AMENDED AND RESTATED
PLAN OF INCORPORATION
OF
THE GOLDMAN SACHS GROUP, L.P.
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THIS PLAN OF INCORPORATION IS BEING MADE AVAILABLE ON A CONFIDENTIAL
BASIS SOLELY FOR THE PURPOSES DESCRIBED HEREIN. BY ACCEPTING ACCESS TO THIS PLAN
OF INCORPORATION, EACH RECIPIENT AGREES NOT TO COPY ALL OR ANY PORTION OF IT AND
TO KEEP ITS CONTENTS CONFIDENTIAL.
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Table of Contents
Introduction
Section 1 General Description of Proposed Transactions
Section 2 Common Stock that PLPs will Receive
Section 3 Treatment of Other Constituencies under this Plan
Section 4 Ongoing Equity Incentives
Section 5 Employment Agreement
Section 6 Hedging
Section 7 Certain Transfer Restrictions on Shares
Section 8 Shareholders' Agreement
Section 9 Noncompetition and Related Arrangements
Section 10 Arrangements Concerning Goldman Sachs-Sponsored Funds
Section 11 Release and Indemnification Arrangements
Section 12 Consequences of an Election to Retire
Section 13 Amendments to this Plan
Section 14 Tax Consequences
Section 15 Management of GS Inc.
Section 16 Other
Section 17 Documents PLPs and RLPs are Being Asked to Sign
Section 18 Copies of this Plan and Contact Persons
Exhibit A-1 Incorporation Term Sheet and Organizational Charts
Exhibit A-2 Additional Information Concerning Proposed Merger Transactions
Exhibit B Amended and Restated Certificate of Incorporation of The
Goldman Sachs Group, Inc.
Exhibit C By-Laws of The Goldman Sachs Group, Inc.
Exhibit D Form S-1 Registration Statement Incorporated by Reference
Exhibit E Term Sheet for Junior Subordinated Nontransferable Debentures
to be Issued to Schedule I Limited Partners
Exhibit F Form of Employment Agreement
Exhibit G Hedging Restrictions
Exhibit H Shareholders' Agreement
Exhibit I Agreement Regarding Noncompetition and other Covenants
(attaching form of Pledge Agreement as Exhibit A)
Exhibit J Indemnification Agreement - General
Exhibit K Indemnification Agreement - Tax
Exhibit L Indemnification Agreement - Registration Statements and
Matters Relating to the IPO
Exhibit M Representations and Warranties
Exhibit N Registration Arrangements
Exhibit O Section 262 of the Delaware General Corporation Law (Appraisal
Rights)
Exhibit P Letter Agreement with Sumitomo Bank Capital Markets, Inc.
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Exhibit Q Letter Agreement with Kamehameha Activities Association
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INTRODUCTION
GENERAL
This is the Amended and Restated Plan of Incorporation (this "Plan") of
The Goldman Sachs Group, L.P. ("GS Group"), pursuant to Article I, Section 14 of
the GS Group Memorandum of Agreement (the "GS Group Partnership Agreement") to
facilitate, among other matters, an initial public offering (the "IPO") of the
common stock ("Common Stock") of The Goldman Sachs Group, Inc. ("GS Inc."),
which will be the corporate successor to GS Group. The Board of Directors of The
Goldman Sachs Corporation ("GS Corp."), acting as the general partner (the
"General Partner") of GS Group, unanimously approved this Plan and its
submission to the Schedule II Limited Partners (the "PLPs") of GS Group for a
vote in accordance with the GS Group Partnership Agreement. If approved by the
PLPs in accordance with the GS Group Partnership Agreement, this Plan shall
constitute (a) an agreement among GS Group, GS Corp., as the General Partner, GS
Inc., the PLPs and the other participants herein to implement this Plan and all
the transactions and agreements related hereto described herein and (b) an
amendment to the GS Group Partnership Agreement.
A MEETING OF THE PLPS WILL BE HELD AT 7:00 A.M., NEW YORK CITY TIME, ON
MONDAY, MARCH 8, 1999, AT WHICH THE PLPS WILL BE ASKED TO CONSENT TO THIS PLAN.
The approval of PLPs having 51% in interest in the profits of GS Group allocable
to the PLPs as set forth in Schedule II to the GS Group Partnership Agreement is
required to approve this Plan and authorize the General Partner to implement
this Plan.
CHOICES AVAILABLE TO PLPS
In connection with this Plan, each PLP will have three choices:
1. CONSENT TO THIS PLAN AND, IF THIS PLAN IS ADOPTED, THEREBY
ELECT TO PARTICIPATE IN THIS PLAN. Participation in this Plan
includes receiving Common Stock in exchange for the PLP's
interests in GS Group and its affiliates, and becoming bound
by all other aspects of this Plan including, but not limited
to, the employment agreement (unless otherwise notified by GS
Inc.), the agreement regarding noncompetition and other
covenants, the pledge agreement, the shareholders' agreement
and certain applicable release and indemnification
arrangements (each of which is described herein and is
attached as an exhibit hereto).
2. WITHHOLD CONSENT TO THIS PLAN AND, IF THIS PLAN IS NONETHELESS
ADOPTED, ELECT TO PARTICIPATE IN THIS PLAN WITH THE EFFECTS
NOTED IN CLAUSE 1 ABOVE.
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3. WITHHOLD CONSENT TO THIS PLAN AND, IF THIS PLAN IS NONETHELESS
ADOPTED, ELECT NOT TO PARTICIPATE IN THIS PLAN. In this event
the PLP will not be bound by the terms of this Plan and the
PLP will be treated as having elected to retire from GS Group
immediately prior to the consummation of the Incorporation
Transactions (as defined below) or such other time specified
by the General Partner. Such PLP will be entitled to payment
in respect of the value of such PLP's interests in GS Group
and its affiliates (including dated account interests (after
the dated account interests have been valued at their fair
value) and without giving effect to any adjustment for firm
goodwill) in accordance with the GS Group Partnership
Agreement. "Dated account interests" means the interest of a
partner in GS Group's principal investments and real estate
principal investments and other dated account interests.
ACTION REQUIRED BY PLPS
These choices are provided for in the Consent Document for Plan of
Incorporation and Power of Attorney (the "Consent Document and Power of
Attorney"), which will be distributed at the March 8 meeting. (A sample copy of
the Consent Document and Power of Attorney is attached to this Plan). If a PLP
does not timely complete and deliver the Consent Document and Power of Attorney,
such PLP will be deemed to have withheld consent to this Plan and if it is
nonetheless adopted, to have selected the option described in Clause 3 above and
will be treated as having elected to retire from GS Group.
PLPs who hold any part of their interest in GS Group through an entity
PLP must execute two Consent Documents and Powers of Attorney in order to accept
this Plan -- one on behalf of such PLP and one on behalf of such entity. If only
one related PLP consents, both PLPs will be deemed to have selected the option
described in Clause 3 above and will be treated as having elected to retire from
GS Group.
Each PLP who or which elects to participate in this Plan will become a
party to this Plan.
CHOICES AVAILABLE TO RLPS
If this Plan is adopted, the General Partner will make available to
Schedule I Limited Partners of GS Group ("RLPs") the alternatives provided for
in this Plan as described in Section 3.
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UNDER THE TERMS OF THE GS GROUP PARTNERSHIP AGREEMENT, EACH PARTNER OF
GS GROUP (WHETHER OR NOT CONSENTING) HAS IRREVOCABLY WAIVED ANY RIGHT TO CONTEST
THE TERMS OF THIS PLAN, WHETHER ON THE GROUNDS OF UNEQUAL OR DISPARATE
TREATMENT, INCONSISTENCY OR
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CONFLICT WITH THE TERMS AND PROVISIONS OF THE GS GROUP PARTNERSHIP AGREEMENT,
UNFAIRNESS OR FOR ANY OTHER REASON.
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1. GENERAL DESCRIPTION OF PROPOSED TRANSACTIONS
The incorporation of GS Group will be accomplished by having (1) GS
Corp., the general partner of GS Group, merge into GS Inc., (2) all of the other
partners in GS Group (other than the holders of Senior Limited Partnership
Interests ("SLPs") and PLPs and RLPs who do not participate in this Plan) either
(a) with respect to certain entities that are wholly-owned by PLPs or RLPs,
merge with and into GS Inc. or (b) with respect to all other partners, transfer
their partnership interests in GS Group to GS Inc., in each case, in exchange
for, (i) in the case of PLPs and Kamehameha Activities Association ("KAA") (an
affiliate of The Estate of Bernice Pauahi Bishop (the "Bishop Estate") through
which the Bishop Estate holds its partnership interest), Common Stock, (ii) in
the case of Sumitomo Bank Capital Markets, Inc. ("SBCM"), Common Stock (voting
and nonvoting), and (iii) in the case of RLPs, cash, Common Stock and/or GS Inc.
subordinated debentures, and (3) GS Group, after all of the interests in GS
Group have been transferred to GS Inc., merge into GS Inc. The transactions
described in the preceeding sentence are referred to herein to as the
"Incorporation Transactions." Prior to the Incorporation Transactions, among
other transactions, the SLPs' interests will be redeemed for cash and PLPs and
RLPs who do not participate in the Plan will retire and receive the distribution
provided for in the GS Group Partnership Agreement. Immediately following the
Incorporation Transactions, GS Inc. will consummate an initial public offering
of its common stock (the "IPO"). The transactions described in this paragraph
are referred to herein collectively as the "Proposed Transactions." Exhibit A
contains a more detailed summary of each of the significant steps of the
Proposed Transactions, in each case as currently contemplated. The General
Partner will have the right under this Plan to vary the Proposed Transactions if
it deems any changes to be necessary or desirable.
