(3) Genworth will prepare (or cause to be prepared), subject to review,
adjustment, and approval by GE, a schedule as described in Treas. Reg.
§ 1.848-2(g)(8)(ii) in respect of each such election, and each of Genworth (as
to the Genworth Companies) and GE (as to itself and its Affiliates) will attach
(or cause to be attached) such schedule in duly executed form to the applicable
United States federal income Tax Return for the first Taxable Year ending after
the applicable election becomes effective.

(d) From and after the time that Genworth is no longer 100%-owned by GE (or its
Affiliates), Genworth will, and will cause each of the Subsidiaries of Genworth
to, comply with each of the representations made in the Submissions or stated in
the Ruling, extend the statute of limitations to the extent requested as
described in the caveat in the Ruling, and otherwise comply with and conform to
all applicable conditions of the Ruling; provided that this Section 8(d) will
not make Genworth responsible for any action or omission of any Person other
than Genworth or a Subsidiary of Genworth.

Section 9. Tax Benefit Payments. (a) (1) Except in the event that Genworth has
made the election under Section 9(a)(2)(iii)(D)(II) with respect to a particular
Taxable Year, not later than 30 days after the due date (with extensions) for
the filing by any Genworth Company of any United States federal, Florida, or
Illinois income Tax Return (other than an estimated return), or any
consolidated, combined, or other similar federal, Florida, or Illinois income
Tax Return (other than an estimated return) that includes any Genworth Company,
for any Taxable Year ending after the Closing Date and on or before the
twenty-fifth anniversary of the Closing Date, Genworth will determine (subject
to review, adjustment, and approval by GE, which approval may not be
unreasonably withheld) the hypothetical Tax liability that would have been shown
on such return if each of the assumptions set forth below is made (solely for
purposes of such hypothetical determination).

(i) None of the elections contemplated by Section 8 is made.

(ii) No deduction is allowed for compensation (including without limitation any
deduction for amounts treated as compensation under Treas. Reg. § 1.83-7)
payable by GE or any Affiliate of GE (other than a Genworth Company) to any
employee of any Genworth Company in cash, stock or other property.

(iii) In respect of Florida or Illinois income Tax Returns of any Genworth
Company that is an insurance company, the hypothetical income Tax liability for
any Taxable Year will be decreased in an amount equal to any reduction in
Florida or Illinois premium, retaliatory, or similar Tax liability that such
Genworth Company would have obtained at any time as a result of such
hypothetical income Tax liability for such Taxable Year.

(iv) In respect of any Florida or Illinois income Tax Returns of Genworth
Companies that are not insurance companies, the hypothetical income Tax
liability will be deemed to be equal to zero.

(2) (i) Except as provided in Section 9(a)(2)(iii)(D)(II), for each Taxable Year
described in Section 9(a)(1), Genworth will make one or more payments (payments
made by Genworth under this Section 9(a), Section 9(d), or Section 9(e) being
hereinafter referred to as “Tax Benefit Payments”) to

 

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GEFAHI in an aggregate amount equal to 80 percent of the excess (if any) of
(A) the hypothetical Tax liability (as determined under Section 9(a)(1)) that
would have been shown on each Tax Return to which Section 9(a)(1) applies, over
(B) the actual Tax liability shown on such Tax Return; provided, however, that
if the amount determined under clause (B) exceeds the amount determined under
clause (A), then GEFAHI will make a payment equal to 80 percent of the amount of
such excess to Genworth, and any such payments to Genworth, together with any
payments to Genworth under Section 9(d) or Section 9(e), will be treated as
negative Tax Benefit Payments. Notwithstanding anything in this Agreement to the
contrary, the total amount of all Tax Benefit Payments (less negative Tax
Benefit Payments) pursuant to this Agreement (determined without regard to any
payment made in respect of an increase or decrease in Schedule B pursuant to
Section 9(c)(1) or (2)) will not at any time exceed $640 million. The amount of
any Tax Benefit Payments not made by reason of the preceding sentence (together
with interest thereon at the Section 12 Rate) will be offset against and reduce
(but not below zero) the amount of any subsequent negative Tax Benefit Payments
that otherwise would be required to be made pursuant to this Agreement.

(ii) For purposes of this Agreement, any right to receive a refund of Tax or tax
sharing payment will be treated as a negative Tax liability, the excess of a
positive Tax liability over a negative Tax liability will be equal to the sum of
the absolute values of such Tax liabilities, and the excess of a negative Tax
liability having a smaller absolute value over a negative Tax liability having a
larger absolute value will be equal to the difference in the absolute values of
such Tax liabilities.

(iii) Any Tax Benefit Payments pursuant to Section 9(a)(2)(i) will be made by
Genworth to GEFAHI (or any negative Tax Benefit Payments pursuant to
Section 9(a)(2)(i) will be made by GEFAHI to Genworth) in accordance with
clauses (A) through (F) set forth below.

(A) Except for any payment deferred under Section 9(a)(2)(iii)(C), Tax Benefit
Payments will be made by Genworth on each Schedule B Date during the first
Taxable Year ending after the Closing Date and the first Taxable Year ending
after the IPO Date as shown in Schedule C.

(B) Except for any payment deferred under Section 9(a)(2)(iii)(C), for each
Taxable Year (other than any Taxable Year described in Section 9(a)(2)(iii)(A))
beginning prior to the Final Date, a positive or negative Tax Benefit Payment
will be made on each Schedule B Date during such then-current Taxable Year equal
to 25% of the Tax Benefit Payment determined for the prior Taxable Year under
Section 9(a)(2)(i) or Section 9(a)(2)(iii)(D)(II), if Genworth had made the
election under Section 9(a)(2)(iii)(D)(II) with respect to the prior Taxable
Year, multiplied in the case of a positive Tax Benefit Payment by a fraction
whose numerator is equal to (1) the total of the amounts shown on Schedule B
with respect to such then-current Taxable Year, and whose denominator is equal
to (2) the total of the amounts shown on Schedule B with respect to such prior
Taxable Year; provided, however, that if such prior Taxable Year includes fewer
than twelve full calendar months, the denominator of such fraction will be
multiplied by twelve, and the numerator will be multiplied by the number of
complete months in such prior Taxable Year; and provided, further, that if, as
of such Schedule B Date, Genworth’s credit rating, as reported by Standard &
Poor’s rating agency, is A- or higher (or its equivalent under any successor
rating categories of Standard & Poor’s rating agency), then Genworth may elect,
by notifying GE in writing on or prior to such Schedule B Date, not to pay the
amount determined in accordance with this Section 9(a)(2)(iii)(B) on such
Schedule B Date, and in lieu thereof, to pay the amount shown on Schedule B with
respect to such Schedule B Date.

(C) If Genworth is otherwise required to make any Tax Benefit Payment on any
Schedule B Date during any Taxable Year to GEFAHI pursuant to
Section 9(a)(2)(iii), then Genworth may (in its sole and absolute discretion)
elect to defer such payment. If Genworth elects to defer any Tax Benefit Payment
pursuant to this Section 9(a)(2)(iii)(C), then (1) such Tax Benefit Payment will
be made on or before the due date (without extensions) for such Taxable Year
together with interest at the rate specified in Section 12, compounded on a
daily basis, from (but not including) such Schedule B Date to (and including)
the date of payment, and (2) such Tax Benefit Payment will be deemed (for all
other purposes of this Section 9) to have been made on such Schedule B Date
without interest.

 

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(D) (I) Subject to Section 9(a)(2)(iii)(D)(II), if (1) any amount payable by
Genworth to GEFAHI under Section 9(a)(2)(i) for any Taxable Year exceeds (2) the
aggregate amount of the Tax Benefit Payments made by Genworth to GEFAHI for such
Taxable Year under Section 9(a)(2)(iii)(A), (B), or (C) (less the aggregate
amount of the negative Tax Benefit Payments made by GEFAHI to Genworth for such
Taxable Year under Section 9(a)(2)(iii)(B)), then Genworth will make a Tax
Benefit Payment equal to the amount of such excess to GEFAHI; provided, however,
that if the amount determined under subclause (2) exceeds the amount determined
under subclause (1), then GEFAHI will make a payment equal to the amount of such
excess to Genworth, and such payment to Genworth will be treated as a negative
Tax Benefit Payment.

(II) If, as of 30 days after the filing of a Genworth Tax Return, Genworth’s
credit rating, as reported by Standard & Poor’s rating agency, is A- or higher
(or its equivalent under any successor rating categories of Standard & Poor’s
rating agency), then Genworth may elect, by notifying GE in writing no later
than 30 days after the filing of a Genworth Tax Return, not to make the
calculation required by Section 9(a)(1) and not to make the payments required by
Section 9(a)(2)(iii) (D)(I) or (E) in respect of the Taxable Year covered by
such Tax Return, and in lieu thereof, if (1) the aggregate amount reflected on
Schedule B for all Schedule B Dates for the Taxable Year covered by such Tax
Return exceeds (2) the aggregate amount of the Tax Benefit Payments made by
Genworth to GEFAHI for such Taxable Year under Section 9(a)(2)(iii)(A), (B), or
(C) (less the aggregate amount of the negative Tax Benefit Payments made by
GEFAHI to Genworth for such Taxable Year under Section 9(a)(2)(iii)(B)), then,
Genworth will make a Tax Benefit Payment equal to the amount of such excess;
provided, however, that if such election is made by Genworth and the amount
determined under subclause (2) exceeds the amount determined under subclause
(1), then GEFAHI will make a payment equal to the amount of such excess to
Genworth, and such payment to Genworth will be treated as a negative Tax Benefit
Payment. For the avoidance of doubt, the parties hereto intend that this
Section 9(a)(2)(iii)(D)(II) shall affect only the timing of payments otherwise
payable under Section 9(a), and shall not affect the aggregate amount of
payments hereunder, except to the extent an acceleration or deferral of a
payment results in increased or reduced interest payable hereunder, and this
Section 9(a)(2)(iii)(D)(II) shall not be interpreted or applied in a manner
inconsistent with this intent.

