<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2000
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE GOLDMAN SACHS GROUP, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 13-4019460
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
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85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GAIL S. BERNEY
THE GOLDMAN SACHS GROUP, INC.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
DAVID B. HARMS
ROBERT W. REEDER III
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box. [
]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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AMOUNT TO BE PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF REGISTERED MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED (1)(2)(3)(4) PRICE PER UNIT(5) PRICE (5)(6) REGISTRATION FEE(4)
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<S> <C> <C> <C> <C>
Debt Securities.................. 100%
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Warrants......................... 100%
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Purchase Contracts............... $14,000,000,000 100% $14,000,000,000 $3,696,000
- --------------------------------- ---------------------
Units(7)......................... 100%
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Preferred Stock.................. 100%
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Depositary Shares(8)............. 100%
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</TABLE>
(1) An indeterminate aggregate principal amount or number of the securities is
being registered as may from time to time be issued at indeterminate prices,
with an aggregate initial offering price not to exceed $14,000,000,000 or
the equivalent thereof in one or more other currencies, currency units or
composite currencies.
(2) This registration statement also covers an undeterminable amount of the
registered securities that may be reoffered and resold on an ongoing basis
after their initial sale in market-making transactions by affiliates of the
registrant.
(3) Includes such indeterminate amounts of debt securities, warrants, purchase
contracts, units, preferred stock and depositary shares as may be issued
upon exercise, conversion or exchange of any securities that provide for
that issuance. Also includes such indeterminate amounts of the registered
securities as may be issued in units and such indeterminate amount of
preferred stock as may be represented by depositary shares.
(4) Pursuant to Rule 429 under the Securities Act, the prospectus filed as part
of this registration statement also relates to (a) $11,000,000,000 aggregate
principal amount (or initial offering price) of the registrant's medium-term
notes that were previously registered and have not yet been issued and sold
and (b) an undeterminable amount of the registrant's medium-term notes that
were previously registered and may be reoffered or resold on an ongoing
basis after their initial sale in market-making transactions by affiliates
of the registrant. The securities described in (b) include those described
in (a) as well as others that have already been issued and sold for an
aggregate initial offering price of $11,000,000,000. The securities
described in (a) and (b) were registered by the registrant on two
registration statements on Form S-1 under the Securities Act (File Nos.
333-75321 and 333-30288). A filing fee of $2,960,000 associated with the
securities described in (a) was previously paid with such registration
statements.
(5) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act.
(6) Separate consideration might not be received for registered securities that
are issuable on exercise, conversion or exchange of other securities or that
are issued in units or represented by depositary shares.
(7) Each unit will be issued under a unit agreement and will represent an
interest in two or more of the other registered securities, which may or may
not be separable from one another.
(8) Each depositary share will be issued under a deposit agreement, will
represent an interest in a fractional share or multiple shares of preferred
stock and will be evidenced by a depositary receipt.
<PAGE> 3
EXPLANATORY NOTE
The prospectus contained in this registration statement relates to both of
the following:
-- the initial offering of debt securities, warrants, purchase contracts,
units, preferred stock and depositary shares of The Goldman Sachs
Group, Inc. on a continuous or delayed basis, at an aggregate initial
public offering price of up to $25,000,000,000; and
-- market-making transactions that may occur on a continuous or delayed
basis in the securities described above, after they are initially
offered and sold, and in debt securities of The Goldman Sachs Group,
Inc., the initial offering and sale of which have already occurred.
When the prospectus is delivered to an investor in the initial offering
described above, the investor will be informed of that fact in the confirmation
of sale. When the prospectus is delivered to an investor who is not so informed,
it is delivered in a market-making transaction.
In addition to the securities registered under this registration statement,
the initial offering and market-making transactions described above involve debt
securities that are registered under previously filed registration statements.
<PAGE> 4
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER
TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
Subject to Completion. Dated May 3, 2000.
$25,000,000,000
THE GOLDMAN SACHS GROUP, INC.
[GOLDMAN SACHS LOGO] Debt Securities
Warrants
Purchase Contracts
Units
Preferred Stock
Depositary Shares
----------------------
The Goldman Sachs Group, Inc. from time to time may offer to sell debt
securities, warrants and purchase contracts, either individually or in units, as
well as preferred stock, either directly or represented by depositary shares.
The total amount of these securities will have an initial aggregate offering
price of up to $25,000,000,000, or the equivalent amount in other currencies,
currency units or composite currencies, although Goldman Sachs may increase this
amount in the future.
Goldman Sachs may offer and sell these securities to or through one or more
underwriters, dealers and agents, including the firm named below, or directly to
purchasers, on a continuous or delayed basis.
This prospectus describes some of the general terms that may apply to these
securities and the general manner in which they may be offered. The specific
terms of any securities to be offered, and the specific manner in which they may
be offered, will be described in a supplement to this prospectus.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
Goldman Sachs may use this prospectus in the initial sale of these
securities. In addition, Goldman, Sachs & Co. or any other affiliate of Goldman
Sachs may use this prospectus in a market-making transaction in any of these or
similar securities after their initial sale. UNLESS GOLDMAN SACHS OR ITS AGENT
INFORMS THE PURCHASER OTHERWISE IN THE CONFIRMATION OF SALE, THIS PROSPECTUS IS
BEING USED IN A MARKET-MAKING TRANSACTION.
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GOLDMAN, SACHS & CO.
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Prospectus dated , 2000.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information....................................... ii
Prospectus Summary.......................................... 1
Ratio of Earnings to Fixed Charges.......................... 4
Description of Debt Securities We May Offer................. 5
Description of Warrants We May Offer........................ 27
Description of Purchase Contracts We May Offer.............. 33
Description of Units We May Offer........................... 38
Description of Preferred Stock We May Offer................. 43
Legal Ownership and Book-Entry Issuance..................... 50
Considerations Relating to Securities Issued in Bearer
Form...................................................... 56
Considerations Relating to Indexed Securities............... 60
Considerations Relating to Securities Denominated or Payable
in or Linked to a Non-U.S. Dollar Currency................ 62
United States Taxation...................................... 65
Plan of Distribution........................................ 83
Employee Retirement Income Security Act..................... 86
Validity of the Securities.................................. 86
Experts..................................................... 86
Cautionary Statement Pursuant to the Private Securities
Litigation Reform Act of 1995............................. 87
</TABLE>
i
<PAGE> 6
AVAILABLE INFORMATION
The Goldman Sachs Group, Inc. is required to file annual, quarterly and
current reports, proxy statements and other information with the SEC. You may
read and copy any documents filed by us at the SEC's public reference room at
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Our filings
with the SEC are also available to the public through the SEC's Internet site at
http://www.sec.gov and through the NYSE, 20 Broad Street, New York, New York
10005, on which our common stock is listed.
We have filed a registration statement on Form S-3 with the SEC relating to
the securities covered by this prospectus. This prospectus is a part of the
registration statement and does not contain all of the information in the
registration statement. Whenever a reference is made in this prospectus to a
contract or other document of Goldman Sachs, please be aware that the reference
is only a summary and that you should refer to the exhibits that are a part of
the registration statement for a copy of the contract or other document. You may
review a copy of the registration statement at the SEC's public reference room
in Washington, D.C., as well as through the SEC's Internet site.
The SEC's rules allow us to "incorporate by reference" information into
this prospectus. This means that we can disclose important information to you by
referring you to another document. Any information referred to in this way is
considered part of this prospectus from the date we file that document. Any
reports filed by us with the SEC after the date of this prospectus and before
the date that the offering of the securities by means of this prospectus is
terminated will automatically update and, where applicable, supersede any
information contained in this prospectus or incorporated by reference in this
prospectus.
The Goldman Sachs Group, Inc. incorporates by reference into this
prospectus the following documents or information filed with the SEC:
(1) Annual Report on Form 10-K for the fiscal year ended November 26, 1999;
(2) Quarterly Report on Form 10-Q for the quarter ended February 25, 2000;
(3) Current Report on Form 8-K, dated March 21, 2000; and
(4) All documents filed by The Goldman Sachs Group, Inc. under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of the initial registration statement and before effectiveness
of the registration statement, and after the date of this prospectus
and before the termination of this offering.
We will provide without charge to each person, including any beneficial
owner, to whom this prospectus is delivered, upon his or her written or oral
request, a copy of any or all documents referred to above which have been or may
be incorporated by reference into this prospectus, excluding exhibits to those
documents unless they are specifically incorporated by reference into those
documents. You can request those documents from our Director of Investor
Relations, 10 Hanover Square, New York, New York 10005, telephone (212)
357-2674.
ii
<PAGE> 7
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus or
incorporated by reference into this prospectus as further described above under
"Available Information". This summary does not contain all the information that
you should consider before investing in the securities being offered by this
prospectus. You should carefully read the entire prospectus, the documents
incorporated by reference into this prospectus and the prospectus supplement
relating to the securities that you propose to buy, especially any description
of investment risks that we may include in the prospectus supplement.
GOLDMAN SACHS
Goldman Sachs is a leading global investment banking and securities firm,
providing a full range of investing, advisory and financing services worldwide
to a substantial and diversified client base, which includes corporations,
financial institutions, governments and high-net-worth individuals. Founded in
1869, we are one of the oldest and largest investment banking firms. Our
headquarters are located at 85 Broad Street, New York, New York 10004, telephone
(212) 902-1000, and we maintain offices in London, Frankfurt, Tokyo, Hong Kong
and other major financial centers around the world.
THE SECURITIES WE ARE OFFERING
We may offer any of the following securities from time to time:
-- debt securities;
-- warrants;
-- purchase contracts;
-- units, comprised of two or more debt securities, warrants and purchase
contracts, in any combination; and
-- preferred stock, either directly or represented by depositary shares.
When we use the term "securities" in this prospectus, we mean any of the
securities we may offer with this prospectus, unless we say otherwise. This
prospectus, including the following summary, describes the general terms that
may apply to the securities; the specific terms of any particular securities
that we may offer will be described in a separate supplement to this prospectus.
DEBT SECURITIES
Our debt securities may be senior or subordinated in right of payment. For
any particular debt securities we offer, the applicable prospectus supplement
will describe the specific designation, the aggregate principal or face amount
and the purchase price; the ranking, whether senior or subordinated; the stated
maturity; the redemption terms, if any; the rate or manner of calculating the
rate and the payment dates for interest, if any; the amount or manner of
calculating the amount payable at maturity and whether that amount may be paid
by delivering cash, securities or other property; and any other specific terms.
We will issue the senior and subordinated debt securities under separate
indentures between us and The Bank of New York, as trustee.
1
<PAGE> 8
WARRANTS
We may offer two types of warrants:
-- warrants to purchase our debt securities; and
-- warrants to purchase or sell, or whose cash value is determined by
reference to the performance, level or value of, one or more of the
following:
-- securities of one or more issuers other than The Goldman Sachs Group,
Inc.;
-- one or more currencies;
-- one or more commodities;
-- any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and
-- one or more indices or baskets of the items described above.
For any particular warrants we offer, the applicable prospectus supplement
will describe the underlying property; the expiration date; the exercise price
or the manner of determining the exercise price; the amount and kind, or the
manner of determining the amount and kind, of property to be delivered by you or
us upon exercise; and any other specific terms. We may issue the warrants under
warrant agreements between us and one or more warrant agents.
PURCHASE CONTRACTS
We may offer purchase contracts for the purchase or sale of, or whose cash
value is determined by reference to the performance, level or value of, one or
more of the following:
-- securities of one or more issuers, including our securities described
in this prospectus and securities of third parties;
-- one or more currencies;
-- one or more commodities;
-- any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and
-- one or more indices or baskets of the items described above.
For any particular purchase contracts we offer, the applicable prospectus
supplement will describe the underlying property; the settlement date; the
purchase price or manner of determining the purchase price and whether it must
be paid when the purchase contract is issued or at a later date; the amount and
kind, or the manner of determining the amount and kind, of property to be
delivered at settlement; whether the holder will pledge property to secure the
performance of any obligations the holder may have under the purchase contract;
and any other specific terms. We may issue purchase contracts under an indenture
described above or a unit agreement described below.
UNITS
We may offer units, comprised of two or more debt securities, warrants and
purchase contracts, in any combination. For any particular units we offer, the
applicable prospectus supplement will describe the particular securities
comprising each unit; the terms on which those securities will be separable, if
any; whether the holder will pledge property to secure the performance of any
obligations the holder may have under the unit; and any other specific terms of
the units. We may issue the units under unit agreements between us and one or
more unit agents.
2
<PAGE> 9
PREFERRED STOCK AND DEPOSITARY SHARES
We may offer our preferred stock, par value $0.01 per share, in one or more
series. For any particular series we offer, the applicable prospectus supplement
will describe the specific designation; the aggregate number of shares offered;
the rate and periods, or manner of calculating the rate and periods, for
dividends, if any; the stated value and liquidation preference amount, if any;
the voting rights, if any; the terms on which the series will be convertible
into or exchangeable for other securities or property, if any; the redemption
terms, if any; and any other specific terms. We may also offer depositary
shares, each of which would represent an interest in a fractional share or
multiple shares of preferred stock. We may issue the depositary shares under
deposit agreements between us and one or more depositaries.
FORM OF SECURITIES
We will issue the securities in book-entry form through one or more
depositaries, such as The Depository Trust Company, Euroclear or Clearstream,
Luxembourg, named in the applicable prospectus supplement. Each sale of a
security in book-entry form will settle in immediately available funds through
the depositary, unless otherwise stated. We will issue the securities only in
registered form, without coupons, although we may issue the securities in bearer
form if so specified in the applicable prospectus supplement.
PAYMENT CURRENCIES
Amounts payable in respect of the securities, including the purchase price,
will be payable in U.S. dollars, unless the applicable prospectus supplement
says otherwise.
LISTING
If any securities are to be listed or quoted on a securities exchange or
quotation system, the applicable prospectus supplement will say so.
USE OF PROCEEDS
We intend to use the net proceeds from the sales of securities to provide
additional funds for our operations and for other general corporate purposes.
MANNER OF OFFERING
The securities will be offered in connection with their initial issuance or
in market-making transactions by our affiliates after initial issuance. Those
offered in market-making transactions may be securities that we will not issue
until after the date of this prospectus as well as debt securities that we have
previously issued. The initial aggregate offering price specified on the cover
of this prospectus relates to the securities that we have not yet issued.
When we issue new securities, we may offer them for sale to or through
underwriters, dealers and agents, including our affiliates, or directly to
purchasers. The applicable prospectus supplement will include any required
information about the firms we use and the discounts or commissions we may pay
them for their services.
Our affiliates that we refer to above may include Goldman, Sachs & Co., for
offers and sales in the United States, and Goldman Sachs International and
Goldman Sachs (Asia) L.L.C., for offers and sales outside the United States.
3
<PAGE> 10
RATIO OF EARNINGS TO FIXED CHARGES
The Goldman Sachs Group, Inc.'s consolidated ratios of earnings to fixed
charges for the three-month periods ended February 26, 1999 and February 25,
2000 and for each of the fiscal years ended November 24, 1995, November 29,
1996, November 28, 1997, November 27, 1998 and November 26, 1999, respectively,
are as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED NOVEMBER ENDED FEBRUARY
----------------------------------------- ---------------
1995 1996 1997 1998 1999 1999 2000
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
(unaudited)(1)(2)..................... 1.14x 1.23x 1.23x 1.21x 1.16x 1.41x 1.42x
</TABLE>
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(1) Our pre-tax earnings in fiscal year 1999 and the three-month period ended
February 25, 2000 reflect payments for services rendered by managing
directors who, before our conversion to corporate form, were profit
participating limited partners. In prior years, and for the three months
ended February 26, 1999, these payments were accounted for as distributions
of partners' capital rather than as compensation and benefits expense. As a
result, these payments are not reflected in operating expenses in fiscal
year 1995, 1996, 1997 or 1998 or the three months ended February 26, 1999
and, therefore, the pre-tax earnings in these periods are not comparable to
fiscal year 1999 and the three-month period ended February 25, 2000. Please
refer to our consolidated financial statements and their notes, which are
incorporated into this prospectus by reference, for further information. See
"Available Information" above for information about how to obtain copies of
our consolidated financial statements.