GS Inc. is a Delaware corporation organized to be the corporate
successor to GS Group. GS Inc. has not conducted any business operations prior
to the date of this Plan. Drafts of the proposed Amended and Restated
Certificate of Incorporation and By-Laws of GS Inc. are attached as Exhibits B
and C, respectively.
No PLP or RLP will be permitted to sell any shares of Common Stock in
the IPO. The Form S-1 Registration Statement of GS Inc. for the IPO on file with
the Securities and Exchange Commission is incorporated by reference herein as
Exhibit D.
2. COMMON STOCK THAT PLPS WILL RECEIVE
Each PLP who elects to participate in this Plan will receive Common
Stock in exchange for such PLP's interests in GS Group and its affiliates. A
description of the capital stock of GS Inc. is contained in the Registration
Statement incorporated by reference herein as Exhibit D.
Prior to the March 8, 1999 meeting of the PLPs, the General Partner
will develop a valuation of GS Inc. and its affiliates for purposes of
allocating shares of Common Stock under
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this Plan on a pro forma basis giving effect to this Plan and the IPO (the
"Allocation Valuation"). Based upon the Allocation Valuation and the number of
shares of Common Stock expected to be outstanding after consummation of the IPO,
a per common share price will be established (the "Per Share Price").
Based on the Allocation Valuation and the Per Share Price, a
determination will then be made as to the number of shares of Common Stock (i)
expected to be sold in the IPO and (ii) to be (a) allocated to constituencies
other than the PLPs, SBCM and KAA (e.g., the RLPs and the non-PLP employees)
under this Plan and (b) reserved for purposes of Sections 10 (Arrangements
Concerning Goldman Sachs-Sponsored Funds) and 16 (Other - Right of General
Partner or GS Inc. to Make Special Arrangements) of this Plan (such reserved
shares, the "Unallocated Shares"). The remaining shares expected to be
outstanding after the IPO (the "Participating Partner Shares") will be allocated
among the PLPs, SBCM and KAA as follows:
(i) SBCM will be allocated Common Stock (voting and
non-voting, as described below) representing approximately 11.34% of
the Participating Partner Shares and KAA will be allocated Common Stock
representing approximately 9.28% of the Participating Partner Shares;
(ii) each PLP who participates in this Plan will first be
allocated shares of Common Stock with an aggregate value (based upon
the Per Share Price) equal to 100% of such PLP's Adjusted Capital (as
defined below); and
(iii) each PLP who participates in this Plan will then be
allocated shares of Common Stock constituting such PLP's portion of the
balance of the Participating Partner Shares available after the
allocation of Common Stock under clauses (i) and (ii) (the "Profit
Shares") calculated by multiplying the number of Profit Shares by the
ratio of the profits interest of such PLP (as set forth in Schedule II
to the GS Group Partnership Agreement) to the aggregate profits
interests of all PLPs who participate in this Plan.
Any Unallocated Shares not necessary for purposes of Section 10
(Arrangements Concerning Goldman Sachs-Sponsored Funds) or 16 of this Plan
(Other - Right of General Partner or GS Inc. to Make Special Arrangements) will
be allocated to SBCM, KAA and the PLPs in accordance with clauses (i) and (iii)
above.
The foregoing computations will permit the calculation of the expected
number of shares of Common Stock that will be issued under this Plan to each PLP
who participates in this Plan. The General Partner will inform each PLP of the
actual number of shares of Common Stock to be issued to such PLP who or which
participates in this Plan on or prior to the date of the consummation of the IPO
(the "IPO Date").
"Adjusted Capital" for a PLP will be determined as of the opening of
business, New York City time, on November 28, 1998, with the adjustments set
forth below. The Adjusted Capital of
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a PLP will reflect (a) the value of such PLP's dated account interests valued at
their fair value as of the opening of business, New York City time, on November
28, 1998 (provided that dispositions of publicly-traded securities (and, in the
sole discretion of the General Partner, other assets) reflected in dated
accounts effected between the opening of business, New York City time, on
November 28, 1998 and the close of business, New York City time, on February 26,
1999 at prices more or less favorable than such fair value as of November 28,
1998 will be reflected at their disposition price and publicly-traded securities
(and, in the sole discretion of the General Partner, other assets) reflected in
dated accounts will be valued at their market value as of the close of business,
New York City time, on February 26, 1999), (b) fiscal 1999 withdrawals from the
PLP's capital account (unless otherwise determined by the General Partner), (c)
the creation of and adjustments to certain reserves and the related tax effects,
(d) capital contributions made by PLPs after the opening of business, New York
City time, on November 28, 1998, and (e) other adjustments that the General
Partner may deem appropriate in its sole discretion.
The General Partner may, in its sole discretion, select a different Per
Share Price and/or a later date for determining Adjusted Capital and/or the
Allocation Valuation and establish the number of shares of Common Stock to be
issued using such different Per Share Price and/or such later determination of
Adjusted Capital and/or the Allocation Valuation.
The General Partner generally has the right, in its sole discretion, to
amend this Plan in any respect that it deems appropriate. See "Section 13 -
Amendments to this Plan" for a discussion of those changes to this Plan that may
give a PLP who or which has previously elected to participate in this Plan the
right to retire from GS Group and receive payment in accordance with the GS
Group Partnership Agreement. None of the changes described in the preceding
paragraph would afford a PLP a retirement right.
3. TREATMENT OF OTHER CONSTITUENCIES UNDER THIS PLAN
Classes of partners in GS Group other than PLPs and other members of
the Goldman Sachs community will be treated as follows under this Plan:
SCHEDULE I LIMITED PARTNERS
A. Each RLP may accept this Plan and elect to receive with
respect to such RLP's Adjusted Capital:
1. Shares of Common Stock with an aggregate value (based
upon the Per Share Price) equal to 130% (150% in the
case of an RLP who retired as a PLP at the end of
fiscal year 1998 (a "1998 RLP")) of such RLP's
Adjusted Capital; or
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2. Junior subordinated nontransferable debentures of GS
Inc. with a principal amount equal to 100% of such
RLP's Adjusted Capital, bearing interest at 12% per
annum, with a maturity in November 2006 (longer
maturities will be made available to RLPs who
currently have longer-dated capital); such debentures
having the other terms set forth in the Term Sheet
for Junior Subordinated Nontransferable Debentures
attached as Exhibit E; or
3. Cash in an amount equal to 130% (150% in the case of
a 1998 RLP) of such RLP's Adjusted Capital; or
4. Any combination of the foregoing.
Except as described below, Adjusted Capital for an RLP will be
determined as of the same time and using the same valuations
of assets, liabilities, reserves and contingencies as those
used for calculating Adjusted Capital for the PLPs. For
purposes of computing an RLP's Adjusted Capital, all capital
awaiting settlement ("CAS") will be treated as part of such
RLP's Adjusted Capital. In the 1999 fiscal year, certain RLPs
have been permitted to contribute additional amounts to their
capital accounts. These amounts will not be included in
Adjusted Capital and will be repaid prior to the Incorporation
Transactions.
The General Partner may, in its sole discretion, select a
different Per Share Price and/or a later date for determining
Adjusted Capital and/or the Allocation Valuation and establish
the number of shares of Common Stock to be issued using such
different Per Share Price and/or such later determination of
Adjusted Capital and/or the Allocation Valuation.
The General Partner generally has the right, in its sole
discretion, to amend this Plan in any respect that it deems
appropriate. See "Section 13 - Amendments to this Plan" for a
discussion of those changes to this Plan that may give an RLP
who or which has previously elected to participate in this
Plan the right to retire from GS Group, with the effect set
forth in Alternative B below. None of the changes described in
the preceding paragraph would afford an RLP a retirement
right.
B. Any RLP may alternatively not accept this Plan and, prior to
the Incorporation Transactions, receive the distribution
provided for in the GS Group Partnership Agreement (cash or
junior subordinated nontransferable debentures issued pursuant
to the GS Group Partnership Agreement in an amount equal to
(i) the RLP's capital contribution less adjustments to
reserves to that date and (ii) the value of the RLP's pro rata
share of items omitted from settlement with such RLP,
including amounts attributable to dated account interests).
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By acceptance of this Plan, an RLP who chooses to take Common Stock
will agree to (i) the terms of the underwriters' lock-up restriction in
connection with the IPO, (ii) a one-year lock-up restriction for all shares of
Common Stock issued in respect of up to 50% of such RLP's Adjusted Capital
(provided that to the extent that an individual RLP owns an interest in GS Group
directly and is affiliated with an entity RLP that also owns an interest in GS
Group (e.g., an individual RLP and the individual RLP's family limited
partnership), the individual RLP may allocate among the individual RLP and the
affiliated entity RLP the shares of Common Stock subject to the one-year lock-up
restriction provided in this clause (ii) and the three-year lock-up restriction
provided in clause (iii) below in his or her discretion as long as no more than
the number of shares of Common Stock issued in respect of 50% of the aggregate
Adjusted Capital of such RLPs is subject to the one-year lock-up restriction
provided in this clause (ii)), (iii) a three-year lock-up restriction for all
other shares of Common Stock issued in respect of such RLP's Adjusted Capital,
and (iv) the hedging restrictions described in Section 6 hereof. Each RLP who
participates in this Plan will execute a confidentiality agreement which is
based on the confidentiality provisions in the GS Group Partnership Agreement.
Shares of Common Stock allocable to an RLP will be held in the record name of a
custodian or other agent selected by GS Inc. pursuant to a custodial agreement
until the lapse of the lock-up restrictions described above.