(E) If (1) any amount payable by GEFAHI to Genworth under Section 9(a)(2)(i) for
any Taxable Year, exceeds (2) the aggregate amount of the negative Tax Benefit
Payments made by GEFAHI to Genworth for such Taxable Year under
Section 9(a)(2)(iii)(B) (less the aggregate amount of the Tax Benefit Payments
made by Genworth to GEFAHI for such Taxable Year under Section 9(a)(2)(iii)(A),
(B), or (C)), then GEFAHI will make a negative Tax Benefit Payment equal to the
amount of such excess to Genworth; provided, however, that if the amount
determined under subclause (2) exceeds the amount determined under subclause
(1), then Genworth will make a Tax Benefit Payment equal to the amount of such
excess to GEFAHI.

(F) Any positive or negative Tax Benefit Payment pursuant to
Section 9(a)(2)(iii)(D) or (E) will be made in immediately available funds
within 30 days after the due date (with extensions) for the Genworth federal
income Tax Return for the relevant Taxable Year together with interest from the
date that is midway between the first and final Schedule B Dates of such Taxable
Year to the date of payment.

(3) For purposes of Section 9(a)(2)(i), actual Tax liability will be determined
by taking into account all relevant facts and circumstances including, for
avoidance of doubt, any payments made pursuant to this Section 9 or any other
provision of this Agreement; provided, however, that (i) any net Tax benefit for
such Taxable Year resulting from the items shown in Schedule D attached hereto
will not be taken into account; (ii) any change in the tax basis of any asset of
any Genworth Company (or any interest deduction) resulting from any payments
made under Section 9(b)(2) or (3) for any Taxable Year will not be taken into
account; (iii) any change in the tax basis of any asset of any Genworth Company
resulting from any compensation paid as described in Section 9(a)(1)(ii) in any
Taxable Year will not be taken into account; and (iv) in respect of Florida or
Illinois income Tax Returns of any Genworth Company that is an insurance
company, the actual income Tax liability for any Taxable Year will be decreased
in an amount equal to any actual reduction in Florida or Illinois premium,
retaliatory, or similar Tax liability that such Genworth Company obtains at any
time as a result of its actual income Tax liability for such Taxable Year, and
(v) in respect of

 

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any Florida or Illinois income Tax Returns of Genworth Companies that are not
insurance companies, the actual income Tax liability will be deemed to be equal
to zero.

(4) If (i) the cumulative amount of the projected Tax Benefit Payments shown on
Schedule B (without taking into account any increase or decrease pursuant to
Section 9(c)) to and including any Schedule B Date, exceeds (ii) the cumulative
amount of the actual Tax Benefit Payments made by Genworth (less the cumulative
amount of any actual negative Tax Benefit Payments made by GEFAHI) as of such
date (determined without regard to any payment made pursuant to this
Section 9(a)(4) on such date), then Genworth may, in its sole and absolute
discretion, make additional Tax Benefit Payments equal to all or any portion of
such excess on such date.

(b) (1) For purposes of Section 9(a)(3), the net Tax benefit for any Taxable
Year resulting from the items shown on Schedule D will be equal to the excess
(if any) of (i) the Tax liability that would have been shown on each Tax Return
for such Taxable Year determined without regard to any item shown in Schedule D
(and without regard to any hypothetical assumption described in
Section 9(a)(1)(i)), over (ii) the sum of (x) the actual Tax liability shown on
such Tax Return (determined as provided in Section 9(a)(3) without regard to
subdivision (i) thereof), and (y) the costs reasonably incurred by Genworth in
realizing such net Tax benefit.

(2) If, for any Taxable Year ending on or prior to the Final Date, the amount
determined under Section 9(b)(1)(i) exceeds the amount determined under
Section 9(b)(1)(ii), then Genworth will pay an amount equal to 50 percent of
such excess to GEFAHI.

(3) If, for any Taxable Year ending on or prior to the Final Date, the amount
determined under Section 9(b)(1)(ii) exceeds the amount determined under
Section 9(b)(1)(i), then GEFAHI will pay an amount equal to 50 percent of such
excess to Genworth.

(4) Any payment made pursuant to this Section 9(b) will not be considered a “Tax
Benefit Payment” or a “negative Tax Benefit Payment” for any purpose of this
Agreement. Any such payment will be made in immediately available funds within
30 days after such Tax Return is filed and will be treated as an adjustment to
the consideration paid for the Genworth Assets pursuant to Section 2 of the
Master Agreement; provided, however, that a portion of any such payment equal to
the excess of (i) the amount of such payment, over (ii) the present value of
such payment (determined as of the Closing Date by using the Section 12 Rate as
the discount rate), or such larger portion as may be required by Section 483,
Section 1274, or any other provision of the Code, will be treated as interest.

(c) (1) If (i) the cumulative amount of the projected Tax Benefit Payments shown
on Schedule B (taking into account any increase or decrease pursuant to this
Section 9(c)) to and including any Schedule B Date exceeds (ii) the sum of
(A) the cumulative amount of the actual Tax Benefit Payments made by Genworth
pursuant to Section 9(a) and Section 9(d) (less the cumulative amount of any
actual negative Tax Benefit Payments made by GEFAHI pursuant to Section 9(a)) as
of such date, plus (B) the amount of any additional Tax Benefit Payments made by
Genworth pursuant to Section 9(a)(4) on or before such date, then the amount
shown on Schedule B for the next Schedule B Date will be increased by an amount
equal to interest on such excess at the rate specified in Section 12, compounded
on a daily basis, from (but not including) the Schedule B Date for which such
excess has been determined to (and including) the next subsequent Schedule B
Date. Any such increase in the amount shown in Schedule B will not be taken into
account for purposes of the last sentence of Section 8(b).

(2) If (i) the amount specified in Section 9(c)(1)(ii) as of any Schedule B Date
exceeds (ii) the amount specified in Section 9(c)(1)(i) for such date, then the
amount shown on Schedule B for the next Schedule B Date will be decreased by an
amount equal to interest on such excess at the rate specified in Section 12,
compounded on a daily basis from (but not including) the Schedule B Date for
which such excess has been determined to and including the next subsequent
Schedule B Date. Any such decrease in the amount shown in Schedule B will not be
taken into account for purposes of the last sentence of Section 8(b).

 

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(3) (i) Genworth will maintain (subject to review, adjustment, and approval by
GE, which approval will not be unreasonably withheld) a running balance of the
aggregate net increase or decrease in the amount shown on Schedule B pursuant to
this Section 9(c).

(ii) If there is an aggregate net increase in the amount shown on Schedule B
pursuant to this Section 9(c) as of any Schedule B Date (determined without
regard to any payment made by Genworth to GEFAHI on such Schedule B Date
pursuant to this Section 9(c)(3)(ii)), then Genworth may, in its sole and
absolute discretion, make an additional payment to GEFAHI on such Schedule B
Date in an amount equal to all or any portion of such aggregate net increase,
and the amount shown on Schedule B for such Schedule B Date will be decreased by
the amount of such payment. Any such decrease in the amount shown on Schedule B
will not be taken into account for purposes of the last sentence of Section
8(b).

(iii) Genworth will pay to GEFAHI an amount equal to any aggregate net increase
in the amount shown on Schedule B pursuant to this Section 9(c) as of the Final
Date, or GEFAHI will pay Genworth an amount equal to any aggregate net decrease
in the amount shown on Schedule B pursuant to this Section 9(c) as of the Final
Date. Any such payment will be made in immediately available funds within
30 days after such Final Date and will be made together with interest at the
Section 12 Rate from (but not including) the Final Date to (and including) the
date on which such payment is made.

(iv) If Section 9(d)(1) applies in respect of an Acceleration Event, then
Genworth will make a payment to GEFAHI equal to any aggregate net increase in
the amount shown on Schedule B pursuant to Section 9(c) as of the last Schedule
B Date on or prior to the date of the Acceleration Event, or GEFAHI will make a
payment to Genworth equal to any aggregate net decrease in the amount shown on
Schedule B pursuant to Section 9(c) as of such date. Any such payment will be
made by Genworth to GEFAHI (or by GEFAHI to Genworth) in immediately available
funds on or before the first Schedule B Date subsequent to the Acceleration
Event.

(v) If Section 9(d)(2) or (3) applies in respect of an Acceleration Event, then
Genworth will make a payment to GEFAHI equal to the Acceleration Fraction
multiplied by any aggregate net increase in the amount shown on Schedule B
pursuant to Section 9(c) as of the last Schedule B Date on or prior to the date
of the Acceleration Event, or GEFAHI will make a payment to Genworth equal to
the Acceleration Fraction multiplied by any aggregate net decrease in the amount
shown on Schedule B pursuant to Section 9(c) as of such date. Any such payment
will be made by Genworth to GEFAHI (or by GEFAHI to Genworth) in immediately
available funds on or before the first Schedule B Date subsequent to the
Acceleration Event, and the amount shown on Schedule B for such Schedule B Date
will be decreased by the amount of such payment. Any such decrease in the amount
shown on Schedule B will not be taken into account for purposes of the last
sentence of Section 8(b).

