Document:

Exhibit 10.1

 

 

 

 

 

GREAT
LAKES DREDGE & DOCK CORPORATION

2007 LONG-TERM INCENTIVE PLAN

 

Great Lakes Dredge &
Dock Corporation (the “Corporation”) has established this Great Lakes Dredge &
Dock Corporation 2007 Long-Term Incentive Plan to provide an additional
inducement for Eligible Individuals to provide services to the Corporation or
an Affiliate as an employee, consultant, non-employee director, or independent
contractor, to reward such Eligible Individuals by providing an opportunity to
acquire incentive awards, and to provide a means through which the Corporation
may attract able persons to enter the employment of or engagement with the
Corporation or one of its Affiliates. Awards may, in the discretion of the
Board or Committee, and subject to such restrictions as the Board or Committee
may determine or as provided herein, consist of Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock, Restricted Stock Units,
Performance Units, Stock Appreciation Rights, or any combination of the foregoing.

 

ARTICLE
1

DEFINITIONS

 

Whenever used in the
Plan, the following terms have the meanings set forth below, and when the
meaning is intended, the initial letter of the word is capitalized:

 

“Affiliate”
means any corporation that is a parent or subsidiary corporation (as Code
Sections 424(e) and (f) define those terms) with respect to the
Corporation.

 

“Award”
means an Incentive Stock Option, Non-Qualified Stock Option, Restricted Stock
Award, Stock Appreciation Rights, Performance Units or Restricted Stock Units
granted under the Plan.

 

“Award Agreement”
means an agreement entered into between the Corporation and the applicable
Participant, setting forth the terms and provisions applicable to the Award
then being granted under the Plan, as further described in Section 2.4 of
the Plan.

 

“Award Date”
means, with respect to any Award, the date of the grant or award specified by
the Committee in a resolution or other writing, duly adopted, and as set forth
in the Award Agreement, provided that such Award Date will not be earlier than
the date of the Committee action.

 

“Board”
means the Board of Directors of the Corporation.

 

“Cause”  will have the meaning set forth in any employment, consulting, or other
written agreement between the Participant and the Corporation. If there is no
employment, consulting, or other written agreement between the Corporation or
an Affiliate and the Participant or if such agreement does not define “Cause,”
then “Cause” will have the meaning specified in the Award Agreement; provided that,
if the Award Agreement does not so specify, “Cause” will mean, as determined by
the Committee in its sole discretion,
the Participant’s:  (i) willful and
continued failure to substantially perform his material duties as an executive
of the Corporation (other than any such failure resulting from incapacity due
to physical or mental illness) after a written demand for substantial
performance is delivered to the Participant by the Board, (ii) willful
misconduct, which is demonstrably and materially injurious to the Corporation,
monetarily or otherwise, (iii) engaging in egregious misconduct involving
serious moral turpitude to the extent that his creditability and reputation no
longer conforms to the standard of senior executive officers of the Corporation
(iv) conviction of, or plea of guilty or nolo
contendere to, a felony, (v) material breach of a material
written policy of the Corporation, (vi) failure to reasonably cooperate
with any audit or investigation involving the Corporation or its business practices;
or (vii) material breach of this Agreement. The Board must give the
Participant at least thirty (30) days written notice of its intent to terminate
him for Cause, specifying the act(s) or omission(s) alleged to
justify the for Cause termination, and an 

 

 

 

 

 

1

 

opportunity to cure such act(s) or omission(s),
where feasible, within the thirty (30) day period. In addition, the Participant’s
Service will be deemed to have terminated for Cause if, after the Participant’s
Service has terminated, facts and circumstances are discovered that would have
justified a termination for Cause. For purposes of this Plan, no act or failure
to act on the Participant’s part will be considered “knowing” or “willful”
unless it is done, or omitted to be done, by him or her in bad faith or without
reasonable belief that his or her action or omission was in the best interests
of the Corporation or an Affiliate. Any act, or failure to act, based upon
authority given pursuant to a resolution duly of the Board or based upon the
advice of counsel for the Corporation will be conclusively presumed to be done,
or omitted to be done, in good faith and in the best interests of the
Corporation or an Affiliate. In no event will a termination be deemed to occur
for “Cause” unless such termination occurs within 90 days after the Board
becomes aware of the circumstance or event giving rise thereto.

 

“Change in Control”
means the first to occur of the following:

 

(a)            The
“beneficial ownership” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) of securities
representing more than 331/3% of the combined voting
power of the then outstanding voting securities of the Corporation entitled to
vote generally in the election of directors (the “Corporation Voting Securities”)
is accumulated, held or acquired by a Person (as defined in Section 3(a)(9) of
the Exchange Act, as modified, and used in Sections 13(d) and 14(d) thereof)
(other than the Corporation, any trustee or other fiduciary holding securities
under an employee benefit plan of the Corporation, holders of capital stock of
the Corporation as of the date hereof or an affiliate thereof, any corporation
owned, directly or indirectly, by the Corporation’s stockholders in
substantially the same proportions as their ownership of stock of the
Corporation); provided, however that any acquisition from the Corporation or
any acquisition pursuant to a transaction that complies with clauses (i), (ii) and
(iii) of subparagraph (c) of this paragraph will not be a Change in
Control under this subparagraph (a), and provided further, that immediately
prior to such accumulation, holding or acquisition, such Person was not a
direct or indirect beneficial owner of twenty-five percent (25%) or more of the
Corporation Voting Securities; or

 

(b)           Individuals
who, as of the date of the Agreement, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Corporation’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board will be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors; or

 

(c)            Consummation
by the Corporation of a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the Corporation or the
acquisition of assets or stock of another entity (a “Business Combination”), in
each case, unless immediately following such Business Combination:  (i) more than 50.1% of the combined
voting power of then outstanding voting securities entitled to vote generally
in the election of directors of (x) the corporation resulting from such
Business Combination (the “Surviving Corporation”), or (y) if applicable,
a corporation that as a result of such transaction owns the Corporation or all
or substantially all of the Corporation’s assets either directly or through one
or more subsidiaries (the “Parent Corporation”), is represented, directly or
indirectly by Corporation Voting Securities outstanding immediately prior to
such Business Combination (or, if applicable, is represented by shares into
which such Corporation Voting Securities were converted pursuant to such
Business 

 

 

2

 

Combination), and such
voting power among the holders thereof is in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Corporation Voting Securities, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 331/3% or more of the combined voting power
of the then outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) except to the extent that such ownership of the Corporation
existed prior to the Business Combination and (iii) at least a majority of
the members of the board of directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving Corporation) were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or

 

(d)           Approval
by the Corporation’s stockholders of a complete liquidation or dissolution of
the Corporation.

 

“Code”
means the Internal Revenue Code of 1986, as amended. A reference to any
provision of the Code will include reference to any successor provision of the
Code.

 

“Committee”
means the Compensation Committee, if any, or such similar or successor
committee appointed by the Board. If the Board has not appointed a Committee,
the Board will function in place of the Committee.

 

“Consultant”
means an individual who is not an Employee or Director of the Corporation or an
Affiliate, but who is providing services to the Corporation or an Affiliate as
an independent contractor.

 

“Corporation”
means Great Lakes Dredge & Dock Corporation.

 

“Director”
means any individual who is a member of the Board.

 

“Disabled Participant”
means the Participant becoming unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or that has lasted or can be expect to
last for a continuous period of not less than 12 months, within the meaning of
Code Section 422(c)(6).

 

“Dividend Equivalent”
means a right to receive on the payment date for any dividend on the shares of
Stock underlying an Award, cash compensation from the Corporation equal to the
dividend that would have been paid on such shares of Stock (or the Fair Market
Value of such dividend, if such dividend would not have been paid in cash), if
such shares had been issued and outstanding, fully vested and held by the
Participant on the record date for payment of such dividend. Notwithstanding
the foregoing, if such dividend would not have been paid in cash, the Dividend
Equivalent with respect thereto will not be paid unless and until certificates
evidencing the shares of Stock with respect to which it is paid are issued to
the Participant. Dividend Equivalents may be provided, in the Committee’s
discretion, in connection with any Award under the Plan, subject to Section 2.6.

 

“Eligible Individual”
means any Employee, Consultant, or non-employee Director.

 

“Employee”
means any common law employee of the Corporation or one of its Affiliates.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value”
will mean (a) if the Common Stock is readily tradeable on a national
securities exchange or other market system, the closing sales price of the
Common Stock on the Award Date, time of exercise, or other date of calculation
(or on the last preceding trading date if Common Stock was not traded on such
date), or (b) if the Common Stock is not readily tradeable on a national
securities 

 

 

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exchange or other market
system, the fair market value as determined in good faith by the Board or the
Committee, by the reasonable application of a reasonable valuation method
consistent with the Code, or Treasury Regulations thereunder, as the Board or
the Committee will in its discretion select and apply at the time of the Award
Date, time of exercise, or other date of calculation.

 

“Freestanding SAR”
means a Stock Appreciation Right that is granted independently of any Options,
as described in Article 6.

 

“Incentive Stock Option”
or “ISO” means an option that is
intended to qualify as an “Incentive Stock Option” within the meaning of Code Section 422.
Any Option that does not qualify under Code Section 422 will be treated as
a Non-Qualified Stock Option.

 

“Non-Qualified Stock Option”
means an Option that is not an Incentive Stock Option.

 

“Option”
means an option to purchase Stock at an Exercise Price determined on the Award
Date, subject to the applicable provisions of Article 3, awarded in
accordance with the terms of the Plan, and which may be an Incentive Stock
Option or a Non-Qualified Stock Option.

 

“Participant”
means an Eligible Individual who the Committee has selected to participate in
the Plan in accordance with Section 2.2 of the Plan.

 

“Performance Unit”
means a performance unit subject to the requirements of Article 4 and
awarded in accordance with the terms of the Plan.

 

“Performance Goals”
will mean performance goals established by the Committee prior to the grant of
an Award based on the attainment of one or any combination of the following, in
each case of the Corporation, an Affiliate, or business unit by or within which
the Participant is primarily employed or a combination thereof, and that are
intended to qualify under Section 162(m): 
(a) net earnings; (b) operating earnings or income; (c) earnings
growth; (d) net income; (e) net income applicable to shares; (f) gross
revenue or revenue by pre-defined business; (g) revenue backlog; (h) margins
realized on delivered services; (i) cash flow, including operating cash
flow, free cash flow, discounted cash flow return on investment, and cash flow
in excess of cost of capital; (j) earnings per share; (k) return on
stockholders’ equity; (l) stock price; (m) return on common
stockholders’ equity; (n) return on capital; (o) return on assets; (p) economic
value added (income in excess of cost of capital); (q) customer
satisfaction; (r) cost control or expense reduction; and (s) ratio of
operating expenses to operating revenues, in each case, absolute or relative to
peer-group comparative.

 

The Committee also may
base Performance Goals upon attaining specified levels of Corporation
performance under one or more of the measures described above relative to the
performance of other corporations. The Committee will set such Performance
Goals within the time prescribed by Section 162(m). The Committee will
have the discretion to adjust targets set for preestablished performance
objectives. If the Committee determines it is advisable to grant Awards that
will not qualify for the performance-based exception of Section 162(m),
the Committee may grant Awards that do not so qualify.

 

“Plan”
means the Great Lakes Dredge & Dock Corporation 2007 Long-Term
Incentive Plan, as set forth herein, as the same may be amended, administered
or interpreted from time to time.

 

“Public Offering”
means any sale of the Corporation’s common stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended from time
to time, or any successor act thereto, filed with the Securities and Exchange
Commission on Form S-1 (or any successor form adopted by the Securities
and Exchange Commission); provided that the following will not be considered a
public offering: (i) any issuance of common equity securities by the
Corporation as consideration for a merger or acquisition, (ii) any
issuance of common securities to employees, directors or consultants of any of
the 

 

 

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Corporation or any of
its Affiliates as part of an incentive or compensation plan, (iii) any
issuance of common equity securities as part of a unit with debt or preferred
stock or any similar structure in which the common equity securities are being
offered primarily as a means of enhancing the Corporation’s ability to sell the
debt or preferred stock and (iv) the issuance of common stock by the
Corporation upon conversion of any preferred stock of the Corporation.