In order for an RLP to accept the offer outlined in Alternative A, such
RLP must agree to be bound by all aspects of this Plan. Each RLP who or which
accepts this Plan will become a party to this Plan. An RLP who selects
Alternative A will have the benefit of the indemnification arrangements provided
below under "Release and Indemnification Arrangements" in Section 11. An RLP who
selects Alternative B will not have the benefit of the indemnification
arrangements and will retain all personal liabilities such RLP had as a partner
in GS Group and its affiliates and their respective predecessors.
An RLP's election of Alternative A or Alternative B will not be
revocable or subject to amendment or alteration. RLPs shall not be permitted to
transfer interests in GS Group pending consummation of this Plan.
With respect to an RLP that is not an "accredited investor" (as defined
in Rule 501 under the Securities Act of 1933, as amended) and as determined by
the General Partner in its sole discretion to be necessary or prudent to achieve
compliance with or expedite consummation of this Plan under applicable law, the
value of such RLP's interest in GS Group may be paid to such RLP in accordance
with the provisions of the GS Group Partnership Agreement in lieu of permitting
such RLP to participate in this Plan or the right to elect to retire as
described above.
CAPITAL AWAITING SETTLEMENT, RESERVE BALANCES AND DEBENTURES
Under this Plan, the General Partner may, in its sole discretion, (a)
make offers to any former partners (i) with CAS, (ii) who are subject to
reserves or (iii) who hold debentures of GS Group, on whatever terms and
conditions the General Partner deems appropriate and (b) establish the manner of
making any such offer.
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SENIOR LIMITED PARTNERS
It is expected that the interests of SLPs will be redeemed for cash
prior to the Incorporation Transactions.
SUMITOMO BANK CAPITAL MARKETS, INC.
SBCM is entitled under the GS Group Partnership Agreement to elect to
receive a combination of the following:
A. Voting and/or non-voting Common Stock (limited, as to voting
stock, to 4.9% of the outstanding shares); and
B. Convertible preferred stock of GS Inc.
It is expected that SBCM will elect to receive all Common Stock (i.e.,
voting and nonvoting). The Common Stock that SBCM will receive will represent
approximately 11.34% of the Participating Partner Shares. The voting Common
Stock that SBCM will hold after the IPO Date will represent 4.9% of the
outstanding voting Common Stock.
Attached as Exhibit P and deemed part of this Plan is the letter
agreement with SBCM, as amended, that provides for, among other things, the
issuance of Common Stock (voting and nonvoting) to SBCM, certain adjustments to
and distribution of capital, SBCM's sale of Common Stock as part of the IPO, the
hedging restrictions applicable to SBCM and certain amendments to SBCM's
registration rights. The Registration Statement incorporated by reference herein
as Exhibit D sets forth a description of the rights of SBCM, including SBCM's
registration rights following the IPO. If this Plan is adopted, SBCM will become
a party to this Plan.
KAMEHAMEHA ACTIVITIES ASSOCIATION
KAA is entitled to receive voting Common Stock under the GS Group
Partnership Agreement. The Common Stock that KAA will receive will represent
approximately 9.28% of the Participating Partner Shares. Attached as Exhibit Q
and deemed part of this Plan is the letter agreement with KAA, as amended, that
provides for, among other things, certain adjustments to and distributions of
capital, KAA's sale of Common Stock as part of the IPO, the hedging restrictions
applicable to KAA and certain amendments to KAA's registration rights. The
Registration Statement incorporated by reference herein as Exhibit D sets forth
a description of the rights of KAA, including KAA's registration rights
following the IPO. If this Plan is adopted, KAA will become a party to this
Plan.
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NON-PLP EMPLOYEES
On the IPO Date, GS Inc. will make substantial awards of equity-based
compensation to the Firm's employees (including certain consultants and
advisors), other than PLPs. These awards are expected to consist of the
following elements:
A. A formula-based award of restricted stock units ("RSUs") under
which Common Stock generally will be delivered in equal
installments on or about the first, second and third
anniversaries of the IPO Date, unless the recipient engages in
conduct detrimental to GS Inc. and its affiliates (together
with their predecessors and successors, the "Firm") prior to
delivery of the Common Stock. No future service is required to
receive delivery of Common Stock. Conduct detrimental to the
Firm would include conduct for which an employee could be
terminated for cause, soliciting clients or employees of the
Firm, engaging in competitive activities and violating Firm
policy, including as to confidentiality and hedging. These
awards will be made available to virtually all employees.
B. A discretionary award of RSUs and stock options that generally
will vest in equal installments on or about the third, fourth
and fifth anniversaries of the IPO Date so long as prior to
the relevant vesting date the employee's employment with the
Firm has not been terminated for any reason and the employee
has not engaged in conduct detrimental to the Firm on or prior
to the relevant vesting date.
C. A contribution of stock to a defined contribution plan (the
"DCP") with the employees' rights to receive the stock
generally vesting in equal installments on or about the third,
fourth and fifth anniversaries of the IPO Date so long as
prior to the relevant vesting date the employee's employment
with the Firm has not been terminated for any reason and the
employee has not engaged in conduct detrimental to the Firm on
or prior to the relevant vesting date.
A further description of these awards is included in the Registration
Statement incorporated by reference herein as Exhibit D.
GOLDMAN SACHS FOUNDATION
It is currently expected that, after the consummation of the IPO and as
part of this Plan, approximately $200 million in cash will be donated by GS Inc.
to a charitable foundation established by the Firm.
* * * * *
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The General Partner has the authority under this Plan not to offer
securities of GS Inc. to or exchange securities of GS Inc. with any person if
the General Partner determines, in its sole discretion, that the making of such
offer or the consummation of such exchange could violate any applicable laws or
regulations, including securities laws.
In the event that any interest in GS Group is held by two or more
related persons (e.g., an individual and such individual's corporation, limited
liability company, family limited partnership or revocable trust), all such
persons must elect to participate in this Plan or not participate in this Plan
and, if all elect to participate, must execute all necessary documents. If such
elections are not made, such documents are not executed or such elections are
inconsistent, the General Partner will determine that an election has been made
by all related persons not to participate in this Plan.
4. ONGOING EQUITY INCENTIVES
GS Inc. will put in place ongoing equity incentives including RSU,
restricted stock and option programs. GS Inc. is also expected to have a Firm
performance-based compensation plan beginning in the 1999 fiscal year in which
certain employees (currently expected to include the existing PLPs who are
employed by the Firm immediately following the IPO) are expected to participate.
Participants in the Firm performance-based plan will be selected on a
discretionary basis.
There is no assurance that any particular PLP will be eligible to
participate in any of these ongoing equity incentives.
5. EMPLOYMENT AGREEMENT
Each PLP who participates in this Plan will agree, unless otherwise
requested by GS Inc., to be bound by an employment agreement (the form of which
is attached as Exhibit F). The employment agreement will provide that the PLP
will serve as a managing director for an initial term ending on November 24,
2000 and thereafter for no set term. Under the employment agreement, the PLP
will have such duties and responsibilities as the Firm may from time to time
determine and will devote such PLP's entire working time to the business and
affairs of the Firm. The agreement will be terminable by the PLP or the Firm at
any time upon 90 days' advance written notice and will require arbitration of
disputes. The Firm may elect to place a PLP on paid leave for all or part of
such 90-day notice period.
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6. HEDGING
Attached as Exhibit G are hedging restrictions relating to securities
of GS Inc. and financial services companies, which, assuming this Plan is
adopted, are effective as of March 4, 1999. The General Partner of GS Group
(until the IPO Date) and the Board of Directors of GS Inc. (thereafter) are
expressly authorized to elaborate upon or change these restrictions from time to
time.
7. CERTAIN TRANSFER RESTRICTIONS ON SHARES
Each PLP and RLP who participates in this Plan will be subject to the
following significant restrictions on the Transfer (as hereinafter defined) of
Common Stock received by such PLP or RLP from GS Inc. pursuant to this Plan.
PLPs who participate in this Plan also will be parties to the Shareholders'
Agreement described in Section 8 below, which will impose further restrictions
on Transfers of shares of Common Stock owned by each PLP.
For purposes of the restrictions described in this section and the
Shareholders' Agreement, the term "Transfer" generally includes any sale,
transfer, pledge or other disposition of securities of GS Inc., including any
disposition of the economic or other risks of ownership through hedging
transactions or derivatives involving GS Inc. securities, other than certain
hedging transactions permitted under the Shareholders' Agreement.
UNDERWRITERS' LOCK-UP AND FIRM-WIDE TRADING RESTRICTIONS
All shares of Common Stock which a PLP or an RLP receives pursuant to
this Plan will be subject to the underwriters' lock-up restriction in connection
with the IPO and, in the case of PLPs and RLPs employed by the Firm (including
as consultants), to any trading restrictions applicable to Firm employees or
consultants.
PLP RESTRICTIONS
Any shares of Common Stock that a PLP receives pursuant to this Plan
(other than shares of Common Stock received in exchange for interests in the
Funds as described in Section 10 and any other shares of Common Stock so
designated by GS Inc. prior to the IPO Date to accommodate particular situations
such as those referred to under "Section 16 -- Other--Right of General Partner
to Make Special Arrangements" (all such other shares, the "Excluded Shares"))
may be Transferred only as follows (the "PLP Transfer Restrictions"):
- 33 1/3% of such shares may be Transferred at any time after
the third anniversary of the IPO Date.
- An additional 33 1/3% of such shares may be Transferred at any
time after the fourth anniversary of the IPO Date.
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- All of such shares may be Transferred at any time after the
fifth anniversary of the IPO Date.