(2) For purposes of the ratio of earnings to fixed charges, "earnings" represent
pre-tax earnings plus fixed charges and "fixed charges" represent interest
expense plus that portion of rent expense that, in our opinion, approximates
the interest factor included in rent expense.
As of the date of this prospectus, we have no preferred stock outstanding.
4
<PAGE> 11
DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
Please note that in this section entitled "Description of Debt Securities We May
Offer", references to The Goldman Sachs Group, Inc., "we", "our" and "us" refer
only to The Goldman Sachs Group, Inc. and not to its consolidated subsidiaries.
Also, in this section, references to "holders" mean those who own debt
securities registered in their own names, on the books that we or the trustee
maintain for this purpose, and not those who own beneficial interests in debt
securities registered in street name or in debt securities issued in book-entry
form through one or more depositaries. Owners of beneficial interests in the
debt securities should read the section below entitled "Legal Ownership and
Book-Entry Issuance".
DEBT SECURITIES MAY BE SENIOR OR SUBORDINATED
We may issue senior or subordinated debt securities. Neither the senior
debt securities nor the subordinated debt securities will be secured by any
property or assets of The Goldman Sachs Group, Inc. or its subsidiaries. Thus,
by owning a debt security, you are one of our unsecured creditors.
The senior debt securities and, in the case of senior debt securities in
bearer form, any related interest coupons will constitute part of our senior
debt, will be issued under our senior debt indenture described below and will
rank on a parity with all of our other unsecured and unsubordinated debt.
The subordinated debt securities and, in the case of subordinated debt
securities in bearer form, any related interest coupons will constitute part of
our subordinated debt, will be issued under our subordinated debt indenture
described below and will be subordinate in right of payment to all of our
"senior indebtedness", as defined in the subordinated debt indenture. The
prospectus supplement for any series of subordinated debt securities or the
information incorporated in this prospectus by reference will indicate the
approximate amount of senior indebtedness outstanding as of the end of our most
recent fiscal quarter. Neither indenture limits our ability to incur additional
senior indebtedness.
When we refer to "debt securities" in this prospectus, we mean both the
senior debt securities and the subordinated debt securities.
THE SENIOR DEBT INDENTURE AND THE SUBORDINATED DEBT INDENTURE
The senior debt securities and the subordinated debt securities are each
governed by a document called an indenture -- the senior debt indenture, in the
case of the senior debt securities, and the subordinated debt indenture, in the
case of the subordinated debt securities. Each indenture is a contract between
us and The Bank of New York, which will initially act as trustee. The indentures
are substantially identical, except for our covenant described below under
"-- Restriction on Liens", which is included only in the senior debt indenture,
and the provisions relating to subordination, which are included only in the
subordinated debt indenture.
The trustee under each indenture has two main roles:
-- First, the trustee can enforce your rights against us if we default.
There are some limitations on the extent to which the trustee acts on
your behalf, which we describe later under "-- Default, Remedies and
Waiver of Default".
-- Second, the trustee performs administrative duties for us, such as
sending you interest payments and notices.
See "-- Our Relationship With the Trustee" below for more information about the
trustee.
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<PAGE> 12
When we refer to the indenture or the trustee with respect to any debt
securities, we mean the indenture under which those debt securities are issued
and the trustee under that indenture.
WE MAY ISSUE MANY SERIES OF DEBT SECURITIES
We may issue as many distinct series of debt securities under either
indenture as we wish. This section summarizes terms of the securities that apply
generally to all series. The provisions of each indenture allow us not only to
issue debt securities with terms different from those of debt securities
previously issued under that indenture, but also to "reopen" a previous issue of
a series of debt securities and issue additional debt securities of that series.
Most of the financial and other specific terms of your series, whether it be a
series of the senior debt securities or subordinated debt securities, are
described in the prospectus supplement to be attached to the front of this
prospectus. Those terms may vary from the terms described here.
As you read this section, please remember that the specific terms of your debt
security as described in your prospectus supplement will supplement and, if
applicable, may modify or replace the general terms described in this section.
If there are any differences between your prospectus supplement and this
prospectus, your prospectus supplement will control. Thus, the statements we
make in this section may not apply to your debt security.
When we refer to a series of debt securities, we mean a series issued under
the applicable indenture. When we refer to your prospectus supplement, we mean
the prospectus supplement describing the specific terms of the debt security you
purchase. The terms used in your prospectus supplement will have the meanings
described in this prospectus, unless otherwise specified.
AMOUNTS THAT WE MAY ISSUE
Neither indenture limits the aggregate amount of debt securities that we
may issue or the number of series or the aggregate amount of any particular
series. We may issue debt securities and other securities in amounts that exceed
the total amount specified on the cover of this prospectus, at any time without
your consent and without notifying you.
The indentures and the debt securities do not limit our ability to incur
other indebtedness or to issue other securities. Also, we are not subject to
financial or similar restrictions by the terms of the debt securities, except as
described below under "-- Restriction on Liens".
PRINCIPAL AMOUNT, STATED MATURITY AND MATURITY
The principal amount of a debt security means the principal amount payable
at its stated maturity, unless that amount is not determinable, in which case
the principal amount of a debt security is its face amount. Any debt securities
owned by us or any of our affiliates are not deemed to be outstanding.
The term "stated maturity" with respect to any debt security means the day
on which the principal amount of your debt security is scheduled to become due.
The principal may become due sooner, by reason of redemption or acceleration
after a default or otherwise in accordance with the terms of the debt security.
The day on which the principal actually becomes due, whether at the stated
maturity or earlier, is called the maturity of the principal.
We also use the terms "stated maturity" and "maturity" to refer to the days
when other payments become due. For example, we may refer to a regular interest
payment date when an installment of interest is scheduled to become due as the
"stated maturity" of that installment.
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<PAGE> 13
When we refer to the "stated maturity" or the "maturity" of a debt security
without specifying a particular payment, we mean the stated maturity or
maturity, as the case may be, of the principal.
WE ARE A HOLDING COMPANY
Because our assets consist principally of interests in the subsidiaries
through which we conduct our businesses, our right to participate as an equity
holder in any distribution of assets of any of our subsidiaries upon the
subsidiary's liquidation or otherwise, and thus the ability of our security
holders to benefit from the distribution, is junior to creditors of the
subsidiary, except to the extent that any claims we may have as a creditor of
the subsidiary are recognized. In addition, dividends, loans and advances to us
from some of our subsidiaries, including Goldman, Sachs & Co., are restricted by
net capital requirements under the Securities Exchange Act of 1934 and under
rules of securities exchanges and other regulatory bodies. Furthermore, because
some of our subsidiaries, including Goldman, Sachs & Co., are partnerships in
which we are a general partner, we may be liable for their obligations. We also
guarantee many of the obligations of our subsidiaries. Any liability we may have
for our subsidiaries' obligations could reduce our assets that are available to
satisfy our direct creditors, including investors in our securities.
THIS SECTION IS ONLY A SUMMARY
The indentures and their associated documents, including your debt
security, contain the full legal text of the matters described in this section
and your prospectus supplement. We have filed copies of the indentures with the
SEC as exhibits to our registration statement. See "Available Information" above
for information on how to obtain copies of them.
This section and your prospectus supplement summarize all the material
terms of the indentures and your debt security. They do not, however, describe
every aspect of the indentures and your debt security. For example, in this
section and your prospectus supplement, we use terms that have been given
special meaning in the indentures, but we describe the meaning for only the more
important of those terms.
GOVERNING LAW
The indentures and the debt securities will be governed by New York law.
CURRENCY OF DEBT SECURITIES
Amounts that become due and payable on your debt security in cash will be
payable in a currency, composite currency, basket of currencies or currency unit
or units specified in your prospectus supplement. We refer to this currency,
composite currency, basket of currencies or currency unit or units as a
"specified currency". The specified currency for your debt security will be U.S.
dollars, unless your prospectus supplement states otherwise. Some debt
securities may have different specified currencies for principal and interest.
You will have to pay for your debt securities by delivering the requisite amount
of the specified currency for the principal to Goldman, Sachs & Co. or another
firm that we name in your prospectus supplement, unless other arrangements have
been made between you and us or you and that firm. We will make payments on your
debt securities in the specified currency, except as described below in
"-- Payment Mechanics for Debt Securities". See "Considerations Relating to
Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency"
below for more information about risks of investing in debt securities of this
kind.
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FORM OF DEBT SECURITIES
We will issue each debt security in global -- i.e., book-entry -- form
only, unless we specify otherwise in the applicable prospectus supplement. Debt
securities in book-entry form will be represented by a global security
registered in the name of a depositary, which will be the holder of all the debt
securities represented by the global security. Those who own beneficial
interests in a global debt security will do so through participants in the
depositary's securities clearance system, and the rights of these indirect
owners will be governed solely by the applicable procedures of the depositary
and its participants. We describe book-entry securities below under "Legal
Ownership and Book-Entry Issuance".
In addition, we will generally issue each debt security in registered form,
without coupons, unless we specify otherwise in the applicable prospectus
supplement. If we issue a debt security in bearer form, the provisions described
below under "Considerations Relating to Securities Issued in Bearer Form" would
apply to that security. As we note in that section, some of the features of the
debt securities that we describe in this prospectus may not apply to bearer debt
securities.
TYPES OF DEBT SECURITIES
We may issue any of the following three types of senior debt securities or
subordinated debt securities:
FIXED RATE DEBT SECURITIES
A debt security of this type will bear interest at a fixed rate described
in the applicable prospectus supplement. This type includes zero coupon debt
securities, which bear no interest and are instead issued at a price lower than
the principal amount. See "-- Original Issue Discount Debt Securities" below for
more information about zero coupon and other original issue discount debt
securities.
Each fixed rate debt security, except any zero coupon debt security, will
bear interest from its original issue date or from the most recent date to which
interest on the debt security has been paid or made available for payment.
Interest will accrue on the principal of a fixed rate debt security at the fixed
yearly rate stated in the applicable prospectus supplement, until the principal
is paid or made available for payment. Each payment of interest due on an
interest payment date or the date of maturity will include interest accrued from
and including the last date to which interest has been paid, or made available
for payment, or from the issue date if none has been paid or made available for
payment, to but excluding the interest payment date or the date of maturity. We
will compute interest on fixed rate debt securities on the basis of a 360-day
year of twelve 30-day months. We will pay interest on each interest payment date
and at maturity as described below under "-- Payment Mechanics for Debt
Securities".
FLOATING RATE DEBT SECURITIES
A debt security of this type will bear interest at rates that are
determined by reference to an interest rate formula. In some cases, the rates
may also be adjusted by adding or subtracting a spread or multiplying by a
spread multiplier and may be subject to a minimum rate or a maximum rate. If
your debt security is a floating rate debt security, the formula and any
adjustments that apply to the interest rate will be specified in your prospectus
supplement.
Each floating rate debt security will bear interest from its original issue
date or from the most recent date to which interest on the debt security has
been paid or made available for payment. Interest will accrue on the principal
of a floating rate debt security at the yearly rate determined according to the
interest rate formula stated in the applicable prospectus supplement, until the
principal is paid or made available for payment. We will pay interest on each
interest payment date and at maturity as described below under "-- Payment
Mechanics for Debt Securities".
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CALCULATION OF INTEREST. Calculations relating to floating rate debt
securities will be made by the calculation agent, an institution that we appoint
as our agent for this purpose. That institution may include any affiliate of
ours, such as Goldman, Sachs & Co. The prospectus supplement for a particular
floating rate debt security will name the institution that we have appointed to
act as the calculation agent for that debt security as of its original issue
date. We may appoint a different institution to serve as calculation agent from
time to time after the original issue date of the debt security without your
consent and without notifying you of the change.
For each floating rate debt security, the calculation agent will determine,
on the corresponding interest calculation or determination date, as described in
the applicable prospectus supplement, the interest rate that takes effect on
each interest reset date. In addition, the calculation agent will calculate the
amount of interest that has accrued during each interest period -- i.e., the
period from and including the original issue date, or the last date to which
interest has been paid or made available for payment, to but excluding the
payment date. For each interest period, the calculation agent will calculate the
amount of accrued interest by multiplying the face or other specified amount of
the floating rate debt security by an accrued interest factor for the interest
period. This factor will equal the sum of the interest factors calculated for
each day during the interest period. The interest factor for each day will be
expressed as a decimal and will be calculated by dividing the interest rate,
also expressed as a decimal, applicable to that day by 360 or by the actual
number of days in the year, as specified in the applicable prospectus
supplement.
Upon the request of the holder of any floating rate debt security, the
calculation agent will provide for that debt security the interest rate then in
effect -- and, if determined, the interest rate that will become effective on
the next interest reset date. The calculation agent's determination of any
interest rate, and its calculation of the amount of interest for any interest
period, will be final and binding in the absence of manifest error.
All percentages resulting from any calculation relating to a debt security
will be rounded upward or downward, as appropriate, to the next higher or lower
one hundred-thousandth of a percentage point, e.g., 9.876541% (or .09876541)
being rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being
rounded up to 9.87655% (or .0987655). All amounts used in or resulting from any
calculation relating to a floating rate debt security will be rounded upward or
downward, as appropriate, to the nearest cent, in the case of U.S. dollars, or
to the nearest corresponding hundredth of a unit, in the case of a currency
other than U.S. dollars, with one-half cent or one-half of a corresponding
hundredth of a unit or more being rounded upward.
In determining the base rate that applies to a floating rate debt security
during a particular interest period, the calculation agent may obtain rate
quotes from various banks or dealers active in the relevant market, as described
in the applicable prospectus supplement. Those reference banks and dealers may
include the calculation agent itself and its affiliates, as well as any
underwriter, dealer or agent participating in the distribution of the relevant
floating rate debt securities and its affiliates, and they may include
affiliates of The Goldman Sachs Group, Inc.
INDEXED DEBT SECURITIES
A debt security of this type provides that the principal amount payable at
its maturity, and/or the amount of interest payable on an interest payment date,
will be determined by reference to:
-- securities of one or more issuers;
-- one or more currencies;
-- one or more commodities;
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-- any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and/or
-- one or more indices or baskets of the items described above.
If you are a holder of an indexed debt security, you may receive an amount at
maturity that is greater than or less than the face amount of your debt security
depending upon the value of the applicable index at maturity. The value of the
applicable index will fluctuate over time.
An indexed debt security may provide either for cash settlement or for
physical settlement by delivery of the underlying property or another property
of the type listed above. An indexed debt security may also provide that the
form of settlement may be determined at our option or at the holder's option.
Some indexed debt securities may be exchangeable, at our option or the holder's
option, for securities of an issuer other than The Goldman Sachs Group, Inc.
If you purchase an indexed debt security, your prospectus supplement will
include information about the relevant index, about how amounts that are to
become payable will be determined by reference to the price or value of that
index and about the terms on which the security may be settled physically or in
cash. The prospectus supplement will also identify the calculation agent that
will calculate the amounts payable with respect to the indexed debt security and
may exercise significant discretion in doing so. The calculation agent may be
Goldman, Sachs & Co. or another of our affiliates. See "Considerations Relating
to Indexed Securities" for more information about risks of investing in debt
securities of this type.
ORIGINAL ISSUE DISCOUNT DEBT SECURITIES
A fixed rate debt security, a floating rate debt security or an indexed
debt security may be an original issue discount debt security. A debt security
of this type is issued at a price lower than its principal amount and provides
that, upon redemption or acceleration of its maturity, an amount less than its
principal amount will be payable. An original issue discount debt security may
be a zero coupon debt security. A debt security issued at a discount to its
principal may, for U.S. federal income tax purposes, be considered an original
issue discount debt security, regardless of the amount payable upon redemption
or acceleration of maturity. See "United States Taxation -- Taxation of Debt
Securities -- United States Holders -- Original Issue Discount" below for a
brief description of the U.S. federal income tax consequences of owning an
original issue discount debt security.