 

“Restricted Stock”
means an award of shares of Stock delivered under the Plan subject to the
requirements of Article 5 and such other restrictions as the Committee
deems appropriate or desirable, including restrictions on transferability, a
risk of forfeiture, and certain other terms and conditions under the Plan or
specified by the Committee. The restrictions on, and risk of forfeiture of, Restricted
Stock generally will expire on a specified date, upon the occurrence of an
event or achievement of Performance Goals, or on an accelerated basis under
certain circumstances specified in the Plan or the Award Agreement.

 

“Restricted Stock Unit”
or “RSU” means a notional account
established pursuant to an Award granted to a Participant, as described in Article 5,
that is (a) valued solely by reference to shares of Stock, (b) subject
to restrictions specified in the Award Agreement, and (c) payable only in
Stock. The RSUs awarded to the Participant will vest according to the
time-based or performance-based criteria specified in the Award Agreement.

 

“Section 162(m)”
will mean Code Section 162(m), as amended, and the Treasury Regulations
thereunder.

 

“Service”
means the provision of personal services to the Corporation or its Affiliates
in the capacity of (i) an Employee, (ii) a Director, or (iii) a
Consultant.

 

“Stock”
means the Common Stock of the Corporation.

 

“Stock Appreciation Right”
or “SAR” means the award of the
contingent right to receive Stock or cash, as specified in the Award Agreement,
in the future, based on the value or the appreciation in the value of Stock,
pursuant to the terms of Article 6. The Committee may grant SARs alone or
in connection with a related Option. Stock Appreciation Rights may be either
Freestanding SARs or Tandem SARs.

 

“Tandem SAR”
means a SAR that is granted in connection with a related Option pursuant to Article 6,
the exercise of which requires forfeiture of the right to purchase a share of
Stock under the related Option (and when a share of Stock is purchased under
the Option, the Tandem SAR similarly will be canceled).

 

“Termination”
means a cessation of the employee-employer relationship between a Participant
and the Corporation and its Affiliates (other than by reason of transfer of the
Employee among the Corporation and its Affiliates), a cessation of an
individual’s Director or Consultant relationship with the Corporation, or the
consummation of a transaction whereby a Participant’s employer (other than the
Corporation) ceases to be an Affiliate of the Corporation.

 

ARTICLE
2

PLAN
ADMINISTRATION

 

Section 2.1   Administration.
The Committee will administer the Plan. The Committee will interpret the Plan
and prescribe such rules, regulations, and procedures in connection with the
operation of the Plan, as it will deem to be necessary and advisable for the
administration of the Plan consistent with the purposes of the Plan. Without
limiting the foregoing, the Committee will have the authority and complete
discretion to:

 

(a)            Prescribe,
amend, and rescind rules and regulations relating to the Plan;

 

 

5

 

(b)           Select
Eligible Individuals to receive Awards under the Plan as provided in Section 2.2
of the Plan;

 

(c)            Determine
the form and terms of Awards;

 

(d)           Determine
the number of shares of Stock or other consideration subject to Awards under
the Plan as provided in Articles 3 through 6 of the Plan;

 

(e)            Determine
whether Awards will be granted singly, in combination or in tandem with, in
replacement of, or as alternatives to, other Awards under the Plan or grants or
awards under any other incentive or compensation plan of the Corporation;

 

(f)              Construe
and interpret the Plan, any Award Agreement in connection with an Award and any
other agreement or document executed pursuant to the Plan;

 

(g)           Correct
any defect or omission, or reconcile any inconsistency in the Plan, any Award,
or any Award Agreement;

 

(h)           Accelerate
or, with the consent of the Participant, defer the vesting of any Award or the
exercise date of any Award, subject to the limitations of Code Section 409A;

 

(i)               Authorize
any person to execute on behalf of the Corporation any instrument required to
effectuate the grant of an Award and delegate to officers of the Corporation
the authority to perform administrative functions under the Plan subject to any
legal requirements that the Committee as a whole take action with respect to
such function, other than any such delegation that would cause Awards or other
transactions under the Plan to cease to (i) be exempt from Section 16(b) of
the Exchange Act, (ii) satisfy the “independent director” requirements of
the Nasdaq Global Market, or (iii) qualify as “performance-based
compensation” under Section 162(m);

 

(j)               Modify
the terms of any Award, and authorize the exchange or replacement of Awards;
provided, however, that (i) no such modification, exchange or substitution
will be to the detriment of a Participant with respect to any Award previously
granted without the affected Participant’s written consent, (ii) in no
event will the Committee be permitted to reduce the Exercise Price of any
outstanding Option or to exchange or replace an outstanding Option with a new
Option with a lower Exercise Price, except pursuant to Section 2.5, and (iii) the
Committee shall use reasonable efforts to ensure that any such modification,
exchange or substitution will not violate Code Section 409A;

 

(k)            Determine
whether a Participant has engaged in the operation or management of a business
that is in competition with the Corporation or any of its Affiliates, or
whether a Participant has violated the restrictive covenants of Section 10.13;
and

 

(l)               Make
all other determinations deemed necessary or advisable for the administration
of the Plan.

 

The Committee will keep
records of action taken at its meetings. A majority of the Committee will
constitute a quorum at any meeting, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee, will be the acts of the Committee.

 

 

6

 

 

Section 2.2           Eligibility.  Those Eligible
Individuals, who share the responsibility for the management, growth or
protection of the business of the Corporation or any Affiliate or who, in the
opinion of the Committee, provide services yielding significant benefits to the
Corporation or any Affiliate will be eligible to receive Awards as described
herein. Subject to the provisions of the Plan, the Committee will have full and
final authority, in its discretion, to grant Awards as described herein and to
determine the Eligible Individuals to whom Awards will be granted.

 

Section 2.3           Shares Available Under the Plan.  Subject to adjustment as
set forth in Section 2.5, the maximum number of shares of Stock that may
be issued or delivered and as to which Awards may be granted under the Plan
will be equal to the sum of: (i) 5,800,000 shares of Stock; and (ii) shares
of Stock delivered (either actually or by attestation) to or withheld by the
Corporation in connection with the exercise of an Option awarded under the Plan,
or in payment of any required income tax withholding for the exercise of an
Option or the vesting of Restricted Stock awarded under the Plan.

 

Notwithstanding anything
to the contrary in this Section 2.3, (i) in no event will more than
1,000,000 shares of Stock be cumulatively available for Awards of Incentive
Stock Options under the Plan, and (ii) in no event will more than
3,000,000 shares of Stock be cumulatively available for Awards other than
Options or Stock Appreciation Rights. Subject to adjustment as set forth in Section 2.5,
the maximum number of shares of Stock with respect to which Awards may be
granted in any calendar year to any Participant under the Plan will be 580,000
shares.

 

If any Award granted
under the Plan is canceled by mutual consent or terminates or expires for any
reason without having been exercised in full, or, if and to the extent that an
award of Performance Units, or RSUs is paid in cash rather than the issuance of
shares of Stock, the number of shares subject to such Award (or in the case of
Performance Units or RSUs, the number of shares of Stock for which payment was
made in cash) will again be available for purposes of the Plan, except that, to
the extent that Stock Appreciation Rights granted in conjunction with an Option
under the Plan are exercised and the related Option surrendered, the number of
shares available for purposes of the Plan will be reduced by the number of
shares, if any, of Stock issued or delivered upon exercise of such Stock
Appreciation Rights.

 

The shares that may be
issued or delivered under the Plan may be either authorized but unissued
shares, repurchased shares, or partly each.

 

If, in connection with
an acquisition of another company or all or part of the assets of another
company by the Corporation or an Affiliate, or in connection with a merger or
other combination of another company with the Corporation or an Affiliate, the
Corporation either (A) assumes stock options or other stock incentive
obligations of such other company, or (B) grants stock options or other
stock incentives in substitution for stock options or other stock incentive
obligations of such other company, then none of the shares of Stock that are
issuable or transferable pursuant to such stock options or other stock
incentives that are assumed or granted in substitution by the Corporation will
be charged against the limitations set forth in this Section.

 

Section 2.4           Award Agreement.  Each Award granted under
the Plan will be evidenced by a written Award Agreement, in a form approved by
the Committee. Such Award Agreement will be subject to and incorporate the
express terms and conditions, if any, required under the Plan or as required by
the Committee for the form of Award granted and such other terms and conditions
as the Committee may specify, and will be executed by the Chief Executive
Officer, the President (if other than the Chief Executive Officer), or any
person designated as an executive officer by the Board for Section 16
purposes, on behalf of the Corporation, and by the Participant to whom such
Award is granted. With the consent of the Participant to whom such Award is
granted, the Board may at any time and from time to time amend an outstanding
Award Agreement in a manner consistent with the Plan. Without consent of the
Participant, the Board of Directors may at any time and from time to time
modify or amend Award Agreements with respect to Options intended as of the
Award Date to be Incentive Stock Options in such 

 

 

7

 

respects as it deems
necessary in order that Incentive Stock Options granted under the Plan will
comply with the appropriate provisions of the Code and regulations thereunder
which are in effect from time to time with respect to Incentive Stock Options.

 

Section 2.5           Adjustment and Substitution of
Shares.  If
a dividend or other distribution will be declared upon the Stock, payable in
shares of Stock, the number of shares of Stock then subject to any outstanding
Award or by reference to which the amount of any other Award is determined and
the number of shares that may be issued or delivered under the Plan will be
adjusted by adding thereto the number of shares that would have been
distributable thereon if such shares had been outstanding on the date fixed for
determining the stockholders entitled to receive such stock dividend or
distribution. An increase in the number of shares subject to an Award will not
occur when the Committee has awarded Dividend Equivalent with respect to such
Award.

 

If the outstanding
shares of Stock will be changed into or exchangeable for a different number or
kind of shares of Stock or other securities of the Corporation or another
corporation, whether through reorganization, reclassification,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then the Committee will substitute for each share of Stock
subject to any then outstanding Award and for each share of Stock, which may be
issued or delivered under the Plan but is not then subject to an outstanding
Award, the number and kind of shares of Stock or other securities into which
each outstanding share of Stock is so changed or for which each such share is
exchangeable; provided, that, in the event of a merger, acquisition or other
business combination of the Corporation with or into another entity, any
adjustment provided for in the applicable agreement and plan of merger (or
similar document) will be conclusively deemed to be appropriate for purposes of
this Section 2.5.

 

In the case of any
adjustment or substitution as provided for in this Section 2.5, the
aggregate Exercise Price for all shares subject to each then outstanding Option
prior to such adjustment or substitution will be the aggregate Exercise Price
for all shares of Stock or other securities (including any fraction) to which
such shares will have been adjusted or which will have been substituted for
such shares. Any new Exercise Price per share will be carried to at least three
decimal places with the last decimal place rounded upwards to the nearest whole
number. No adjustment or substitution provided for in this Section 2.5
will require the Corporation to issue or sell a fraction of a share or other
security.

 

If any such adjustment
or substitution provided for in this Section 2.5 requires the approval of
stockholders in order to enable the Corporation to grant Incentive Stock
Options, then no such adjustment or substitution of ISOs will be made without
prior stockholder approval. If the effect of any adjustment or substitution
would be to cause an Option to fail to continue to qualify as an ISO or to
cause a modification, extension or renewal of such Option within the meaning of
Code Sections 409A or 424, the Committee may elect that such adjustment or
substitution not be made but rather will use reasonable efforts to effect such
other adjustment of each then outstanding Option as the Committee in its sole
discretion will deem equitable and which will not result in any
disqualification, modification, extension or renewal (within the meaning of
Code Sections 409A or 424) of such Incentive Stock Option.