The PLP Transfer Restrictions may generally be waived or terminated
only by action of the Shareholders' Committee established pursuant to the
Shareholders' Agreement. In the case of a third-party tender or exchange offer,
however, the PLP Transfer Restrictions may be waived only by 66 2/3% of the
outstanding Voting Interests (as defined below) if the Board of Directors of GS
Inc. is recommending rejection of the tender or exchange offer, and only by a
majority of the outstanding Voting Interests if the Board of Directors of GS
Inc. is recommending acceptance of the tender or exchange offer or is not making
any recommendation with respect to acceptance. In the case of a tender or
exchange offer by GS Inc., the PLP Transfer Restrictions may be waived either by
the Shareholders' Committee or a majority of the outstanding Voting Interests.
The PLP Transfer Restrictions as to a PLP will terminate upon the death of such
PLP, although the underwriters' lock-up restrictions in the IPO will continue to
apply. If the Shareholders' Agreement is terminated prior to the expiration or
termination of the PLP Transfer Restrictions, the PLP Transfer Restrictions will
continue to apply unless waived or terminated by the Board of Directors of GS
Inc.
RLP RESTRICTIONS
Any shares of Common Stock that an RLP receives pursuant to this Plan
(other than Excluded Shares) may be Transferred only as follows (the "RLP
Transfer Restrictions"):
- Shares issued in respect of 50% or less of an RLP's Adjusted
Capital may be Transferred at any time after the first
anniversary of the IPO Date.
- All of such shares may be Transferred at any time after the
third anniversary of the IPO Date.
The RLP Transfer Restrictions may be waived or terminated only by the
Board of Directors of GS Inc. The RLP Transfer Restrictions as to an RLP will
terminate upon the death of such RLP, although the underwriters' lock-up
restrictions in the IPO will continue to apply.
CUSTODY ARRANGEMENTS
All shares of Common Stock issued to a PLP or an RLP must be held in a
brokerage, custody or similar account maintained at Goldman, Sachs & Co. or
another firm as GS Inc. may determine. GS Inc. will be entitled to monitor all
activity in each PLP's or RLP's account and to enforce applicable transfer and
hedging restrictions, any Firm trading restrictions applicable to employees and
consultants as in effect from time to time and (in the case of PLPs) the pledge
arrangements described in Section 9 below. Any Common Stock held in such an
account may be held of record by a custodian or nominee. GS Inc. may require
each PLP or RLP to execute an account agreement with the custodian or other
firm, in such form as GS Inc. may determine
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(which may include customary provisions relating to indemnification of the
custodian or other firm and an undertaking to arbitrate custody-related
disputes).
8. SHAREHOLDERS' AGREEMENT
Each PLP who participates in this Plan will be subject to the
provisions of a Shareholders' Agreement which is also expected to include as
parties all managing directors of GS Inc. and its affiliates. A copy of the
Shareholders' Agreement is attached as Exhibit H.
COVERED PERSONS AND COVERED SHARES
Each PLP who participates in this Plan and each other person who is a
managing director on the IPO Date or becomes a managing director thereafter will
be a party to the Shareholders' Agreement (collectively, the "Covered Persons").
The shares covered by the Shareholders' Agreement (the "Covered
Shares") generally will be all shares of Common Stock acquired from GS Inc. by a
Covered Person and beneficially owned by the Covered Person at the time in
question. Covered Shares will include any shares of Common Stock received by the
PLPs pursuant to this Plan except for Excluded Shares (as defined in "Section 7
-- Certain Restrictions on Shares"). Thus, Covered Shares will include shares of
Common Stock (i) received by Covered Persons pursuant to the plans and awards
described under "Non-PLP Employees" in Section 3, above and (ii) received by
Covered Persons from the Firm through any other employee compensation, benefit
or similar plan. Covered Shares will not include any shares of Common Stock
purchased by a Covered Person in the open market or in a subsequent underwritten
public offering or other shares excluded from the definition of Covered Shares
by action of the Board of Directors of GS Inc. prior to the IPO or, in the case
of a deferred compensation plan, at any time.
The Shareholders' Agreement will require that all Covered Shares be
held in a custody account until released for Transfer in accordance with the
provisions of the Shareholders' Agreement and this Plan.
TRANSFER RESTRICTIONS AND WAIVERS
Covered Shares will be subject to transfer restrictions under the
Shareholders' Agreement. Each Covered Person will agree in the Shareholders'
Agreement to:
- retain Sole Beneficial Ownership (as defined in the
Shareholders' Agreement) of Covered Shares at least equal to
25% of the total number of Covered Shares beneficially owned
by such Covered Person at the time such Covered Person became
a Covered Person or acquired by such Covered Person thereafter
and with no reduction for any shares
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Transferred (the "General Transfer Restrictions"), for so long
as he or she is a Covered Person and an employee of GS Inc.
(an "Employee Covered Person");
- comply with the underwriters' 180-day lockup arrangement in
the IPO with respect to all Common Stock;
- comply with respect to all Common Stock with certain
"black-out" restrictions related to future primary or
secondary offerings of Common Stock if requested to do so by
GS Inc.; and
- comply with restrictions that may be imposed by GS Inc. from
time to time to enable GS Inc. or another party to account for
a business combination using the pooling-of-interests method
of accounting.
Each PLP will also be subject to the PLP Transfer Restrictions
described above under "Section 7--Certain Transfer Restrictions on Shares."
The General Transfer Restrictions (and the other provisions of the
Shareholders' Agreement) may generally be waived by a majority of the
outstanding Voting Interests. In the case of a third-party tender or exchange
offer, the General Transfer Restrictions may be waived or amended only by 66
2/3% of the outstanding Voting Interests if the Board of Directors of GS Inc. is
recommending rejection of the tender or exchange offer, and only by a majority
of the outstanding Voting Interests if the Board of Directors of GS Inc. is
recommending acceptance of the tender or exchange offer or is not making any
recommendation with respect to acceptance. The Shareholders' Committee also has
the power to waive the General Transfer Restrictions to permit Covered Persons
to:
- participate as sellers in underwritten public offerings of
Common Stock and tender or exchange offers and share
repurchase programs by GS Inc.;
- Transfer Covered Shares to charities, including charitable
foundations;
- Transfer Covered Shares held in employee benefit plans; and
- Transfer Covered Shares in specific transactions (for example,
to immediate family members and trusts).
The General Transfer Restrictions may be waived, in connection with any
tender or exchange offer by GS Inc., by the affirmative vote of a majority of
the outstanding Voting Interests.
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VOTING
Prior to any vote of the shareholders of GS Inc., the Shareholders'
Agreement will require a separate, preliminary vote of the Voting Interests on
each matter upon which a vote of the shareholders of GS Inc. is proposed to be
taken (a "Preliminary Vote"). In general, each Covered Share held by an Employee
Covered Person and other Covered Shares which cannot then be Transferred without
violating the PLP Transfer Restrictions ("Voted Covered Shares") will be voted
in accordance with the majority of the votes cast by the Voting Interests in the
Preliminary Vote. In elections of directors, each Voted Covered Share will be
voted in favor of the election of those persons, equal in number to the number
of such positions to be filled, receiving the highest numbers of votes cast by
the Voting Interests in the Preliminary Vote. "Voting Interests" are all Covered
Shares beneficially owned by all Covered Persons through December 31, 2000 and
thereafter are all Covered Shares beneficially owned by all Employee Covered
Persons. The Shareholders' Agreement contains an irrevocable proxy and
power-of-attorney authorizing the Shareholders' Committee to vote the Voted
Covered Shares.
OTHER RESTRICTIONS
The Shareholders' Agreement will also prevent Covered Persons from
engaging in certain activities with any person that is not a Covered Person or a
director, officer or employee of GS Inc. acting in his or her capacity as such
(a "Restricted Person"). Among other things, a Covered Person may not
participate in a proxy solicitation to or with a Restricted Person; deposit any
Covered Shares in a voting trust or subject any Covered Shares to any voting
agreement or arrangement that includes any Restricted Person; form, join or in
any way participate in a "group" with any Restricted Person; or, together with
any Restricted Person, propose certain transactions with GS Inc. or seek the
removal of any directors of GS Inc. or any change in the composition of the
Board of Directors of GS Inc.
TERM, AMENDMENT AND CONTINUATION
The Shareholders' Agreement will continue in effect until the earlier
of January 1, 2050 and the time it is terminated by the vote of 66 2/3% of the
Voting Interests. The Shareholders' Agreement can be amended only by a majority
(66 2/3% with respect to certain provisions) of the outstanding Voting
Interests. In the event of any transaction in which a third party succeeds to
the business of GS Inc. and in which Covered Persons hold securities of such
third party, unless otherwise terminated, the Shareholders' Agreement will
remain in full force and effect as to the securities of such third party, and
such third party shall succeed to the rights and obligations of GS Inc. under
the Shareholders' Agreement.
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ADMINISTRATION
A Shareholders' Committee will be formed to administer the terms and
provisions of the Shareholders' Agreement. The Shareholders' Committee will
generally act through a majority of its members at meetings of the Shareholders'
Committee and unanimously if acting by written consent. The Shareholders'
Committee initially will consist of those Covered Persons who are employees of
the Firm and members of the Board of Directors of GS Inc. If there are fewer
than three such individuals, the Shareholders' Committee shall include other
Covered Persons who are employees of the Firm and are selected pursuant to
procedures established by the Shareholders' Committee.