INFORMATION IN THE PROSPECTUS SUPPLEMENT
Your prospectus supplement will describe the specific terms of your debt
security, which will include some or all of the following:
-- whether it is a senior debt security or a subordinated debt security;
-- any limit on the total principal amount of the debt securities of the
same series;
-- the stated maturity;
-- the specified currency or currencies for principal and interest, if
not U.S. dollars;
-- the price at which we originally issue your debt security, expressed
as a percentage of the principal amount, and the original issue date;
-- whether your debt security is a fixed rate debt security, a floating
rate debt security or an indexed debt security;
-- if your debt security is a fixed rate debt security, the yearly rate
at which your debt security will bear interest, if any, and the
interest payment dates;
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-- if your debt security is a floating rate debt security, the interest
rate basis; any applicable index currency or maturity, spread or
spread multiplier or initial, maximum or minimum rate; the interest
reset, determination, calculation and payment dates; the day count
used to calculate interest payments for any period; and the
calculation agent;
-- if your debt security is an indexed debt security, the principal
amount, if any, we will pay you at maturity, the amount of interest,
if any, we will pay you on an interest payment date or the formula we
will use to calculate these amounts, if any, and the terms on which
your debt security will be exchangeable for or payable in cash,
securities or other property;
-- if your debt security is also an original issue discount debt
security, the yield to maturity;
-- if applicable, the circumstances under which your debt security may be
redeemed at our option or repaid at the holder's option before the
stated maturity, including any redemption commencement date, repayment
date(s), redemption price(s) and redemption period(s);
-- the authorized denominations, if other than $1,000 and integral
multiples of $1,000;
-- the depositary for your debt security, if other than DTC, and any
circumstances under which the holder may request securities in
non-global form, if we choose not to issue your debt security in
book-entry form only;
-- if your debt security will be issued in bearer form, any special
provisions relating to bearer securities that are not addressed in
this prospectus;
-- if applicable, the circumstances under which we will pay additional
amounts on any debt securities held by a person who is not a United
States person for tax purposes and under which we can redeem the debt
securities if we have to pay additional amounts;
-- the names and duties of any co-trustees, depositaries, authenticating
agents, paying agents, transfer agents or registrars for your debt
security; and
-- any other terms of your debt security, which could be different from
those described in this prospectus.
MARKET-MAKING TRANSACTIONS. If you purchase your debt security -- or any
of our other securities we describe in this prospectus -- in a market-making
transaction, you will receive information about the price you pay and your trade
and settlement dates in a separate confirmation of sale. A market-making
transaction is one in which Goldman, Sachs & Co. or another of our affiliates
resells a security that it has previously acquired from another holder. A
market-making transaction in a particular security occurs after the original
issuance and sale of the security.
REDEMPTION AND REPAYMENT
Unless otherwise indicated in your prospectus supplement, your debt
security will not be entitled to the benefit of any sinking fund -- that is, we
will not deposit money on a regular basis into any separate custodial account to
repay your debt securities. In addition, we will not be entitled to redeem your
debt security before its stated maturity unless your prospectus supplement
specifies a redemption commencement date. You will not be entitled to require us
to buy your debt security from you, before its stated maturity, unless your
prospectus supplement specifies one or more repayment dates.
If your prospectus supplement specifies a redemption commencement date or a
repayment date, it will also specify one or more redemption prices or repayment
prices, which may be expressed as a percentage of the principal amount of your
debt security. It may also specify one or more redemption periods during which
the redemption prices relating to a redemption of debt securities during those
periods will apply.
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If your prospectus supplement specifies a redemption commencement date,
your debt security will be redeemable at our option at any time on or after that
date or at a specified time or times. If we redeem your debt security, we will
do so at the specified redemption price, together with interest accrued to the
redemption date. If different prices are specified for different redemption
periods, the price we pay will be the price that applies to the redemption
period during which your debt security is redeemed.
If your prospectus supplement specifies a repayment date, your debt
security will be repayable at the holder's option on the specified repayment
date at the specified repayment price, together with interest accrued to the
repayment date.
If we exercise an option to redeem any debt security, we will give to the
trustee and the holder written notice of the principal amount of the debt
security to be redeemed, not less than 30 days nor more than 60 days before the
applicable redemption date. We will give the notice in the manner described
below in "-- Notices".
If a debt security represented by a global debt security is subject to
repayment at the holder's option, the depositary or its nominee, as the holder,
will be the only person that can exercise the right to repayment. Any indirect
owners who own beneficial interests in the global debt security and wish to
exercise a repayment right must give proper and timely instructions to their
banks or brokers through which they hold their interests, requesting that they
notify the depositary to exercise the repayment right on their behalf. Different
firms have different deadlines for accepting instructions from their customers,
and you should take care to act promptly enough to ensure that your request is
given effect by the depositary before the applicable deadline for exercise.
Street name and other indirect owners should contact their banks or brokers for
information about how to exercise a repayment right in a timely manner.
We or our affiliates may purchase debt securities from investors who are
willing to sell from time to time, either in the open market at prevailing
prices or in private transactions at negotiated prices. Debt securities that we
or they purchase may, at our discretion, be held, resold or cancelled.
MERGERS AND SIMILAR TRANSACTIONS
We are generally permitted to merge or consolidate with another corporation
or other entity. We are also permitted to sell our assets substantially as an
entirety to another corporation or other entity. With regard to any series of
debt securities, however, we may not take any of these actions unless all the
following conditions are met:
-- If the successor entity in the transaction is not The Goldman Sachs
Group, Inc., the successor entity must be organized as a corporation,
partnership, trust, limited liability company or other similar entity
and must expressly assume our obligations under the debt securities of
that series and the indenture with respect to that series. The
successor entity may be organized under the laws of any jurisdiction,
whether in the United States or elsewhere.
-- Immediately after the transaction, no default under the debt
securities of that series has occurred and is continuing. For this
purpose, "default under the debt securities of that series" means an
event of default with respect to that series or any event that would
be an event of default with respect to that series if the requirements
for giving us default notice and for our default having to continue
for a specific period of time were
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disregarded. We describe these matters below under "-- Default, Remedies and
Waiver of Default".
If the conditions described above are satisfied with respect to the debt
securities of any series, we will not need to obtain the approval of the holders
of those debt securities in order to merge or consolidate or to sell our assets.
Also, these conditions will apply only if we wish to merge or consolidate with
another entity or sell our assets substantially as an entirety to another
entity. We will not need to satisfy these conditions if we enter into other
types of transactions, including any transaction in which we acquire the stock
or assets of another entity, any transaction that involves a change of control
of The Goldman Sachs Group, Inc. but in which we do not merge or consolidate and
any transaction in which we sell less than substantially all our assets.
Also, if we merge, consolidate or sell our assets substantially as an
entirety and the successor is a non-U.S. entity, neither we nor any successor
would have any obligation to compensate you for any resulting adverse tax
consequences relating to your debt securities.
SUBORDINATION PROVISIONS
Holders of subordinated debt securities should recognize that contractual
provisions in the subordinated debt indenture may prohibit us from making
payments on those securities. Subordinated debt securities are subordinate in
right of payment, to the extent and in the manner stated in the subordinated
debt indenture, to all of our senior indebtedness, including all debt securities
we have issued and will issue under the senior debt indenture.
The subordinated debt indenture defines "senior indebtedness" as all
indebtedness and obligations of, or guaranteed or assumed by, The Goldman Sachs
Group, Inc. for borrowed money or evidenced by bonds, debentures, notes or other
similar instruments, whether existing now or in the future, and all amendments,
renewals, extensions, modifications and refundings of any indebtedness or
obligations of that kind. Senior debt excludes the subordinated debt securities
and any other indebtedness or obligations specifically designated as being
subordinate, or not superior, in right of payment to the subordinated debt
securities.
The subordinated debt indenture provides that, unless all principal of and
any premium or interest on the senior indebtedness has been paid in full, no
payment or other distribution may be made in respect of any subordinated debt
securities in the following circumstances:
-- in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization, assignment for creditors or
other similar proceedings or events involving us or our assets;
-- (a) in the event and during the continuation of any default in the
payment of principal, premium or interest on any senior indebtedness
beyond any applicable grace period or (b) in the event that any event
of default with respect to any senior indebtedness has occurred and is
continuing, permitting the holders of that senior indebtedness (or a
trustee) to accelerate the maturity of that senior indebtedness,
whether or not the maturity is in fact accelerated (unless, in the
case of (a) or (b), the payment default or event of default has been
cured or waived or ceased to exist and any related acceleration has
been rescinded) or (c) in the event that any judicial proceeding is
pending with respect to a payment default or event of default
described in (a) or (b); or
-- in the event that any subordinated debt securities have been declared
due and payable before their stated maturity.
If the trustee under the subordinated debt indenture or any holders of the
subordinated debt securities receive any payment or distribution that is
prohibited under the subordination
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provisions, then the trustee or the holders will have to repay that money to the
holders of the senior indebtedness.
Even if the subordination provisions prevent us from making any payment
when due on the subordinated debt securities of any series, we will be in
default on our obligations under that series if we do not make the payment when
due. This means that the trustee under the subordinated debt indenture and the
holders of that series can take action against us, but they will not receive any
money until the claims of the holders of senior indebtedness have been fully
satisfied.
The subordinated debt indenture allows the holders of senior indebtedness
to obtain a court order requiring us and any holder of subordinated debt
securities to comply with the subordination provisions.
RESTRICTION ON LIENS
In the senior debt indenture, we promise, with respect to each series of
senior debt securities, not to create or guarantee any debt for borrowed money
that is secured by a lien on the voting or profit participating equity ownership
interests that we or any of our subsidiaries own in Goldman, Sachs & Co., or in
any subsidiary that beneficially owns or holds, directly or indirectly, those
interests in Goldman, Sachs & Co., unless we also secure the senior debt
securities of that series on an equal or priority basis with the other secured
debt. Our promise, however, is subject to an important exception: we may secure
debt for borrowed money with liens on those interests without securing the
senior debt securities of any series if our board of directors determines that
the liens do not materially detract from or interfere with the value or control
of those interests, as of the date of the determination.
The subordinated debt indenture does not include the promise described in the
preceding paragraph.
Except as noted above, neither indenture restricts our ability to put liens
on our interests in our subsidiaries other than Goldman, Sachs & Co., nor do the
indentures restrict our ability to sell or otherwise dispose of our interests in
any of our subsidiaries, including Goldman, Sachs & Co. In addition, the
restriction on liens in the senior debt indenture applies only to liens that
secure debt for borrowed money. For example, liens imposed by operation of law,
such as liens to secure statutory obligations for taxes or workers' compensation
benefits, or liens we create to secure obligations to pay legal judgments or
surety bonds, would not be covered by this restriction.
DEFEASANCE AND COVENANT DEFEASANCE
Unless we say otherwise in the applicable prospectus supplement, the
provisions for full defeasance and covenant defeasance described below apply to
each senior and subordinated debt security. In general, we expect these
provisions to apply to each debt security that has a specified currency of U.S.
dollars and is not a floating rate or indexed debt security.
FULL DEFEASANCE. If there is a change in U.S. federal tax law, as
described below, we can legally release ourselves from all payment and other
obligations on any debt securities. This is called full defeasance. For us to do
so, each of the following must occur:
-- We must deposit in trust for the benefit of all holders of those debt
securities a combination of money and U.S. government or U.S.
government agency notes or bonds that will generate enough cash to
make interest, principal and any other payments on those debt
securities on their various due dates;
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-- There must be a change in current U.S. federal tax law or an Internal
Revenue Service ruling that lets us make the above deposit without
causing the holders to be taxed on those debt securities any
differently than if we did not make the deposit and just repaid those
debt securities ourselves. Under current federal tax law, the deposit
and our legal release from your debt security would be treated as
though we took back your debt security and gave you your share of the
cash and notes or bonds deposited in trust. In that event, you could
recognize gain or loss on your debt security;
-- We must deliver to the trustee a legal opinion of our counsel
confirming the tax law change described above; and
-- In the case of the subordinated debt securities, the following
requirements must also be met:
-- No event or condition may exist that, under the provisions described
above under "-- Subordination Provisions" above, would prevent us
from making payments of principal, premium or interest on those
subordinated debt securities on the date of the deposit referred to
above or during the 90 days after that date; and
-- We must deliver to the trustee an opinion of counsel to the effect
that (a) the trust funds will not be subject to any rights of holders
of senior indebtedness and (b) after the 90-day period referred to
above, the trust funds will not be subject to any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, except that if a court were to rule
under any of those laws in any case or proceeding that the trust
funds remained our property, then the relevant trustee and the
holders of the subordinated debt securities would be entitled to some
enumerated rights as secured creditors in the trust funds.
If we ever fully defeased your debt security, you would have to rely solely
on the trust deposit for payments on your debt security. You would not be able
to look to us for payment in the event of any shortfall.
COVENANT DEFEASANCE. Under current U.S. federal tax law, we can make the
same type of deposit described above and be released from the restriction on
liens described under "-- Restriction on Liens" above and any other restrictive
covenants relating to your debt security that may be described in your
prospectus supplement. This is called covenant defeasance. In that event, you
would lose the protection of those restrictive covenants. In order to achieve
covenant defeasance for any debt securities, we must do both of the following:
-- We must deposit in trust for the benefit of the holders of those debt
securities a combination of money and U.S. government or U.S.
government agency notes or bonds that will generate enough cash to
make interest, principal and any other payments on those debt
securities on their various due dates; and
-- We must deliver to the trustee a legal opinion of our counsel
confirming that under current U.S. federal income tax law we may make
the above deposit without causing the holders to be taxed on those
debt securities any differently than if we did not make the deposit
and just repaid those debt securities ourselves.
In addition, in order to achieve covenant defeasance for any subordinated debt
securities that have the benefit of any restrictive covenants, both conditions
described in the last bullet point under "-- Full Defeasance" above must be
satisfied. Subordinated debt securities will not have the benefit of any
restrictive covenants unless the applicable prospectus supplement specifically
provides that they do.
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If we accomplish covenant defeasance with regard to your debt security, the
following provisions of the applicable indenture and your debt security would no
longer apply:
-- If your debt security is a senior debt security, our promise not to
create liens on our voting or profit participating equity ownership
interests in Goldman, Sachs & Co. described above under
"-- Restriction on Liens";
-- Any additional covenants that your prospectus supplement may state are
applicable to your debt security; and
-- The events of default resulting from a breach of covenants, described
below in the fourth bullet point under "-- Default, Remedies and
Waiver of Default -- Events of Default".
If we accomplish covenant defeasance on your debt security, you can still
look to us for repayment of your debt security in the event of any shortfall in
the trust deposit. You should note, however, that if one of the remaining events
of default occurred, such as our bankruptcy, and your debt security became
immediately due and payable, there may be a shortfall. Depending on the event
causing the default, you may not be able to obtain payment of the shortfall.
DEFAULT, REMEDIES AND WAIVER OF DEFAULT
You will have special rights if an event of default with respect to your
series of debt securities occurs and is continuing, as described in this
subsection.
EVENTS OF DEFAULT
When we refer to an event of default with respect to any series of debt
securities, we mean any of the following:
-- We do not pay the principal or any premium on any debt security of
that series on the due date;
-- We do not pay interest on any debt security of that series within 30
days after the due date;
-- We do not deposit a sinking fund payment with regard to any debt
security of that series on the due date, but only if the payment is
required under provisions described in the applicable prospectus
supplement;
-- We remain in breach of our covenant described above under
"-- Restriction on Liens", in the case of any series of senior debt
securities, or any other covenant we make in the indenture for the
benefit of the relevant series, for 60 days after we receive a notice
of default stating that we are in breach. The notice must be sent by
the trustee or the holders of not less than 10% in principal amount of
the relevant series of debt securities;
-- We file for bankruptcy or other events of bankruptcy, insolvency or
reorganization relating to The Goldman Sachs Group, Inc. occur. Those
events must arise under U.S. federal or state law, unless we merge,
consolidate or sell our assets as described above and the successor
firm is a non-U.S. entity. If that happens, then those events must
arise under U.S. federal or state law or the law of the jurisdiction
in which the successor firm is legally organized; or
-- If the applicable prospectus supplement states that any additional
event of default applies to the series, that event of default occurs.
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REMEDIES IF AN EVENT OF DEFAULT OCCURS
If you are the holder of a subordinated debt security, all the remedies
available upon the occurrence of an event of default under the subordinated debt
indenture will be subject to the restrictions on the subordinated debt
securities described above under "-- Subordination Provisions".