 

Section 2.6           Corporation’s Obligation to
Deliver Stock. The obligation of the
Corporation to issue or deliver shares of Stock under the Plan will be subject
to (i) the effectiveness of a registration statement under the Securities
Act of 1933, as amended, with respect to such shares, if deemed necessary or
appropriate by counsel for the Corporation; (ii) the condition that the
shares will have been listed (or authorized for listing upon official notice of
issuance) upon each stock exchange on which such shares may then be listed; and
(iii) all other applicable laws, regulations, rules and orders which
may then be in effect.

 

 

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ARTICLE
3

STOCK
OPTIONS

 

Section 3.1           Grant of Stock Options.  The Committee will have
authority, in its discretion, to grant Incentive Stock Options, Non-Qualified
Stock Options or both types of Options. Notwithstanding the above, the
Committee may grant Incentive Stock Options to Employees only. Subject to
adjustment as set forth in Section 2.5, no Participant will be granted an
Option or Options under the Plan (disregarding canceled, terminated, or expired
stock options) for an aggregate number of shares in excess of 1,160,000.

 

Section 3.2           Terms and Conditions of Options.  Options granted under
the Plan will be subject to the following terms and conditions:

 

(a)            The
purchase price at which each Option may be exercised (the “Exercise Price”)
will be such price as the Committee, in its discretion, will determine, except
that, the Exercise Price will not be less than one hundred percent (100%) of
the Fair Market Value per share of Stock covered by the Option as determined on
the Award Date.

 

(b)           The
Exercise Price will be payable in full in any one or more of the following
ways, as will be determined by the Committee to be applicable to any such
Award:

 

(i)                in
cash; or

 

(ii)             in
shares of Stock (which are owned by the Participant free and clear of all liens
and other encumbrances and which are not subject to the restrictions set forth
in Article 5) having an aggregate Fair Market Value on the date of
exercise of the Option equal to the Exercise Price for the shares being
purchased; or

 

(iii)          by
requesting that the Corporation withhold such number of shares of Stock then
issuable upon exercise of the Option as will have an aggregate Fair Market
Value equal to the Exercise Price for the shares being acquired upon exercise
of the Option (and any applicable withholding taxes); or

 

(iv)         by
waiver of compensation due or accrued to the Participant for services rendered;
or

 

(v)            provided
that a public market for the Corporation’s stock exists, and to the extent
permitted by the Sarbanes-Oxley Act of 2002:

 

(A)         through
a “same day sale” commitment from the Participant and a broker-dealer that is a
member of the National Association of Securities Dealers (an “NASD Dealer”)
whereby the Participant irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay the purchase price (or a larger
number of the shares so purchased), and whereby the NASD Dealer irrevocably
commits upon receipt of such shares to forward the purchase price directly to
the Corporation (and any excess to the Participant); or

 

(B)           through
a “margin” commitment from the Participant and an NASD Dealer whereby the
Participant irrevocably elects to exercise the Option and to pledge the shares
so purchased to the NASD Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the purchase price, and whereby the NASD
Dealer irrevocably commits upon receipt of such shares to forward the purchase
price directly to the Corporation; or

 

(vi)         to
the extent permitted by the Sarbanes-Oxley Act of 2002, by promissory note
executed by the Participant, evidencing his or her obligation to make future
cash payment thereof, secured by an applicable number of shares of Stock or
such other security as may be 

 

9

 

determined by the Committee; provided,
however, that in no event may the Committee accept a promissory note for an
amount in excess of the difference between the aggregate Exercise Price and the
par value of the shares; or

 

(vii)      by
any combination of the foregoing.

 

If the Exercise Price is
paid in whole or in part in shares of Stock, any portion of the Exercise Price
representing a fraction of a share must be paid in cash. The date of exercise
of an Option will be determined under procedures established by the Committee,
and the Exercise Price will be payable at such time or times as the Committee,
in its discretion, will determine. No shares will be issued or delivered upon
exercise of an Option until full payment of the Exercise Price has been made,
provided that, for this purpose, if permitted by the Committee, tender of a
promissory note will constitute full payment of the principal amount of such
promissory note. When full payment of the Exercise Price has been made, the
Participant will be considered for all purposes to be the owner of the shares
with respect to which payment has been made, subject to the restrictions set
forth in Article 7.

 

(c)            An
Option may be exercised (i) at such time as the Option vests; or (ii) if
and to the extent set forth in the applicable Award Agreement, prior to the
date on which the Option vests provided that such Stock obtained will be
subject to the same requirements that are applicable to grants of Restricted
Stock set forth in Article 5. No Non-Qualified Stock Option will be
exercisable after the expiration of ten years from the Award Date, provided
that if an exercise would violate applicable securities laws, the Non-Qualified
Stock Option will be exercisable no more than 30 days after the exercise of the
Option first would no longer violate applicable securities laws. Subject to
this Section 3.2(c), and Sections 3.3(e), and 2.6, Options may be
exercised at such times, in such amounts and subject to such restrictions as
will be determined by the Committee, in its discretion.

 

(d)           Unless
otherwise determined by the Committee and set forth in the Award Agreement
referred to in Section 2.4 or an amendment thereto, following a
Participant’s Termination for any reason, such Participant must exercise any
outstanding Option, if at all, within one year from the date of Termination.

 

Section 3.3           Special Provisions Applicable to
ISOs.  Notwithstanding
any other provision of this Article 3, the following special provisions
will apply to any award of Incentive Stock Options:

 

(a)            The
Committee will not award an Incentive Stock Option under this Plan if it would
cause the aggregate Fair Market Value of Stock with respect to which Incentive
Stock Options are exercisable by the Participant for the first time during a
calendar year (under all plans of the Corporation and its Affiliates) to exceed
$100,000.

 

(b)           If
the Employee to whom the Incentive Stock Option is granted is a Ten Percent
Owner of the Corporation, then: (A) the Exercise Price for each share
subject to an Option will be at least one hundred ten percent (110%) of the
Fair Market Value of the Stock on the Award Date; and (B) the Option will
expire upon the earlier of (i) the time specified by the Committee in the
Award Agreement, or (ii) the fifth anniversary of the Award Date.

 

(c)            No
Option that is intended to be an Incentive Stock Option may be granted under
the Plan until the Corporation’s stockholders approve the Plan. If such
stockholder approval is not obtained within 12 months after the Board’s
adoption of the Plan, then no Options may be granted under the Plan that are
intended to be Incentive Stock Options.

 

(d)           The
maximum number of shares of Stock with respect to which any one Participant may
be granted Options that are intended to be Incentive Stock Options in any one
calendar year will be 100,000, subject to adjustment as set forth in Section 2.5.

 

 

10

 

(e)            An
Incentive Stock Option must be exercised, if at all, within three months after
the Participant’s Termination for a reason other than death or becoming a
Disabled Participant, and within twelve months after the Participant’s
Termination for death or becoming a Disabled Participant; provided that, an
Option that is intended to be an Incentive Stock Option may be exercised more
than three months, but not more than twelve months, after the Participant’s
Termination for a reason other than death or becoming a Disabled Participant,
in which case the Option will be a Nonqualified Stock Option.

 

(f)              For
purposes of this Section, “Ten Percent Owner” means an individual who, at the
time an Option is granted under this Plan, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Corporation or any Affiliate. For purposes of this Section 3.3(f), a
Participant will be considered as owning (i) not only shares of the Stock
owned individually, but also all shares that are at the time owned, directly or
indirectly, by or for the spouse, ancestors, lineal descendants and brothers
and sisters (whether by the whole or half blood) of such individual and (ii) proportionately
any shares of Stock owned, directly or indirectly, by or for any corporation,
partnership, estate or trust in which such individual will be a stockholder,
partner or beneficiary.

 

ARTICLE
4

PERFORMANCE
UNITS

 

Section 4.1           Performance Period and Objectives.  The Committee will have
authority, in its discretion, to award Performance Units to Eligible
Individuals. The Committee will determine a performance period (the “Performance
Period”) of one or more years and will determine the Performance Goals for
grants of Performance Units. Performance Goals may vary from Participant to
Participant. Performance Periods may overlap and Participants may participate
simultaneously with respect to Performance Units for which different
Performance Periods are prescribed.

 

Section 4.2           Eligibility.  At the beginning of a
Performance Period, the Committee will determine for each Participant or group
of Participants eligible for Performance Units with respect to that Performance
Period the range of dollar values, if any, which may be fixed or may vary in
accordance with such performance or other criteria specified by the Committee,
which will be paid to a Participant as an Award if the relevant Performance
Goals for the Performance Period are met.

 

Section 4.3           Significant Event.  If during the course of
a Performance Period there will occur a significant event or events (a “Significant
Event”) as determined by the Committee, including, but not limited to, a
reorganization of the Corporation or a Change in Control, which the Committee
expects to have a substantial effect on a Performance Goal during such period,
the Committee may revise such objective.

 

Section 4.4           Termination.  If a Participant
terminates Service with the Corporation or any of its Affiliates during a
Performance Period because of death or becoming a Disabled Participant, as
determined by the Committee, that Participant will be entitled to payment in
settlement of each Performance Unit for which the Performance Period was
prescribed (i) based upon the Performance Goals satisfied at the end of
such period; and (ii) prorated for the portion of the Performance Period
during which the Participant was in Service with the Corporation or any of its
Affiliates; provided, however, the Committee may provide for an earlier payment
in settlement of such Performance Unit in such amount or amounts and under such
terms and conditions as the Committee deems appropriate or desirable with the
consent of the Participant. If a Participant terminates Service with the
Corporation or any of its Affiliates during a Performance Period for any other
reason, the Participant will not be entitled to any payment with respect to
that Performance Period unless the Committee will otherwise determine.

 

 

11

 

Section 4.5           Award.  Each Performance Unit
will be paid in cash either as a lump sum payment or in annual installments, as
the Committee will determine at the time of grant of the Performance Unit or
otherwise, commencing as soon as practicable after the end of the relevant
Performance Period.

 

Section 4.6           Section 409A.  If required, Performance
Units granted under this Article 4 will be subject to and conform to the
requirements of Code Section 409A.

 

ARTICLE
5

RESTRICTED
STOCK AND RESTRICTED STOCK UNITS

 

Section 5.1           Award.  Subject to the terms and
provisions of the Plan, the Committee may grant, at any time and from time to
time, Restricted Stock or Restricted Stock Units to any Eligible Individual in
the number and form, and subject to such restrictions on transferability and
other restrictions as the Committee may determine in its discretion, including
without limitation the achievement of Performance Goals. Restricted Stock also
may be received by a Participant as the result of an exercise of an Option,
when such award has not vested. Restricted Stock and RSUs will be subject to a
restriction period (after which restrictions will lapse), which means a period
commencing on the Award Date and ending on such date or upon the achievement of
such Performance Goals or other criteria as the Committee will determine (the “Restriction
Period”). The Committee may provide for the lapse of restrictions in
installments where it deems appropriate.

 

Section 5.2           Restriction Period.  Except as otherwise
provided in this Article 5, no shares of Restricted Stock received by a
Participant will be sold, exchanged, transferred, pledged, hypothecated, or
otherwise disposed of during the Restriction Period. Except as otherwise
provided in the Award Agreement, the Restriction Period for any recipient of
Restricted Stock or RSUs will expire and all restrictions on shares of
Restricted Stock will lapse upon a Participant’s Death or becoming a Disabled
Participant.

 

Section 5.3           Termination.  Except as otherwise
provided in Section 5.2 above, if a Participant’s Termination occurs
before the expiration of the Restriction Period, all shares of Restricted Stock
still subject to restriction, will be forfeited by the recipient, unless the
Committee otherwise determines, and will be reacquired by the Corporation. In
the case of Restricted Stock purchased through the exercise of an Option, the
Corporation will refund the Exercise Price paid on the exercise of the Option.
Such forfeited shares of Restricted Stock will again become available for award
under the Plan.