(vi) Any payment made pursuant to this Section 9(c)(3) will not be considered a
“Tax Benefit Payment” for any purpose of this Agreement. Any such payment will
be treated as a payment with respect to the debt instrument described in Section
9(f).

(d) (1) Subject to Section 9(d)(5), if there is an Acceleration Event of
Genworth, then Genworth will make a Tax Benefit Payment to GEFAHI equal to the
total present value of all amounts shown on Schedule B (determined without
regard to any increase or decrease pursuant to Section 9(c)) for each Schedule B
Date subsequent to the date of the Acceleration Event.

(2) Subject to Section 9(d)(5), if there is an Acceleration Event of any
Genworth Company other than Genworth, then (except as provided in
Section 9(d)(3)) Genworth will make a Tax Benefit Payment to GEFAHI equal to the
product of (i) the amount determined pursuant to Section 9(d)(1), and (ii) a
fraction (the “Acceleration Fraction”) whose numerator is equal the present
value of all amounts shown on Schedule B (determined without regard to any
increase or decrease pursuant to Section 9(c)) attributable to such Genworth
Company for each Schedule B Date subsequent to the date of the Acceleration
Event, and whose denominator is equal to the total present value of all amounts
shown on Schedule B (determined without regard to any increase or decrease
pursuant to Section 9(c)) for all such subsequent Schedule B Dates.

 

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(3) If there is an Acceleration Event of any Genworth Company other than
Genworth, then Section 9(d)(2) will not apply if all of the following conditions
are satisfied prior to the first Schedule B Date subsequent to such Acceleration
Event: (i) Genworth notifies GE in writing that it has irrevocably elected to
have this Section 9(d)(3) apply; (ii) such Genworth Company (or any Person that
has acquired Control of such Genworth Company) agrees in writing to become
obligated to pay the Acceleration Fraction of all amounts shown on Schedule B
(determined without regard to any increase or decrease under Section 9(c)) for
each Schedule B Date subsequent to the Acceleration Date; (iii) such agreement
is in form and substance reasonably satisfactory to GE; and (iv) no credit
rating of such Genworth Company (or other Person becoming obligated pursuant to
Section 9(d)(3)(ii)) is less than the corresponding credit rating of Genworth at
the time of such Acceleration Event, or the credit standing of such Genworth
Company (or other Person) is otherwise acceptable to GE.

(4) If there has been an Acceleration Event of any Genworth Company, then (for
all purposes of this Agreement) the Taxable Year of such Genworth Company will
be deemed to end on the date of such Acceleration Event, and, if the payment
described in Section 9(d)(1) or 9(d)(2) is made or the conditions of
Section 9(d)(3) are satisfied, Section 9(a) will not apply to any Tax Return
filed by such Genworth Company for any Taxable Year beginning after the date of
such Acceleration Event. For purposes of this Section 9(d), present value will
be determined as of the date of the Acceleration Event by using the interest
rate specified in Section 12, compounded on a daily basis, as the discount rate.
Any Tax Benefit Payment (or negative Tax Benefit Payment) pursuant to this
Section 9(d) will be made by Genworth to GEFAHI (or by GEFAHI to Genworth) in
immediately available funds on or before the first Schedule B Date subsequent to
such Acceleration Event.

(5) The payments described in Sections 9(d)(1) and 9(d)(2) shall not be made
without approval of the domiciliary state insurance regulatory authorities of
each of the U.S. insurance subsidiaries of Genworth, which approvals shall be
within the sole discretion of such regulatory authorities. Genworth shall use
its reasonable best efforts to obtain such regulatory approvals.

(e) If as of the Final Date (1) the cumulative amount of all projected Tax
Benefit Payments shown on Schedule B (without taking into account any increase
or decrease pursuant to Section 9(c)) exceeds (2) the cumulative amount of the
actual Tax Benefit Payments made by Genworth pursuant to Section 9(a) and
(d) (less the cumulative amount of the actual negative Tax Benefit Payments made
by GEFAHI pursuant to Section 9(a) and (d)), then Genworth will make a Tax
Benefit Payment equal to the amount of such excess to GEFAHI; provided, however,
that if the amount determined under clause (2) of this Section 9(e) exceeds the
amount determined under clause (1) of this Section 9(e), then GEFAHI will make a
negative Tax Benefit Payment equal to the amount of such excess to Genworth. Any
such Tax Benefit Payment will be made by Genworth to GEFAHI (or by GEFAHI to
Genworth) in immediately available funds within 30 days after such Final Date
and will be made together with interest at the Section 12 Rate from (but not
including) the last Schedule B Date to (and including) the date on which such
Tax Benefit Payment is made.

(f) The Tax Benefit Payments to be made pursuant to this Section 9, together
with any other payments to be made by Genworth pursuant to Section 9(c), will be
treated for income tax purposes, including on Schedule A and Schedule B (without
duplication), as a debt instrument described in Treas. Reg. § 1.1272-1(c)(2)
issued to GEFAHI as part of the consideration paid for the Genworth Assets
pursuant to Section 2 of the Master Agreement. Such debt instrument will be
treated as bearing interest at the Section 12 Rate, or at such greater rate as
may be required by Section 1274 or any other provision of the Code.

(g) For each Taxable Year beginning after the Closing Date and prior to the
Final Date, the Chief Financial Officer of Genworth will provide to GEFAHI,
within 30 days after the date that Genworth files its federal income Tax Return,
a certification to the effect that (i) all computations made pursuant to this
Agreement have been made without regard to any transaction a significant purpose
of which is to reduce or defer any amount payable by Genworth pursuant to this
Section 9; (ii) all items described on Schedule D arising during the Taxable
Year are listed on a schedule attached to the certification; and (iii) except as
provided in the last sentence of this Section 9(g), the aggregate amount
calculated under Section 9(a)(2)(i) for the Taxable Year (determined without
regard to the introductory cross reference therein to

 

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Section 9(a)(2)(iii)(D)(II)) is equal to or less than the aggregate amounts
reflected on Schedule B for the Taxable Year. If the Chief Financial Officer of
Genworth determines that it is necessary to adjust any computations made
pursuant to this Agreement in order to provide the certification required by the
preceding sentence, then such Chief Financial Officer will be permitted to make
such adjustments in a manner reasonably acceptable to GE. If the Chief Financial
Officer of Genworth is not able to provide the certification required in clause
(iii) of this Section 9(g), then the Chief Financial Officer of Genworth shall
certify that he is unable to make such certification.

SECTION 10. Subordination. Notwithstanding any other provision of this Agreement
to the contrary, any Tax Benefit Payment (together with any interest thereon or
other Schedule B amount due) required to be made by Genworth to GEFAHI pursuant
to Section 9 of this Agreement will rank subordinate and junior in right of
payment to any principal, interest, or other amounts due and payable in respect
of any debt or other liabilities of Genworth (collectively, the “Outstanding
Obligations”). Accordingly, in the event that Genworth has insufficient funds on
the date any Tax Benefit Payment (together with any interest thereon or other
Schedule B amount due) is required to be made hereunder to pay in full both (a)
the Outstanding Obligations due and payable on such date and (b) the Tax Benefit
Payment due and payable on such date (together with any interest thereon or
other Schedule B amount due), Genworth may forego payment of such Tax Benefit
Payment (together with any interest thereon or other Schedule B amount due) on
such date, but only to the extent necessary to pay in full the Outstanding
Obligations due and payable on such date; provided, however, that the amount of
any Tax Benefit Payment (together with any interest thereon or other Schedule B
amount due) foregone pursuant to this sentence will carry over and be payable by
Genworth to GEFAHI (together with any interest thereon) at such time as, and to
the extent that, Genworth’s available funds exceed the amount necessary to pay
in full its Outstanding Obligations due and payable at such time.

SECTION 11. Other Tax Sharing Agreements. All rights and obligations of GE and
its Affiliates (with respect to the Genworth Companies) and of the Genworth
Companies (with respect to GE and its Affiliates) to make or receive any Tax
sharing payments (other than pursuant to this Agreement) will terminate
immediately prior to Closing; provided, however, that notwithstanding Section
7(a)(1), (a) the GECA Tax Allocation Agreement will remain in effect as to UFLIC
pursuant to Section 5 of such Agreement for each Taxable Year in which UFLIC was
included in the GECA Affiliated Group, (b) the GEFAHI Tax Allocation Agreement
will remain in effect as to each Genworth Company that was a party thereto
pursuant to Section 5 of such Agreement for each Taxable Year in which such
Genworth Company was included in the GE Affiliated Group, (c) the GECC Tax
Allocation Agreement will remain in effect as to each Genworth Company that was
a party thereto pursuant to Section VII of such Agreement for each Taxable Year
in which such Genworth Company was included in the GE Affiliated Group;
provided, further, that the amount payable by or to any Genworth Company
pursuant to the GECA Tax Allocation Agreement, the GEFAHI Tax Allocation
Agreement, or the GECC Tax Allocation Agreement will be determined without
taking into account any Transaction Taxes (determined for purposes of this
proviso without regard to Section 3(a)(2)(ii)(A) and (B)); provided, further,
that no amount will be payable by or to any Genworth Company under any agreement
in respect of any adjustment, as a result of an amended return, audit or
otherwise, at any time from and after the date of this Agreement, to the federal
income tax treatment to any Genworth Company of any Reinsurance Transaction to
the extent (but only to the extent) there is a corresponding and related
offsetting adjustment to UFLIC; and provided, further, that GE will be entitled
to any refunds (including interest paid therewith) in respect of any loss that
(i) was recognized by any Genworth Company on a Transaction, (ii) was deferred
under Section 267(f) of the Code (other than any such loss to which GE or any
Affiliate of GE (other than any Genworth Company) succeeds under Section 381 of
the Code, and (iii) is carried back into a GE Consolidated Return and generates
a refund.