If an event of default has occurred with respect to any series of debt
securities and has not been cured or waived, the trustee or the holders of not
less than 25% in principal amount of all debt securities of that series may
declare the entire principal amount of the debt securities of that series to be
due immediately. If the event of default occurs because of events in bankruptcy,
insolvency or reorganization relating to The Goldman Sachs Group, Inc., the
entire principal amount of the debt securities of that series will be
automatically accelerated, without any action by the trustee or any holder.
Each of the situations described above is called an acceleration of the
maturity of the affected series of debt securities. If the maturity of any
series is accelerated and a judgment for payment has not yet been obtained, the
holders of a majority in principal amount of the debt securities of that series
may cancel the acceleration for the entire series.
If an event of default occurs, the trustee will have special duties. In
that situation, the trustee will be obligated to use those of its rights and
powers under the relevant indenture, and to use the same degree of care and
skill in doing so, that a prudent person would use in that situation in
conducting his or her own affairs.
Except as described in the prior paragraph, the trustee is not required to
take any action under the relevant indenture at the request of any holders
unless the holders offer the trustee reasonable protection from expenses and
liability. This is called an indemnity. If the trustee is provided with an
indemnity reasonably satisfactory to it, the holders of a majority in principal
amount of all debt securities of the relevant series may direct the time, method
and place of conducting any lawsuit or other formal legal action seeking any
remedy available to that trustee with respect to that series. These majority
holders may also direct the trustee in performing any other action under the
applicable indenture with respect to the debt securities of that series.
Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to any debt security, the following must occur:
-- The holder of your debt security must give the trustee written notice
that an event of default has occurred, and the event of default must
not have been cured or waived.
-- The holders of not less than 25% in principal amount of all debt
securities of your series must make a written request that the trustee
take action because of the default, and they or other holders must
offer to the trustee indemnity reasonably satisfactory to the trustee
against the cost and other liabilities of taking that action.
-- The trustee must not have taken action for 60 days after the above
steps have been taken.
-- During those 60 days, the holders of a majority in principal amount of
the debt securities of your series must not have given the trustee
directions that are inconsistent with the written request of the
holders of not less than 25% in principal amount of the debt
securities of your series.
You are entitled at any time, however, to bring a lawsuit for the payment of
money due on your debt security on or after its due date.
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WAIVER OF DEFAULT
The holders of not less than a majority in principal amount of the debt
securities of any series may waive a default for all debt securities of that
series. If this happens, the default will be treated as if it has not occurred.
No one can waive a payment default on your debt security, however, without the
approval of the particular holder of that debt security.
WE WILL GIVE THE TRUSTEE INFORMATION ABOUT DEFAULTS ANNUALLY
We will furnish to each trustee every year a written statement of two of
our officers certifying that to their knowledge we are in compliance with the
applicable indenture and the debt securities issued under it, or else specifying
any default under the indenture.
Book-entry and other indirect owners should consult their banks or brokers for
information on how to give notice or direction to or make a request of the
trustee and how to declare or cancel an acceleration of the maturity. Book-entry
and other indirect owners are described below under "Legal Ownership and
Book-Entry Issuance".
MODIFICATION OF THE INDENTURES AND WAIVER OF COVENANTS
There are four types of changes we can make to a particular indenture and
the debt securities of any series issued under that indenture.
CHANGES REQUIRING EACH HOLDER'S APPROVAL
First, there are changes that cannot be made without the approval of each
holder of a debt security affected by the change under a particular indenture.
Here is a list of those types of changes:
-- change the stated maturity for any principal or interest payment on a
debt security;
-- reduce the principal amount, the amount payable on acceleration of the
maturity after a default, the interest rate or the redemption price
for a debt security;
-- permit redemption of a debt security if not previously permitted;
-- impair any right a holder may have to require repayment of its debt
security;
-- impair any right that a holder of an indexed debt security may have to
exchange the debt security for securities or other property;
-- change the currency of any payment on a debt security other than as
permitted by the debt security;
-- change the place of payment on a debt security, if it is in non-global
form;
-- impair a holder's right to sue for payment of any amount due on its
debt security;
-- reduce the percentage in principal amount of the debt securities of
any one or more affected series, taken together, the approval of whose
holders is needed to change the indenture or those debt securities;
-- reduce the percentage in principal amount of the debt securities of
any one or more affected series, taken separately or together, as the
case may be, the consent of whose holders is needed to waive our
compliance with the applicable indenture or to waive defaults; and
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-- change the provisions of the applicable indenture dealing with
modification and waiver in any other respect, except to increase any
required percentage referred to above or to add to the provisions that
cannot be changed or waived without approval.
CHANGES NOT REQUIRING APPROVAL
The second type of change does not require any approval by holders of the
debt securities of an affected series. These changes are limited to
clarifications and changes that would not adversely affect the debt securities
of that series in any material respect. Nor do we need any approval to make
changes that affect only debt securities to be issued under the applicable
indenture after the changes take effect.
We may also make changes or obtain waivers that do not adversely affect a
particular debt security, even if they affect other debt securities. In those
cases, we do not need to obtain the approval of the holder of that debt
security; we need only obtain any required approvals from the holders of the
affected debt securities.
MODIFICATION OF SUBORDINATION PROVISIONS
We may not amend the subordinated debt indenture to alter the subordination
of any outstanding subordinated debt securities without the written consent of
each holder of senior indebtedness then outstanding who would be adversely
affected. In addition, we may not modify the subordination provisions of the
subordinated debt indenture in a manner that would adversely affect the
outstanding subordinated debt securities of any one or more series in any
material respect, without the consent of the holders of a majority in aggregate
principal amount of all affected series, voting together as one class.
CHANGES REQUIRING MAJORITY APPROVAL
Any other change to a particular indenture and the debt securities issued
under that indenture would require the following approval:
-- If the change affects only the debt securities of a particular series,
it must be approved by the holders of a majority in principal amount
of the debt securities of that series.
-- If the change affects the debt securities of more than one series of
debt securities issued under the applicable indenture, it must be
approved by the holders of a majority in principal amount of all
series affected by the change, with the debt securities of all the
affected series voting together as one class for this purpose.
In each case, the required approval must be given by written consent.
The same majority approval would be required for us to obtain a waiver of
any of our covenants in either indenture. Our covenants include the promises we
make about merging and putting liens on our interests in Goldman, Sachs & Co.,
which we describe above under "-- Mergers and Similar Transactions" and
"-- Restrictions on Liens" and which, in the latter case, are only for the
benefit of the holders of our senior debt securities. If the holders approve a
waiver of a covenant, we will not have to comply with it. The holders, however,
cannot approve a waiver of any provision in a particular debt security, or in
the applicable indenture as it affects that debt security, that we cannot change
without the approval of the holder of that debt security as described above in
"-- Changes Requiring Each Holder's Approval", unless that holder approves the
waiver.
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Book-entry and other indirect owners should consult their banks or brokers for
information on how approval may be granted or denied if we seek to change an
indenture or any debt securities or request a waiver.
SPECIAL RULES FOR ACTION BY HOLDERS
When holders take any action under either indenture, such as giving a
notice of default, declaring an acceleration, approving any change or waiver or
giving the trustee an instruction, we will apply the following rules.
ONLY OUTSTANDING DEBT SECURITIES ARE ELIGIBLE
Only holders of outstanding debt securities of the applicable series will
be eligible to participate in any action by holders of debt securities of that
series. Also, we will count only outstanding debt securities in determining
whether the various percentage requirements for taking action have been met. For
these purposes, a debt security will not be "outstanding":
-- if it has been surrendered for cancellation;
-- if we have deposited or set aside, in trust for its holder, money for
its payment or redemption;
-- if we have fully defeased it as described above under "-- Defeasance
and Covenant Defeasance -- Full Defeasance"; or
-- if we or one of our affiliates, such as Goldman, Sachs & Co., is the
owner.
ELIGIBLE PRINCIPAL AMOUNT OF SOME DEBT SECURITIES
In some situations, we may follow special rules in calculating the
principal amount of a debt security that is to be treated as outstanding for the
purposes described above. This may happen, for example, if the principal amount
is payable in a non-U.S. dollar currency, increases over time or is not to be
fixed until maturity.
For any debt security of the kind described below, we will decide how much
principal amount to attribute to the debt security as follows:
-- For an original issue discount debt security, we will use the
principal amount that would be due and payable on the action date if
the maturity of the debt security were accelerated to that date
because of a default;
-- For a debt security whose principal amount is not known, we will use
any amount that we indicate in the prospectus supplement for that debt
security. The principal amount of a debt security may not be known,
for example, because it is based on an index that changes from time to
time and the principal amount is not to be determined until a later
date; or
-- For debt securities with a principal amount denominated in one or more
non-U.S. dollar currencies or currency units, we will use the U.S.
dollar equivalent, which we will determine.
DETERMINING RECORD DATES FOR ACTION BY HOLDERS
We will generally be entitled to set any day as a record date for the
purpose of determining the holders that are entitled to take action under either
indenture. In certain limited circumstances, only the trustee will be entitled
to set a record date for action by holders. If we or the trustee set a record
date for an approval or other action to be taken by holders, that vote or
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action may be taken only by persons or entities who are holders on the record
date and must be taken during the period that we specify for this purpose, or
that the trustee specifies if it sets the record date. We or the trustee, as
applicable, may shorten or lengthen this period from time to time. This period,
however, may not extend beyond the 180th day after the record date for the
action. In addition, record dates for any global debt security may be set in
accordance with procedures established by the depositary from time to time.
Accordingly, record dates for global debt securities may differ from those for
other debt securities.
FORM, EXCHANGE AND TRANSFER OF DEBT SECURITIES
If any debt securities cease to be issued in registered global form, they
will be issued:
-- only in fully registered form;
-- without interest coupons; and
-- unless we indicate otherwise in your prospectus supplement, in
denominations of $1,000 and that are multiples of $1,000.
Holders may exchange their debt securities for debt securities of smaller
denominations or combined into fewer debt securities of larger denominations, as
long as the total principal amount is not changed.
Holders may exchange or transfer their debt securities at the office of the
trustee. They may also replace lost, stolen, destroyed or mutilated debt
securities at that office. We have appointed the trustee to act as our agent for
registering debt securities in the names of holders and transferring and
replacing debt securities. We may appoint another entity to perform these
functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or
exchange their debt securities, but they may be required to pay for any tax or
other governmental charge associated with the exchange or transfer. The transfer
or exchange, and any replacement, will be made only if our transfer agent is
satisfied with the holder's proof of legal ownership. The transfer agent may
require an indemnity before replacing any debt securities.
If we have designated additional transfer agents for your debt security,
they will be named in your prospectus supplement. We may appoint additional
transfer agents or cancel the appointment of any particular transfer agent. We
may also approve a change in the office through which any transfer agent acts.
If the debt securities of any series are redeemable and we redeem less than
all those debt securities, we may block the transfer or exchange of those debt
securities during the period beginning 15 days before the day we mail the notice
of redemption and ending on the day of that mailing, in order to freeze the list
of holders to prepare the mailing. We may also refuse to register transfers of
or exchange any debt security selected for redemption, except that we will
continue to permit transfers and exchanges of the unredeemed portion of any debt
security being partially redeemed.
If a debt security is issued as a global debt security, only the
depositary -- e.g., DTC, Euroclear or Clearstream, Luxembourg -- will be
entitled to transfer and exchange the debt security as described in this
subsection, since the depositary will be the sole holder of the debt security.
The rules for exchange described above apply to exchange of debt securities
for other debt securities of the same series and kind. If a debt security is
exchangeable for a different kind of security, such as one that we have not
issued, or for other property, the rules governing that type of exchange will be
described in the applicable prospectus supplement.
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PAYMENT MECHANICS FOR DEBT SECURITIES
WHO RECEIVES PAYMENT?
If interest is due on a debt security on an interest payment date, we will
pay the interest to the person in whose name the debt security is registered at
the close of business on the regular record date relating to the interest
payment date as described below under "-- Payment and Record Dates for
Interest". If interest is due at maturity but on a day that is not an interest
payment date, we will pay the interest to the person entitled to receive the
principal of the debt security. If principal or another amount besides interest
is due on a debt security at maturity, we will pay the amount to the holder of
the debt security against surrender of the debt security at a proper place of
payment or, in the case of a global debt security, in accordance with the
applicable policies of the depositary, Euroclear and Clearstream, Luxembourg, as
applicable.
PAYMENT AND RECORD DATES FOR INTEREST
Unless we specify otherwise in the applicable prospectus supplement,
interest on any fixed rate debt security will be payable semiannually each May
15 and November 15 and at maturity, and the regular record date relating to an
interest payment date for any fixed rate debt security will be the May 1 or
November 1 next preceding that interest payment date. The regular record date
relating to an interest payment date for any floating rate debt security will be
the 15th calendar day before that interest payment date. These record dates will
apply regardless of whether a particular record date is a "business day", as
defined below. For the purpose of determining the holder at the close of
business on a regular record date when business is not being conducted, the
close of business will mean 5:00 P.M., New York City time, on that day.
BUSINESS DAY. The term "business day" means, for any debt security, a day
that meets all the following applicable requirements:
-- for all debt securities, is a Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in New York
City generally are authorized or obligated by law, regulation or
executive order to close;
-- if the debt security is a floating rate debt security whose interest
rate is based on LIBOR, is also a day on which dealings in the
relevant index currency specified in the applicable prospectus
supplement are transacted in the London interbank market;
-- if the debt security has a specified currency other than U.S. dollars
or euros, is also a day on which banking institutions are not
authorized or obligated by law, regulation or executive order to close
in the principal financial center of the country issuing the specified
currency;
-- if the debt security either is a floating rate debt security whose
interest rate is based on EURIBOR or has a specified currency of
euros, is also a day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System, or any successor
system, is open for business;
-- if the debt security is held through Euroclear, is also not a day on
which banking institutions in Brussels, Belgium are generally
authorized or obligated by law, regulation or executive order to
close; and
-- if the debt security is held through Clearstream, Luxembourg, is also
not a day on which banking institutions in Luxembourg are generally
authorized or obligated by law, regulation or executive order to
close.
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HOW WE WILL MAKE PAYMENTS DUE IN U.S. DOLLARS
We will follow the practice described in this subsection when paying
amounts due in U.S. dollars. Payments of amounts due in other currencies will be
made as described in the next subsection.
PAYMENTS ON GLOBAL DEBT SECURITIES. We will make payments on a global debt
security in accordance with the applicable policies of the depositary as in
effect from time to time. Under those policies, we will pay directly to the
depositary, or its nominee, and not to any indirect owners who own beneficial
interests in the global debt security. An indirect owner's right to receive
those payments will be governed by the rules and practices of the depositary and
its participants, as described below in the section entitled "Legal Ownership
and Book-Entry Issuance -- What Is a Global Security?".
PAYMENTS ON NON-GLOBAL DEBT SECURITIES. We will make payments on a debt
security in non-global, registered form as follows. We will pay interest that is
due on an interest payment date by check mailed on the interest payment date to
the holder at his or her address shown on the trustee's records as of the close
of business on the regular record date. We will make all other payments by check
at the paying agent described below, against surrender of the debt security. All
payments by check will be made in next-day funds -- i.e., funds that become
available on the day after the check is cashed.
Alternatively, if a non-global debt security has a face amount of at least
$1,000,000 and the holder asks us to do so, we will pay any amount that becomes
due on the debt security by wire transfer of immediately available funds to an
account at a bank in New York City, on the due date. To request wire payment,
the holder must give the paying agent appropriate wire transfer instructions at
least five business days before the requested wire payment is due. In the case
of any interest payment due on an interest payment date, the instructions must
be given by the person or entity who is the holder on the relevant regular
record date. In the case of any other payment, payment will be made only after
the debt security is surrendered to the paying agent. Any wire instructions,
once properly given, will remain in effect unless and until new instructions are
given in the manner described above.
Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive payments on their debt securities.
HOW WE WILL MAKE PAYMENTS DUE IN OTHER CURRENCIES
We will follow the practice described in this subsection when paying
amounts that are due in a specified currency other than U.S. dollars.
PAYMENTS ON GLOBAL DEBT SECURITIES. We will make payments on a global debt
security in accordance with the applicable policies as in effect from time to
time of the depositary, which will be DTC, Euroclear or Clearstream, Luxembourg.