 

Section 5.4           Exchange of Shares.  Nothing in this Article 5
will preclude a recipient of Restricted Stock from exchanging any shares of
Restricted Stock subject to the restrictions contained herein for any other
shares of Stock that are similarly restricted.

 

Section 5.5           Dividend Equivalents.  Any Award of Restricted
Stock under the Plan may earn, in the discretion of the Committee and if the
shares are unissued, Dividend Equivalents. In respect of any such Award that is
outstanding on a dividend record date for Stock, the Participant may be
credited with an amount equal to the cash or stock dividends or other
distributions that would have been paid on the shares of Stock covered by such
Award had such covered shares been issued and outstanding on such dividend
record date. The Committee will establish such rules and procedures
governing the crediting of Dividend Equivalents, including the timing, form of
payment and payment contingencies of such Dividend Equivalents, as it deems are
appropriate or necessary.

 

Section 5.6           Deferral of Restricted Stock.  If the applicable Award
Agreement so provides, a Participant may elect, in accordance with such
procedures as the Committee may specify from time to time, to defer the
delivery of such Restricted Stock and, if the deferral election so specifies,
of the Dividend Equivalents with respect thereto, until the date or dates
specified in such election. Any deferral under this Section must comply
with the provisions of Code Section 409A. Deferred Restricted Stock will
not be 

 

 

12

 

issued until the date or
dates that it is to be delivered to the Participant in accordance with his or
her deferral election, at which time certificates evidencing Stock will be
delivered to the Participant (unless such Deferred Restricted Stock has
previously been forfeited pursuant to Section 5.3). From the Award Date of
Deferred Restricted Stock through the earlier of (i) the date such Deferred
Restricted Stock is forfeited, and (ii) the date certificates evidencing
such Deferred Restricted Stock are delivered to the Participant, the
Participant will be entitled to receive Dividend Equivalents with respect
thereto, but will have none of the rights of a stockholder with respect to such
shares; provided, that if the deferral election made with respect to such
Deferred Restricted Stock specifies that the Dividend Equivalents will be
deferred, the Dividend Equivalents will not be paid until the date or dates
specified in such deferral election.

 

ARTICLE
6

STOCK
APPRECIATION RIGHTS

 

Section 6.1           Grant of Stock Appreciation Rights.  The Committee will have
the authority, in its discretion, to grant Stock Appreciation Rights to
Participants at any time and from time to time. Within the limits of Article 2
and this Article 6, the Committee will have sole discretion to determine
the number of SARs granted to each Participant and, consistent with the
provisions of the Plan, to determine the terms and conditions pertaining to
SARs. The Committee may grant Freestanding SARs, Tandem SARs or any combination
of the two, as specified in the Award Agreement. Stock Appreciation Rights
granted in conjunction with a Non-Qualified Stock Option may be granted either
at the time such Non-Qualified Stock Option is granted or at any time
thereafter during the term of such Non-Qualified Stock Option. Stock
Appreciation Rights granted in conjunction with an Incentive Stock Option may
only be granted at the time such Incentive Stock Option is granted.

 

The Exercise Price of a
Freestanding SAR will equal the Fair Market Value of a share of Stock on the
Award Date of the SAR. If a Tandem SAR is granted after the grant of the
related Option, or if an Option is granted after the grant of the Tandem SAR,
the later granted Award will have the same Exercise Price as the earlier
granted Award, but the Exercise Price for the later granted Award may be less
than the Fair Market Value of the Stock at the time of such grant. SARs may be
subject to Code Section 409A.

 

Section 6.2           Exercise of Tandem SARs.  Tandem SARs may be
exercised for all or part of the shares subject to the related Option, upon the
surrender of the right to exercise the equivalent portion of the related
Option. A Tandem SAR may be exercised only with respect to the shares for which
its related Option is then exercisable.

 

Section 6.3           Exercise of Freestanding SARs.  Freestanding SARs may be
exercised upon whatever terms and conditions the Committee, in its sole
discretion, imposes, and sets forth in the Award Agreement.

 

Section 6.4           Term of SARs.  The Committee will
determine the term of an SAR, in its sole discretion, which it will set forth
in the Award Agreement. The term of an SAR may not exceed ten years.

 

Section 6.5           Payment of SAR Amount.  Upon exercise of an SAR,
a Participant will be entitled to receive payment from the Corporation in an
amount determined by multiplying:

 

(a)            the
excess (or some portion of the excess as determined at the time of the grant by
the Committee) if any, of the Fair Market Value of a share on the date of
exercise of the SAR over the Exercise Price specified in the Award Agreement;
by

 

(b)           the
number of shares of Stock as to which the SAR is exercised.

 

The Committee will set
forth in the Award Agreement whether the payment upon SAR exercise will be made
in cash, in shares of Stock of equivalent Fair Market Value or in some
combination of the two.

 

 

13

 

ARTICLE
7

CERTIFICATES
FOR AWARDS OF STOCK

 

Section 7.1           Stock Certificates.  Except as otherwise
provided in this Section 7.1, each Participant entitled to receive shares
of Stock under the Plan will be issued a certificate for such shares. Such
certificate will be registered in the name of the Participant and will bear an
appropriate legend reciting the terms, conditions and restrictions, if any,
applicable to the Stock and will be subject to appropriate stop-transfer
orders. To the extent that the Plan provides for issuance of stock certificates
to reflect the issuance of shares of Stock, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange. If the issuance of shares under
the Plan is effected on a non-certificated basis, the issuance of shares to a Participant
will be reflected by crediting (by means of a book entry) the applicable number
of shares of Stock to an account maintained by the Corporation in the name of
such Participant, which account may be an account maintained by the Corporation
for such Participant under any dividend reinvestment program offered by the
Corporation. The Committee may require, under such terms and conditions as it
deems appropriate or desirable, that the certificates for Restricted Stock
delivered under the Plan be held in custody by a bank or other institution, or
that the Corporation may itself hold such shares in custody until the
Restriction Period expires or until restrictions thereon otherwise lapse, and
may require, as a condition of any receipt of Restricted Stock, that the
recipient will have delivered a stock power endorsed in blank relating to the
Restricted Stock. Certificates for shares of unrestricted Stock may be
delivered to the Participant after, and only after, the Restricted Period will
have expired without forfeiture in respect of such shares of Restricted Stock.

 

Section 7.2           Compliance With Laws and
Regulations.  The
Corporation will not be required to issue or deliver any certificates for
shares of Stock, or to effect the issuance of any non-certificated shares as
provided in Section 7.1, prior to (a) the listing of such shares on
any stock exchange or quotation system on which the Stock may then be listed;
and (b) the completion of any registration or qualification of such shares
under any Federal or state law, or any ruling or regulation of any government
body which the Corporation will, in its sole discretion, determine to be
necessary or advisable.

 

Section 7.3           Restrictions.  All certificates for
shares of Stock delivered under the Plan (and all non-certificated shares
credited to a Participant’s account as provided in Section 7.1) also will
be subject to such stop-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange or quotation system upon
which the Stock is then listed and any applicable Federal or state securities
laws; and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. The foregoing
provisions of this Section 7.3 will not be effective if and to the extent
that the shares of Stock delivered under the Plan are covered by an effective
and current registration statement under the Securities Act of 1933, or if and
so long as the Committee determines that application of such provisions is no
longer required or desirable. In making such determination, the Committee may
rely upon an opinion of counsel for the Corporation.

 

Section 7.4           Rights of Stockholders.  Except for the
restrictions on Restricted Stock under Article 5, each Participant who
receives an award of Stock will have all of the rights of a stockholder with
respect to such shares, including the right to vote the shares and receive
dividends and other distributions. No Participant awarded an Option, a Stock
Appreciation Right, a Performance Unit or an RSU will have any right as a
stockholder with respect to any shares subject to such Award prior to the date
of issuance to him or her of a certificate or certificates for such shares, or
if applicable, the crediting of non-certificated shares to an account
maintained by the Corporation in the name of such Participant.

 

 

 

14

ARTICLE
8

NORMAL
OR EARLY RETIREMENT

 

At the time of any
Awards, the Committee, in its sole discretion, may add such provisions,
including, but not limited to, provisions for fully or partial vesting and
lapse of restrictions, to Participants’ Awards relating to an Employee’s normal
or early retirement, which the Committee shall define.

 

ARTICLE
9

CHANGE
IN CONTROL

 

The Committee will have
the discretion to provide in applicable Award Agreements that, in the event of
a Change in Control or Significant Event, the following provisions will apply:

 

(a)            Each
outstanding Option will immediately become vested and exercisable in full;

 

(b)           The
restrictions on each share of Restricted Stock, RSU, or Performance Unit will
lapse; and

 

(c)            Each
outstanding SAR will immediately become vested and exercisable in full;

 

provided that, full
vesting of all outstanding Awards will occur upon consummation of a Change in
Control unless the Corporation is the surviving entity and any adjustments
reasonably necessary to preserve the value of the Participant’s outstanding
Awards have been made, or the Corporation’s successor at the time of the Change
in Control irrevocably assumes the Corporation’s obligations under this Plan or
replaces each Participant’s outstanding Award with an award of equal or greater
value and having terms and conditions no less favorable to the Participant than
those applicable to the Participant’s Award immediately prior to the Change in
Control.

 

In the event of a Change
in Control or Significant Event, the Committee will have the discretion to
provide for (a) the termination of any or all outstanding Options and SARs
as of the effective date of such Change in Control or Significant Event and/or (b) the
settlement and termination of any or all outstanding Options and SARs for
consideration equal to the consideration paid to holders of Stock (in their
capacity as such) in such Change in Control or Significant Event over the
Exercise Price for such Option or SAR being settled and terminated (and, if the
Exercise Price exceeds such price per share, at no consideration); provided,
that, no Option or SAR will be terminated (without the consent of the
Participant) pursuant to clause (a) foregoing prior to the expiration of
the later of (x) twenty (20) days following the date on which the
Participant received written notice of the Change in Control or Significant
Event and (y) the date of consummation of such Change in Control or
Significant Event.

 

ARTICLE
10

MISCELLANEOUS

 

Section 10.1                Effect of the Plan on the Rights of Employees and
Employer. Neither the adoption of
the Plan nor any action of the Board or the Committee pursuant to the Plan will
be deemed to give any Eligible Individual any right to be granted an Award
under the Plan and nothing in the Plan, in any Award granted under the Plan or
in any Award Agreement will confer any right to any Participant to continue in
the employment of the Corporation or any Affiliate or to continue to be
retained to provide Services to the Corporation or any Affiliate as a Director,
or Consultant or interfere in any way with the rights of the Corporation or any
Affiliate to terminate a Participant’s Service at any time.

 

Section 10.2                Amendment.  The Board specifically
reserves the right to alter and amend the Plan at any time and from time to
time and the right to revoke or terminate the Plan or to suspend the granting
of Awards pursuant to the Plan; provided always that no such revocation,
termination, alteration or suspension of any Award will terminate any
outstanding Award theretofore granted under the Plan, unless there is a
liquidation or a dissolution of the Corporation; and provided further that no
such 

 

 

15

 

alteration or amendment
of the Plan will, without prior stockholder approval (i) increase the
total number of shares which may be issued or delivered under the Plan; (ii) make
any changes in the class of Eligible Individuals; (iii) extend the period
set forth in the Plan during which Awards may be granted; or (iv) make any
changes that require stockholder approval under the rules and regulations
of any securities exchange or market on which the Stock is traded. No
alteration, amendment, revocation, or termination of the Plan or suspension of
any Award will adversely affect, without the written consent of the holder of
an Award theretofore granted under the Plan, the rights of such holder with
respect to such Award. The Committee may not amend any Award to extend the
exercise period beyond a date that is later than the earlier of the latest date
upon which the Award could have expired by its original terms under any
circumstances or the tenth anniversary of the original date of grant of the
Award, or otherwise cause the Award to become subject to Code Section 409A.
However, if the exercise period of an Option is extended at a time when the
Exercise Price of the Option equals or exceeds the Fair Market Value of the
Stock that could be purchased (in the case of an Option) or the Fair Market
Value of the Stock used to determine the payment to the Participant (in the
case of a Stock Appreciation Right), it is not an extension of the original
Award.