9. NONCOMPETITION AND RELATED ARRANGEMENTS
Each PLP who participates in this Plan will be bound by an agreement of
noncompetition and other covenants (the "noncompetition agreement") which is a
successor to, and substantially similar (other than with respect to liquidated
damages and the pledge) to, the comparable provision in the GS Group Partnership
Agreement. The principal features of this agreement are:
A. Confidential information concerning the business, operations,
financial affairs, organizational and personnel matters,
policies, procedures and other non-public matters of the Firm
and of third parties (including the existence of and any
information concerning any dispute between a PLP and the
Firm), will not be permitted to be disclosed.
B. While employed by the Firm and for a period ending 12 months
after the later of the IPO Date or the date the PLP is no
longer employed by the Firm, a PLP will not, without the prior
written consent of GS Inc., be permitted to (a) form, or
acquire a 5% or greater equity ownership, voting or profit
participation interest in, any Competitive Enterprise (as
defined below), or (b) associate (including, but not limited
to, association as an officer, employee, partner, director,
consultant, agent or advisor) with any Competitive Enterprise
and in connection with such association engage in, or directly
or indirectly manage or supervise personnel engaged in, any
activity (i) which is similar or substantially related to any
activity in which the PLP was engaged, in whole or in part, at
the Firm, or (ii) for which the PLP had direct or indirect
managerial or supervisory responsibility at the Firm, or (iii)
which calls for the application of the same or similar
specialized knowledge or skills as those utilized by the PLP
in his or her activities with the Firm, at any time during the
one-year period immediately prior to termination of such
PLP's employment (or, in the case of actions while employed,
the one-year period prior to such actions) and irrespective of
the purpose of the activity or whether the activity is or was
in furtherance of advisory, agency, proprietary or fiduciary
business of either the Firm or the Competitive Enterprise. (By
way of example only, this provision would
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preclude an "advisory" investment banker from joining a
leveraged buy-out firm or a research analyst from becoming a
proprietary trader or joining a hedge fund).
The term "Competitive Enterprise" means a business enterprise
that (i) engages in any activity, or (ii) owns or controls a
significant interest in any entity that engages in any
activity, that, in either case, competes anywhere with any
activity in which the Firm is engaged. The activities covered
by the previous sentence include, without limitation,
financial services such as investment banking, public or
private finance, lending, financial advisory services, private
investing (for anyone other than the PLP or member of the
PLP's family), merchant banking, asset or hedge fund
management, insurance or reinsurance underwriting or
brokerage, property management, or securities, futures,
commodities, energy, derivatives or currency brokerage, sales,
lending, custody, clearance, settlement or trading).
C. While employed by the Firm and for a period ending 18 months
after the later of the IPO Date or the date the PLP is no
longer employed by the Firm, a PLP will not be permitted, in
any manner, to directly or indirectly, (i) Solicit (as defined
below) any Client (as defined below) to transact business with
a Competitive Enterprise or to reduce or refrain from doing
any business with the Firm, or (ii) interfere with or damage
(or attempt to interfere with or damage) any relationship
between the Firm and any such Client.
The term "Solicit" means any direct or indirect communication
of any kind whatsoever, regardless of by whom initiated,
inviting, advising, encouraging or requesting any person, in
any manner, to take or refrain from taking any action.
The term "Client" means any client or prospective client of
the Firm to whom the PLP provided services, or for whom the
PLP transacted business, or whose identity became known to the
PLP in connection with the PLP's relationship with or
employment by the Firm.
D. While employed by the Firm and for a period ending 18 months
after the later of the IPO Date or the date the PLP is no
longer employed by the Firm, a PLP will not be permitted, in
any manner, to directly or indirectly, Solicit any person who
is an employee of the Firm to apply for or to accept
employment with any Competitive Enterprise.
E. Each PLP will agree, if such PLP's employment is terminated by
the PLP or the Firm, to take all actions and do all things
during a 90-day cooperation period reasonably requested by the
Firm to maintain for the Firm the business, goodwill and
business relationships with the Firm's clients with whom the
PLP worked during the term of such PLP's employment.
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F. Prior to accepting employment with any other person or entity
during the PLP's employment with the Firm and for a period
ending 18 months after the later of the IPO Date or the date
the PLP is no longer employed by the Firm, the PLP will
provide such prospective employer with written notice of the
terms of the noncompetition agreement (and simultaneously send
a copy of that notice to GS Inc.).
G. Without limiting the Firm's ability to obtain injunctive
relief relating to any breach of the noncompetition agreement,
the noncompetition agreement will provide for liquidated
damages due upon a breach, as determined by the Board of
Directors of GS Inc. in its good faith judgment, of the
provisions of the noncompetition agreement described in
clauses B through D above (the "noncompetition provisions") at
any time prior to the fifth anniversary of the IPO Date. The
amount of liquidated damages represents an attempt to estimate
the harm that would be incurred by GS Inc. if a PLP violates
such PLP's obligations under the noncompetition provisions.
There will be two levels of liquidated damages. For PLPs who
initially will serve as members of the Board of Directors of
GS Inc. or on one of the other management committees of the
Firm (e.g., the equivalent of the current Management Committee
or Partnership Committee), the liquidated damages will be set
at $15 million. For all other PLPs, the amount will be $10
million. Following the fifth anniversary of the IPO Date,
there will be no liquidated damages and, in the event of a
breach of the noncompetition agreement by a PLP, the Firm will
be entitled to such relief as may be awarded by an arbitrator
or court. By participating in this Plan, each PLP agrees to
the liquidated damages amount applicable to such PLP. Pursuant
to a pledge agreement (the "pledge agreement") to be entered
into on the IPO Date, Common Stock (or other collateral
acceptable to GS Inc. with an equal or greater market value)
will be pledged by the PLP as security for the payment of the
liquidated damages. The Common Stock (or other acceptable
collateral) initially pledged will have a market value (based
upon the initial public offering price in the IPO) equal to
100% of the required liquidated damages amount at the IPO
Date. At no time may a PLP substitute collateral unless the
value of substitute collateral is greater than or equal to the
value of the released collateral. Absent any breach, all of
the collateral will be released on the earliest of (i) the
fifth anniversary of the IPO Date, (ii) the PLP's death, or
(iii) the expiration of the 24-month period following the
later of (A) the termination of the PLP's employment with the
Firm or (B) the IPO Date. No collateral will be released if
there are pending disputes with the PLP as to the existence of
a breach of the noncompetition agreement or GS Inc.'s exercise
of its remedies thereunder, including realization against the
collateral. The liquidated damages in the noncompetition
agreement are in addition to, and not in lieu of, any
forfeitures of awards (required pursuant to the terms of any
such awards) that may be granted to the PLP in the future
under one or more of the Firm's compensation, benefit or
similar plans.
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Pursuant to the GS Group Partnership Agreement, any partner in GS Group
who does not participate in this Plan will continue to be bound by the
confidentiality, noncompetition, nonsolicitation and cooperation provisions of
the GS Group Partnership Agreement as currently in effect.
A copy of the PLP noncompetition agreement and the pledge agreement are
attached as Exhibit I.
10. ARRANGEMENTS CONCERNING
GOLDMAN SACHS-SPONSORED FUNDS
A PLP who participates in this Plan and an RLP or other person who
participates in this Plan and elects to receive shares of Common Stock and, in
each case, who has interests in Goldman Sachs-sponsored funds (the "Funds"),
including, without limitation, the Stone Street Funds, the Bridge Street Funds
and the Managing Directors' Investment Funds, shall, if requested by the General
Partner, be required to choose one of the following actions (at the election of
such PLP, RLP or other person):
A. Transfer interests in the Funds to a wholly-owned corporation;
or
B. Transfer interests in the Funds to such person's spouse.
If the General Partner determines to require a PLP, RLP or
other person to choose one of the above actions, the General Partner will notify
such affected person when he or she is required to make the choice. If the
affected person is notified that he or she must choose to take one of the
actions and fails to make the election in the time specified in the notice from
the General Partner, the General Partner will elect to (i) require the affected
person to transfer interests in the relevant Funds to GS Inc. as part of this
Plan in exchange for Common Stock (which will be subject to the underwriters'
lock-up in the IPO, to the hedging restrictions referred to in Section 6 above
and to applicable securities laws and Firm-imposed transfer restrictions, but
will not be subject to the Shareholders' Agreement or to the other transfer
restrictions described in Section 7), (ii) require the affected person to
transfer interests in the relevant Funds to the general partner of the relevant
Fund (or another affiliate of GS Group designated by GS Group) in exchange for
cash or (iii) a combination of the foregoing, in each case, in the sole
discretion of the General Partner.
11. RELEASE AND INDEMNIFICATION ARRANGEMENTS
In connection with this Plan, GS Inc. will provide the following
release and indemnification arrangements covering liabilities, if any, in
relation to tax and non-tax claims:
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A. Release and Indemnification (Other than for Taxes). GS Inc.
will release and indemnify each PLP and RLP who participates
in this Plan and certain former partners, as well as SBCM and
KAA, with respect to specified liabilities and will assume the
obligations of those participants in this Plan who are
indemnifying parties under the indemnification agreement dated
as of November 30, 1996. This indemnification is attached as
Exhibit J.
B. Tax Indemnification. GS Inc. will indemnify each PLP and RLP
who participates in this Plan and certain former partners, as
well as SBCM and KAA, against increased tax liabilities
resulting from adjustments to tax returns filed by GS Group or
any affiliate (or by an indemnitee to the extent of items
attributable to GS Group or an affiliate) for open periods
prior to the Incorporation Transactions (other than certain
specified periods). The amount of any increased taxes with
respect to which a PLP (or other indemnitee) has received a
payment from GS Inc. and which are subsequently refunded or
credited to such PLP (or other indemnitee) will, to the extent
not taken into account in determining the amount of the
indemnity, be reimbursed to GS Inc. by such PLP (or other
indemnitee). GS Inc. will gross-up payments under the tax
indemnification to the extent that indemnified taxes exceed a
fixed amount for each of the indemnitees that will be
specified by GS Inc. (in its sole discretion). This
indemnification is attached as Exhibit K.