Unless we specify otherwise in the applicable prospectus supplement, The
Depository Trust Company, New York, New York, known as DTC, will be the
depositary for all debt securities in global form. We understand that DTC's
policies, as currently in effect, are as follows:
Unless otherwise indicated in your prospectus supplement, if you are an
indirect owner of global debt securities denominated in a specified currency
other than U.S. dollars and if you have
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the right to elect to receive payments in that other currency and do so elect,
you must notify the participant through which your interest in the global debt
security is held of your election:
-- on or before the applicable regular record date, in the case of a
payment of interest; or
-- on or before the 16th day before the stated maturity, or any
redemption or repayment date, in the case of payment of principal or
any premium.
Your participant must, in turn, notify DTC of your election on or before
the third DTC business day after that regular record date, in the case of a
payment of interest, and on or before the 12th DTC business day prior to the
stated maturity, or on the redemption or repayment date if your debt security is
redeemed or repaid earlier, in the case of a payment of principal or any
premium.
DTC, in turn, will notify the paying agent of your election in accordance
with DTC's procedures.
If complete instructions are received by the participant and forwarded by
the participant to DTC, and by DTC to the paying agent, on or before the dates
noted above, the paying agent, in accordance with DTC's instructions, will make
the payments to you or your participant by wire transfer of immediately
available funds to an account maintained by the payee with a bank located in the
country issuing the specified currency or in another jurisdiction acceptable to
us and the paying agent.
If the foregoing steps are not properly completed, we expect DTC to inform
the paying agent that payment is to be made in U.S. dollars. In that case, we or
our agent will convert the payment to U.S. dollars in the manner described below
under "-- Conversion to U.S. Dollars". We expect that we or our agent will then
make the payment in U.S. dollars to DTC, and that DTC in turn will pass it along
to its participants.
Indirect owners of a global debt security denominated in a currency other than
U.S. dollars should consult their banks or brokers for information on how to
request payment in the specified currency.
PAYMENTS ON NON-GLOBAL DEBT SECURITIES. Except as described in the last
paragraph under this heading, we will make payments on debt securities in
non-global form in the applicable specified currency. We will make these
payments by wire transfer of immediately available funds to any account that is
maintained in the applicable specified currency at a bank designated by the
holder and is acceptable to us and the trustee. To designate an account for wire
payment, the holder must give the paying agent appropriate wire instructions at
least five business days before the requested wire payment is due. In the case
of any interest payment due on an interest payment date, the instructions must
be given by the person or entity who is the holder on the regular record date.
In the case of any other payment, the payment will be made only after the debt
security is surrendered to the paying agent. Any instructions, once properly
given, will remain in effect unless and until new instructions are properly
given in the manner described above.
If a holder fails to give instructions as described above, we will notify
the holder at the address in the trustee's records and will make the payment
within five business days after the holder provides appropriate instructions.
Any late payment made in these circumstances will be treated under the
applicable indenture as if made on the due date, and no interest will accrue on
the late payment from the due date to the date paid.
Although a payment on a debt security in non-global form may be due in a
specified currency other than U.S. dollars, we will make the payment in U.S.
dollars if the holder asks us
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to do so. To request U.S. dollar payment, the holder must provide appropriate
written notice to the trustee at least five business days before the next due
date for which payment in U.S. dollars is requested. In the case of any interest
payment due on an interest payment date, the request must be made by the person
or entity who is the holder on the regular record date. Any request, once
properly made, will remain in effect unless and until revoked by notice properly
given in the manner described above.
Book-entry and other indirect owners of a debt security with a specified
currency other than U.S. dollars should contact their banks or brokers for
information about how to receive payments in the specified currency or in U.S.
dollars.
CONVERSION TO U.S. DOLLARS. When we are asked by a holder to make payments
in U.S. dollars of an amount due in another currency, either on a global debt
security or a non-global debt security as described above, the exchange rate
agent described below will calculate the U.S. dollar amount the holder receives
in the exchange rate agent's discretion.
A holder that requests payment in U.S. dollars will bear all associated
currency exchange costs, which will be deducted from the payment.
WHEN THE SPECIFIED CURRENCY IS NOT AVAILABLE. If we are obligated to make
any payment in a specified currency other than U.S. dollars, and the specified
currency or any successor currency is not available to us due to circumstances
beyond our control -- such as the imposition of exchange controls or a
disruption in the currency markets -- we will be entitled to satisfy our
obligation to make the payment in that specified currency by making the payment
in U.S. dollars, on the basis of the exchange rate determined by the exchange
rate agent described below, in its discretion.
The foregoing will apply to any debt security, whether in global or
non-global form, and to any payment, including a payment at maturity. Any
payment made under the circumstances and in a manner described above will not
result in a default under any debt security or the applicable indenture.
THE EURO. The euro may be a specified currency for some debt securities.
On January 1, 1999, the euro became the legal currency for the 11 member states
participating in the European Economic and Monetary Union. During a transition
period from January 1, 1999 to December 31, 2001 and for a maximum of six months
after December 31, 2001, the former national currencies of these 11 member
states will continue to be legal tender in their country of issue, at rates
irrevocably fixed on December 31, 1998.
EXCHANGE RATE AGENT. If we issue a debt security in a specified currency
other than U.S. dollars, we will appoint a financial institution to act as the
exchange rate agent and will name the institution initially appointed when the
debt security is originally issued in the applicable prospectus supplement. We
may select Goldman, Sachs & Co. or another of our affiliates to perform this
role. We may change the exchange rate agent from time to time after the original
issue date of the debt security without your consent and without notifying you
of the change.
All determinations made by the exchange rate agent will be in its sole
discretion unless we state in the applicable prospectus supplement that any
determination requires our approval. In the absence of manifest error, those
determinations will be conclusive for all purposes and binding on you and us,
without any liability on the part of the exchange rate agent.
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PAYMENT WHEN OFFICES ARE CLOSED
If any payment is due on a debt security on a day that is not a business
day, we will make the payment on the next day that is a business day. Payments
postponed to the next business day in this situation will be treated under the
applicable indenture as if they were made on the original due date. Postponement
of this kind will not result in a default under any debt security or the
applicable indenture, and no interest will accrue on the postponed amount from
the original due date to the next day that is a business day. The term business
day has a special meaning, which we describe above under "-- Payment and Record
Dates for Interest".
PAYING AGENT
We may appoint one or more financial institutions to act as our paying
agents, at whose designated offices debt securities in non-global entry form may
be surrendered for payment at their maturity. We call each of those offices a
paying agent. We may add, replace or terminate paying agents from time to time.
We may also choose to act as our own paying agent. Initially, we have appointed
the trustee, at its corporate trust office in New York City, as the paying
agent. We must notify you of changes in the paying agent.
UNCLAIMED PAYMENTS
Regardless of who acts as paying agent, all money paid by us to a paying
agent that remains unclaimed at the end of two years after the amount is due to
a holder will be repaid to us. After that two-year period, the holder may look
only to us for payment and not to the trustee, any other paying agent or anyone
else.
NOTICES
Notices to be given to holders of a global debt security will be given only
to the depositary, in accordance with its applicable policies as in effect from
time to time. Notices to be given to holders of debt securities not in global
form will be sent by mail to the respective addresses of the holders as they
appear in the trustee's records, and will be deemed given when mailed. Neither
the failure to give any notice to a particular holder, nor any defect in a
notice given to a particular holder, will affect the sufficiency of any notice
given to another holder.
Book-entry and other indirect owners should consult their banks or brokers for
information on how they will receive notices.
OUR RELATIONSHIP WITH THE TRUSTEE
The Bank of New York has provided commercial banking and other services for
us and our affiliates in the past and may do so in the future. Among other
things, The Bank of New York provides us with a line of credit, holds debt
securities issued by us and serves as trustee or agent with regard to other debt
obligations of The Goldman Sachs Group, Inc. or its subsidiaries.
The Bank of New York is initially serving as the trustee for both the
senior debt securities and the subordinated debt securities. Consequently, if an
actual or potential event of default occurs with respect to any debt securities,
the trustee may be considered to have a conflicting interest for purposes of the
Trust Indenture Act of 1939. In that case, the trustee may be required to resign
under one of the indentures, and we would be required to appoint a successor
trustee. For this purpose, a "potential" event of default means an event that
would be an event of default if the requirements for giving us default notice or
for the default having to exist for a specific period of time were disregarded.
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DESCRIPTION OF WARRANTS WE MAY OFFER
Please note that in this section entitled "Description of Warrants We May
Offer", references to The Goldman Sachs Group, Inc., "we", "our" and "us" refer
only to The Goldman Sachs Group, Inc. and not to its consolidated subsidiaries.
Also, in this section, references to "holders" mean those who own warrants
registered in their own names, on the books that we or our agent maintain for
this purpose, and not those who own beneficial interests in warrants registered
in street name or in warrants issued in book-entry form through one or more
depositaries. Owners of beneficial interests in the warrants should read the
section below entitled "Legal Ownership and Book-Entry Issuance".
WE MAY ISSUE MANY SERIES OF WARRANTS
We may issue warrants that are debt warrants or universal warrants. We may
offer warrants separately or together with our debt securities. We may also
offer warrants together with other warrants, purchase contracts and debt
securities in the form of units, as summarized below in "Description of Units We
May Offer".
We may issue warrants in such amounts or in as many distinct series as we
wish. This section summarizes terms of the warrants that apply generally to all
series. Most of the financial and other specific terms of your warrant will be
described in the prospectus supplement to be attached to the front of this
prospectus. Those terms may vary from the terms described here.
As you read this section, please remember that the specific terms of your
warrant as described in your prospectus supplement will supplement and, if
applicable, may modify or replace the general terms described in this section.
If there are differences between your prospectus supplement and this prospectus,
your prospectus supplement will control. Thus, the statements we make in this
section may not apply to your warrant.
When we refer to a series of warrants, we mean all warrants issued as part
of the same series under the applicable warrant agreement. When we refer to your
prospectus supplement, we mean the prospectus supplement describing the specific
terms of the warrant you purchase. The terms used in your prospectus supplement
will have the meanings described in this prospectus, unless otherwise specified.
DEBT WARRANTS
We may issue warrants for the purchase of our debt securities on terms to
be determined at the time of sale. We refer to this type of warrant as a "debt
warrant".
UNIVERSAL WARRANTS
We may also issue warrants, on terms to be determined at the time of sale,
for the purchase or sale of, or whose cash value is determined by reference to
the performance, level or value of, one or more of the following:
-- securities of one or more issuers other than The Goldman Sachs Group,
Inc.;
-- one or more currencies;
-- one or more commodities;
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-- any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and
-- one or more indices or baskets of the items described above.
We refer to this type of warrant as a "universal warrant". We refer to each
property described above as a "warrant property".
We may satisfy our obligations, if any, with respect to any universal
warrants by delivering:
-- the warrant property;
-- the cash value of the warrant property; or
-- the cash value of the warrants determined by reference to the
performance, level or value of the warrant property.
The applicable prospectus supplement will describe what we may deliver to
satisfy our obligations with respect to any universal warrants.
GENERAL TERMS OF WARRANTS
Your prospectus supplement may contain, where applicable, the following
information about your warrants:
-- the specific designation and aggregate number of, and the price at
which we will issue, the warrants;
-- the currency with which the warrants may be purchased;
-- the date on which the right to exercise the warrants will begin and
the date on which that right will expire or, if you may not
continuously exercise the warrants throughout that period, the
specific date or dates on which you may exercise the warrants;
-- whether the warrants will be issued in fully registered form or bearer
form, in global or non-global form or in any combination of these
forms, although, in any case, the form of a warrant included in a unit
will correspond to the form of the unit and of any debt security or
purchase contract included in that unit;
-- the identities of the warrant agent, any depositaries and any paying,
transfer, calculation or other agents for the warrants;
-- any securities exchange or quotation system on which the warrants or
any securities deliverable upon exercise of the warrants may be
listed;
-- whether the warrants are to be sold separately or with other
securities, as part of units or otherwise; and
-- any other terms of the warrants.
If we issue warrants as part of a unit, the accompanying prospectus
supplement will specify whether the warrants will be separable from the other
securities in the unit before the warrants' expiration date. A warrant issued in
a unit in the United States may not be so separated before the 91st day after
the unit is issued.
No holder of a warrant will have any rights of a holder of the warrant
property purchasable under the warrant.
An investment in a warrant may involve special risks, including risks
associated with indexed securities and currency-related risks if the warrant or
the warrant property is linked to an index or is payable in or otherwise linked
to a non-U.S. dollar currency. We describe some of these
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risks below under "Considerations Relating to Indexed Securities" and
"Considerations Relating to Securities Denominated or Payable in or Linked to a
Non-U.S. Dollar Currency".
Because we are a holding company, our ability to perform our obligations on
the warrants will depend in part on our ability to participate in distributions
of assets from our subsidiaries. We discuss these matters above under
"Description of Debt Securities We May Offer -- We Are a Holding Company".
Our affiliates may resell warrants in market-making transactions after
their initial issuance. We discuss these transactions above under "Description
of Debt Securities We May Offer -- Information in the Prospectus
Supplement -- Market-Making Transactions".
ADDITIONAL TERMS OF WARRANTS
DEBT WARRANTS
If you purchase debt warrants, your prospectus supplement may contain,
where applicable, the following additional information about your warrants:
-- the designation, aggregate principal amount, currency and terms of the
debt securities that may be purchased upon exercise of the debt
warrants;
-- whether the exercise price may be paid in cash, by the exchange of any
debt warrants or other securities or both and the method of exercising
the debt warrants; and
-- the designation, terms and amount of debt securities, if any, to be
issued together with each of the debt warrants and the date, if any,
after which the debt warrants and debt securities will be separately
transferable.
UNIVERSAL WARRANTS
If you purchase universal warrants, your prospectus supplement may contain,
where applicable, the following additional information about your warrants:
-- whether the universal warrants are put warrants or call warrants;
-- the warrant property, and the amount or method for determining the
amount of warrant property, deliverable upon exercise of each
universal warrant;
-- the price at which and the currency with which the warrant property
may be purchased or sold upon the exercise of each universal warrant,
or the method of determining that price;
-- whether the exercise price may be paid in cash, by the exchange of any
universal warrants or other securities or both, and the method of
exercising the universal warrants; and
-- whether the exercise of the universal warrants is to be settled in
cash or by delivery of the warrant property or both and whether
settlement will occur on a net basis or a gross basis.
GENERAL PROVISIONS OF WARRANT AGREEMENTS
We will issue the warrants in one or more series and under one or more
warrant agreements, each to be entered into between us and a bank, trust company
or other financial institution as warrant agent. We may add, replace or
terminate warrant agents from time to time. We may also choose to act as our own
warrant agent. We will describe the warrant agreement under which we issue any
warrants in the applicable prospectus supplement, and we will file that
agreement with the SEC, either as an exhibit to a current report on Form 8-K or
as an exhibit to
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the registration statement of which this prospectus is a part. See "Available
Information" above for information on how to obtain a copy of a warrant
agreement when it is filed.
In some cases, we may issue warrants under one of our indentures. For these
warrants, the applicable provisions relating to our debt securities and
indentures would apply instead of the provisions described in this section.
ENFORCEMENT OF RIGHTS
The warrant agent under a warrant agreement will act solely as our agent in
connection with the warrants issued under that agreement. The warrant agent will
not assume any obligation or relationship of agency or trust for or with any
holders of those warrants. Any holder of warrants may, without the consent of
any other person, enforce by appropriate legal action, on its own behalf, its
right to exercise those warrants in accordance with their terms. No holder of
any warrant will be entitled to any rights of a holder of the debt securities or
any other warrant property purchasable upon exercise of the warrant, including
any right to receive payments on those debt securities or other warrant property
or to enforce any covenants or rights in the relevant indenture or any other
agreement.
MODIFICATIONS WITHOUT CONSENT OF HOLDERS
We and the applicable warrant agent may amend any warrant or warrant
agreement without the consent of any holder:
-- to cure any ambiguity;
-- to cure, correct or supplement any defective or inconsistent
provision; or
-- to make any other change that we believe is necessary or desirable and
will not adversely affect the interests of the affected holders in any
material respect.
We do not need any approval to make changes that affect only warrants to be
issued after the changes take effect. We may also make changes that do not
adversely affect a particular warrant in any material respect, even if they
adversely affect other warrants in a material respect. In those cases, we do not
need to obtain the approval of the holder of the unaffected warrant; we need
only obtain any required approvals from the holders of the affected warrants.