 

Section 10.3                Effective Date and Duration of Plan.  The Plan will be
effective as of September 18, 2007 (the “Effective Date”), the date of its
adoption by the Board, provided that the stockholders of the Corporation
thereafter approve it at a duly held stockholders’ meeting. If the Plan is not
so approved by stockholders, the Plan (and any Award granted under the Plan)
will be null, void and of no force or effect. If so approved, the Plan will
remain in effect until the earliest of the date (i) all shares authorized
to be issued or transferred hereunder have been issued or transferred (ii) the
Plan is terminated by the Board of Directors, or (iii) the tenth
anniversary of the Effective Date, and will continue in effect thereafter with
respect to any Awards outstanding at the time of such termination. In no event
will an Incentive Stock Option be granted under the Plan more than ten (10) years
from the date the Plan is adopted by the Board, or the date the Plan is
approved by the Corporation’s stockholders, whichever is earlier, unless within
such ten year period stockholders approve an increase in the number of shares
available for grants under the Plan, in which case more than ten (10) years
from the last date on which the stockholders so approve any such increase.

 

Section 10.4                Unfunded Status of Plan.  The Plan will be
unfunded. The Corporation will not be required to establish any special or
separate fund nor to make any other segregation of assets to assume the payment
of any benefits under the Plan. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
will give any such Participant any rights that are greater than those of a
general unsecured creditor of the Corporation; provided, however, that the
Committee may authorize the creation of trusts or make other arrangements to
meet the Corporation’s obligations under the Plan to deliver cash, shares or
other property pursuant to any Award, which trusts or other arrangements will
be consistent with the “unfunded” status of the Plan unless the Committee
otherwise determines. Any provision of this Plan that becomes subject to Code Section 409A,
will be interpreted and applied consistent with that Section.

 

Section 10.5                Employee Status.  For purposes of
determining questions of Termination and exercise of an Option or Stock
Appreciation Right after a Participant’s Termination, a leave of absence for
military service, illness, short-term disability or other reasons approved by a
duly authorized officer of the Corporation will not be treated as Termination
or interruption of Service; provided, however, that, with respect to an
Incentive Stock Option, if such leave of absence exceeds ninety (90) days, such
Option will be deemed a Non-Qualified Stock Option unless the Eligible
Individual’s right to reemployment with the Corporation or a Affiliate
following such leave of absence is guaranteed by statute or by contract.

 

Notwithstanding anything
in the Plan to the contrary, the Committee, in its sole discretion, reserves
the right to designate a Participant’s leave of absence longer than ninety (90)
consecutive days, other than for illness or short-term disability, as “Personal
Leave,” provided that military leaves and approved family or medical leaves
will not be considered Personal Leave. A Participant’s unvested Awards will
remain 

 

 

16

 

unvested during a
Personal Leave and the time spent on a Personal Leave will not count towards
the vesting of such Awards. A Participant’s vested Options or SARs that may be
exercised will remain exercisable upon commencement of Personal Leave until the
earlier of (i) a period of one year from the date of commencement of such
Personal Leave; or (ii) the remaining exercise period of such Options.

 

Section 10.6                Tax Withholding.  Whenever the Corporation
proposes or is required to distribute Stock under the Plan, the Corporation may
require the recipient to remit to the Corporation an amount sufficient to
satisfy any Federal, state and local tax withholding requirements prior to the
delivery of any certificate for such shares or, in the discretion of the
Committee, the Corporation may withhold from the shares to be delivered the
minimum number of shares sufficient to satisfy all or a portion of such tax
withholding requirements. Whenever under the Plan payments are to be made in
cash, such payments may be net of an amount sufficient to satisfy any Federal,
state and local tax withholding requirements.

 

Any Award may provide
that the Participant may elect, in accordance with any conditions set forth in
such Award, to pay any withholding taxes in shares of Stock; provided that, the
Participant, by accepting the Award will be deemed to instruct and authorize
the Corporation or its delegatee for such purpose to sell on his or her behalf
a whole number of shares of Stock from those shares of Stock issuable to the
Participant in payment of vested shares of Restricted Stock or units as the
Corporation or its delegatee determines to be appropriate to generate cash
proceeds sufficient to satisfy the minimum tax withholding obligation. This
direction and authorization is intended to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under
the Exchange Act, and to be interpreted to comply with the requirements of Rule 10b5-1(c).
Such shares will be sold on the day the Restricted Stock or units become
vested, which is the date the tax-withholding obligation arises, or as soon
thereafter as practicable. The Participant will be responsible for all
brokerage fees and other costs of sale, and the Participant will agree to
indemnify and hold the Corporation harmless from any losses, costs, damages, or
expenses relating to any such sale. To the extent the proceeds of such sale
exceed the Participant’s minimum tax withholding obligation (e.g., because of the need to sell
whole shares), the Corporation or its delegatee will pay such excess in cash to
the Participant through payroll as soon as practicable. The Corporation is
under no obligation to arrange for such sale at any particular price. The
Participant agrees to pay to the Corporation as soon as practicable, including
through additional payroll withholding, any amount of the tax withholding
obligation that is not satisfied by the sale of shares described above.

 

Section 10.7                Benefits.
Amounts received under the Plan are not to be taken into account for purposes
of computing benefits under other plans.

 

Section 10.8                Successors and Assigns.  The terms of the Plan
will be binding upon the Corporation and its successors and assigns.

 

Section 10.9                Headings.  Captions preceding the
sections hereof are inserted solely as a matter of convenience and in no way
define or limit the scope or intent of any provision hereof.

 

Section 10.10              Federal and State Laws, Rules and Regulations.  The Plan and the grant
of Awards will be subject to all applicable federal and state laws, rules, and
regulations and to such approval by any government or regulatory agency as may
be required.

 

Section 10.11              Governing Law.
To the extent not preempted by federal law, this Plan, any Award Agreement, and
documents evidencing Awards or rights relating to Awards will be construed,
administered and governed in all respects under and by the laws of the State of
Illinois, without giving effect to its conflict of laws principles. If any
provision of this Plan will be held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions hereof will continue to be
fully effective. The jurisdiction and venue for any disputes arising under, or
any action brought to enforce (or otherwise relating to), this Plan will
be exclusively in the courts in the State of Illinois, County of Cook,
including the Federal Courts located therein (should Federal jurisdiction
exist).

 

 

17

 

Section 10.12              Beneficiary Designation.  Each Participant may
name, from time to time, any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case the Participant should die or become a Disabled Participant before
receiving any or all of his or her Plan benefits. Each beneficiary designation
will revoke all prior designations by the same Participant, must be in a form
prescribed by the Committee, and must be made during the Participant’s
lifetime. If the Participant’s designated beneficiary predeceases the
Participant or no beneficiary has been designated, benefits remaining unpaid at
the Participant’s death will be paid to the Participant’s estate or other
entity described in the Participant’s Award Agreement.

 

Section 10.13              Restrictive Covenants.  An Award Agreement may
provide that, notwithstanding any other provision of this Plan to the contrary,
if the Participant breaches the non-compete, non-solicitation, non-disclosure
or other restrictive covenants of the Award Agreement, whether during or after
Termination, in addition to any other penalties or restrictions that may apply
under any employment agreement, state law, or otherwise, the Participant will
forfeit:

 

(a)            any
and all Awards granted to him or her under the Plan, including Awards that have
become vested and exercisable; and/or

 

(b)           the
profit the Participant has realized on the exercise of any Options, which is
the difference between the Options’ Exercise Price and the Fair Market Value of
any Option the Participant exercised after terminating Service and within the
six month period immediately preceding the Participant’s termination of Service
(the Participant may be required to repay such difference to the Corporation).

 

Section 10.14              Indemnification.  Each person who is or
has been a member of the Committee or the Board, and any individual or
individuals to whom the Committee has delegated authority under Article 2
of the Plan, will be indemnified and held harmless by the Corporation and its
Affiliates from and against any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or as a
result of any claim, action, suit or proceeding to which he or she may be a
party or in which he or she may be involved by reason of any action taken, or
failure to act, under the Plan to the extent permitted by State law. Each such
person will also be indemnified and held harmless by the Corporation and its
Affiliates from and against any and all amounts paid by him or her in a
settlement approved by the Corporation, or paid by him or her in satisfaction
of any judgment, of or in a claim, action, suit or proceeding against him or
her and described in the previous sentence, so long as he or she gives the
Corporation an opportunity, at its own expense, to handle and defend the claim,
action, suit or proceeding before he or she undertakes to handle and defend it.
The foregoing right of indemnification will not be exclusive of any other
rights of indemnification to which a person who is or has been a member of the
Committee or the Board may be entitled under the Corporation’s Articles of
Incorporation or By-Laws, as a matter of law, or otherwise, or any power that
the Corporation may have to indemnify him or her or hold him or her harmless.

 

Section 10.15              Notice.  Any notice or other
communication required or permitted under the Plan must be in writing and must
be delivered personally, sent by certified, registered, or express mail, or
sent by overnight courier, at the sender’s expense. Notice will be deemed given
(i) when delivered personally or, (ii) if mailed, three days after
the date of deposit in the United States mail or, (iii) if sent by
overnight courier, on the regular business day following the date sent. Notice
to the Participant should be sent to the address set forth on the Corporation’s
records. Either party may change the address to which the other party must give
notice under this Section by giving the other party written notice of such
change, in accordance with the procedures described above.

 

Section 10.16              Awards Not Transferable.  Except as otherwise
provided by the Committee, Awards under the Plan are not transferable other
than to a beneficiary designated by the Participant in the event of a
Participant’s death, or by will or the laws of descent and distribution. An
Award Agreement for a 

 

 

18

 

grant of Non-Qualified
Stock Options may permit or may be amended to permit the Participant who received
the Option, at any time prior to the Participant’s death, to assign all or any
portion of the Option granted to him or her to (a) the Participant’s
spouse or lineal descendants; (b) the trustee of a trust for the primary
benefit of the Participant, the Participant’s spouse or lineal descendants, or
any combination thereof; (c) a partnership of which the Participant, the
Participant’s spouse and/or lineal descendants are the only partners; (d) custodianships
for lineal descendants under the Uniform Transfers to Minors Act or any other
similar statute; or (e) upon the termination of a trust by the custodian
or trustee thereof, or the dissolution or other termination of the family
partnership or the termination of a custodianship under the Uniform Transfers
to Minors Act or other similar statute, to the person or persons who, in
accordance with the terms of such trust, partnership or custodianship are
entitled to receive Options held in trust, partnership or custody. In such
event, the spouse, lineal descendant, trustee, partnership or custodianship
will be entitled to all of the Participant’s rights with respect to the
assigned portion of such Option, and such portion of the Option will continue
to be subject to all of the terms, conditions and restrictions applicable to
the Option, as set forth herein and in the related option agreement. Any such
assignment will be permitted only if: (x) the Participant does not receive
any consideration therefor; and (y) the applicable Award Agreement
expressly permits the assignment. The Committee’s approval of an Award
Agreement with assignment rights will not require the Committee to include such
assignment rights in an Award Agreement with any other Participant. Any such
assignment will be evidenced by an appropriate written document executed by the
Participant, and the Participant will deliver a copy thereof to the Committee
on or prior to the effective date of the assignment. An assignee or transferee
of an Option must sign an agreement with the Corporation to be bound by the
terms of the applicable Award Agreement.