12. CONSEQUENCES OF AN ELECTION TO RETIRE
As noted in the Introduction, one of the choices available to a PLP and
an RLP under the GS Group Partnership Agreement will be to elect to retire as a
partner in GS Group. Each PLP withholding consent to the adoption of this Plan
and each RLP will have until 5:00 p.m., New York City time, on March 15, 1999 to
make this election. A PLP may make this election through the Consent Document
and Power of Attorney, which will be distributed at the March 8 meeting. An RLP
may make this election through the Acceptance Document and Power of Attorney,
which is being sent to the RLPs. The effectiveness of any election to retire
received prior to the approval of this Plan by the PLPs will be conditioned upon
approval of this Plan by the PLPs.
If a PLP elects or has been deemed to elect to retire, such retirement
will occur immediately prior to the Incorporation Transactions. Upon retirement
as a partner, the PLP will become entitled to receive payment of such PLP's
interest in GS Group and its affiliates valued in the manner provided in the GS
Group Partnership Agreement as if such PLP had retired and not elected to become
an RLP. Thus, a retiring PLP will be entitled only to payment in respect of the
value of such PLP's interests in GS Group and its affiliates (including such
PLP's dated account interests (after the dated account interests have been
valued at their fair value) and without giving effect to any adjustment for firm
goodwill) in accordance with the GS Group Partnership Agreement. In addition,
the retiring PLP will not have the benefit of the indemnification arrangements
described in
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"Section 11 -- Release and Indemnification Arrangements" and will retain
whatever personal liabilities such PLP had as a partner in GS Group and its
affiliates and their respective predecessors.
For a discussion of the consequences of an RLP's election to retire,
see "Section 3 --Treatment of Other Constituencies under this Plan -- Schedule I
Limited Partners."
13. AMENDMENTS TO THIS PLAN
The General Partner, in its sole discretion, may amend this Plan in any
respect prior to the consummation of this Plan, including making any amendments
to the Exhibits to this Plan, provided that (i) an amendment shall not be
binding upon a PLP if it would (a) change the employment agreement or the
noncompetition or pledge agreements provided for in this Plan to make any such
agreements materially more burdensome to the PLP (which would include increasing
the amount of liquidated damages), (b) change this Plan or the Shareholders'
Agreement to lengthen or otherwise change in a manner materially adverse to such
PLP the Transfer Restrictions described therein, or (c) change the method for
allocating Participating Partner Shares among the PLPs set forth in clauses (ii)
and (iii) of Section 2 above (it being understood that the selection of a
different Per Share Price and/or a later date for determining Adjusted Capital
and/or the Allocation Valuation shall not be such a change in the method for
allocating Participating Partner Shares among the PLPs) in a manner that is
materially adverse to such PLP without, in each case referred to in clause (a),
(b) or (c), either (A) obtaining the consent of such PLP or (B) offering such
PLP the opportunity (in lieu of accepting such change) to elect to retire from
GS Group immediately prior to the consummation of the Incorporation Transactions
and receive payment in respect of the value of such PLP's interests in
accordance with the GS Group Partnership Agreement, (ii) an amendment shall not
be binding upon an RLP if it would (a) change the percentages of Adjusted
Capital used for calculating the number of shares of Common Stock, principal
amount of debentures or amount of cash to be received by such RLP under clauses
1 through 4 of Section 3.A above, (b) change the provisions of any Junior
Subordinated Nontransferable Debentures to be received by such RLP from those
set forth in Exhibit E, or (c) change this Plan to lengthen or otherwise change
the RLP Transfer Restrictions, in each case referred to in clause (a), (b) or
(c), in a manner that is materially adverse to such RLP without either (A)
obtaining the consent of such RLP or (B) offering such RLP the opportunity (in
lieu of accepting such change) to elect to retire from GS Group immediately
prior to the consummation of the Incorporation Transactions and receive payment
in respect of the value of such RLP's interests in accordance with the GS Group
Partnership Agreement, (iii) an amendment to this Plan shall not be binding on
SBCM if such amendment (a) effects a modification to this Plan that makes this
Plan, as so modified, inconsistent with Section 5 of Article II of the GS Group
Partnership Agreement (which provides for terms upon which a plan for the
incorporation of the business of GS Group may be adopted without the consent of
SBCM), without obtaining the consent of SBCM or (b) effects a modification to
Section 11 (Release and Indemnification Arrangements) or Section 16 (Other --
Release) hereof that (A) materially and adversely effects SBCM's rights under
this Plan and (B) is not of general applicability to all parties who are subject
to the Section modified, and (iv) an amendment to this Plan shall not be binding
on KAA if such amendment (a)
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effects a modification to this Plan that makes this Plan, as so modified,
inconsistent with Section 5 of Article VI and Section 5 of Article II of the GS
Group Partnership Agreement (which provides for terms upon which a plan for the
incorporation of the business of GS Group may be adopted without the consent of
KAA), without obtaining the consent of KAA or (b) effects a modification to
Section 11 (Release and Indemnification Arrangements) or Section 16 (Other --
Release) hereof that (A) materially and adversely effects KAA's rights under
this Plan and (B) is not of general applicability to all parties who are subject
to the Section modified.
Following consummation of the Plan, the Board of Directors of GS Inc.
may waive or amend any aspect of the Plan that has not yet been completed or
reflected in a separate agreement but any such amendment shall not be binding
upon a PLP or an RLP if it would be materially adverse to such PLP or RLP unless
the consent of such PLP or RLP has been obtained. The PLP Transfer Restrictions
and RLP Transfer Restrictions may be waived as provided in "Section 7 - Certain
Transfer Restrictions on Shares."
14. TAX CONSEQUENCES
TREATMENT OF PLPS WHO PARTICIPATE IN THIS PLAN
The Incorporation Transactions have been structured so that a PLP who
receives solely Common Stock in exchange for such PLP's interest in GS Group and
its affiliates will not recognize income, gain or loss for U.S. federal income
tax purposes, except in certain limited circumstances described below. The
contributions of interests in GS Group and its affiliates to GS Inc. for Common
Stock will qualify as tax-free contributions to a controlled corporation under
Section 351 of the United States Internal Revenue Code of 1986, as amended (the
"Code"), and the mergers of GS Corp. and certain corporations that are PLPs into
GS Inc. for Common Stock will qualify as tax-free reorganizations under Section
368 of the Code. As a result, the following U.S. federal income tax consequences
will apply to a PLP that participates in this Plan:
Exchange of GS Group Interest for Common Stock. A PLP who exchanges
such PLP's directly-held interests in GS Group and its affiliates solely for
Common Stock will not recognize gain or loss, subject to the discussion below
regarding indemnification payments and certain consequences to nonresident alien
PLPs. The PLP's basis in the Common Stock will be equal to the PLP's basis in
the interests transferred (calculated without regard to the PLP's share of any
liabilities of GS Group or the affiliate).
Treatment of PLPs Who Hold Interests in GS Group through Corporations.
A PLP who holds a PLP interest in GS Group through a wholly-owned corporation
that merges into GS Inc. (a "PLP Corporation") will not recognize gain or loss
on the exchange of such PLP's shares in the PLP Corporation for Common Stock.
The PLP's basis in the Common Stock will be the same as such PLP's basis in the
shares of the PLP Corporation.
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Exchange of Common or Preferred Stock in GS Corp. for Common Stock. A
PLP who exchanges common or preferred stock in GS Corp. for Common Stock will
not recognize gain or loss on the exchange. The PLP's basis in the Common Stock
will be equal to the PLP's basis in the common or preferred stock of GS Corp.
that is exchanged therefor. PLPs who hold both common and preferred stock of GS
Corp. will receive two separate lots of Common Stock so that the appropriate tax
basis may be assigned to each lot of Common Stock.
Treatment of Indemnification Payments. A PLP who receives an
indemnification payment for a personal liability (such as income taxes) will be
subject to tax on such payment, generally at the time it is received. A portion
of the payment will be treated as interest (determined by discounting the
payment back to the IPO Date), and the remainder generally will be treated as
capital gain.
Treatment of Certain Nonresident Alien PLPs. A PLP who is a nonresident
alien and who exchanges a directly-held interest in GS Group or an affiliate
solely for Common Stock will be subject to U.S. tax on the portion of such PLP's
gain that is attributable to such PLP's proportionate share of the U.S. real
property interests held by GS Group and its lower-tier partnerships or the
affiliate. The gain generally will be taxable as capital gain.
NONRESIDENT PLPS
A PLP who is not a resident of the United States may be subject to
different tax treatment in such PLP's residence country.
TAX OPINION
Consummation of this Plan will be conditioned upon receipt of an
opinion of Sullivan & Cromwell to the effect that a PLP who receives solely
Common Stock in exchange for such PLP's interests in GS Group and, if
applicable, its affiliates will not recognize income, gain or loss for U.S.
federal income tax purposes in respect of the transfers of those interests to GS
Inc., except to the extent described above with respect to certain nonresident
alien PLPs and the treatment of indemnification payments.