MODIFICATIONS WITH CONSENT OF HOLDERS
We may not amend any particular warrant or a warrant agreement with respect
to any particular warrant unless we obtain the consent of the holder of that
warrant, if the amendment would:
-- change the exercise price of the warrant;
-- change the kind or reduce the amount of the warrant property or other
consideration receivable upon exercise, cancellation or expiration of
the warrant, except as permitted by the antidilution or other
adjustment provisions of the warrant;
-- shorten, advance or defer the period of time during which the holder
may exercise the warrant or otherwise impair the holder's right to
exercise the warrant; or
-- reduce the percentage of outstanding, unexpired warrants of any series
or class the consent of whose holders is required to amend the series
or class, or the applicable warrant agreement with regard to that
series or class, as described below.
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Any other change to a particular warrant agreement and the warrants issued
under that agreement would require the following approval:
-- If the change affects only the warrants of a particular series issued
under that agreement, the change must be approved by the holders of a
majority of the outstanding, unexpired warrants of that series.
-- If the change affects the warrants of more than one series issued
under that agreement, the change must be approved by the holders of a
majority of all outstanding, unexpired warrants of all series affected
by the change, with the warrants of all the affected series voting
together as one class for this purpose.
In each case, the required approval must be given in writing.
WARRANT AGREEMENT WILL NOT BE QUALIFIED UNDER TRUST INDENTURE ACT
No warrant agreement will be qualified as an indenture, and no warrant
agent will be required to qualify as a trustee, under the Trust Indenture Act.
Therefore, holders of warrants issued under a warrant agreement will not have
the protection of the Trust Indenture Act with respect to their warrants.
MERGER AND SIMILAR TRANSACTIONS PERMITTED; NO RESTRICTIVE COVENANTS OR EVENTS OF
DEFAULT
The warrants and warrant agreements will not restrict our ability to merge
or consolidate with, or sell our assets to, another firm or to engage in any
other transactions. If at any time we merge or consolidate with, or sell our
assets substantially as an entirety to, another firm, the successor corporation
will succeed to and assume our obligations under the warrants and warrant
agreements. We will then be relieved of any further obligation under the
warrants and warrant agreements.
The warrants and warrant agreements will not include any restrictions on
our ability to put liens on our assets, including our interests in our
subsidiaries, nor will they restrict our ability to sell our assets. The
warrants and warrant agreements also will not provide for any events of default
or remedies upon the occurrence of any events of default.
GOVERNING LAW
The warrants and each warrant agreement will be governed by New York law.
FORM, EXCHANGE AND TRANSFER
We will issue each warrant in global -- i.e., book-entry -- form only,
unless we say otherwise in the applicable prospectus supplement. Warrants in
book-entry form will be represented by a global security registered in the name
of a depositary, which will be the holder of all the warrants represented by the
global security. Those who own beneficial interests in a global warrant will do
so through participants in the depositary's system, and the rights of these
indirect owners will be governed solely by the applicable procedures of the
depositary and its participants. We describe book-entry securities below under
"Legal Ownership and Book-Entry Issuance".
In addition, we will issue each warrant in registered form, unless we say
otherwise in the applicable prospectus supplement. Bearer securities would be
subject to special provisions, as we describe below under "Considerations
Relating to Securities Issued in Bearer Form".
If any warrants are issued in non-global form, the following will apply to
them:
The warrants will be issued in fully registered form in denominations
stated in the applicable prospectus supplement. Holders may exchange their
warrants for warrants of smaller denomina-
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tions or combined into fewer warrants of larger denominations, as long as the
total amount is not changed.
Holders may exchange or transfer their warrants at the office of the
warrant agent. They may also replace lost, stolen, destroyed or mutilated
warrants at that office. We may appoint another entity to perform these
functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or
exchange their warrants, but they may be required to pay any tax or other
governmental charge associated with the transfer or exchange. The transfer or
exchange, and any replacement, will be made only if our transfer agent is
satisfied with the holder's proof of legal ownership. The transfer agent may
also require an indemnity before replacing any warrants.
If we have the right to redeem, accelerate or settle any warrants before
their expiration, and we exercise our right as to less than all those warrants,
we may block the transfer or exchange of those warrants during the period
beginning 15 days before the day we mail the notice of exercise and ending on
the day of that mailing, in order to freeze the list of holders to prepare the
mailing. We may also refuse to register transfers of or exchange any warrant
selected for early settlement, except that we will continue to permit transfers
and exchanges of the unsettled portion of any warrant being partially settled.
Only the depositary will be entitled to transfer or exchange a warrant in
global form, since it will be the sole holder of the warrant.
PAYMENTS AND NOTICES
In making payments and giving notices with respect to our warrants, we will
follow the procedures we plan to use with respect to our debt securities, where
applicable. We describe these procedures above under "Description of Debt
Securities We May Offer -- Payment Mechanics for Debt Securities" and
"-- Notices".
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DESCRIPTION OF PURCHASE CONTRACTS WE MAY OFFER
Please note that in this section entitled "Description of Purchase Contracts We
May Offer", references to The Goldman Sachs Group, Inc., "we", "our" and "us"
refer only to The Goldman Sachs Group, Inc. and not to its consolidated
subsidiaries. Also, in this section, references to "holders" mean those who own
purchase contracts registered in their own names, on the books that we or our
agent maintain for this purpose, and not those who own beneficial interests in
purchase contracts registered in street name or in purchase contracts issued in
book-entry form through one or more depositaries. Owners of beneficial interests
in the purchase contracts should read the section below entitled "Legal
Ownership and Book-Entry Issuance".
PURCHASE CONTRACT PROPERTY
We may issue purchase contracts for the purchase or sale of, or whose cash
value is determined by reference or linked to the performance, level or value
of, one or more of the following:
-- securities of one or more issuers, including our securities described
in this prospectus and securities of third parties;
-- one or more currencies;
-- one or more commodities;
-- any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and
-- one or more indices or baskets of the items described above.
We refer to each property described above as a "purchase contract property".
Each purchase contract will obligate:
-- the holder to purchase or sell, and obligate us to sell or purchase,
on specified dates, one or more purchase contract properties at a
specified price or prices; or
-- the holder or us to settle the purchase contract by reference to the
value, performance or level of one or more purchase contract
properties, on specified dates and at a specified price or prices.
Some purchase contracts may include multiple obligations to purchase or sell
different purchase contract properties, and both we and the holder may be
sellers or buyers under the same purchase contract. No holder of a purchase
contract will have any rights of a holder of the purchase contract property
purchasable under the contract, including any right to receive payments on that
property.
An investment in purchase contracts may involve special risks, including
risks associated with indexed securities and currency-related risks if the
purchase contract or purchase contract property is linked to an index or is
payable in or otherwise linked to a non-U.S. dollar currency. We describe some
of these risks below under "Considerations Relating to Indexed Securities" and
"Considerations Relating to Securities Denominated or Payable in or Linked to a
Non-U.S. Dollar Currency".
Because we are a holding company, our ability to perform our obligations on
the purchase contracts will depend in part on our ability to participate in
distributions of assets from our
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subsidiaries. We discuss these matters above under "Description of Debt
Securities We May Offer -- We Are a Holding Company".
Our affiliates may resell purchase contracts after their initial issuance
in market-making transactions. We describe these transactions above under
"Description of Debt Securities We May Offer -- Information in the Prospectus
Supplement -- Market-Making Transactions".
WE MAY ISSUE MANY SERIES OF PURCHASE CONTRACTS
We may issue purchase contracts in such amounts and in as many distinct
series as we wish. In addition, we may issue a purchase contract separately or
as part of a unit, as described below under "Description of Units We May Offer".
This section summarizes terms of the purchase contracts that will apply
generally to all purchase contracts. We will describe most of the financial and
other specific terms of your purchase contract in the prospectus supplement to
be attached to the front of this prospectus. Those terms may vary from the terms
described here.
As you read this section, please remember that the specific terms of your
purchase contract as described in your prospectus supplement will supplement
and, if applicable, may modify or replace the general terms described in this
section. If there are differences between your prospectus supplement and this
prospectus, your prospectus supplement will control. Thus, the statements we
make in this section may not apply to your purchase contract.
When we refer to a series of purchase contracts, we mean all the purchase
contracts issued as part of the same series under the applicable governing
instrument. When we refer to your prospectus supplement, we mean the prospectus
supplement describing the specific terms of the purchase contract you purchase.
The terms used in your prospectus supplement will have the meanings described in
this prospectus, unless otherwise specified.
PREPAID PURCHASE CONTRACTS; APPLICABILITY OF INDENTURE
Some purchase contracts may require the holders to satisfy their
obligations under the contracts at the time the contracts are issued. We refer
to those contracts as "prepaid purchase contracts". Our obligation to settle a
prepaid purchase contract on the relevant settlement date will be one of our
senior debt securities or subordinated debt securities, which are described
above under "Description of Debt Securities We May Offer". Prepaid purchase
contracts will be issued under the applicable indenture, and the provisions of
that indenture will govern those contracts, including the rights and duties of
the holders, the trustee and us with respect to those contracts.
NON-PREPAID PURCHASE CONTRACTS; NO TRUST INDENTURE ACT PROTECTION
Some purchase contracts do not require the holders to satisfy their
obligations under the contracts until settlement. We refer to those contracts as
"non-prepaid purchase contracts". The holder of a non-prepaid purchase contract
may remain obligated to perform under the contract for a substantial period of
time.
Non-prepaid purchase contracts will be issued under a unit agreement, if
they are issued in units, or under some other document, if they are not. For
example, we may issue non-prepaid purchase contracts under which the holder has
multiple obligations to purchase or sell, some of which are prepaid and some of
which are not, under one of our indentures. We describe unit agreements
generally under "Description of Units We May Offer" below. We will describe the
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particular governing document that applies to your non-prepaid purchase
contracts in the applicable prospectus supplement.
Non-prepaid purchase contracts will not be senior debt securities or
subordinated debt securities and will not be issued under one of our indentures,
unless we say otherwise in the applicable prospectus supplement. Consequently,
no governing documents for non-prepaid purchase contracts will be qualified as
indentures, and no third party will be required to qualify as a trustee with
regard to those contracts, under the Trust Indenture Act. Holders of non-prepaid
purchase contracts will not have the protection of the Trust Indenture Act with
respect to those contracts.
GENERAL TERMS OF PURCHASE CONTRACTS
Your prospectus supplement may contain, where applicable, the following
information about your purchase contract:
-- whether the purchase contract obligates the holder to purchase or
sell, or both purchase and sell, one or more purchase contract
properties and the nature and amount of each of those properties, or
the method of determining those amounts;
-- whether the purchase contract is to be prepaid or not and the
governing document for the contract;
-- whether the purchase contract is to be settled by delivery, or by
reference or linkage to the value, performance or level of, the
purchase contract properties;
-- any acceleration, cancellation, termination or other provisions
relating to the settlement of the purchase contract;
-- whether the purchase contract will be issued as part of a unit and, if
so, the other securities comprising the unit and whether any unit
securities will be subject to a security interest in our favor as
described below; and
-- whether the purchase contract will be issued in fully registered or
bearer form and in global or non-global form.
If we issue a purchase contract as part of a unit, the accompanying
prospectus supplement will state whether the contract will be separable from the
other securities in the unit before the contract settlement date. A purchase
contract issued in a unit in the United States may not be so separated before
the 91st day after the unit is issued.
ADDITIONAL TERMS OF NON-PREPAID PURCHASE CONTRACTS
In addition to the general terms described above, a non-prepaid purchase
contract may include the following additional terms.
PLEDGE BY HOLDERS TO SECURE PERFORMANCE
If we say so in the applicable prospectus supplement, the holder's
obligations under the purchase contract and governing document will be secured
by collateral. In that case, the holder, acting through the unit agent as its
attorney-in-fact, if applicable, will pledge the items described below to a
collateral agent named in the prospectus supplement, which will hold them, for
our benefit, as collateral to secure the holder's obligations. We refer to this
as the "pledge" and all the items described below as the "pledged items". The
pledge will create a security interest in the holder's entire interest in and
to:
-- any other securities included in the unit, if the purchase contract is
part of a unit, or any other property specified in the applicable
prospectus supplement;
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-- all additions to and substitutions for the pledged items;
-- all income, proceeds and collections received in respect of the
pledged items; and
-- all powers and rights owned or acquired later with respect to the
pledged items.
The collateral agent will forward all payments from the pledged items to us,
unless the payments have been released from the pledge in accordance with the
purchase contract and the governing document. We will use the payments from the
pledged items to satisfy the holder's obligations under the purchase contract.
SETTLEMENT OF PURCHASE CONTRACTS THAT ARE PART OF UNITS
The following will apply to a non-prepaid purchase contract that is issued
together with any of our debt securities as part of a unit. If the holder fails
to satisfy its obligations under the purchase contract, the unit agent may apply
the principal payments on the debt securities to satisfy those obligations as
provided in the governing document. If the holder is permitted to settle its
obligations by cash payment, the holder may be permitted to do so by delivering
the debt securities in the unit to the unit agent as provided in the governing
document.
Book-entry and other indirect owners should consult their banks or brokers for
information on how to settle their purchase contracts.
FAILURE OF HOLDER TO PERFORM OBLIGATIONS
If the holder fails to settle its obligations under a non-prepaid purchase
contract as required, the holder will not receive the purchase contract property
or other consideration to be delivered at settlement. Holders that fail to make
timely settlement may also be obligated to pay interest or other amounts.
MERGER AND SIMILAR TRANSACTIONS PERMITTED; NO RESTRICTIVE COVENANTS OR EVENTS OF
DEFAULT
Purchase contracts that are not prepaid will not restrict our ability to
merge or consolidate with, or sell our assets to, another firm or to engage in
any other transactions. If at any time we merge or consolidate with, or sell our
assets substantially as an entirety to, another firm, the successor corporation
will succeed to and assume our obligations under these purchase contracts. We
will then be relieved of any further obligation under these purchase contracts.
Purchase contracts that are not prepaid will not include any restrictions
on our ability to put liens on our assets, including our interests in our
subsidiaries, nor will they restrict our ability to sell our assets. These
purchase contracts also will not provide for any events of default or remedies
upon the occurrence of any events of default.
GOVERNING LAW
The purchase contracts and any governing documents will be governed by New
York law.
FORM, EXCHANGE AND TRANSFER
We will issue each purchase contract in global -- i.e., book-entry -- form
only, unless we specify otherwise in the applicable prospectus supplement.
Purchase contracts in book-entry form will be represented by a global security
registered in the name of a depositary, which will be the holder of all the
purchase contracts represented by the global security. Those who own beneficial
interests in a purchase contract will do so through participants in the
depositary's
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system, and the rights of these indirect owners will be governed solely by the
applicable procedures of the depositary and its participants. We describe
book-entry securities under "Legal Ownership and Book-Entry Issuance".
In addition, we will issue each purchase contract in registered form,
unless we say otherwise in the applicable prospectus supplement. Bearer
securities would be subject to special provisions, as we describe below under
"Considerations Relating to Securities Issued in Bearer Form".
If any purchase contracts are issued in non-global form, the following will
apply to them:
-- The purchase contracts will be issued in fully registered form in
denominations stated in the applicable prospectus supplement. Holders
may exchange their purchase contracts for contracts of smaller
denominations or combined into fewer contracts of larger
denominations, as long as the total amount is not changed.
-- Holders may exchange or transfer their purchase contracts at the
office of the trustee, unit agent or other agent we name in the
applicable prospectus supplement. Holders may also replace lost,
stolen, destroyed or mutilated purchase contracts at that office. We
may appoint another entity to perform these functions or perform them
ourselves.
-- Holders will not be required to pay a service charge to transfer or
exchange their purchase contracts, but they may be required to pay for
any tax or other governmental charge associated with the transfer or
exchange. The transfer or exchange, and any replacement, will be made
only if our transfer agent is satisfied with the holder's proof of
legal ownership. The transfer agent may also require an indemnity
before replacing any purchase contracts.