 

Except as otherwise
provided in a Participant’s Award Agreement, no Option, SAR, RSU, Restricted
Stock or Performance Unit granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution, or pursuant to a domestic relations
order (as defined in Code Section 414(p)). The Committee may require, in
its discretion, a Participant’s guardian or legal representative to supply it
with the evidence the Committee deems necessary to establish the authority of
the guardian or legal representative to act on behalf of the Participant.

 

Section 10.17              Awards to Foreign Nationals and Employees Outside
the United States.  To the extent the
Committee deems it necessary, appropriate or desirable to comply with foreign
law or practice and to further the purposes of this Plan, the Committee may,
without amending the Plan, (i) establish rules applicable to Awards
granted to Participants who are foreign nationals, are employed outside the
United States, or both, including rules that differ from those set forth
in this Plan, and (ii) grant Awards to such Participants in accordance
with those rules.

 

Section 10.18              Compliance With Code Section 409A.
Notwithstanding any provision of this Plan to the contrary, all Awards made
under this Plan are intended to be exempt from or, in the alternative, comply
with Code Section 409A and the interpretive guidance thereunder, including
the exceptions for stock rights and short-term deferrals. The Plan will be
construed and interpreted in accordance with such intent.

 

 

 

19Exhibit 4.1

 

PRICING INSTRUMENT

 

WHEREAS, the parties named herein desire to enter into
certain Program Documents (as defined herein) contained herein, each such
document (unless otherwise specified in such document) dated as of March 31,
2008, relating to the issuance by Genworth Global Funding Trust 2008-11 (the “Trust”)
of Notes to investors under the secured notes program sponsored by Genworth
Life and Annuity Insurance Company (“GLAIC”), the terms of such Notes as
specified in the pricing supplement attached to this Pricing Instrument as Exhibit C
(the “Pricing Supplement”);

 

WHEREAS, the Trust is a trust and will be organized
under and its activities will be governed by the provisions of the Trust
Agreement (set forth in Section A of this Pricing Instrument), dated as of
March 31, 2008, by and between the parties thereto indicated in Section E
herein;

 

WHEREAS, certain expense and indemnification
arrangements between GLAIC and the Trustee, on behalf of itself and on behalf
of the Trust, are governed pursuant to the provisions of the Expense and
Indemnity Agreement dated as of October 1, 2006 by and between GLAIC and
the Trustee;

 

WHEREAS, certain licensing arrangements between the
Trust and Genworth Financial, Inc. will be governed pursuant to the provisions
of the License Agreement dated as of October 28, 2005, by and between the
Trust and Genworth Financial, Inc.;

 

WHEREAS, certain custodial arrangements for the
Funding Agreement will be governed pursuant to the provisions of the Custodial
Agreement (the “Custodial Agreement”) dated as of December 7, 2005 by and
among SunTrust Bank, acting as custodian (the “Custodian”), the Indenture
Trustee and the Trust;

 

WHEREAS, the Notes will be issued pursuant to the
Indenture (set forth in Section B of this Pricing Instrument), dated as of
the Original Issue Date, by and between the parties thereto indicated in Section E
herein;

 

WHEREAS, the sale of the Notes will be governed by the
Terms Agreement (set forth in Section C of this Pricing Instrument), dated
as of March 31, 2008, by and among the parties thereto indicated in Section E
herein; and

 

WHEREAS, certain agreements relating to the Notes and
the Funding Agreement are set forth in the Coordination Agreement (set forth in
Section D of this Pricing Instrument), dated as of March 31, 2008, by
and among the parties thereto indicated in Section E herein.

 

All capitalized terms used herein and not otherwise
defined will have the meanings set forth in the Indenture.

 

1

 

SECTION A

 

TRUST AGREEMENT

 

This TRUST AGREEMENT (this “Trust Agreement”), dated
as of March 31, 2008, is entered into by and between GSS Holdings II, Inc.,
a Delaware corporation, as trust beneficial owner (the “Trust Beneficial Owner”),
and U.S. Bank National Association, a national banking association, as Trustee
(the “Trustee”).

 

References in the Standard
Trust Terms to JPMorgan Chase Bank, N.A. shall refer to The Bank of
New York Trust Company, N.A. and its permitted successors and assigns.

 

W I T N E S S E T
H:

 

WHEREAS, the Trust Beneficial Owner and the Trustee
desire to authorize the issuance of a Trust Beneficial Interest and a series of
Notes in connection with the entry into this Trust Agreement;

 

WHEREAS, all things necessary to make this Trust
Agreement a valid and legally binding agreement of the Trustee and the Trust
Beneficial Owner, enforceable in accordance with its terms, have been done;

 

WHEREAS, the parties intend to provide for, among
other things, (i) the issuance and sale of the Notes (pursuant to the
Indenture, the Distribution Agreement and the related Terms Agreement) and the
Trust Beneficial Interest, (ii) the use of the proceeds of the sale of the
Notes and Trust Beneficial Interest to acquire the Funding Agreement, and (iii) all
other actions deemed necessary or desirable in connection with the transactions
contemplated by this Trust Agreement; and

 

WHEREAS, the parties hereto desire to incorporate by
reference those certain Standard Trust Terms, dated as of December 8, 2005,
and attached to the Pricing Instrument as Exhibit A
(the “Standard Trust Terms”).

 

NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which are hereby acknowledged, each party hereby agrees as
follows:

 

ARTICLE 1

 

Section 1.01           Incorporation by
Reference.  All terms,
provisions and agreements set forth in the Standard Trust Terms (except to the
extent expressly modified herein) are hereby incorporated herein by reference
with the same force and effect as though fully set forth herein.  All capitalized terms not otherwise defined
herein (including the recitals hereof) shall have the meanings set forth in the
Standard Trust Terms (the Standard Trust Terms and this Trust Agreement,
collectively, the “Trust Agreement”).  To
the extent that the terms set forth in Article 2 of this Trust Agreement
are inconsistent with the terms of the Standard Trust Terms, the terms set
forth in Article 2 herein shall apply.

 

A-1

 

ARTICLE 2

 

Section 2.01           Name.  The Trust created and governed by this Trust
Agreement shall be the trust specified in the Pricing Instrument.  The name of the Trust shall be the name
specified in the first paragraph of the Pricing Instrument, as such name may be
modified from time to time by the Trustee following written notice to the Trust
Beneficial Owner.

 

Section 2.02           Jurisdiction.  The Trust is hereby organized in, and formed
under and pursuant to, the laws of the jurisdiction specified in the Pricing
Supplement.

 

Section 2.03           Initial Capital
Contribution and Ownership. 
The Trust Beneficial Owner has paid or has caused to be paid to, or to
an account at the direction of, the Trustee, on the date hereof, the sum of $15
(or, in the case of Notes issued with original issue discount, such amount
multiplied by the issue price of the Notes as specified in the Pricing
Supplement).  The Trustee hereby
acknowledges receipt in trust from the Trust Beneficial Owner, as of the date
hereof, of the foregoing contribution, which shall be used along with the
proceeds from the sale of the series of Notes to purchase the Funding
Agreement.  Upon the creation of the
Trust and the registration of the Trust Beneficial Interest in the Securities
Register (as defined in the Trust Agreement) by the Trust Registrar in the name
of the Trust Beneficial Owner, the Trust Beneficial Owner shall be the sole
beneficial owner of the Trust.

 

Section 2.04           Acknowledgment.  The Trustee, on behalf of the Trust,
expressly acknowledges its duties and obligations set forth in the Standard
Trust Terms incorporated herein by reference.

 

Section 2.05           Additional Terms.  Section 5.01(a) of the Standard
Trust Terms is hereby replaced with the following: “it is a national banking
association duly organized, validly existing and in good standing under the
laws of the United States of America and it is a “bank” within the meaning of Section 581
of the Code;”.

 

Section 2.06           Pricing Instrument;
Execution and Incorporation of Terms.

 

The parties hereto will enter into the Trust Agreement
by executing the Pricing Instrument.

 

By executing the Pricing Instrument, the Trustee and
the Trust Beneficial Owner hereby agree that the Trust Agreement will constitute
a legal, valid and binding agreement between the Trustee and the Trust
Beneficial Owner.

 

All terms relating to the Trust or the series of Notes
not otherwise included herein will be as specified in the Pricing Instrument or
Pricing Supplement, as indicated herein.

 

Section 2.07           Governing
Law.  This Trust Agreement
will be governed by, and construed in accordance with, the laws of the
jurisdiction specified in the Pricing Supplement.

 

A-2

 

Section 2.08           Counterparts.  The Trust Agreement, through the Pricing
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

 

A-3

 

SECTION B

 

INDENTURE

 

This INDENTURE (this “Indenture”) is entered into as
of the Original Issue Date by and between the Genworth Global Funding Trust
specified in the Pricing Instrument (the “Trust”) and The Bank of New York
Trust Company, N.A., as the indenture trustee (the “Indenture Trustee”).

 

The Bank of New York Trust Company, N.A., in its
capacity as Indenture Trustee, hereby accepts its role as Registrar, Paying
Agent, Transfer Agent and Calculation Agent hereunder.

 

References herein to “Indenture Trustee,” “Registrar,”
“Transfer Agent,” “Paying Agent” or “Calculation Agent” shall include the
permitted successors and assigns of any such entity from time to time and
references in the Standard Indenture Terms to The Bank of New York shall refer
to U.S. Bank National Association and its permitted successors and assigns.

 

W I T N E S S E T H:

 

WHEREAS, the Trust has duly authorized the execution
and delivery of this Indenture to provide for the issuance of Notes;

 

WHEREAS, all things necessary to make this Indenture a
valid and legally binding agreement of the Trust and the other parties to this
Indenture, enforceable in accordance with its terms, have been done, and the
Trust proposes to do all things necessary to make the Notes, when executed by
the Trust and authenticated and delivered pursuant hereto, valid and legally
binding obligations of the Trust as hereinafter provided; and

 

WHEREAS, the parties hereto desire to incorporate by
reference those certain Standard Indenture Terms, dated as of December 8,
2005, and attached to the Pricing Instrument as Exhibit B
(the “Standard Indenture Terms”).

 

NOW, THEREFORE, for and in consideration of the
premises and the purchase of the Notes by the Holders thereof, it is mutually
covenanted and agreed by each of the parties hereto as follows:

 

ARTICLE 1

 

Section 1.01           Incorporation by
Reference.  All terms,
provisions and agreements set forth in the Standard Indenture Terms (except to
the extent expressly modified herein) are hereby incorporated herein by
reference with the same force and effect as though fully set forth herein.  All capitalized terms not otherwise defined
herein (including the recitals hereof) shall have the meanings set forth in the
Standard Indenture Terms (the Standard Indenture Terms and this Indenture,
collectively, the “Indenture”).  To the
extent that the terms set forth in Article 2 of this Indenture are
inconsistent with the terms of the Standard Indenture Terms, the terms set
forth in Article 2 herein shall apply.

 

B-1

 

ARTICLE 2

 

Section 2.01           Agreement to be
Bound.  Each of the Trust, the
Indenture Trustee, the Registrar, the Transfer Agent, the Paying Agent and the
Calculation Agent hereby agrees to be bound by all of the terms, provisions and
agreements set forth in the Indenture, with respect to all matters contemplated
in the Indenture, including, without limitation, those relating to the issuance
of the below-referenced Notes.

 

Section 2.02           Designation of the
Trust, the Notes and the Funding Agreement.  The Trust created by the Trust Agreement
specified in the Pricing Instrument and referred to herein is the Genworth
Global Funding Trust specified in the Pricing Instrument. The Notes issued by
the Trust and governed by the Indenture shall be the Notes specified in the
Pricing Supplement.  The Funding
Agreement designated hereby is the Funding Agreement designated in the Pricing
Supplement, effective as of the Original Issue Date, between the Trust and
Genworth Life and Annuity Insurance Company.