TAX REPRESENTATIONS
In order to ensure compliance with requirements for tax-free treatment,
all PLPs who or which participate in this Plan are required to make the
representations set forth in Exhibit M, including representations to the effect
that (1) the PLP does not currently have any agreement, whether written or oral,
to dispose of the Common Stock, (2) at the time of the Incorporation
Transactions, the PLP will not have any agreement, whether written or oral, to
dispose of the Common Stock and (3) for all tax purposes, the PLP will treat the
exchange of the PLP's interest in GS Group and, if applicable, its affiliates
for Common Stock as a transaction governed by Section 351 of the Code, the
merger of GS Corp. into GS Inc. as a transaction governed by Section 368 of
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the Code and, if the PLP owns an interest in GS Group through a PLP Corporation
that is merging into GS Inc., the merger of the PLP Corporation into GS Inc. as
a transaction governed by Section 368 of the Code. The other constituencies,
including RLPs, who or which participate in this Plan will be required to make
similar representations.
TREATMENT OF PLPS WHO DO NOT PARTICIPATE IN THIS PLAN
A PLP interested in the tax consequences of not fully participating in
this Plan and retiring as a partner in GS Group should contact Esta Stecher in
the Tax Department.
FURTHER INFORMATION
Any PLP with questions concerning the tax treatment of this Plan or who
would like a more detailed explanation of the tax consequences (including the
consequences under the tax laws of any state or foreign country) should contact
Esta Stecher in the Tax Department.
15. MANAGEMENT OF GS INC.
The Amended and Restated Certificate of Incorporation of GS Inc. will
provide for a classified Board of Directors consisting of three classes. It is
anticipated that at the IPO Date a majority of the Board will be drawn from the
current members of the Board of Directors of GS Corp. Beginning in 2000, at each
annual meeting of shareholders, directors will be elected for three-year terms
and until their respective successors have been elected and qualified. A
director may be removed only for cause and only by the affirmative vote of the
holders of not less than 80% of the outstanding shares of capital stock entitled
to vote in the election of directors.
GS Inc. will enter into an indemnification agreement in the form
attached as Exhibit L with each director of GS Inc. and each officer of GS Inc.
who signs the registration statement for the IPO and the other registration
statements to be filed by GS Inc., to indemnify them for actions taken in
consummating the transactions contemplated by this Plan..
16. OTHER
ARBITRATION
Without diminishing the finality and conclusive effect of any
determination by the General Partner (or its Board of Directors) or by GS Inc.
(or its Board of Directors) of any matter under this Plan which is provided
herein to be determined by the General Partner (or its Board of Directors) or by
GS Inc. (or its Board of Directors) or of the waiver referred under "Section 16
- Other Waiver", any dispute, controversy or claim arising out of or relating to
or concerning the provisions of this Plan or any of the Exhibits to this Plan
(other than any Exhibit that contains its own
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provisions for the resolution of disputes and other than Exhibit B (Amended and
Restated Certificate of Incorporation of GS Inc.) and Exhibit C (By-Laws of GS
Inc.), shall be finally settled by arbitration in New York City before, and in
accordance with the rules then obtaining of, the New York Stock Exchange, Inc.
("NYSE") or, if the NYSE declines to arbitrate the matter, the American
Arbitration Association ("AAA") in accordance with the commercial arbitration
rules of the AAA; provided, however, that, (i) notwithstanding the foregoing, in
addition to the right to compel arbitration of any dispute or controversy, GS
Inc., GS Corp. or GS Group may bring an action or special proceeding in a state
or federal court of competent jurisdiction sitting in New York City, whether or
not an arbitration proceeding has theretofore been or is ever initiated, for the
purpose of temporarily, preliminarily, or permanently enforcing the provisions
of this Plan or to enforce an arbitration award and, for the purposes of this
provision, each participant in this Plan expressly consents to the jurisdiction
of any such court in respect of any such action and waives to the fullest extent
permitted by applicable law any objection to personal jurisdiction or to the
laying of venue of any such suit, action or proceeding in such court, agrees
that proof shall not be required that monetary damages for breach of the
provisions of this Plan would be difficult to calculate and that remedies at law
would be inadequate and irrevocably appoints the General Counsel of GS Inc. and
GS Corp., as the participant's agent for service of process in connection with
any such action or proceeding, who shall promptly advise such participant in
this Plan of any such service of process and (ii) any dispute between GS Group
and SBCM or KAA which is subject to the provisions of Article II, Section 9,
Article VI, Section 9 or Article VII, Section 9 of the GS Group Partnership
Agreement shall be resolved as provided in the applicable section.
DETERMINATIONS UNDER PLAN
Each person participating in this Plan agrees that the Board of
Directors of GS Corp. and, following the merger of GS Corp. into GS Inc., the
Board of Directors of GS Inc. shall have the right to make all determinations
under this Plan and each Exhibit to this Plan and each Annex to the notice of
submission of this Plan to RLPs (other than matters reserved for the
determination of the Shareholders' Committee under the Shareholders' Agreement).
GS GROUP PARTNERSHIP AGREEMENT
If adopted, this Plan shall constitute an amendment to the GS Group
Partnership Agreement and the provisions of this Plan, to the extent that they
are inconsistent with the GS Group Partnership Agreement will control. The
provisions of the GS Group Partnership Agreement will continue to apply to all
partners until the IPO Date. Moreover, the covenants in the GS Group Partnership
Agreement which apply to RLPs and PLPs will continue to apply to such RLPs and
PLPs until the expiration of any applicable time period specified therein. These
covenants include provisions relating to confidentiality, noncompetition and
nonsolicitation. PLPs and RLPs who retire as partners in GS Group rather than
participate in this Plan will continue to be subject to the relevant provisions
of the GS Group Partnership Agreement as currently in effect. For all purposes
hereof, a deceased PLP (or the estate of a deceased PLP) will continue to be
treated as a PLP under this Plan.
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ABANDONMENT AND TERMINATION OF PLAN
This Plan may be abandoned at any time by the General Partner. If the
IPO has not been consummated by November 24, 2000, unless re-approved, this Plan
will be automatically abandoned and will be of no further force and effect.
WAIVER
Under the terms of the GS Group Partnership Agreement, each partner in
GS Group (whether or not consenting), has irrevocably waived any right to
contest the terms of this Plan, whether on the grounds of unequal or disparate
treatment, inconsistency or conflict with the terms and provisions of the GS
Group Partnership Agreement, unfairness or for any other reason.
RELEASE
Each person (other than GS Inc., GS Corp. and GS Group) participating
in this Plan will, by virtue of such participation, irrevocably release GS Inc.,
GS Corp., GS Group, each and every affiliate, shareholder, subsidiary, partner,
officer, member, director and employee of GS Inc., GS Corp. and GS Group and
their affiliates in their capacities as such and each other person who
participates in this Plan ("Releasees") from any claims, liabilities, costs,
expenses, actions, suits or demands however arising, whether at law or in
equity, contingent, known or unknown, which any such person may have or assert,
in respect of any interest in GS Group and its affiliates or arising out of any
partnership or employment relationship with GS Group and its affiliates that
such person or such person's heirs, successors or assigns had with any such
person on or prior to the IPO Date; provided that this release shall not extend
to (i) indebtedness owing to a person participating in this Plan by any
Releasee, (ii) representations or warranties made or agreements entered into by
a Releasee in connection with the Plan, and (iii) any conduct that resulted from
a Releasee's bad faith, fraud or criminal act or omission.
REPRESENTATIONS AND WARRANTIES
Each person participating in this Plan will, by virtue of such
participation, be deemed to make certain representations and warranties with
respect to: (a) such person's intention regarding ownership of the stock and
certain other matters upon which tax counsel can rely in rendering its opinion
regarding the tax consequences of this Plan; (b) certain securities law matters;
(c) ownership of partnership interests by such person and (d) other matters,
which are attached as Exhibit M for PLPs and are annexed to the notice of
submission for RLPs. Each person who elects to participate in this Plan agrees,
if so requested by the General Partner, to make additional representations and
warranties.
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RIGHT OF GENERAL PARTNER OR GS INC. TO MAKE SPECIAL ARRANGEMENTS
The transactions included in this Plan have been structured in a manner
that is expected not to result in a significantly disproportionate tax or other
burden to any partner participating in this Plan in any jurisdiction. If it
develops that the consummation of this Plan would, in fact, have (or had) such
an impact, the General Partner and GS Inc. will have the right, but not the
obligation, at any time either before or after the IPO Date to make special
arrangements with any person participating in this Plan or such person's estate
or legal representative (including special payments) to ameliorate, in whole or
in part, such adverse impact. Each person participating in this Plan recognizes,
acknowledges and agrees that this paragraph shall not create any right on the
part of such person to any such special arrangement or accommodation.
Each person participating in this Plan hereby waives, and each future
stockholder of GS Inc. will be deemed to have waived, any right to object to a
decision by the General Partner or the Board of Directors of GS Inc. to make
such special arrangements.
REGISTRATION OF CERTAIN SECURITIES FOR RESALE
As part of this Plan, GS Inc. proposes to issue certain securities
which have not been registered under the Securities Act of 1933 and recognizes
that in certain circumstances it may be desirable that some or all of such
securities and other securities be registered for sale or resale under such Act.
A term sheet relating to the undertakings of GS Inc. under such circumstances is
attached as Exhibit N. Accordingly, it is acknowledged as part of this Plan that
if GS Inc. determines to so register such securities under such Act, GS Inc.
will undertake responsibility for representations and warranties, covenants,
payment of expenses, satisfaction of closing conditions and indemnification and
contribution which are customarily found in registration rights agreements. The
obligation of GS Inc. to assume responsibility for the matters referred to in
the preceding sentence shall be subject, however, to the determination by GS
Inc. in its sole discretion to register such securities in the first instance.
Each person participating in this Plan hereby waives, and each future
stockholder of GS Inc. will be deemed to have waived, any right to object to a
decision by the General Partner or the Board of Directors of GS Inc. to assume
such responsibilities.