SECTION 12. Interest. In the event that any payment required to be made under
this Agreement is made after the date on which such payment is due, interest
will accrue on the amount of such payment from (but not including) the due date
of such payment to (and including) the date such payment is actually made at
5.7165%, compounded on a daily basis; provided, however, that no interest will
accrue pursuant to this Section 12 to the extent that such interest would be
duplicative of interest payable under Section 9(b).

 

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SECTION 13. Adjustments. (a) If any adjustment (other than any adjustment to
which Section 5(b), Section 11 or Section 13(b)(3) applies) is made to any
income, deduction, gain, loss, credit, or other item, as the result of any
amended return, audit, or otherwise, and the amount of any payment required
under this Agreement would have been different if such adjustment had been made
at the time the amount of such payment was determined, then GE or GEFAHI will
make a payment to Genworth equal to the amount of any such difference that was
detrimental to Genworth or its Affiliates (or Genworth will pay GE or GEFAHI the
amount of any such difference that was detrimental to GE or GEFAHI or its
Affiliates). Any such payment (an “Adjustment Payment”) will be made within 30
days after such adjustment becomes final together with interest at the Section
12 Rate from (but not including) the date of the original payment to (and
including) the date such payment is actually made; provided, however, that in
the case of any such adjustment for any Taxable Year that results from the
carryback of any net operating loss or other Tax Attribute from any subsequent
Taxable Year, such Adjustment Payment will be made together with interest at the
Section 12 Rate from (but not including) the date on which the relevant Tax
Return is filed for such subsequent Taxable Year to (and including) the date
such payment is actually made. Any Adjustment Payment (exclusive of interest)
which represents an adjustment to a prior Tax Benefit Payment or negative Tax
Benefit Payment will be treated as a Tax Benefit Payment or negative Tax Benefit
Payment, as the case may be.

(b) In connection with the Life/Non-life Election made by GE in respect of its
Taxable Year commencing January 1, 2004, the parties hereto agreed, pursuant to
Section 13(b) of the Original Tax Matters Agreement, that payments would be made
to and/or from Genworth if and when the actual net aggregate Tax liability of
the Genworth Companies for any Taxable Year on or prior to the Final Date was
increased or decreased as a result of such Election. In order to effectuate the
intent and objectives underlying such Section 13(b) of this Agreement as
originally in effect while at the same time eliminating certain of the
inconvenience and complexity of administering the original provision over
extended periods of time, and in order to establish certain additional
guidelines for the application of this Section 13(b) consistent with such intent
and objectives, the parties hereto agree to the following
Section 13(b)(1)-(3) (which, for the avoidance of doubt, amends and supercedes
Section 13(b) of the Original Tax Matters Agreement):

(1) Genworth shall pay to GEFAHI $130,132,016 in immediately available funds
within 30 days after the date on which the GECA federal income Tax Return is
filed for the Taxable Year ending December 31, 2004. Notwithstanding
Section 13(b)(3) and except as provided in Section 13(b)(2), no amounts shall be
paid by GEFAHI to Genworth or from Genworth to GEFAHI, pursuant to this
Section 13(b) or pursuant to any other provision hereof or any other agreement,
in respect of any Tax Attribute or item of income, gain or other tax item, that
was taken into account in calculating the payment by Genworth of $130,132,016
pursuant to this Section 13(b)(1), as reflected on Annex C hereto, unless there
is an adjustment as a result of an amended return, audit or otherwise to any
such item. In the event there is such an adjustment, Section 13(b)(3), and not
this Section 13(b)(1), shall apply with respect to such adjustment and no other
payment shall be made by the parties hereto in respect thereof.

(2) If the federal income Tax of any Genworth Company is reduced in any Taxable
Year as a result of the utilization of any operations loss deduction under
Section 805(a)(5) of the Code, as determined under Section 810 of the Code,
attributable to River Lake Insurance Company’s Taxable Year ended May 24, 2004,
Genworth will pay to GEFAHI an amount equal to the product of (i) the amount of
the operations loss deduction (to the extent so utilized to reduce federal
income Tax of any Genworth Company), multiplied by (ii) 35%. In the event that
River Lake Insurance Company shall cease to be a member of Genworth’s affiliated
group (within the meaning of Section 1504(a) without giving effect to the
limitation in Section 1504(b)(2)), Genworth shall pay to GEFAHI an amount equal
to the product of (i) the amount of the operations loss deduction for River Lake
Insurance Company’s Taxable Year ended May 24, 2004 that as of the date that
River Lake Insurance Company ceases to be a member of Genworth’s affiliated
group, has neither expired nor been taken into account under clause (i) of the
preceding sentence, multiplied by (ii) 35%. Any amount payable under the first
sentence of this Section 13(b)(2) will be made in immediately available funds
within 30 days after the date on which the return reflecting use of the
operations loss

 

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deduction is filed, and any amount payable under the second sentence of this
Section 13(b)(2) will be made in immediately available funds within 30 days
after the date that River Lake Insurance Company ceases to be a member of
Genworth’s affiliated group, it being understood and agreed that in no event
shall a payment be duplicated under both the first sentence and the second
sentence of this section 13(b)(2) with respect to any operations loss deduction.

(3) Except for any Tax Attributes or items of income, gain or other tax items
governed by Section 13(b)(1) and (2), if GE and Genworth identify any other Tax
Attribute, item of income or gain or any other tax item of a Genworth Company
that would have been different had GE not filed a Life/Non-Life Election for the
2004 Taxable Year, then Genworth shall make a payment to GEFAHI or GEFAHI shall
make a payment to Genworth, as applicable, in an amount equal to the sum of the
net present values (using the Section 12 Rate) of the product of (i) the
absolute amount of each such difference of a Tax Attribute or item of income,
gain or other tax item of any Genworth Company for any Taxable Year ending on or
before the Final Date, multiplied by (ii) 35%. GE and Genworth shall cooperate
in good faith to calculate the sum of such net present values or to otherwise
determine the appropriate amount of such payment. Any such payment will be made
in immediately available funds within 30 days after the parties agree on the
amount of such payment. This Section 13(b)(3) shall also apply to any adjustment
as a result of an amended return, audit or otherwise to any Tax Attribute
governed by this Section 13(b)(3).

(4) If any Genworth Company incurs a loss that as a result of the Life/Non-Life
Election is or may be carried back into a GE Consolidated Return, and had no
Life/Non-Life Election been made, such loss would have been carried back to a
GECA Consolidated Return and such carryback would have resulted in a refund,
then, at Genworth’s request, GE shall carryback such loss into the GE
Consolidated Return and, excluding any capital loss described in the final
sentence of this Section 13(b)(4), GEFAHI shall make a payment to Genworth in an
amount equal to 23.75% of such loss carried back in immediately available funds
within 30 days after the date of filing of the GE Tax Return reflecting such
carryback, and three additional payments each of which shall be in an amount
equal to 3.75% of such loss carried back. The second, third and fourth payments,
if any, will be made in immediately available funds on June 30 of the second
Taxable Year, the third Taxable Year or the fourth Taxable Year, in the case of
the second, third and fourth payments, respectively, following the Taxable Year
to which the loss was carried back. In the event of any capital loss of any
Genworth Company realized for federal income tax purposes on or before May 24,
2004 and deferred as of the time of such realization under Section 267 of the
Code to a Taxable Year beginning after May 24, 2004, if such loss is carried
back, the rights and obligations of the parties hereto shall be determined in
accordance with existing tax sharing principles (including, without limitation,
Section 11, Section 13(e) and the GECC Tax Allocation Agreement as defined in
Section 1(yyyy)); for the avoidance of doubt, such capital losses include, but
are not necessarily limited to, capital losses realized in the Taxable year
ending on May 24, 2004 as a result of a Reinsurance Transaction and losses
described in Section 13(e) (including losses subject to the final proviso of
Section 11).

(c) If (1) the amount determined with respect to any Genworth Company under
Section 3(a)(2)(i)(B) exceeds (2) the amount determined with respect to such
Genworth Company under Section 3(a)(2)(i)(A), then Genworth will pay an amount
equal to such excess to GE. Any amount payable under this Section 13(c) will be
made in immediately available funds within 30 days after the date on which the
Genworth federal income tax is filed for the Taxable Year in which the Closing
occurs.

(d) If (1) the amount determined under Section 1(i)(2), exceeds (2) the amount
determined under Section 1(i)(1), then Genworth will pay an amount equal to such
excess to GE. Any amount payable under this Section 13(d) will be made in
immediately available funds within 30 days after the date on which the
Brookfield federal income Tax Return is filed for the Taxable Year ending
December 31, 2003.