-- If we have the right to redeem, accelerate or settle any purchase
contracts prior to their maturity, and we exercise our right as to
less than all those purchase contracts, we may block the transfer or
exchange of those purchase contracts during the period beginning 15
days before the day we mail the notice of exercise and ending on the
day of that mailing, in order to freeze the list of holders to prepare
the mailing. We may also refuse to register transfers of or exchange
any purchase contract selected for early settlement, except that we
will continue to permit transfers and exchanges of the unsettled
portion of any purchase contract being partially settled.
Only the depositary will be entitled to transfer or exchange a purchase
contract in global form, since it will be the sole holder of the purchase
contract.
PAYMENTS AND NOTICES
In making payments and giving notices with respect to purchase contracts,
we will follow the procedures we plan to use with respect to our debt
securities, when applicable. We describe these procedures above under
"Description of Debt Securities We May Offer -- Payment Mechanics for Debt
Securities" and "-- Notices."
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DESCRIPTION OF UNITS WE MAY OFFER
Please note that in this section entitled "Description of Units We May Offer",
references to The Goldman Sachs Group, Inc., "we", "our" and "us" refer only to
The Goldman Sachs Group, Inc. and not to its consolidated subsidiaries. Also, in
this section, references to "holders" mean those who own units registered in
their own names, on the books that we or our agent maintain for this purpose,
and not those who own beneficial interests in units registered in street name or
in units issued in book-entry form through one or more depositaries. Owners of
beneficial interests in the units should read the section below entitled "Legal
Ownership and Book-Entry Issuance".
We may issue units comprised of one or more debt securities, warrants and
purchase contracts in any combination. Each unit will be issued so that the
holder of the unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations of a holder of
each included security. The unit agreement under which a unit is issued may
provide that the securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified date.
The applicable prospectus supplement may describe:
-- the designation and terms of the units and of the securities
comprising the units, including whether and under what circumstances
those securities may be held or transferred separately;
-- any provisions of the governing unit agreement that differ from those
described below; and
-- any provisions for the issuance, payment, settlement, transfer or
exchange of the units or of the securities comprising the units.
The applicable provisions described in this section, as well as those described
under "Description of Debt Securities We May Offer", "Description of Warrants We
May Offer" and "Description of Purchase Contracts We May Offer", will apply to
each unit and to any debt security, warrant or purchase contract included in
each unit, respectively.
An investment in units may involve special risks, including risks
associated with indexed securities and currency-related risks if the securities
comprising the units are linked to an index or are payable in or otherwise
linked to a non-U.S. dollar currency. We describe some of these risks below
under "Considerations Relating to Indexed Securities" and "Considerations
Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar
Currency".
Our affiliates may resell units after their initial issuance in
market-making transactions. We discuss these transactions above under
"Description of Debt Securities We May Offer -- Information in the Prospectus
Supplement -- Market-Making Transactions".
WE MAY ISSUE MANY SERIES OF UNITS
We may issue units in such amounts and in as many distinct series as we
wish. This section summarizes terms of the units that apply generally to all
series. Most of the financial and other specific terms of your series will be
described in the prospectus supplement to be attached to the front of this
prospectus. Those terms may vary from the terms described here.
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As you read this section, please remember that the specific terms of your unit
as described in your prospectus supplement will supplement and, if applicable,
may modify or replace the general terms described in this section. If there are
differences between your prospectus supplement and this prospectus, your
prospectus supplement will control. Thus, the statements we make in this section
may not apply to your unit.
When we refer to a series of units, we mean all units issued as part of the
same series under the applicable unit agreement. We will identify the series of
which your units are a part in your prospectus supplement. When we refer to your
prospectus supplement, we mean the prospectus supplement describing the specific
terms of the units you purchase. The terms used in your prospectus supplement
will have the meanings described in this prospectus, unless otherwise specified.
UNIT AGREEMENTS: PREPAID, NON-PREPAID AND OTHER
We will issue the units under one or more unit agreements to be entered
into between us and a bank or other financial institution, as unit agent. We may
add, replace or terminate unit agents from time to time. We may also choose to
act as our own unit agent. We will identify the unit agreement under which your
units will be issued and the unit agent under that agreement in your prospectus
supplement.
If a unit includes one or more purchase contracts and all those purchase
contracts are prepaid purchase contracts, we will issue the unit under a
"prepaid unit agreement". Prepaid unit agreements will reflect the fact that the
holders of the related units have no further obligations under the purchase
contracts included in their units. If a unit includes one or more non-prepaid
purchase contracts, we will issue the unit under a "non-prepaid unit agreement".
Non-prepaid unit agreements will reflect the fact that the holders have payment
or other obligations under one or more of the purchase contracts comprising
their units. We may also issue units under other kinds of unit agreements, which
we will describe in the applicable prospectus supplement. In some cases, we may
issue units under one of our indentures.
A unit agreement may also serve as the governing document for a security
included in a unit. For example, a non-prepaid purchase contract that is part of
a unit may be issued under and governed by the relevant unit agreement.
In this prospectus, we refer to prepaid unit agreements, non-prepaid unit
agreements and other unit agreements, generally, as "unit agreements". We will
file the unit agreement under which we issue your units with the SEC, either as
an exhibit to a current report on Form 8-K or as an exhibit to an amendment to
the registration statement of which this prospectus is a part. See "Available
Information" above for information on how to obtain a copy of a unit agreement
when it is filed.
GENERAL PROVISIONS OF A UNIT AGREEMENT
This following provisions will generally apply to all unit agreements
unless otherwise stated in the applicable prospectus supplement.
ENFORCEMENT OF RIGHTS
The unit agent under a unit agreement will act solely as our agent in
connection with the units issued under that agreement. The unit agent will not
assume any obligation or relationship of agency or trust for or with any holders
of those units or of the securities comprising those units. The unit agent will
not be obligated to take any action on behalf of those holders to enforce or
protect their rights under the units or the included securities.
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Except as indicated in the next paragraph, a holder of a unit may, without
the consent of the unit agent or any other holder, enforce its rights as holder
under any security included in the unit, in accordance with the terms of that
security and the indenture, warrant agreement or unit agreement under which that
security is issued. Those terms are described elsewhere in this prospectus under
the sections relating to debt securities, warrants and purchase contracts.
Notwithstanding the foregoing, a unit agreement may limit or otherwise
affect the ability of a holder of units issued under that agreement to enforce
its rights, including any right to bring a legal action, with respect to those
units or any securities, other than debt securities and prepaid purchase
contracts, that are included in those units. Limitations of this kind will be
described in the applicable prospectus supplement.
MODIFICATION WITHOUT CONSENT OF HOLDERS
We and the applicable unit agent may amend any unit or unit agreement
without the consent of any holder:
-- to cure any ambiguity;
-- to correct or supplement any defective or inconsistent provision; or
-- to make any other change that we believe is necessary or desirable and
will not adversely affect the interests of the affected holders in any
material respect.
We do not need any approval to make changes that affect only units to be issued
after the changes take effect. We may also make changes that do not adversely
affect a particular unit in any material respect, even if they adversely affect
other units in a material respect. In those cases, we do not need to obtain the
approval of the holder of the unaffected unit; we need only obtain any required
approvals from the holders of the affected units.
The foregoing applies also to any security issued under a unit agreement,
as the governing document.
MODIFICATION WITH CONSENT OF HOLDERS
We may not amend any particular unit or a unit agreement with respect to
any particular unit unless we obtain the consent of the holder of that unit, if
the amendment would:
-- impair any right of the holder to exercise or enforce any right under
a security included in the unit if the terms of that security require
the consent of the holder to any changes that would impair the
exercise or enforcement of that right;
-- impair the right of the holder to purchase or sell, as the case may
be, the purchase contract property under any non-prepaid purchase
contract issued under the unit agreement, or to require delivery of or
payment for that property when due; or
-- reduce the percentage of outstanding units of any series or class the
consent of whose holders is required to amend that series or class, or
the applicable unit agreement with respect to that series or class, as
described below.
Any other change to a particular unit agreement and the units issued under
that agreement would require the following approval:
-- If the change affects only the units of a particular series issued
under that agreement, the change must be approved by the holders of a
majority of the outstanding units of that series.
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-- If the change affects the units of more than one series issued under
that agreement, it must be approved by the holders of a majority of
all outstanding units of all series affected by the change, with the
units of all the affected series voting together as one class for this
purpose.
These provisions regarding changes with majority approval also apply to changes
affecting any securities issued under a unit agreement, as the governing
document.
In each case, the required approval must be given by written consent.
UNIT AGREEMENTS WILL NOT BE QUALIFIED UNDER TRUST INDENTURE ACT
No unit agreement will be qualified as an indenture, and no unit agent will
be required to qualify as a trustee, under the Trust Indenture Act. Therefore,
holders of units issued under unit agreements will not have the protections of
the Trust Indenture Act with respect to their units.
ADDITIONAL PROVISIONS OF A NON-PREPAID UNIT AGREEMENT
In addition to the provisions described above, a non-prepaid unit agreement
will include the following provisions.
OBLIGATIONS OF UNIT HOLDER
Each holder of units issued under a non-prepaid unit agreement will:
-- be bound by the terms of each non-prepaid purchase contract included
in the holder's units and by the terms of the unit agreement with
respect to those contracts; and
-- appoint the unit agent as its authorized agent to execute, deliver and
perform on the holder's behalf each non-prepaid purchase contract
included in the holder's units.
The unit agreement for a unit that includes a non-prepaid purchase contract will
also include provisions regarding the holder's pledge of collateral and special
settlement provisions. These are described above under "Description of Purchase
Contracts We May Offer -- Additional Terms of Non-Prepaid Purchase Contracts".
ASSUMPTION OF OBLIGATIONS BY TRANSFEREE
When the holder of a unit issued under a non-prepaid unit agreement
transfers the unit to a new holder, the new holder will assume the obligations
of the prior holder with respect to each non-prepaid purchase contract included
in the unit, and the prior holder will be released from those obligations. Under
the non-prepaid unit agreement, we will consent to the transfer of the unit, to
the assumption of those obligations by the new holder and to the release of the
prior holder, if the transfer is made in accordance with the provisions of that
agreement.
MERGERS AND SIMILAR TRANSACTIONS PERMITTED; NO RESTRICTIVE COVENANTS OR EVENTS
OF DEFAULT
The unit agreements will not restrict our ability to merge or consolidate
with, or sell our assets to, another firm or to engage in any other
transactions. If at any time we merge or consolidate with, or sell our assets
substantially as an entirety to, another firm, the successor corporation will
succeed to and assume our obligations under the unit agreements. We will then be
relieved of any further obligation under these agreements.
The unit agreements will not include any restrictions on our ability to put
liens on our assets, including our interests in our subsidiaries, nor will they
restrict our ability to sell our assets. The unit agreements also will not
provide for any events of default or remedies upon the occurrence of any events
of default.
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GOVERNING LAW
The unit agreements and the units will be governed by New York law.
FORM, EXCHANGE AND TRANSFER
We will issue each unit in global -- i.e., book-entry -- form only. Units
in book-entry form will be represented by a global security registered in the
name of a depositary, which will be the holder of all the units represented by
the global security. Those who own beneficial interests in a unit will do so
through participants in the depositary's system, and the rights of these
indirect owners will be governed solely by the applicable procedures of the
depositary and its participants. We describe book-entry securities below under
"Legal Ownership and Book-Entry Issuance".
In addition, we will issue each unit in registered form, unless we say
otherwise in the applicable prospectus supplement. Bearer securities would be
subject to special provisions, as we describe below under "Considerations
Relating to Securities Issued in Bearer Form".
Each unit and all securities comprising the unit will be issued in the same
form.
If we issue any units in registered, non-global form, the following will
apply to them:
The units will be issued in the denominations stated in the applicable
prospectus supplement. Holders may exchange their units for units of smaller
denominations or combined into fewer units of larger denominations, as long as
the total amount is not changed.
-- Holders may exchange or transfer their units at the office of the unit
agent. Holders may also replace lost, stolen, destroyed or mutilated
units at that office. We may appoint another entity to perform these
functions or perform them ourselves.
-- Holders will not be required to pay a service charge to transfer or
exchange their units, but they may be required to pay for any tax or
other governmental charge associated with the transfer or exchange.
The transfer or exchange, and any replacement, will be made only if
our transfer agent is satisfied with the holder's proof of legal
ownership. The transfer agent may also require an indemnity before
replacing any units.
-- If we have the right to redeem, accelerate or settle any units prior
to their maturity, and we exercise our right as to less than all those
units or other securities, we may block the transfer or exchange of
those units during the period beginning 15 days before the day we mail
the notice of exercise and ending on the day of that mailing, in order
to freeze the list of holders to prepare the mailing. We may also
refuse to register transfers of or exchange any unit selected for
early settlement, except that we will continue to permit transfers and
exchanges of the unsettled portion of any unit being partially
settled. We may also block the transfer or exchange of any unit in
this manner if the unit includes securities that are or may be
selected for early settlement.
Only the depositary will be entitled to transfer or exchange a unit in
global form, since it will be the sole holder of the unit.
PAYMENTS AND NOTICES
In making payments and giving notices with respect to our units, we will
follow the procedures we plan to use with respect to our debt securities, where
applicable. We describe those procedures above under "Descriptions of Debt
Securities We May Offer -- Payment Mechanics for Debt Securities" and
"-- Notices".
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DESCRIPTION OF PREFERRED STOCK WE MAY OFFER
Please note that in this section entitled "Description of Preferred Stock We May
Offer", references to The Goldman Sachs Group, Inc., "we", "our" and "us" refer
only to The Goldman Sachs Group, Inc. and not to its consolidated subsidiaries.
Also, in this section, references to "holders" mean those who own shares of
preferred stock or depositary shares, as the case may be, registered in their
own names, on the books that the registrar or we maintain for this purpose, and
not those who own beneficial interests in shares registered in street name or in
shares issued in book-entry form through one or more depositaries. Owners of
beneficial interests in shares of preferred stock or depositary shares should
read the section below entitled "Legal Ownership and Book-Entry Issuance".
We may issue our preferred stock in one or more series, as described below.
This section summarizes terms of the preferred stock that apply generally to all
series. Most of the financial and other specific terms of your series will be
described in the prospectus supplement to be attached to the front of this
prospectus. Those terms may vary from the terms described here.
As you read this section, please remember that the specific terms of your series
of preferred stock and any related depositary shares as described in your
prospectus supplement will supplement and, if applicable, may modify or replace
the general terms described in this section. If there are differences between
your prospectus supplement and this prospectus, your prospectus supplement will
control. Thus, the statements we make in this section may not apply to your
series of preferred stock or any related depositary shares.
When we refer to a series of preferred stock, we mean all of the shares of
preferred stock issued as part of the same series under a certificate of
designations filed as part of our certificate of incorporation. When we refer to
your prospectus supplement, we mean the prospectus supplement describing the
specific terms of the preferred stock and any related depositary shares you
purchase. The terms used in your prospectus supplement will have the meanings
described in this prospectus, unless otherwise specified.
Our affiliates may resell preferred stock and depositary shares after their
initial issuance in market-making transactions. We describe these transactions
above under "Description of Debt Securities We May Offer -- Information in the
Prospectus Supplement -- Market-Making Transactions."
OUR AUTHORIZED PREFERRED STOCK
Our authorized capital stock includes 150,000,000 shares of preferred
stock, par value $0.01 per share. We do not have any preferred stock outstanding
as of the date of this prospectus; the prospectus supplement with respect to any
offered preferred stock will describe any preferred stock that may be
outstanding as of the date of the prospectus supplement.
PREFERRED STOCK ISSUED IN SEPARATE SERIES
Our board of directors is authorized to divide the preferred stock into
series and, with respect to each series, to determine the designations, the
powers, preferences and rights and the qualifications, limitations and
restrictions of the series, including:
-- dividend rights;
-- conversion or exchange rights;
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-- voting rights;
-- redemption rights and terms;
-- liquidation preferences;
-- sinking fund provisions;
-- the serial designation of the series; and
-- the number of shares constituting the series.
Subject to the rights of the holders of any series of preferred stock, the
number of authorized shares of any series of preferred stock may be increased or
decreased, but not below the number of shares of that series then outstanding,
by resolution adopted by our board of directors and approved by the affirmative
vote of the holders of a majority of the voting power of all outstanding shares
of capital stock entitled to vote on the matter, voting together as a single
class. No separate vote of the holders of any series of preferred stock is
required for an increase or decrease in the number of authorized shares of that
series.
