Exhibit
10.7


 




 





 


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


 


              ,
    , 2004


 




 





 

















 


TABLE OF CONTENTS


 


	
  SECTION 1.

  	
  Definitions

  	
   

  
	
  SECTION 2.

  	
  Filing of Tax Returns

  	
   

  
	
  SECTION 3.

  	
  Indemnification by GE

  	
   

  
	
  SECTION 4.

  	
  Indemnification by Genworth

  	
   

  
	
  SECTION 5.

  	
  Tax Sharing Payments

  	
   

  
	
  SECTION 6.

  	
  Control

  	
   

  
	
  SECTION 7.

  	
  Refunds

  	
   

  
	
  SECTION 8.

  	
  Section 338 Elections

  	
   

  
	
  SECTION 9.

  	
  Tax Benefit Payments

  	
   

  
	
  SECTION 10.

  	
  Subordination

  	
   

  
	
  SECTION 11.

  	
  Other Tax Sharing
  Agreements

  	
   

  
	
  SECTION 12.

  	
  Interest

  	
   

  
	
  SECTION 13.

  	
  Adjustments

  	
   

  
	
  SECTION 14.

  	
  No Duplicative Payments

  	
   

  
	
  SECTION 15.

  	
  Tax Cooperation

  	
   

  
	
  SECTION 16.

  	
  Resolution of Disputes

  	
   

  
	
  SECTION 17.

  	
  Survival

  	
   

  
	
  SECTION 18.

  	
  Amendment

  	
   

  
	
  SECTION 19.

  	
  Transfer and Similar Taxes

  	
   

  
	
  SECTION 20.

  	
  Additional Provisions

  	
   

  



 


i

















 


TAX MATTERS AGREEMENT


 


This Agreement is made
this          day of
                  ,
2004 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
                  ,
2004 among the GE Parties and 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 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 will
constitute (as to certain of such Genworth Companies) a qualified stock
purchase within the meaning of Section 338(d)(3) of the Code.


 


B.  
GE and certain of the Genworth Companies have 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 have heretofore filed United
States federal income tax returns on a consolidated basis (the “GE Consolidated
Returns”) pursuant to Section 1501 of the Code.


 


C.  
Certain of GE and its Affiliates have heretofore
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 filing such a return that
includes 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 is a wholly owned indirect subsidiary of
GEFAHI, and the Subsidiaries of GECA that are domestic life insurance
companies, including Union Fidelity Life Insurance Company, an Illinois
corporation  (“UFLIC”), have been
treated as members of an affiliated group of life insurance companies of which
GECA is the common parent (the “GECA Affiliated Group”) pursuant to
Section 1504(c)(1) of the Code, and the members of the GECA Affiliated
Group have heretofore filed United States federal income tax returns on a
consolidated basis 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”).


 


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H.  
As a consequence of the Acquisition and the Initial
Public Offering, the Genworth Companies that have been members of the GE
Affiliated Group will no longer be members of the GE Affiliated Group, one or
more of the Genworth Companies may no longer be members of a Combined Group,
and UFLIC will 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.


 


J.  
The parties to this Agreement desire to make certain
covenants with respect to tax matters and to allocate 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 to provide for the allocation of any Tax
benefits which may arise as a result of any Section 338 Election.


 


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:


 


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SECTION 1.   Definitions.  (a)    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.


 


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


 


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


 


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


 


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


 


(f) 
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


 


4

















 


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.


 


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


 


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


 


(i) 
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.


 


(j) 
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.


 


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


 


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


 


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


 


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


 


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


 


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


 


(q) 
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.


 


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


 


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


 


(t) 
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).


 


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(u) 
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.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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(ee) 
The term “GECA Affiliated Group” 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.


 


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


 


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(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.


 


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


 


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


 


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


 


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


 


(bbb)  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.


 


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


 


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


 


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


 


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


 


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(ggg)  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.


 


(hhh)  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).


 


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


 


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


 


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


 


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


 


(mmm)  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.


 


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


 


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


 


(ppp)  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).


 


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


 


(rrr)  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 is (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).


 


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


 


(ttt)  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.


 


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


 


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


 


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


 


(xxx)  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).


 


13

















 


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 gain, loss, or
other 


 


14

















 


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


 


15

















 


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.


 


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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


 


17

















 


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 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; (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.


 


18

















 


(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.


 


19

















 


(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.


 


20

















 


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).


 


(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 this Section 4
will be made in immediately available funds within 30 days after receipt by
Genworth of a written request therefor.


 


21

















 


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 the date of this Agreement
(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 the date of this Agreement
(as determined in the reasonable discretion of GE).  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;


 


22

















 


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 (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.


 


23

















 


(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.


 


24

















 


SECTION 6.   Control.  (a)  Except
as provided in Section 6(b), 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.


 


25

















 


(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.


 


26

















 


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.


 


27

















 


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


 


28

















 


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


 


29

















 


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).