(e) If (1) any Genworth Company recognizes any loss on a Transaction, and
(2) the loss is deferred under Section 267(f) of the Code (other than any such
loss to which GE or any Affiliate of GE (other than any Genworth Company)
succeeds under Section 381 of the Code), then Genworth will make a payment or
payments to GE in immediately available funds within 30 days after the date on
which the Genworth federal income Tax Return is filed for each Taxable Year in
which such loss is no longer deferred under

 

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Section 267(f) and there is a resulting reduction of Tax for Genworth or any
Genworth Company for such Taxable Year, with the amount owing with respect to
such Taxable Year equaling the amount of such reduction for such taxable Year,
except if and to the extent any such loss is carried back and generates a refund
in a GE Consolidated Return that is retained, pursuant to Section 11 hereof, by
GE. For the avoidance of doubt, this Section 13(e) will not apply to any loss
recognized pursuant to a Reinsurance Transaction.

(f) Any amount paid pursuant to Section 13(b), (c), (d), or (e) will be treated
as an adjustment to the consideration paid for the Genworth Assets pursuant to
Section 2 of the Master Agreement, to the extent not otherwise taken into
account under this Agreement; provided, however, that a portion of any such
payment equal to the excess of (1) the amount of such payment, over (2) the
present value of such payment (determined as of the Closing Date by using the
Section 12 Rate as the discount rate), or such larger portion as may be required
by Section 483, Section 1274, or any other provision of the Code, will be
treated as interest.

SECTION 14. No Duplicative Payments. No duplicative payment of interest or any
other amount will be required under this Agreement.

SECTION 15. Tax Cooperation. (a) Under this Agreement and the Transition
Services Agreement, GE and Genworth will furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance relating to the Genworth Companies and the Genworth Business
(including access to books and records) as is reasonably necessary for the
filing of all Tax Returns, the making of any election related to Taxes, the
preparation for any audit by any Taxing Authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Taxes or Tax Return. GE
and Genworth will cooperate with each other in the conduct of any audit or other
proceeding related to Taxes and all other Tax matters relating to the Genworth
Companies and the Genworth Business, and each will execute and deliver such
powers of attorney and other documents as are necessary to carry out the intent
of this Agreement. The party requesting cooperation under this Section 15 will
reimburse the other party for any actual out-of-pocket expenses incurred in
furnishing such cooperation, except that the amount of reimbursement for any
services governed by the Transition Services Agreement for the time period
specified therein shall be determined by that agreement. All Tax records
relating to the Genworth Business will be retained for at least seven (7) years
after such records are created.

(b) Pursuant to the Transition Services Agreement, for the time period specified
therein, the GE Parties will provide to Genworth and GNA certain tax consulting,
tax compliance, tax related-software, and other tax-related services (the “GE
Tax Services”) as set forth in Schedule A of the Transition Services Agreement.
Further, for the time period specified in the Transition Services Agreement and
as set forth in Schedule B of the Transition Services Agreement, Genworth and
GNA will provide to the GE Parties certain tax-related services (the “Genworth
Tax Services”). This Agreement incorporates the provisions of the Transition
Services Agreement relating to the GE Tax Services and the Genworth Tax
Services. Any dispute relating to the performance of the GE Tax Services and the
Genworth Tax Services or the fees payable for such services will be governed by
the provisions of the Transition Services Agreement.

(c) Unless there has previously been a Final Determination to the contrary,
neither Genworth nor any of its Affiliates will take any position with respect
to Taxes (including on any Tax Return or in connection with any Tax controversy)
for any Taxable Year that is inconsistent with (1) any allocation shown on the
Final Allocation Schedule, (2) any election made pursuant to Section 8, or
(3) the treatment of any payment made pursuant to Section 9 as provided in this
Agreement; provided, however, that Genworth will not be required to take any
position if (A) Genworth obtains, at its sole cost and expense, an opinion of
nationally recognized tax counsel mutually acceptable to Genworth and GE, to the
effect that there is no “substantial authority,” within the meaning of
Section 6662 of the Code, for such position, and (B) such opinion is reasonably
satisfactory in form and substance to GE.

 

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(d) GE and Genworth will promptly provide to the other a copy of any written
communication from or with the IRS or any other Taxing Authority that relates in
any respect to the treatment of the Acquisition or any related transaction
(including any communication that relates to the allocation shown on the Final
Allocation Schedule).

SECTION 16. Resolution of Disputes. If any dispute arises between the parties
hereto with respect to this Agreement, then, except as provided in Section
15(b), such dispute will be finally resolved by arbitration in which the sole
arbitrator will be a person or firm chosen mutually by GE and Genworth. If GE
and Genworth are unable to agree on such a person or firm, then each will
designate one person and the two persons so designated will choose a third
person or firm that will be the sole arbitrator. The parties expressly waive and
forego any right to (a) punitive, exemplary, statutorily-enhanced, or similar
damages in excess of compensatory damages, and (b) trial by jury. The parties
agree to use commercially reasonable efforts to resolve any arbitration within
30 days of the initiation of arbitration. Any arbitration proceeding will take
place in New York, New York unless the parties mutually agree to another
location. The parties agree that no appeal will lie from the arbitration award,
that they will not challenge the award for any reason in any court, and that the
arbitration award will have the force and effect of a judgment as if a court
having jurisdiction thereof has entered judgment on the award. The arbitration
will be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16. The parties
expressly agree that this dispute resolution procedure governs disputes arising
under this Agreement and that it supersedes dispute resolution provisions
contained in any other Transaction Documents, including the Master Agreement.

SECTION 17. Survival. Except to the extent inconsistent with applicable law, the
indemnity and payment obligations set forth in this Agreement will survive until
the date which is six months after the date of expiration of the applicable
statute of limitations (including any extensions thereof). The right to
indemnification with respect to claims of which notice was given prior to the
expiration of the applicable survival period will survive such expiration until
such claim is finally resolved and any obligations with respect thereto are
fully satisfied.

SECTION 18. Amendment. No provision of this Agreement may be waived, amended or
modified except by a written instrument signed by the GE Parties and Genworth.

SECTION 19. Transfer and Similar Taxes. All stock transfer, real estate
transfer, documentary, stamp, recording, ad valorem, and other similar Taxes
arising out of, in connection with or attributable to the Transactions and
incurred by any of the parties thereto will be borne and paid by GE. Genworth
will use its reasonable best efforts to secure, and to cause its Affiliates to
secure, any available exemptions from any such Taxes and to cooperate with GE in
providing any information and documentation that may be necessary to obtain such
exemptions.

SECTION 20. Additional Provisions. The following provisions of the Master
Agreement shall apply (mutatis mutandis) to this Agreement: Sections 8.1
(Corporate Power; Fiduciary Duty); 8.2 (Governing Law); 8.3 (Survival of
Covenants); 8.5 (Notices); 8.6 (Severability); 8.7 (Entire Agreement); 8.8
(Assignment; No Third-Party Beneficiaries); 8.9 (Public Announcements); 8.10
(Amendment); 8.11 (Rules of Construction); and 8.12 (Counterparts).

SECTION 21. Effective Date. Subject to completion of the filing of a Form D,
Prior Notice of a Transaction, (or the equivalent) with the requisite state
insurance commissioners, and such filing being deemed sufficient and the
transaction not disapproved by said commissioners, this Agreement restates the
Original Tax Matters Agreement in its entirety and supercedes the Original Tax
Matters Agreement in all respects, effective as of February 1st 2006. The
provisions of the Original Tax Matters Agreement, as in effect prior to the date
of this Agreement, shall be effective only until the effective date of this
Agreement.

 

21

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

IN WITNESS WHEREOF, this Agreement has been duly executed on the day and year
first above written.

 

GENERAL ELECTRIC COMPANY

  GENERAL ELECTRIC CAPITAL
CORPORATION By:  

/S/    RICHARD DEVINO

  By:  

/S/    RICHARD DEVINO

Name:   Richard Devino   Name:   Richard Devino Title:   Vice President   Title:
  Vice President GEI, INC.   GE FINANCIAL ASSURANCE HOLDINGS, INC. By:  

/S/    RICHARD DEVINO

  By:  

/S/    THEODORE F. WEILAND

Name:   Richard Devino   Name:   Theodore F. Weiland Title:   Vice President  
Title:   President GENWORTH FINANCIAL, INC.     By:  

/S/    RICHARD P. MCKENNEY

    Name:   Richard P. McKenney     Title:   Senior Vice President and Chief
Financial Officer    

 

22

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Annex A

ELECTION STATEMENT

This Election Statement is made this     day of     , 2003, among
                    , a                     corporation (the “Ceding Company”),
and                     , a             corporation (“Reinsurer”).

Unless otherwise indicated, all capitalized terms used herein shall have the
same meaning as in the [Assumption/Indemnity] Reinsurance Agreement by and
between the Ceding Company and Reinsurer dated as of                     , 2003
(the “Reinsurance Agreement”).

1. The Ceding Company and Reinsurer hereby make a joint election under Treasury
Regulation § 1.848-2(g)(8) (the “Joint Election”) with respect to the
Reinsurance Agreement.

2. The Ceding Company and Reinsurer hereby agree to include this Election
Statement as an Addendum to the Reinsurance Agreement.

3. The Ceding Company and Reinsurer hereby agree that the party with net
positive consideration for the Reinsurance Agreement for each Taxable Year will
capitalize specified policy acquisition expenses with respect to the Reinsurance
Agreement without regard to the general deductions limitation of
Section 848(c)(1) of the Code.