 

Section 2.03           Additional Terms.
Notwithstanding anything to the contrary in Section 2.04(c) of the
Standard Indenture Terms, the Indenture Trustee will give written notice of
redemption to the Holders in accordance with Section 1.06 of the Standard
Indenture Terms not more than seventy-five (75) calendar days and not less than
thirty (30) calendar days prior to the date set for such redemption.
Notwithstanding anything to the contrary in Section 2.04(f) of the
Standard Indenture Terms, the Indenture Trustee shall treat as satisfactory to
it thirty-five (35) calendar days’ notice from the Trust (or from GLAIC on
behalf of the Trust) of a redemption date for the Notes; provided that there
are at least three Business Days between the receipt by it of such notice and
the deadline for giving notice of such redemption under Section 2.04(c);
provided further that the Notes are in the form of Global Notes and the
redemption is in whole.  The initial
principal amount of the Notes shall be $4,979,000.00.

 

Section 2.04           Pricing Instrument;
Execution and Incorporation of Terms.

 

The parties hereto will enter into this Indenture by
executing the Pricing Instrument.

 

By executing the Pricing Instrument, the Indenture
Trustee, the Registrar, the Transfer Agent, the Paying Agent, the Calculation
Agent and the Trust hereby agree that the Indenture will constitute a legal,
valid and binding agreement between the Indenture Trustee, the Registrar, the
Transfer Agent, the Paying Agent, the Calculation Agent and the Trust.

 

All terms relating to the Trust or the Notes not
otherwise included herein will be as specified in the Pricing Instrument or
Pricing Supplement, as indicated herein.

 

Section 2.05           Counterparts.  This Indenture, through the Pricing
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute one and the same instrument.

 

[Remainder of Page Left
Intentionally Blank]

 

B-2

 

SECTION C

 

TERMS AGREEMENT

 

This TERMS AGREEMENT (this “Terms Agreement”) is
entered into as of March 31, 2008 by and among Genworth Life and Annuity
Insurance Company (“GLAIC”), the Genworth Global Funding Trust specified in the
Pricing Instrument (the “Trust”) and the Agent specified in the Pricing
Supplement (the “Agent”).

 

W I T N E S S E T H:

 

WHEREAS, GLAIC and the Agent have entered into that
certain Distribution Agreement dated December 9, 2005 (the “Distribution
Agreement”).

 

NOW, THEREFORE, in consideration of the mutual
promises set forth herein and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, each of the parties
hereby agrees as follows:

 

ARTICLE 1

 

Section 1.01           Incorporation by
Reference.  The provisions of
the Distribution Agreement and the related definitions (unless otherwise
specified herein) are incorporated by reference herein and shall be deemed to
have the same force and effect as if set forth in full herein.

 

ARTICLE 2

 

Section 2.01           Addition of Trust
as Party to Distribution Agreement.

 

Pursuant to Section 1 of the Distribution
Agreement, each of the undersigned parties hereby acknowledges and agrees that
the Trust, upon execution hereof by the Trust and the other parties to this
Terms Agreement, shall become a Trust for purposes of the Distribution
Agreement in accordance with the terms thereof, in respect of the Notes, with all
the authority, rights, powers, duties and obligations of a Trust under the
Distribution Agreement.  The Trust
confirms that any agreement, covenant, acknowledgment, representation or
warranty under the Distribution Agreement applicable to the Trust is made by
the Trust at the date hereof, unless another time or times are specified in the
Distribution Agreement, in which case such agreement, covenant, acknowledgment,
representation or warranty shall be deemed to be confirmed by the Trust at such
specified time or times.

 

All references to Section 9 (Indemnification) of
the Distribution Agreement to “solely with respect to the applicable Agent(s) or
Co-Agent(s)” will include all of such Agent’s or Co-Agent’s directors and
officers and each person, if any, who controls such Agent or Co-Agent within
the meaning of Section 15 of the Securities Act of 1933, as amended or Section 20
of the Securities Exchange Act of 1934, as amended.  All references in the Distribution Agreement
to the “Registration Statement”, the “Institutional Base Prospectus”, the “Retail
Base Prospectus”, any “preliminary prospectus”, the “Time of Sale Prospectus”
and the “Prospectus” shall also be deemed to include all documents incorporated
by reference therein.

 

C-1

 

Section 2.02           Purchase of Notes
as Principal.

 

(a)           Subject
in all respects to the terms and conditions of the Distribution Agreement, the
Trust hereby agrees to sell to the Agent and the Agent hereby agrees to
purchase the Notes having the terms specified in the Pricing Supplement
relating to such Notes. The initial principal amount of the Notes is
$4,979,000.00.

 

(b)           In
connection with any purchase of Notes from the Trust by the Agent as principal,
the parties agree that the items specified on Schedule I of the Pricing
Instrument will be delivered as of the Settlement Date.

 

Section 2.03           Termination.  Upon the termination of this Terms Agreement
pursuant to Section 13(b) of the Distribution Agreement the
undersigned parties hereby agree to allocate the expenses reasonably incurred
prior to or in connection with such termination as follows:

 

The expenses will be borne by GLAIC.

 

Section 2.04           Applicable
Time.  For purposes of the
Distribution Agreement, the Applicable Time shall be 3:21 pm EST, March 31,
2008.

 

Section 2.05           Governing Law.  This Terms Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the principles of conflicts of laws thereof.

 

Section 2.06           Notices.
For purposes of Section 14 of the Distribution Agreement, the Trust’s
communications details are as set forth in Section D of the Pricing
Instrument.

 

Section 2.07           Additional Terms. 
The Agent represents, warrants and covenants with or to (as the case may
be) the Trust and the Company that it has not offered, sold or delivered and it
will not offer, sell or deliver, any of the Notes, in or from any jurisdiction
except under circumstances that are reasonably designed to result in compliance
with the applicable securities laws and regulations thereof.

 

Section   2.08         Pricing Instrument; Execution and Incorporation of Terms.

 

The parties hereto will enter into this Terms
Agreement by executing the Pricing Instrument.

 

By executing the Pricing Instrument, each party hereto
agrees that this Terms Agreement will constitute a legal, valid and binding
agreement by and among such parties.

 

All terms relating to the Trust or the Notes not
otherwise included in this Terms Agreement will be as specified in the Pricing
Instrument or Pricing Supplement, as indicated herein.

 

Section 2.09 
Counterparts.  This Terms Agreement, through the Pricing
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

 

C-2

 

SECTION D

 

COORDINATION
AGREEMENT

 

This COORDINATION AGREEMENT (this “Coordination
Agreement”), dated as of March 31, 2008, is entered into by and among
Genworth Life and Annuity Insurance Company (“GLAIC”), the Genworth Global
Funding Trust specified in the Pricing Instrument (the “Trust”), SunTrust Bank,
in its capacity as custodian of the Funding Agreement (“Custodian”) and The
Bank of New York Trust Company, N.A., as the indenture trustee (the “Indenture
Trustee”).

 

W I T N E S S E T H

 

WHEREAS, the Trust will enter into the Funding
Agreement with GLAIC, effective as of the Original Issue Date specified in the
Pricing Supplement;

 

WHEREAS, the Agents (as defined in the Distribution
Agreement) will sell the Notes in accordance with the Registration Statement;

 

WHEREAS, the Trust intends to issue the Notes in
accordance with the Indenture, to collaterally assign to, and grant a security
interest in, the Funding Agreement to and in favor of the Indenture Trustee in
accordance with the Indenture to secure payment of the Notes; and

 

WHEREAS, the Custodian will hold the Funding Agreement
on behalf of the Indenture Trustee pursuant to the terms of the Custodial
Agreement.

 

NOW, THEREFORE, to give effect to the agreements and
arrangements established under the Terms Agreement included in the Pricing
Instrument, as applicable, the Trust Agreement, the Indenture and the Notes, and
in consideration of the agreements and obligations set forth herein and for
other good and valuable consideration, the sufficiency of which are hereby
acknowledged, each party hereby agrees as follows:

 

ARTICLE 1

 

Section 1.01           Delivery of the
Funding Agreement.  The Trust
hereby authorizes the Custodian, on behalf of the Indenture Trustee, to receive
the Funding Agreement from GLAIC pursuant to the assignment of the Funding
Agreement (the “Assignment”), to be entered into on the Original Issue Date,
included in the closing instrument dated as of the Original Issue Date (the “Closing
Instrument”).

 

Section 1.02           Issuance and
Purchase of the Notes.

 

(a)           Delivery
of the Funding Agreement to the Custodian, on behalf of the Indenture Trustee,
pursuant to the Assignment or execution of the cross-receipt contained in the
Closing Instrument shall be confirmation of payment by the Trust for the
Funding Agreement.

 

(b)           The
Trust hereby directs the Indenture Trustee, upon receipt of the Funding
Agreement by the Custodian, on behalf of the Indenture Trustee and pursuant to
the Assignment, 

 

D-1

 

(i) to authenticate the certificates representing
the Notes (the “Certificates”) in accordance with the Indenture and (ii) to
(A) deliver each relevant Certificate to the clearing system or systems
identified in each such Certificate, or to the nominee of such clearing system,
or the custodian thereof, for credit to such accounts as the Agent may direct,
or (B) deliver each relevant Certificate to the purchasers thereof as
identified by the Agent.

 

ARTICLE 2

 

Section 2.01           Directions
Regarding Periodic Payments. 
As registered owner of the Funding Agreement as collateral securing
payments on the Notes, the Indenture Trustee will receive payments on the
Funding Agreement on behalf of the Trust. 
The Trust hereby directs the Indenture Trustee to use such funds to make
payments on behalf of the Trust pursuant to the Trust Agreement and the
Indenture.

 

Section 2.02           Maturity of the
Funding Agreement.  Upon the
maturity of the Funding Agreement and the return of funds thereunder, the Trust
hereby directs the Indenture Trustee to set aside from such funds an amount
sufficient for the repayment of the outstanding principal on the Notes and
Trust Beneficial Interest when due.

 

ARTICLE 3

 

Section 3.01           Officer’s
Certificates.  GLAIC hereby
agrees to deliver an Officer’s Certificate, a copy of which is attached hereto
as Exhibit D, on a quarterly basis to
any rating agency currently rating the Program. 
The Trust hereby agrees to deliver an Officer’s Certificate, a copy of
which is attached to the Pricing Instrument as Exhibit E,
on a quarterly basis to any rating agency currently rating the Program.

 

Section 3.02           Filings.  GLAIC hereby covenants to file, or cause to
be filed, in a timely manner on behalf of the Trust all reports, certifications
or similar filings required under the Securities Exchange Act of 1934, as
amended.

 

ARTICLE 4

 

Section 4.01           No Additional
Liability.  Nothing in this
Coordination Agreement shall impose any liability or obligation on the part of
any party to this Coordination Agreement to make any payment or disbursement in
addition to any liability or obligation such party has under the Program
Documents, except to the extent that a party has actually received funds which
it is obligated to disburse pursuant to this Coordination Agreement.

 

Section 4.02           No Conflict.  This Coordination Agreement is intended to be
in furtherance of the agreements reflected in the documents related to the
Program Documents, and not in conflict. 
To the extent that a provision of this Coordination Agreement conflicts
with the provisions of one or more Program Documents, the provisions of such
Program Documents shall govern.

 

Section 4.03           Governing Law.  This Coordination Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to the principles of conflicts of laws thereof.

 

D-2

 

Section 4.04           Severability.  If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.

 

Section 4.05           Notices.  All demands, notices and communications under
this Coordination Agreement shall be in writing and shall be deemed to have
been duly given upon receipt at the addresses set forth below:

 

To the Trust:

 

Genworth Global Funding
Trust 2008-11

c/o U.S. Bank National
Association

Corporate Trust Services

209 S. LaSalle Street, Suite 300

Chicago, Illinois 60604

Attention:  Patricia Child, VP

Facsimile: (312) 325-8905

 

To the Indenture Trustee:

 

The Bank of New York
Trust Company, N.A.