 


(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
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


 


30

















 


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)  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


 


31

















 


(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)   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 GEFAHI in an aggregate amount equal to 80 percent of the
excess (if any) of (A) the hypothetical Tax liability (as


 


32

















 


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.


 


33

















 


(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 under Section 9(a)(2)(i) for 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.


 


(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


 


34

















 


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.


 


(D)  
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.


 


(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


 


35

















 


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 any Florida or Illinois income Tax Returns


 


36

















 


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.


 


37

















 


(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 


 


38

















 


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).


 


(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).


 


39

















 


(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


 


40

















 


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.


 


41

















 


(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)(1)
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


 


42

















 


(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.


 


43

















 


(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 a certification to the effect that 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. 
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.


 


44

















 


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.


 


45

















 


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; and 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)).


 


46

















 


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 [specify rate equal to Genworth’s cost funds at Closing determined with
reference to compounding on a daily basis], 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).


 


47

















 


SECTION 13.   Adjustments.  (a)   If any adjustment (other than any adjustment
to which Section 5(b) 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) 
If GE makes a Life/Non-Life Election for any Taxable
Year beginning on or prior to January 1, 2004, then GEFAHI will pay to
Genworth an amount equal to (1) the excess (if any) of the actual net
aggregate Tax liability incurred by the Genworth Companies for such Taxable
Year and each subsequent Taxable Year ending on or before the Final Date, over (2)
the


 


48

















 


amount of such aggregate
net Tax liability incurred by the Genworth Companies determined as if such
Life/Non-Life Election had not been made; provided, however, that
if the amount determined under subparagraph (2) exceeds the amount determined
under subparagraph (1), then Genworth will make a payment equal to the amount
of such excess to GEFAHI.  Any amount
payable under this Section 13(b) in respect of any Taxable Year will be
made in immediately available funds within 30 days after the date on which the
Genworth federal income tax return is filed for such Taxable Year.


 


(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(j)(2), exceeds (2) the amount determined under
Section 1(j)(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


 


49

















 


Code), then Genworth will
pay an amount equal to 35% of such loss to GE. 
Any amount payable under this Section 13(e) will be made in
immediately available funds within 30 days after the date on which the Genworth
federal income Tax return is filed for the Taxable Year in which such
Transaction occurs.  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; 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.


 


50

















 


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


 


51

















 


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


 


52

















 


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.


 


(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).


 


53

















 


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.


 


54

















 


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.


 


55

















 


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.


 


56

















 


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.


 


57

















 


SECTION 20.   Additional Provisions.  Provisions of the Master Agreement that
apply (mutatis  mutandis) to this Agreement include only 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).


 


58

















 


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:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GEI, INC.

  	
  GE FINANCIAL ASSURANCE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GENWORTH
  FINANCIAL, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  



 


59

















 


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.


 


A-1

















 


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-2

















 


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-3

















 


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”).


 


B-1

















 


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:


 


B-2

















 


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.


 


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).


 


B-3

















 


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-4

















 


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.


 


B-1

















 


SCHEDULE A


 


(Part II)


 


PRO FORMA
SCHEDULE OF TAX BENEFIT PAYMENTS


 


 


Tax Benefit
Payments

(in $)


 


	
   

  	
   

  	
  4/15

  	
   

  	
  6/15

  	
   

  	
  9/15

  	
   

  	
  12/15

  	
   

  	
  Total

  	
   

  
	
  2004

  	
   

  	
  —

  	
   

  	
  5,573,919

  	
   

  	
  10,939,489

  	
   

  	
  10,916,159

  	
   

  	
  27,429,566

  	
   

  
	
  2005

  	
   

  	
  7,357,065

  	
   

  	
  7,348,840

  	
   

  	
  7,340,549

  	
   

  	
  7,332,190

  	
   

  	
  29,378,644

  	
   

  
	
  2006

  	
   

  	
  11,078,182

  	
   

  	
  11,053,242

  	
   

  	
  11,028,099

  	
   

  	
  11,002,751

  	
   

  	
  44,162,275

  	
   

  
	
  2007

  	
   

  	
  10,946,624

  	
   

  	
  10,920,996

  	
   

  	
  10,895,160

  	
   

  	
  10,869,113

  	
   

  	
  43,631,893

  	
   

  
	
  2008

  	
   

  	
  10,132,373

  	
   

  	
  10,109,013

  	
   

  	
  10,085,463

  	
   

  	
  10,061,722

  	
   

  	
  40,388,572

  	
   

  
	
  2009

  	
   

  	
  11,624,919

  	
   

  	
  11,593,838

  	
   

  	
  11,562,504

  	
   

  	
  11,530,916

  	
   

  	
  46,312,178

  	
   

  
	
  2010

  	
   

  	
  14,698,718

  	
   

  	
  14,652,598

  	
   

  	
  14,606,103

  	
   

  	
  14,559,230

  	
   

  	
  58,516,648

  	
   

  
	
  2011

  	
   

  	
  15,200,638

  	
   

  	
  15,149,983

  	
   

  	
  15,098,916

  	
   