4. The Ceding Company and Reinsurer hereby agree to exchange all necessary
information pertaining to the amount of net consideration under the Reinsurance
Agreement each year to ensure consistency.

5. The Ceding Company will submit a schedule to Reinsurer by
[                    ] of each year, of its calculation of the net consideration
for the preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by one of the Ceding Company’s officers
stating that such net consideration will be reported on any United States
federal income Tax Return filed with respect to the Ceding Company for the
preceding calendar year.

6. Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company by [                    ]. If Reinsurer does
not so notify the Ceding Company the net consideration as determined by the
Ceding Company will be reported on any United States federal income Tax Returns
filed with respect to the Ceding Company or Reinsurer for the preceding calendar
year.

7. If Reinsurer contests the Ceding Company’s calculation of the net
consideration, the parties will act in good faith to reach an agreement as to
the correct amount by [date]. If the Ceding Company and Reinsurer reach
agreement on an amount of the net consideration, such amount shall be reported
on any United States federal income Tax Returns filed with respect to the Ceding
Company or Reinsurer for the previous calendar year.

8. The Ceding Company and Reinsurer hereby agree that the first Taxable Year for
which the Joint Election is effective is the Taxable Year ending [December 31,
2004].

9. Reinsurer represents and warrants that it is subject to United States
taxation within the meaning of Treasury Regulation Section 1.848-2(h).

 

A-1

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

IN WITNESS WHEREOF, this Election Statement has been duly executed on the day
and year first above written.

 

[CEDING COMPANY] By:  

 

Name:   Title:   [REINSURER] By:  

 

Name:   Title:  

 

A-2

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Annex B

ELECTION STATEMENT

This Election Statement is made this     day of     , 2004 between GE Financial
Assurance Holdings, Inc., a Delaware corporation (“GEFAHI”), and
                    , a                     corporation (the “Company”).

WHEREAS, pursuant to the Master Agreement dated as of                     , 2003
among the General Electric Company, a New York corporation (“GE”), General
Electric Capital Corporation, a Delaware corporation (“GECC”), GEI, Inc., a
Delaware corporation (“GEI”), GE Financial Assurance Holdings, Inc., a Delaware
corporation (“GEFAHI”, and collectively with GE, GEI, and GECC, the “GE
Parties”), and Genworth Financial, Inc., a Delaware corporation (“Genworth”)
(the “Master Agreement”), Genworth has agreed, on the terms and subject to the
conditions set forth in the Master Agreement, to acquire (the “Acquisition”),
directly or indirectly, all the outstanding shares of stock of certain
subsidiaries of GE (such subsidiaries, together with Genworth, the “Genworth
Companies”) in a transaction that will constitute (as to certain of such
Genworth Companies) a qualified stock purchase within the meaning of
Section 338(d)(3) of the Code.

WHEREAS, pursuant to the Tax Matters Agreement dated as of
                    among the GE Parties and Genworth (the “GE-Genworth TMA”),
GE and Genworth have agreed to make a Section 338(h)(10) election with respect
to the Company in connection with the Acquisition (the “Section 338 Election”).

WHEREAS, in accordance with the Section 338 Election, the Company as of the
Closing Date (“Old Company”) was treated as if it transferred all of its assets
and liabilities, including its insurance contracts, to a new Company and then
liquidated.

WHEREAS, pursuant to the GE-Genworth TMA, GE and Genworth have agreed to treat
the deemed transfer of insurance contracts pursuant to the Section 338 Election
as a deemed assumption reinsurance transaction (the “Deemed Reinsurance
Transaction”) for federal income tax purposes in accordance with proposed Treas.
Reg. § 1.338-11.

WHEREAS, GEFAHI, on behalf of Old Company, and Company wish to make an election
under Treas. Reg. § 1.848-2(g) requiring the Company to capitalize specified
policy acquisition expenses with respect to the Deemed Reinsurance Transaction
without regard to the general deductions limitation (the “Section 848
Election”).

WHEREAS, there is no actual reinsurance agreement in which the Section 848
Election may be made with respect to the Deemed Reinsurance Transaction, and the
parties to this Election Statement intend that, with respect to the Deemed
Reinsurance Transaction, this Election Statement be included as an addendum to
the transaction documents in accordance with Treas. Reg. § 1.848-2(g)(8)(ii).

NOW THEREFORE, in consideration of the foregoing and of the mutual promises,
covenants, and conditions contained in the Election Statement, the parties to
this Election Statement agree as follows:

1. Unless otherwise indicated, all capitalized terms used herein shall have the
same meaning as in the GE-Genworth TMA.

2. GEFAHI, as successor in interest to Old Company, and the Company hereby make
a joint election under Treasury Regulation § 1.848-2(g)(8) (the “Joint
Election”) with respect to the Deemed Reinsurance Agreement.

3. GEFAHI and the Company hereby agree that the Company will capitalize
specified policy acquisition expenses with respect to the Deemed Reinsurance
Transaction without regard to the general deductions limitation of
Section 848(c)(1) of the Code.

 

B-1

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

4. GEFAHI and the Company hereby agree to exchange all necessary information
pertaining to the amount of net consideration with respect to the Deemed
Reinsurance Transaction to ensure consistency.

5. GEFAHI and the Company hereby agree that the first Taxable Year for which the
Joint Election is effective is the Taxable Year ending on the Closing Date.

6. The Company represents and warrants that it is subject to United States
taxation within the meaning of Treas. Reg. § 1.848-2(h).

IN WITNESS WHEREOF, this Election Statement has been duly executed on the day
and year first above written.

 

GE FINANCIAL ASSURANCE HOLDINGS, INC. By:  

 

Name:   Title:   [THE COMPANY] By:  

 

Name:   Title:  

 

B-2

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Annex C

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

 

 

C-1

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SCHEDULE A

(Part I)

PRO FORMA ALLOCATION OF AGGREGATE DEEMED SALE PRICE (ADSP)

AND ADJUSTED GROSSED-UP BASIS (AGUB)

 

ASSET

   ADSP    AGUB

Cash and Short Term Investments

   $ 945,039,715    $ 945,039,715

Bonds

     22,388,030,810      22,388,077,157

Stocks and Mutual Funds

     93,070,329      93,070,329

Mortgage Loans

     3,020,983,900      3,020,983,900

Policy Loans

     820,671,102      820,671,102

Other Investments

     380,552,932      380,552,932

Receivables

     3,465,418,505      3,465,418,505

Fixed Assets

     22,490,255      22,916,885

Real Estate

     17,192,414      17,200,636

SPV’s

     552,376,359      556,653,583

Investment in Subsidiaries

     11,681,277,744      11,791,684,085

Guaranty Fund Assessments

     29,432,478      30,101,875

Separate Account Assets

     108,537,641      108,537,641

Other Assets

     760,693,834      760,693,834

Tax DAC

     0      126,190,315

PVFP and Other Tax Intangibles

     1,158,859,684      1,046,059,452

TOTAL ASSETS

   $ 46,444,627,703    $ 46,573,851,945

The amounts shown above in Part I of this Schedule A reflect the totals of the
allocations for all relevant entities. For purposes of Schedule B, a separate
allocation will be made for each relevant entity.

 

C-2

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SCHEDULE A

(Part II)

PRO FORMA SCHEDULE OF TAX BENEFIT PAYMENTS

Total Payments (in $)

 

     4/15     6/15     9/15     12/15     Total     Cum. Total

2004

   —       3,195,916     7,922,397     7,908,902     19,027,215     19,027,215

2005

   6,149,315     6,143,361     6,137,357     6,131,304     24,561,338    
43,588,553

2006

   6,170,778     6,164,422     6,158,013     6,151,551     24,644,764    
68,233,317

2007

   7,627,451     7,614,290     7,601,020     7,587,641     30,430,402    
98,663,719

2008

   8,761,861     8,742,978     8,723,939     8,704,743     34,933,521    
133,597,240

2009

   11,044,960     11,014,952     10,984,696     10,954,191     43,998,798    
177,596,037

2010

   12,603,358     12,564,876     12,526,076     12,486,956     50,181,267    
227,777,304

2011

   13,071,684     13,029,139     12,986,242     12,942,992     52,030,057    
279,807,361

2012

   10,753,543     10,719,118     10,684,409     10,649,412     42,806,482    
322,613,843

2013

   11,403,005     11,363,920     11,324,513     11,284,780     45,376,218    
367,990,061

2014

   10,324,196     10,287,897     10,251,299     10,214,398     41,077,790    
409,067,851

2015

   8,626,063     8,595,448     8,564,581     8,533,458     34,319,550    
443,387,401

2016

   8,316,654     8,285,839     8,254,771     8,223,446     33,080,710    
476,468,111

2017

   8,124,454     8,092,909     8,061,104     8,029,036     32,307,502    
508,775,614

2018

   7,678,300     7,647,116     7,615,674     7,583,973     30,525,062    
539,300,675

2019

   4,532,263     4,513,465     4,494,511     4,475,401     18,015,640    
557,316,316

2020

   885,165     881,618     878,042     874,437     3,519,261     560,835,577

2021

   936,052     932,096     928,108     924,087     3,720,342     564,555,920

2022

   1,023,878     1,019,329     1,014,741     1,010,116     4,068,064    
568,623,984

2023

   1,031,856     1,027,037     1,022,178     1,017,279     4,098,349    
572,722,333

2024

   1,113,100     1,107,672     1,102,198     1,096,680     4,419,651    
577,141,983

2025

   964,252     959,206     954,119     948,989     3,826,566     580,968,550

2026

   631,617     627,791     623,933     620,043     2,503,383     583,471,933

2027

   (148,929 )   (149,481 )   (150,038 )   (150,599 )   (599,046 )   582,872,886

2028

   (1,052,820 )   (1,049,381 )   (1,045,914 )   (1,042,418 )   (4,190,533 )  
578,682,353

2029

   (12,833,226 )         (12,833,226 )   565,849,128                 

Total—Tax Benefits

           565,849,128                     

 

C-3

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PRO FORMA SCHEDULE OF PRINCIPAL PAYMENTS

ON DEBT INSTRUMENT REFERRED TO IN SECTION 9(f)

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

i

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PRO FORMA SCHEDULE OF INTEREST PAYMENTS

ON DEBT INSTRUMENT REFERRED TO IN SECTION 9(f)

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

ii

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SCHEDULE A

(Part III)

STATEMENT OF PRINCIPLES APPLIED AND METHODOLOGIES USED IN PREPARING SCHEDULES A
AND B.