BENEFIT
Nothing in this Plan, express or implied, is intended or shall be
construed to confer upon or give to any person other than GS Group, GS Corp., GS
Inc. and, to the extent expressly provided herein, the PLPs, the RLPs, any other
person participating in this Plan, SBCM and KAA, any remedy or claim under or by
reason of this Plan or any term, covenant or condition hereof, all of which
shall be for the sole and exclusive benefit of the parties mentioned above in
this paragraph; except that the provision set forth above in this Section 16
under "Release" shall be enforceable by the Releasee's mentioned therein.
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HEADINGS
The headings of the Sections of this Plan are inserted as a matter of
convenience and for reference purposes only, are of no binding effect, and in no
respect define, limit or describe the scope of this Plan or the intent of any
Section.
NOTICES
Any notices, demands, requests and other communications required or
permitted to be given to a PLP, RLP, SBCM, KAA or other participant in this Plan
shall be deemed duly given if communicated directly or if sent to the address of
such party as set forth on the records of GS Group, GS Corp. or GS Inc.
EXHIBITS
All Exhibits to this Plan shall be deemed part of this Plan and
incorporated herein, where applicable, as if fully set forth herein.
ENTIRE AGREEMENT
This Agreement, including the Exhibits hereto, represents the entire
understanding and agreement among GS Group, GS Corp., GS Inc., the PLPs, the
RLPs, SBCM, KAA and the other participants herein with respect to the subject
matter hereof, and supersedes all prior negotiations among such parties hereto
with respect to such subject matter. Each PLP consenting to this Plan and RLP or
other person who accepts this Plan expressly agrees that none of GS Group, GS
Corp. or GS Inc. has made any representations, warranties, promises or
inducements in connection with this Plan other than as provided herein.
GOVERNING LAW
THIS PLAN WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS,
EXCEPT TO THE EXTENT THAT THIS PLAN REPRESENTS AN AMENDMENT TO THE GS GROUP
PARTNERSHIP AGREEMENT, IN WHICH EVENT SUCH AMENDMENT WILL BE GOVERNED BY
DELAWARE LAW, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. THE GENERAL
PARTNER IS EXPRESSLY AUTHORIZED TO MAKE ANY CHANGES TO THIS GOVERNING LAW
PROVISION AND THE GOVERNING LAW PROVISIONS OF ANY EXHIBIT AS IT SHALL DEEM
NECESSARY OR DESIRABLE PRIOR TO THE IPO DATE.
GS INC. TO BE BOUND BY PLAN
By executing a copy of this Plan, GS Inc. agrees to be bound by all of
the provisions of this Plan (and related documents and agreements) applicable to
it, either directly or as a result of the mergers of GS Corp. and GS Group into
GS Inc. It is further agreed as part of this Plan that GS Inc.
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shall have the benefit of and shall be entitled to enforce all of its rights
under this Plan (and related documents and agreements) applicable to it, either
directly or as a result of the mergers of GS Corp. and GS Group into GS Inc.
17. DOCUMENTS PLPs AND RLPs ARE BEING ASKED TO SIGN
GENERAL POWER OF ATTORNEY
Each PLP will be furnished a Consent Document and Power of Attorney and
each RLP will be furnished an Acceptance Document and Power of Attorney (each, a
"Document"). For each PLP, the applicable Document is the document by which such
PLP will cast such PLP's vote on whether this Plan should be adopted and, if
this Plan is adopted, by which such PLP may elect to participate in this Plan,
or, alternatively, to retire under the GS Group Partnership Agreement. For each
RLP, the applicable Document is the document by which such RLP may elect to
participate in this Plan, or, alternatively, to retire under the GS Group
Partnership Agreement. Each PLP and each RLP who elects to participate in this
Plan by executing the applicable Document will thereby become a party to this
Plan.
In addition, for those PLPs and RLPs who do not elect to retire, the
applicable Document includes their power of attorney authorizing designated
officers of the Firm to take all actions on their behalf to implement this Plan
and related arrangements and execute Exhibits and other documents on their
behalf.
Each PLP and RLP electing to participate in this Plan must execute the
applicable Document. If, as GS Corp. anticipates, this Plan is adopted and a PLP
or RLP fails to execute and deliver the applicable Document by 5:00 p.m., New
York City time, on March 15, 1999, such PLP or RLP, as the case may be, will be
treated the same as a PLP or RLP who elects to retire.
PARTNER, STOCKHOLDER AND MEMBER ACTION
Without limiting the authority conferred above under "General Power of
Attorney", each PLP, each RLP and each other person participating in this Plan
in the capacity as a partner, stockholder, member or other owner of an entity
which is the subject of this Plan hereby authorizes such attorney-in-fact under
the applicable foregoing Document to take all action on the following matters to
the extent such action is required (references are to portions of this Plan or
an Exhibit where information on such matter may be found):
a) Each of the actions, transactions and mergers listed on the
documents included as part of Exhibit A;
b) Each of the actions listed in the applicable Document; and
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c) Approval of the Goldman Sachs employee benefit plans
described in Exhibit D under the caption "Management."
AGREEMENT TO ASSIST IN CONSUMMATING TRANSACTIONS
In addition to signing the applicable Document, each person
participating in this Plan agrees that such person will execute and deliver, or
cause to be executed and delivered, or to obtain and provide such additional
information, documents, instruments and agreements as the General Partner or GS
Inc. may request in order to implement this Plan. Among other things, the
General Partner and GS Inc. may require additional information and documentation
in connection with interests and securities held in trust or by related entities
and in connection with transfers having a relationship to community property
jurisdictions.
18. COPIES OF DOCUMENTS AND CONTACT PERSONS
From Friday, March 5 through Friday, March 12, copies of this Plan
(including the current draft Form S-1 Registration Statement and all other
exhibits hereto) will be made available for inspection by PLPs and RLPs at the
following times:
Weekdays from 9:00 a.m. (local time) until 5:00 p.m. (local time)
Weekends from noon (local time) until 5:00 p.m. (local time)
(and otherwise by prior arrangement) at the following locations:
Goldman, Sachs & Co.
12th Floor
85 Broad Street
New York, New York 10004
c/o James McHugh
(902-5738)
Goldman Sachs International
3rd Floor
Daniel House
140 Fleet Street
London, EC4A 2BJ, England
c/o Therese Miller
(774-1315)
Goldman Sachs (Japan) Ltd.
ARK Mori Bldg. 6th Floor
12-32, Akasaka 1-chome
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36
Minato-ku, Tokyo 107, Japan
c/o Haruko Watanuki
(3589-7091)
Goldman Sachs (Asia) L.L.C.
35th Floor Asia Pacific Finance Tower
Citibank Plaza
3 Garden Road
Central Hong Kong
c/o Pamela Root
(2978-0655)
Financial, tax, legal and other personnel will be available at the PLP
meeting on Monday, March 8 and the RLP meetings on Tuesday, March 9 and
Thursday, March 11 to answer questions concerning this Plan.
UNLESS OTHERWISE DESIGNATED, THE SECURITIES OF GS INC. TO BE
DISTRIBUTED OTHER THAN IN THE IPO HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES OR BLUE SKY LAWS
OF ANY STATE OR OTHER JURISDICTION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR THE REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PLAN OR ANY OTHER DOCUMENT IN CONNECTION
HEREWITH OR RECOMMENDED THE APPROVAL OF THIS PLAN OR THE ACQUISITION OF ANY SUCH
SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IN MAKING A DECISION TO PARTICIPATE IN THIS PLAN AND ACQUIRE GS
INC. SECURITIES, PLPS AND RLPS MUST RELY ON THEIR OWN EXAMINATION OF
GS INC.
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AMENDMENT AND RESTATEMENT
On April , 1999 this Plan was amended and restated. In effecting such
amendment and restatement provisions which spoke prospectively at the time this
Plan was originally submitted to the PLPs were not generally revised to reflect
the taking or omission of actions or the occurrence of events subsequent to the
submission of the Plan to the PLPs or to reflect changes in the terms of any
Exhibit the provisions of which are described or summarized in the Plan. The
amendment and restatement is not intended to create any implication that actions
or events which had not been taken or had not occurred at the time of such
submission and that are referred to in this amended and restated Plan as to have
been taken or to occur prospectively were not taken or did not occur prior to
such amendment and restatement. Similarly, where such actions were taken or did
occur, the existence of the prospective references in this amended and restated
Plan shall not create any implication that such actions or events must or are
expected to be retaken or to occur again following the date of this amended and
restated Plan. Moreover, the terms and provisions of each Exhibit in the form
ultimately adopted, executed or delivered supercede the terms and provisions of
any previous form of such Exhibit and any description or summary of such terms
or provisions contained in the Plan or the Plan as amended or restated.
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* * *
ACKNOWLEDGEMENT
By executing this Plan, the undersigned agree that this Plan shall
constitute an agreement among GS Group, GS Corp., as General Partner of GS
Group, GS Inc. the PLPs consenting to this Plan, SBCM, KAA, the RLPs and certain
former partners accepting this Plan and, as provided above, an amendment to the
GS Group Partnership Agreement.
THE GOLDMAN SACHS CORPORATION
By: /s/ Gregory K. Palm
_________________________________
Name: Gregory K. Palm
Title: General Counsel
THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation
By: /s/ Gregory K. Palm
____________________________
Name: Gregory K. Palm
Title: General Counsel
THE GOLDMAN SACHS GROUP, INC.
By: /s/ Gregory K. Palm
_________________________________
Name: Gregory K. Palm
Title: General Counsel
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Plan of Incorporation - Goldman Sachs Group LP
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