  	
  15,047,433

  	
   

  	
  60,496,970

  	
   

  
	
  2012

  	
   

  	
  13,119,678

  	
   

  	
  13,075,570

  	
   

  	
  13,031,104

  	
   

  	
  12,986,277

  	
   

  	
  52,212,629

  	
   

  
	
  2013

  	
   

  	
  12,339,185

  	
   

  	
  12,296,262

  	
   

  	
  12,252,989

  	
   

  	
  12,209,364

  	
   

  	
  49,097,800

  	
   

  
	
  2014

  	
   

  	
  9,343,851

  	
   

  	
  9,311,873

  	
   

  	
  9,279,634

  	
   

  	
  9,247,133

  	
   

  	
  37,182,491

  	
   

  
	
  2015

  	
   

  	
  7,566,935

  	
   

  	
  7,541,119

  	
   

  	
  7,515,093

  	
   

  	
  7,488,855

  	
   

  	
  30,112,002

  	
   

  
	
  2016

  	
   

  	
  7,578,467

  	
   

  	
  7,551,293

  	
   

  	
  7,523,897

  	
   

  	
  7,496,279

  	
   

  	
  30,149,936

  	
   

  
	
  2017

  	
   

  	
  7,636,626

  	
   

  	
  7,607,820

  	
   

  	
  7,578,779

  	
   

  	
  7,549,502

  	
   

  	
  30,372,728

  	
   

  
	
  2018

  	
   

  	
  8,010,956

  	
   

  	
  7,979,050

  	
   

  	
  7,946,885

  	
   

  	
  7,914,458

  	
   

  	
  31,851,348

  	
   

  
	
  2019

  	
   

  	
  4,352,619

  	
   

  	
  4,335,121

  	
   

  	
  4,317,480

  	
   

  	
  4,299,696

  	
   

  	
  17,304,917

  	
   

  
	
  2020

  	
   

  	
  2,330,903

  	
   

  	
  2,321,373

  	
   

  	
  2,311,766

  	
   

  	
  2,302,081

  	
   

  	
  9,266,123

  	
   

  
	
  2021

  	
   

  	
  1,324,608

  	
   

  	
  808,672

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  2,133,279

  	
   

  
	
  2022

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  2023

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  2024

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  2025

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  2026

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  2027

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  2028

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  2029

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Tax Benefit Payments

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  640,000,000

  	
   

  
													



 


B-2

















 


PRO FORMA
SCHEDULE OF PRINCIPAL PAYMENTS

ON DEBT INSTRUMENT REFERRED TO IN SECTION 9(b)


 


 


Principal Payments

(in $)


 


	
   

  	
   

  	
  4/15

  	
   

  	
  6/15

  	
   

  	
  9/15

  	
   

  	
  12/15

  	
   

  	
  Total

  	
   

  
	
  2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2007

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2009

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2012

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2013

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2014

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2015

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2016

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2017

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2018

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2019

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2020

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2021

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2022

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2023

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2024

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2025

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2026

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2027

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2028

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2029

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Principal Payments

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
													



 


The pro forma schedule shown
above will be completed at Closing.


 


B-3

















 


PRO FORMA
SCHEDULE OF INTEREST PAYMENTS ON DEBT

INSTRUMENT REFERRED TO IN SECTION 9(b)


 


Interest Payments

(in $)


 


	
   

  	
   

  	
  4/15

  	
   

  	
  6/15

  	
   

  	
  9/15

  	
   

  	
  12/15

  	
   

  	
  Total

  	
   

  
	
  2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2007

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2009

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2012

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2013

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2014

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2015

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2016

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2017

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2018

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2019

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2020

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2021

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2022

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2023

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2024

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2025

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2026

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2027

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2028

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2029

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Interest Payments

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
													



 


The pro forma
schedule shown above will be completed at Closing.


 


B-4

















 


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 [  ],
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
[  ], 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

  	
   

  



 


B-5

















 


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)


 


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.


 












(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.


 


B-6

















 


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.


 












(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 [  ], 2004.  Such method of estimation will not be used
in preparing Schedule B.


 


B-7

















 


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.


 


B-8

















 


SCHEDULE B


 


Schedule B will be
prepared after Closing pursuant to Section 8(b) of the Tax Matters
Agreement.


 


B-9

















 


SCHEDULE C


 


SCHEDULE OF
TAX BENEFIT PAYMENTS PURSUANT TO

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


 




	
  6/15/2004

  	
   

  	
  $

  	
  5,573,919

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9/15/2004

  	
   

  	
  $

  	
  10,938,489

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12/15/2004

  	
   

  	
  $

  	
  10,916,159

  	
   

  






 


B-10

















 


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 the Transaction (other than the Reinsurance Transactions);
and


 


(4)                                       any
other item (including as the result of any 
Life/Non-Life Election made by Genworth) not reflected in
Schedule B that results from the Transaction (other than the Reinsurance
Transactions), that is contingent on one or more events subsequent to the Closing
Date, that is not an item 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.


 


B-11