Principle I: The $167,000,000 amount of general deductions (as defined in
Section 848(c)(2) of the Code) of UFLIC for the taxable year ending December 31,
2004 has been determined based on the 2004 statutory operating plan (“OP Plan”)
projections prepared as part of Business Planning & Analysis (“BP&A”)
forecasting.

Principle II: The total amounts of general deductions (as defined in
Section 848(c)(2) of the Code) for the calendar year ending December 31, 2004
have been determined based on the 2004 Op Plan projections prepared as part of
BP&A forecasting. Such amounts have been allocated between the portion of the
calendar year 2004 ending on the Closing Date and the remainder of such calendar
year on a ratable daily basis. Such amounts (assuming that the Closing Date will
be May 24, 2004) are as set forth below.

 

Insurance Company

   Pre-Closing
Amount    Post-Closing
Amount

GE Capital Assurance Company

   $ 257,315,300    $ 392,184,009

Professional Insurance Company

   $ 8,493,844    $ 12,945,790

GE Group Life Assurance Company

   $ 76,732,057    $ 116,950,238

Brookfield Life Assurance Company

   $ 2,608,914    $ 3,976,345

Principle III: The total amounts of specified policy acquisition expenses
(“SPAE”), as defined in Section 848(c) of the Code, for the post-closing portion
of the calendar year ending December 31, 2004 (excluding SPAE resulting from the
deemed assumption reinsurance transaction described in Section 8(c) of the Tax
Matters Agreement), have been determined based on the OP Plan financial
projections prepared as part of BP&A forecasting. Such amounts (assuming that
the Closing Date will be May 24, 2004) are as set forth below.

 

Insurance Company

   Amount

GE Capital Assurance Company

   $ 85,842,755

Professional Insurance Company

   $ 1,919,890

GE Group Life Assurance Company

   $ 784,813

Brookfield Life Assurance Company

   $ 7,946,518

Principle IV: Income, deductions, and other relevant items for the period
beginning January 1, 2004 and ending December 31, 2004 will be allocated between
(A) the period beginning January 1, 2004 and ending on the Closing Date, and
(B) the period beginning on the day after the Closing Date and ending on
December 31, 2004, based on (1) interim financial statements prepared as of
April 30, 2004, and (2) extrapolation of the average daily results for the
period beginning on January 1, 2004 and ending on April 30, 2004 (excluding any
items not arising in the ordinary course of business) to the Closing Date.

Principle V: For purposes of determining amortization of premium and accrual of
discount, securities of the type reported in NAIC Annual Statement Schedule D
(except for stock of parents, subsidiaries, and affiliates) owned by each
Genworth Company at the beginning of the day after the Closing Date will have
projected principal paydowns as forecast by GE Asset Management at the time of
the acquisition of such securities (taking into account any adjustments made by
GE Asset Management on or before March 15, 2004).1

 

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

1

For purposes of preparing Schedule A, amortization of premium and accrual of
discount has been determined with regard to I.R.C. §§ 171 and 811, and the
resulting schedule of projected paydowns has been multiplied by a factor of 1.8.
Such method of estimation will not be used in preparing Schedule B.

 

iii

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Principle VI: All securities of the type referred to in Principle V owned by any
Genworth Company at the beginning of the day after the Closing Date (and owned
by such Genworth Company or any other Genworth Company on December 31, 2028)
will be deemed sold to an unrelated third party for cash on December 31, 2028.
For the avoidance of doubt, this Principle VI will not be taken into account in
determining the amortization of premium and accrual of discount (which
amortization and accrual is governed solely by Principle V).

Principle VII: All intercompany accounts receivable owned by any Genworth
Company at the beginning of the day after the Closing Date will be deemed paid
on the first anniversary of the Closing Date.

Principle VIII: All other accounts receivable arising in the ordinary course of
business owned by any Genworth Company at the beginning of the day after the
Closing Date will be deemed paid on the second anniversary of the Closing Date.

Principle IX: Mortgage loans owned by any Genworth Company at the beginning of
the day after the Closing Date will have projected principal paydowns based on
the average weighted life as of February 15, 2004, as determined in the
valuation model provided by Goldman Sachs in its draft valuation report dated
March 23, 2004. For the avoidance of doubt, no adjustments will be made for any
change in facts after February 15, 2004.

Principle X: The hypothetical tax liability referred to in Section 9(a)(2)(i)(A)
of the Tax Matters Agreement will be determined by treating the tax basis of
each asset (other than the stock of a Genworth Company) acquired by Genworth in
the Transaction as being equal to the tax basis of such asset in the hands of
the transferor; provided, however, that if any such item was not an asset in the
hands of the transferor, then the hypothetical tax liability referred to in
Section 9(a)(2)(i)(A) of the Tax Matters Agreement will be determined by
treating such asset as having a tax basis equal to zero. If none of the
elections contemplated by Section 8 of the Tax Matters Agreement had been made,
the tax basis of any goodwill, going concern value, and any other intangible
asset in the hands of Genworth would have been equal to a total amount of $60
million.

Principle XI: Policy loans owned by any Genworth Company at the beginning of the
day after the Closing Date will have projected principal paydowns based on the
assumptions reflected in the calculations used in preparing Schedule A, without
taking into account any change in facts after the date on which such assumptions
were prepared (other than changes in the principal amounts of such policy loans
and interest rates).

Principle XII: Each derivative owned by any Genworth Company at the beginning of
the day after the Closing Date will have projected reversal patterns based on
(i) reversal on the expiration date of the contract, or (ii) in the case of
contracts relating to perpetual critical terms match and S&P options,
straight-line amortization to the expiration date.2

Principle XIII: Special purpose vehicles (“SPV’s”) owned by any Genworth Company
at the beginning of the day after the Closing Date will have projected reversal
patterns based on straight-line amortization over the expected life (as
determined by GE Asset Management at the time of the formation of the SPV) for
the underlying asset, with the exception of SPV’s with $600,000 or less in basis
step-up, in which case no reversal pattern will be used.

Principle XIV: Each Genworth Company will have taxable income as reflected in
the projections used in preparing Schedule A.

Principle XV: Each of the Principles stated in Part III of this Schedule A will
be conclusively presumed correct and will be applied (in preparing Schedule B
and making any adjustments thereto) even though it may be determined that such
Principle is actually contrary to fact.

 

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

2

Solely for purposes of Schedule A, only those derivative contracts owned by a
Genworth Company on March 18, 2004 have been taken into account, and it has been
assumed that the Closing Date will be May 24, 2004. Such method of estimation
will not be used in preparing Schedule B.

 

iv

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SCHEDULE B

 

           Adjusted Deemed
Sale Price    Adjusted
Grossed-Up Book

Cash and Short Term Investments

   I CASH    202,193,757    202,193,990

Bonds

   II B    23,747,319,375    23,753,973,298

Stocks and Mutual Funds

   II E    87,623,297    87,645,516

Separate Account Assets

   II SA    61,172,343    61,188,009

Mortgage Loans

   III M    2,796,963,962    2,797,685,369

Policy Loans

   III P    1,556,086,301    1,556,484,841

Other Investments

   II OI    242,856,262    243,022,362

Receivables

   R    3,232,831,779    3,233,953,103

Fixed Assets

   V FA    19,976,774    20,193,425

Real Estate

   V RE    —      —  

SPVs and Partnerships

   V SPV    220,758,418    224,639,824

Intercompany Receivables

   V IR    1,036,913,921    1,042,434,619

Investment in Subsidiaries

   V SUB    11,658,166,477    11,746,215,735

Guarantee Fund Assessments

   V GFA    —      —  

Other Assets

   V OA    165,408,710    166,554,093

Tax DAC

   VI DAC    —      470,012,099

PVFP and Other Tax Intangibles

   INT    1,503,046,020    1,373,799,696             

Total Assets

      46,531,317,398    46,979,995,981             

 

v

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IPO Tax Workpaper

Data as of 12/17/2004

Part I—Initial Allocation of Aggregate Deemed Sales Price (ADSP) and Adjusted
Grossed-Up Basis (AGUB)

 