2 North LaSalle Street, Suite 1020

Chicago, Illinois 60602

Attention: Corporate
Finance

Facsimile: (312) 827-8542

 

To GLAIC:

 

Genworth Life and Annuity
Insurance Company

6610 West Broad Street

Richmond, Virginia 23230

Attention: Treasurer

Facsimile: (804) 662-7777

 

with a copy to:

 

Genworth Life and Annuity
Insurance Company

6610 West Broad Street

Richmond, Virginia 23230

Attention: Heather Harker, Esq.

Facsimile: (804) 281-6005

 

To the Custodian:

 

SunTrust Bank

919 East Main Street

Richmond, Virginia
23219

Attention:
Retirement Services

Facsimile: (804)
782-7439

 

D-3

 

or at
such other address as shall be designated by any such party in a written notice
to the other parties.

 

ARTICLE 5

 

Section 5.01           Pricing Instrument;
Execution and Incorporation of Terms.

 

The parties to this Coordination Agreement will enter
into this Coordination Agreement by executing the Pricing Instrument.

 

By executing the Pricing Instrument, each party hereto
agrees that this Coordination Agreement will constitute a legal, valid and
binding agreement by and among the Trust, GLAIC, the Custodian and the
Indenture Trustee.

 

All terms relating to the Trust or the Notes not
otherwise included in this Coordination Agreement will be as specified in the
Pricing Instrument or Pricing Supplement, as indicated herein.

 

Section 5.02           Counterparts.  This Coordination Agreement, through the
Pricing Instrument, may be executed in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.

 

Section 5.03           Capitalized Terms.  All capitalized terms used herein and not
otherwise defined in this Coordination Agreement will have the meanings set
forth in the Indenture.

 

[Remainder of Page Left
Intentionally Blank]

 

D-4

 

SECTION E

 

MISCELLANEOUS AND
EXECUTION PAGES

 

This Pricing Instrument may be executed by each of the
parties hereto in any number of counterparts, and by each of the parties hereto
on separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

 

Each signatory, by its execution hereof, does hereby
become a party to each of the agreements or indenture identified for such party
as of the date specified in such agreements or indenture.

 

IN WITNESS WHEREOF, the undersigned have executed this
Pricing Instrument with respect to the Notes as of the date first written
above.

 

 

	
   

  	
   

  	
  GENWORTH LIFE AND ANNUITY INSURANCE COMPANY (in executing below
  agrees and becomes a party to (i) the Terms Agreement set forth in
  Section C herein and (ii) the Coordination Agreement set forth in
  Section D herein)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
         /s/
  Pamela C. Asbury

  
	
   

  	
   

  	
   

  	
  Name: Pamela C. Asbury

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  

 

E-1

 

	
   

  	
  THE GENWORTH GLOBAL FUNDING TRUST DESIGNATED IN THIS PRICING
  INSTRUMENT (in executing below agrees and becomes a party to (i) the
  Indenture set forth in Section B herein, (ii) the Terms Agreement
  set forth in Section C herein and (iii) the Coordination Agreement
  set forth in Section D herein)

  
	
   

  	
   

  
	
   

  	
  By: U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity
  but solely in its capacity as Trustee of the Trust

  
	
   

  	
   

  
	
   

  	
  By:

  	
         /s/
  Patricia M. Child

  
	
   

  	
   

  	
  Name: Patricia M. Child

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION (in executing below agrees and becomes
  a party to the Trust Agreement set forth in Section A herein), as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
         /s/
  Patricia M. Child

  
	
   

  	
   

  	
  Name: Patricia M. Child

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION (in executing below acknowledges and agrees to Section 5.01
  of the Trust Agreement as set forth in and amended by Section A herein),
  in its individual capacity

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
         /s/
  Patricia M. Child

  
	
   

  	
   

  	
  Name: Patricia M. Child

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  GSS HOLDINGS II, INC. (in executing below agrees and becomes a party
  to the Trust Agreement set forth in Section A herein), as Trust
  Beneficial Owner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
         /s/
  Bernard J. Angelo

  
	
   

  	
   

  	
  Name: Bernard J. Angelo

  
	
   

  	
   

  	
  Title: Vice President

  

 

E-2

 

	
   

  	
  THE BANK OF NEW YORK TRUST COMPANY, N.A. (in executing below agrees
  and becomes a party to (i) the Indenture set forth in Section B
  herein, as Indenture Trustee, Registrar, Transfer Agent, Paying Agent and
  Calculation Agent and (ii) the Coordination Agreement set forth in
  Section D herein), as Indenture Trustee, Registrar, Transfer Agent,
  Paying Agent and Calculation Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
         /s/
  R. Tarnas

  
	
   

  	
   

  	
  Name: R. Tarnas

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  SUNTRUST BANK (in executing below agrees and becomes a party to the
  Coordination Agreement set forth in Section D herein), as Custodian

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
         /s/
  Richard J. Owens, III

  
	
   

  	
   

  	
  Name: Richard J.
  Owens, III

  
	
   

  	
   

  	
  Title: VP/Trust Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  INCAPITAL,
  LLC (in executing below agrees and becomes a party to the Terms Agreement set
  forth in Section C herein)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
         /s/
  Brian Walker

  
	
   

  	
   

  	
  Name: Brian Walker

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

E-3

 

EXHIBIT A

Standard Trust Terms

 

As filed as Exhibit 4.5
to the Registration Statement on Form S-3 (File No. 333-128718),
filed by Genworth Life and Annuity Insurance Company with the Securities and
Exchange Commission (the “Commission”) on September 30, 2005, as amended
by Amendment No. 1, filed with the Commission on December 8, 2005.

 

A-1

 

EXHIBIT B

Standard Indenture Terms

 

As filed as Exhibit 4.1
to the Registration Statement on Form S-3 (File No. 333-128718),
filed by Genworth Life and Annuity Insurance Company with the Securities and
Exchange Commission (the “Commission”) on September 30, 2005, as amended
by Amendment No. 1, filed with the Commission on December 8, 2005.

 

B-1

 

EXHIBIT C

Pricing Supplement

 

As filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act, dated as of March 24, 2008, with respect to the Notes to
be issued by the Trust.

 

C-1

 

EXHIBIT D

Genworth Life and Annuity Insurance Company

 

Officer’s Certificate

 

The undersigned, an officer of Genworth Life and
Annuity Insurance Company, a stock life insurance company operating under a
charter granted by the Commonwealth of Virginia (“GLAIC”), does hereby certify
to Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., in such capacity and on behalf of GLAIC, to the knowledge
of the undersigned and after reasonable inquiry, that:

 

1.                                       each
of the representations and warranties of GLAIC contained in each Expense and
Indemnity Agreement entered into in connection with the Registration Statement
(defined below), and each Funding Agreement issued in connection with the
Program (the “Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and correct on
and as of the date hereof, with the same effect as though such representation
or warranty had been made on and as of the date hereof;

 

2.                                       no
default under any of the Specified Agreements and no event or any condition
which, with notice or lapse of time or both, would become a default, has
occurred and is continuing as of the date hereof;

 

3.                                       GLAIC
has performed and complied with, in all material respects, all of the
agreements, covenants, obligations and conditions applicable to GLAIC required
by the Specified Agreements to be performed or complied with by GLAIC on or
before the date hereof;

 

4.                                       the
Registration Statement filed on Form S-3 (File No. 333-128718) (the “Registration
Statement”) by GLAIC has been declared effective by the Securities and Exchange
Commission (the “Commission”) under the Securities Act of 1933, as amended (the
“Act”) and no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
commenced by or are pending before or contemplated by the Commission;

 

5.                                       all
filings, if any, required by Rule 424 and Rule 430A under the Act
have been made in a timely manner;

 

6.                                       since
[·](1),
the Trusts organized in connection with the program contemplated by the
Registration Statement have issued the following series of Notes:

 

[List each series
of Notes]  [(collectively, the “Designated
Notes”)]; and

 

7.                                       the
Funding Agreements issued in connection with the Designated Notes have been
executed and delivered by GLAIC in accordance with the terms and conditions of
the Program Documents.

 

(1) This certificate
to be signed quarterly.

 

D-1

 

Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Standard Indenture
Terms attached as Exhibit 4.1 to the Registration Statement.

 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of the [·] day of [·]
200[·].

 

	
   

  	
  [Name], in [his/her]
  capacity as an authorized officer of Genworth Life and Annuity Insurance
  Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

D-2

 

EXHIBIT E 

Genworth Global Funding Trusts

 

Trustee Officer’s Certificate

 

U.S. Bank National Association, not in its individual
capacity but solely in its capacity as trustee acting on behalf of each common
law trust organized under the laws of the State of Illinois (in such capacity,
the “Trustee,” and each such common law trust being referred to herein as a “Trust”)
in connection with the program contemplated by the Registration Statement filed
on Form S-3 (File No. 333-128718) by Genworth Life and Annuity
Insurance Company with the Securities and Exchange Commission (the “Commission”)
on September 30, 2005, as amended by Amendment No. 1, filed with the
Commission on December 8, 2005 (the “Registration Statement”), does hereby
certify to Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., in such capacity and on behalf of each Trust,
to the knowledge of the Trustee without any independent investigation, that; as
of October 1, 2006:

 

1.                                       each
of the representations and warranties of each Trust contained in the Notes
issued in connection with the Program, each Indenture entered into in
connection with the Registration Statement and the Expense and Indemnity
Agreement concerning the Trusts (the “Specified Agreements”) (other than any
representation or warranty expressly made as of a date prior to the date
hereof) are true and correct on and as of the date hereof, with the same effect
as though such representation or warranty had been made on and as of the date
hereof;

 

2.                                       no
default under any of the Specified Agreements and no event or any condition
which, with notice or lapse of time or both, would become a default, has
occurred and is continuing as of the date hereof;

 

3.                                       each
Trust has performed and complied with, in all material respects, all of the
agreements, covenants, obligations and conditions applicable to such Trust
required by the Specified Agreements to be performed or complied with by such
Trust on or before the date hereof;

 

4.                                       the
Notes issued in connection with the Program have been issued, in all material
respects, in accordance with the terms and conditions of the Program Documents;
and

 

5.                                       each
Funding Agreement has been executed and delivered by the related Trust in
accordance with the terms and conditions of the Program Documents.

 

Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Standard Indenture
Terms attached as Exhibit 4.1 to the Registration Statement. In no event
shall U.S. Bank National Association in its personal corporate capacity (or any
officer of the Trustee in his or her personal capacity) have any liability for
any of the certifications or statements contained in this Trustee Officer’s
Certificate, such liability being solely that of each Trust.

 

E-1

 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of the [·] day of [·],
200[·].

 

	
   

  	
  U.S. Bank National
  Association, not in its individual capacity but solely in its capacity as
  Trustee acting on behalf of each Trust

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

E-2

 

SCHEDULE I

 

Terms Agreement Specifications

 

In
connection with Section 3(a)(iv) of the Distribution Agreement, the
Program under which the Notes are issued is rated Aa3 by Moody’s Investors
Service, Inc. (“Moody’s”) and AA- by Standard & Poor’s Rating
Services, a division of The McGraw-Hill Companies, Inc. (“S&P”).  Genworth Life and Annuity Insurance Company (“GLAIC”)
expects that the Notes will be rated Aa3 by Moody’s and AA- by S&P.  GLAIC’s financial strength rating is Aa3 by
Moody’s and AA- by S&P.

 

In
accordance with Section 2.02(b) of the Terms Agreement and in
connection with the purchase of Notes from the Trust by the Agent, the
following items will be delivered on or prior to the Settlement Date to the
Agent:  None.

 

All capitalized terms used herein and not otherwise
defined herein will have the meanings set forth in the Distribution Agreement.

 

I-1

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