Aggregate Deemed Sales Price

  1   3   14   6   15   16   2   17     Total   Genworth
Financial Inc.   General Electric
Capital
Assurance
Company   Brookfield Life
Assurance
Company   Professional
Insurance
Company   Viking
Insurance
Company   GE Group Life
Assurance
Company   GNA
Corporation   FFRL Re

Class I I

  202,193,757   —     80,654,912   70,089,147   1,136,194   17,732,887   —    
3,426,550   1,217,016

Class II II

  24,016,134,145   115,453,096   22,535,982,793   184,315,573   42,859,280  
169,412,569   739,578,359   154,163,198   19,402,006

Class III III

  7,708,719,175   —     5,266,042,972   2,291,261,969   13,896,292   39,742,053
  88,632,343   2,613,774   —  

Class IV IV

  —     —     —     —     —     —     —     —     —  

Class V V

  13,101,224,301   3,516,109,798   5,347,036,974   191,390,860   6,174,768  
101,660,715   43,850,170   467,000,457   —  

Class VI VI

  693,582,096   6,978,566   —     415,700,571   45,767,241   10,076,543  
213,695,489   —     —  

Class VII VII

  809,463,924   413,032,560   —     —     —     —     —     —     —            
                         

Total

  46,531,317,398   4,051,574,020   33,229,717,652   3,152,758,118   109,833,774
  338,624,767   1,085,756,361   627,203,979   20,619,022                        
           

Adjusted Grossed-Up Basis

                                    Total   Genworth
Financial Inc.   General Electric
Capital
Assurance
Company   Brookfield Life
Assurance
Company   Professional
Insurance
Company   Viking
Insurance
Company   GE Group Life
Assurance
Company   GNA
Corporation   FFRL Re

Class I I

  202,193,990   —     80,654,912   70,089,147   1,136,194   17,732,887   —    
3,426,550   1,217,016

Class II II

  24,022,958,446   115,584,419   22,541,754,189   184,380,509   42,870,493  
169,560,420   740,045,157   154,335,478   19,414,300

Class III III

  7,710,994,054   —     5,267,391,590   2,292,069,198   13,899,927   39,776,737
  88,688,285   2,616,695   —  

Class IV IV

  —     —     —     —     —     —     —     —     —  

Class V V

  13,200,037,696   3,520,109,232   5,441,049,341   191,458,288   6,176,383  
101,749,437   43,877,846   467,522,340   —  

Class VI VI

  1,030,156,376   6,978,566   335,460,396   415,700,571   46,881,125  
10,076,543   213,695,489   —     —  

Class VII VII

  813,655,419   413,032,560   —     —     —     —     —     0   —              
                       

Total

  46,979,995,981   4,055,704,777   33,666,310,427   3,153,697,712   110,964,123
  338,896,024   1,086,306,777   627,901,063   20,631,316                        
           

Sch B and 338 Calculations 12-22-2004—For Entries.xls, Sch B ADSP and AGUB By LE

 

vi

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

IPO Tax Workpaper

Data as of 12/17/2004

Part I—Initial Allocation of Aggregate Deemed Sales Price (ADSP) and Adjusted
Grossed-Up Basis (AGUB)

 

Aggregate Deemed Sales Price

  45   22   23   26   43   54   27   18         LTC Inc.   GE Residential
Mortgage
Insurance
Company   GE Home Equity
Insurance
Company   Verex Assurance
Company   Newco
Properties  

Fee for

Service, Inc.

  IFN Insurance
Agency   GE Mortgage
Contract
Services   Other

Class I I

  18,236,300   4,848,485   1,046,677   133,265   —     3,240,668   60,040   —  
  371,617

Class II II

  —     23,075,046   4,092,750   27,645,608   —     —     134,735   19,134   —  

Class III III

  2,697,142   635,505   86,785   476,438   —     136,479   413,450   2,065,451  
18,523

Class IV IV

  —     —     —     —     —     —     —     —     —  

Class V V

  5,649,070   177,898   —     184,249   —     3,903,328   16,650,331   —    
3,401,435,683

Class VI VI

  —     1,363,687   —     —     —     —     —     —     —  

Class VII VII

  79,690,852   —     3,728,943   —     —     2,290,402   26,268,274   —    
284,452,893                                    

Total

  106,273,364   30,100,620   8,955,155   28,439,561   —     9,570,876  
43,526,830   2,084,584   3,686,278,716                                    

Adjusted Grossed-Up Basis

                                        LTC Inc.   GE Residential
Mortgage
Insurance
Company   GE Home Equity
Insurance
Company   Verex Assurance
Company   Newco
Properties  

Fee for

Service, Inc.

  IFN Insurance
Agency   GE Mortgage
Contract
Services   Other

Class I I

  18,236,300   4,848,485   1,046,677   133,265   —     3,240,668   60,040   —  
  371,850

Class II II

  —     23,093,872   4,092,750   27,673,026   —     —     134,833   19,000   —  

Class III III

  2,731,660   636,023   86,785   476,911   —     136,810   413,751   2,051,029  
18,653

Class IV IV

  —     —     —     —     —     —     —     —     —  

Class V V

  5,721,368   178,043   —     184,432   —     3,912,808   16,662,473   —    
3,401,435,705

Class VI VI

  —     1,363,687   —     —     —     —     —     —     —  

Class VII VII

  79,690,852   —     3,728,943   —     —     2,290,402   26,268,274   —    
288,644,388                                    

Total

  106,380,180   30,120,109   8,955,155   28,467,634   —     9,580,687  
43,539,371   2,070,029   3,690,470,596                                    

Sch B and 338 Calculations 12-22-2004—For Entries.xls, Sch B ADSP and AGUB By LE

 

vii

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IPO Tax Workpaper

Data as of 12/17/2004

Schedule B

Genworth Financial Inc. Total

Tax Benefit Payments

 

     4/15     6/15     9/15     12/15     Total  

2004

   —       2,247,028     6,168,444     6,144,125     14,559,597  

2005

   8,410,372     7,133,906     7,770,720     7,738,370     31,053,367  

2006

   5,668,987     4,431,448     5,070,146     5,051,107     20,221,688  

2007

   5,869,129     4,626,844     5,266,462     5,246,466     21,008,901  

2008

   6,569,241     5,302,205     5,938,275     5,914,939     23,724,660  

2009

   8,131,264     6,886,672     7,508,177     7,476,977     30,003,090  

2010

   10,596,818     9,372,241     9,961,491     9,917,916     39,848,467  

2011

   13,408,028     12,236,367     12,772,127     12,714,221     51,130,743  

2012

   13,390,800     12,304,854     12,783,712     12,725,222     51,204,587  

2013

   12,310,781     11,354,754     11,780,162     11,726,116     47,171,813  

2014

   12,454,754     11,600,483     11,968,144     11,912,637     47,936,018  

2015

   11,232,258     10,492,713     10,807,139     10,756,855     43,288,965  

2016

   12,750,914     12,097,978     12,345,745     12,287,269     49,481,906  

2017

   11,776,838     11,265,266     11,448,411     11,393,754     45,884,269  

2018

   10,302,807     9,919,776     10,044,170     9,995,880     40,262,633  

2019

   6,212,092     5,954,931     6,044,492     6,015,568     24,227,083  

2020

   4,116,982     3,929,919     3,996,940     3,977,886     16,021,726  

2021

   3,906,663     3,766,011     3,810,631     3,792,287     15,275,592  

2022

   4,149,094     4,050,523     4,069,694     4,049,838     16,319,149  

2023

   11,375,747     (0 )   (0 )   (0 )   11,375,747  

2024

   (0 )   (0 )   (0 )   (0 )   (0 )

2025

   (0 )   (0 )   (0 )   (0 )   (0 )

2026

   (0 )   (0 )   (0 )   (0 )   (0 )

2027

   (0 )   (0 )   (0 )   (0 )   (0 )

2028

   (0 )   (0 )   (0 )   (0 )   (0 )               

Total—Tax Benefits

           640,000,000                 

Sch B and 338 Calculations 12-22-2004—For Entries.xls, Sch B Tax Benefit
Payments

 

viii

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SCHEDULE C

SCHEDULE OF TAX BENEFIT PAYMENTS PURSUANT TO

SECTION 9(a)(2)(iii)(A) OF THE TAX MATTERS AGREEMENT

 

6/15/2004

   $ 3,195,916

9/15/2004

   $ 7,922,397

12/15/2004

   $ 7,908,902

 

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SCHEDULE D

The items shown on this Schedule D are as follows:

(1) any compensation described in Section 9(a)(1)(ii);

(2) any Section 338 Election made in respect of any Genworth Company that is a
foreign corporation within the meaning of Section 7701(a)(5) of the Code;

(3) any increase or decrease in the basis of the stock of any Genworth Company
(other than a Genworth Company in respect of which a Section 338 Election is
made) as a result of a Transaction (other than the Reinsurance Transactions);
and

(4) any other economic benefit to any Genworth Company that is funded by GE or a
non-Genworth Affiliate of GE (excluding as the result of any Life/Non-Life
Election made by Genworth) not reflected in Schedule B that results from a
Transaction (other than the Reinsurance Transactions), that is contingent on one
or more events subsequent to the Closing Date, that is not a contingency
specified in clause (i), (ii), (iii), (v), or (vi) in Section 8(b), that is not
attributable to the breach of any covenant hereunder, and that has the effect of
increasing or reducing the aggregate income tax liability of the Genworth
Companies for taxable years beginning after the Closing Date.

 

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