Before we issue any series of preferred stock, our board of directors will
adopt resolutions creating and designating the series and will file a
certificate of designations stating the terms of the series with the Secretary
of State of the State of Delaware. None of our stockholders will need to approve
that amendment.
In addition, as described below under "-- Fractional or Multiple Shares of
Preferred Stock Issued as Depositary Shares", we may, at our option, instead of
offering whole individual shares of any series of preferred stock, offer
depositary shares evidenced by depositary receipts, each representing a fraction
of a share or some multiple of shares of the particular series of preferred
stock issued and deposited with a depositary. The fraction of a share or
multiple of shares of preferred stock which each depositary share represents
will be stated in the prospectus supplement relating to any series of preferred
stock offered through depositary shares.
The rights of holders of preferred stock may be adversely affected by the
rights of holders of any preferred stock that may be issued in the future. Our
board of directors may cause shares of preferred stock to be issued in public or
private transactions for any proper corporate purpose. Examples of proper
corporate purposes include issuances to obtain additional financing for
acquisitions and issuances to officers, directors and employees under their
respective benefit plans. Shares of preferred stock we issue may have the effect
of discouraging or making more difficult an acquisition of The Goldman Sachs
Group, Inc. We may choose to issue preferred stock, together with our other
securities described in this prospectus, in units.
Preferred stock will be fully paid and nonassessable when issued, which
means that its holders will have paid their purchase price in full and that we
may not ask them to surrender additional funds. Holders of preferred stock will
not have preemptive or subscription rights to acquire more stock of The Goldman
Sachs Group, Inc.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to that series.
RANK
Shares of each series of preferred stock will rank equally with each other
series of preferred stock and senior to our common stock with respect to
dividends and distributions of assets. In addition, we will generally be able to
pay dividends and distributions of assets to holders of our preferred stock only
if we have satisfied our obligations on our indebtedness then due and payable.
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DIVIDENDS
Holders of each series of preferred stock will be entitled to receive cash
dividends when, as and if declared by our board of directors, from funds legally
available for the payment of dividends. The rates and dates of payment of
dividends for each series of preferred stock will be stated in the applicable
prospectus supplement. Dividends will be payable to holders of record of
preferred stock as they appear on our books on the record dates fixed by our
board of directors. Dividends on any series of preferred stock may be cumulative
or noncumulative, as set forth in the applicable prospectus supplement.
REDEMPTION
If specified in an applicable prospectus supplement, a series of preferred
stock may be redeemable at any time, in whole or in part, at our option or the
holder's, and may be redeemed mandatorily.
Any restriction on the repurchase or redemption by us of our preferred
stock while there is an arrearage in the payment of dividends will be described
in the applicable prospectus supplement.
Any partial redemptions of preferred stock will be made in a way that our
board of directors decides is equitable.
Unless we default in the payment of the redemption price, dividends will
cease to accrue after the redemption date on shares of preferred stock called
for redemption and all rights of holders of these shares will terminate except
for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
The Goldman Sachs Group, Inc., holders of each series of preferred stock will be
entitled to receive distributions upon liquidation in the amount described in
the applicable prospectus supplement, plus an amount equal to any accrued and
unpaid dividends. These distributions will be made before any distribution is
made on any securities ranking junior to the preferred stock with respect to
liquidation, including our common stock. If the liquidation amounts payable
relating to the preferred stock of any series and any other securities ranking
on a parity regarding liquidation rights are not paid in full, the holders of
the preferred stock of that series and the other securities will share in any
distribution of our available assets on a ratable basis in proportion to the
full liquidation preferences of each security. Holders of our preferred stock
will not be entitled to any other amounts from us after they have received their
full liquidation preference.
VOTING RIGHTS
The holders of preferred stock of each series will have no voting rights,
except:
-- as stated in the applicable prospectus supplement and in the
certificate of designations establishing the series; or
-- as required by applicable law.
MERGER AND SIMILAR TRANSACTIONS PERMITTED; NO RESTRICTIVE COVENANTS
The terms of the preferred stock will not include any restrictions on our
ability to merge or consolidate with, or sell our assets to, another firm or to
engage in any other transactions. The terms of the preferred stock also will not
include any restrictions on our ability to put liens on our assets, including
our interests in our subsidiaries.
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Because we are a holding company, our ability to make payments on the
preferred stock will depend in part on our ability to participate in
distributions of assets from our subsidiaries. We discuss these matters above
under "Description of Debt Securities We May Offer -- We Are a Holding Company".
GOVERNING LAW
The preferred stock will be governed by Delaware law.
FRACTIONAL OR MULTIPLE SHARES OF PREFERRED STOCK ISSUED AS DEPOSITARY SHARES
We may choose to offer fractional shares or some multiple of shares of our
preferred stock, rather than whole individual shares. If we decide to do so, we
will issue the preferred stock in the form of depositary shares. Each depositary
share would represent a fraction or multiple of a share of the preferred stock
and would be evidenced by a depositary receipt. We will issue depositary shares
under a deposit agreement between a depositary, which we will appoint in our
discretion, and us.
DEPOSIT AGREEMENT
We will deposit the shares of preferred stock to be represented by
depositary shares under a deposit agreement. The parties to the deposit
agreement will be:
-- The Goldman Sachs Group, Inc.;
-- a bank or other financial institution selected by us and named in the
applicable prospectus supplement, as preferred stock depositary; and
-- the holders from time to time of depositary receipts issued under that
depositary agreement.
Each holder of a depositary share will be entitled to all the rights and
preferences of the underlying preferred stock, including, where applicable,
dividend, voting, redemption, conversion and liquidation rights, in proportion
to the applicable fraction or multiple of a share of preferred stock represented
by the depositary share. The depositary shares will be evidenced by depositary
receipts issued under the deposit agreement. The depositary receipts will be
distributed to those persons purchasing the fractional or multiple shares of
preferred stock. A depositary receipt may evidence any number of whole
depositary shares.
We will file the deposit agreement, including the form of depositary
receipt, with the SEC, either as an exhibit to an amendment to the registration
statement of which this prospectus forms a part or as an exhibit to a current
report on Form 8-K. See "Available Information" above for information on how to
obtain a copy of the form of deposit agreement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute any cash dividends or other
cash distributions received in respect of the deposited preferred stock to the
record holders of depositary shares relating to the underlying preferred stock
in proportion to the number of depositary shares owned by the holders. The
preferred stock depositary will distribute any property received by it other
than cash to the record holders of depositary shares entitled to those
distributions, unless it determines that the distribution cannot be made
proportionally among those holders or that it is not feasible to make a
distribution. In that event, the preferred stock depositary may, with our
approval, sell the property and distribute the net proceeds from the sale to the
holders of the depositary shares in proportion to the number of depositary
shares they own.
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The amounts distributed to holders of depositary shares will be reduced by
any amounts required to be withheld by the preferred stock depositary or by us
on account of taxes or other governmental charges.
REDEMPTION OF PREFERRED STOCK
If we redeem preferred stock represented by depositary shares, the
preferred stock depositary will redeem the depositary shares from the proceeds
it receives from the redemption, in whole or in part, of the preferred stock.
The preferred stock depositary will redeem the depositary shares at a price per
share equal to the applicable fraction or multiple of the redemption price per
share of preferred stock. Whenever we redeem shares of preferred stock held by
the preferred stock depositary, the preferred stock depositary will redeem as of
the same date the number of depositary shares representing the redeemed shares
of preferred stock. If fewer than all the depositary shares are to be redeemed,
the preferred stock depositary will select the depositary shares to be redeemed
by lot or ratably or by any other equitable method it chooses.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding, and all rights of the
holders of those shares will cease, except the right to receive the amount
payable and any other property to which the holders were entitled upon the
redemption. To receive this amount or other property, the holders must surrender
the depositary receipts evidencing their depositary shares to the preferred
stock depositary. Any funds that we deposit with the preferred stock depositary
for any depositary shares that the holders fail to redeem will be returned to us
after a period of two years from the date we deposit the funds.
WITHDRAWAL OF PREFERRED STOCK
Unless the related depositary shares have previously been called for
redemption, any holder of depositary shares may receive the number of whole
shares of the related series of preferred stock and any money or other property
represented by those depositary receipts after surrendering the depositary
receipts at the corporate trust office of the preferred stock depositary, paying
any taxes, charges and fees provided for in the deposit agreement and complying
with any other requirement of the deposit agreement. Holders of depositary
shares making these withdrawals will be entitled to receive whole shares of
preferred stock, but holders of whole shares of preferred stock will not be
entitled to deposit that preferred stock under the deposit agreement or to
receive depositary receipts for that preferred stock after withdrawal. If the
depositary shares surrendered by the holder in connection with withdrawal exceed
the number of depositary shares that represent the number of whole shares of
preferred stock to be withdrawn, the preferred stock depositary will deliver to
that holder at the same time a new depositary receipt evidencing the excess
number of depositary shares.
VOTING DEPOSITED PREFERRED STOCK
When the preferred stock depositary receives notice of any meeting at which
the holders of any series of deposited preferred stock are entitled to vote, the
preferred stock depositary will mail the information contained in the notice to
the record holders of the depositary shares relating to the applicable series of
preferred stock. Each record holder of the depositary shares on the record date,
which will be the same date as the record date for the preferred stock, may
instruct the preferred stock depositary to vote the amount of the preferred
stock represented by the holder's depositary shares. To the extent possible, the
preferred stock depositary will vote the amount of the series of preferred stock
represented by depositary shares in accordance with the instructions it
receives. We will agree to take all reasonable actions that the preferred stock
depositary determines are necessary to enable the preferred stock depositary to
vote as instructed. If the preferred stock depositary does not receive specific
instructions from the
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holders of any depositary shares representing a series of preferred stock, it
will vote all shares of that series held by it proportionately with instructions
received.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
We may amend the form of depositary receipt evidencing the depositary
shares and any provision of the deposit agreement at any time and from time to
time by agreement with the preferred stock depositary. However, any amendment
that imposes additional charges or materially and adversely alters any
substantial existing right of the holders of depositary shares will not be
effective unless the holders of at least a majority of the affected depositary
shares then outstanding approve the amendment. We will make no amendment that
impairs the right of any holder of depositary shares, as described above under
"-- Withdrawal of Preferred Stock", to receive shares of the related series of
preferred stock and any money or other property represented by those depositary
shares, except in order to comply with mandatory provisions of applicable law.
Holders who retain or acquire their depositary receipts after an amendment
becomes effective will be deemed to have agreed to the amendment and will be
bound by the amended deposit agreement.
The deposit agreement will automatically terminate if:
-- all outstanding depositary shares have been redeemed or converted or
exchanged for any other securities into which they or the underlying
preferred stock are convertible or exchangeable; or
-- a final distribution in respect of the preferred stock has been made
to the holders of depositary shares in connection with any
liquidation, dissolution or winding up of The Goldman Sachs Group,
Inc.
We may terminate the deposit agreement at any time, and the preferred stock
depositary will give notice of that termination to the recordholders of all
outstanding depositary receipts not less than 30 days before the termination
date. In that event, the preferred stock depositary will deliver or make
available for delivery to holders of depositary shares, upon surrender of the
depositary receipts evidencing the depositary shares, the number of whole or
fractional shares of the related series of preferred stock as are represented by
those depositary shares.
CHARGES OF PREFERRED STOCK DEPOSITARY; TAXES AND OTHER GOVERNMENTAL CHARGES
We will pay the fees, charges and expenses of the preferred stock
depositary provided in the deposit agreement to be payable by us. Holders of
depositary receipts will pay any taxes and governmental charges and any charges
provided in the deposit agreement to be payable by them, including a fee for the
withdrawal of shares of preferred stock upon surrender of depositary receipts.
If the preferred stock depositary incurs fees, charges or expenses for which it
is not otherwise liable at the election of a holder of a depositary receipt or
other person, that holder or other person will be liable for those fees, charges
and expenses.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by giving us notice,
and we may remove or replace the preferred stock depositary at any time.
REPORTS TO HOLDERS
We will deliver all required reports and communications to holders of the
preferred stock to the preferred stock depositary. It will forward those reports
and communications to the holders of depositary shares.
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LIMITATION ON LIABILITY OF THE PREFERRED STOCK DEPOSITARY
The preferred stock depositary will not be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the deposit agreement. The obligations of the preferred stock
depositary under the deposit agreement will be limited to performance in good
faith of its duties under the agreement, and it will not be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares,
depositary receipts or shares of preferred stock unless satisfactory and
reasonable protection from expenses and liability is furnished. This is called
an indemnity. The preferred stock depositary may rely upon written advice of
counsel or accountants, upon information provided by holders of depositary
receipts or other persons believed to be competent and upon documents believed
to be genuine.
FORM OF PREFERRED STOCK AND DEPOSITARY SHARES
We may issue preferred stock in book-entry form. Preferred stock in
book-entry form will be represented by a global security registered in the name
of a depositary, which will be the holder of all the shares of preferred stock
represented by the global security. Those who own beneficial interests in shares
of preferred stock will do so through participants in the depositary's system,
and the rights of these indirect owners will be governed solely by the
applicable procedures of the depositary and its participants. However,
beneficial owners of any preferred stock in book-entry form will have the right
to obtain their shares in non-global form. We describe book-entry securities
below under "Legal Ownership and Book-Entry Issuance". All preferred stock will
be issued in registered form.
We will issue depositary shares in book-entry form, to the same extent as
we describe above for preferred stock. Depositary shares will be issued in
registered form.
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LEGAL OWNERSHIP AND BOOK-ENTRY ISSUANCE
In this section, we describe special considerations that will apply to
registered securities issued in global -- i.e., book-entry -- form. First we
describe the difference between legal ownership and indirect ownership of
registered securities. Then we describe special provisions that apply to global
securities.
WHO IS THE LEGAL OWNER OF A REGISTERED SECURITY?
Each debt security, warrant, purchase contract, unit, share of preferred
stock and depositary share in registered form will be represented either by a
certificate issued in definitive form to a particular investor or by one or more
global securities representing the entire issuance of securities. We refer to
those who have securities registered in their own names, on the books that we or
the trustee maintain for this purpose, as the "holders" of those securities.
These persons are the legal holders of the securities. We refer to those who,
indirectly through others, own beneficial interests in securities that are not
registered in their own names as indirect owners of those securities. As we
discuss below, indirect owners are not legal holders, and investors in
securities issued in book-entry form or in street name will be indirect owners.
BOOK-ENTRY OWNERS
We will issue each security in book-entry form only. This means securities
will be represented by one or more global securities registered in the name of a
financial institution that holds them as depositary on behalf of other financial
institutions that participate in the depositary's book-entry system. These
participating institutions, in turn, hold beneficial interests in the securities
on behalf of themselves or their customers.
Under each indenture, only the person in whose name a security is
registered is recognized as the holder of that security. Consequently, for
securities issued in global form, we will recognize only the depositary as the
holder of the securities and we will make all payments on the securities,
including deliveries of any property other than cash, to the depositary. The
depositary passes along the payments it receives to its participants, which in
turn pass the payments along to their customers who are the beneficial owners.
The depositary and its participants do so under agreements they have made with
one another or with their customers; they are not obligated to do so under the
terms of the securities.
As a result, investors will not own securities directly. Instead, they will
own beneficial interests in a global security, through a bank, broker or other
financial institution that participates in the depositary's book-entry system or
holds an interest through a participant. As long as the securities are issued in
global form, investors will be indirect owners, and not holders, of the
securities.
STREET NAME OWNERS
In the future we may terminate a global security or issue securities
initially in non-global form. In these cases, investors may choose to hold their
securities in their own names or in street name. Securities held by an investor
in street name would be registered in the name of a bank, broker or other
financial institution that the investor chooses, and the investor would hold
only a beneficial interest in those securities through an account he or she
maintains at that institution.
For securities held in street name, we will recognize only the intermediary
banks, brokers and other financial institutions in whose names the securities
are registered as the holders of those securities and we will make all payments
on those securities, including deliveries of any property other than cash, to
them. These institutions pass along the payments they receive to their customers
who are the beneficial owners, but only because they agree to do so in their
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customer agreements or because they are legally required to do so. Investors who
hold securities in street name will be indirect owners, not holders, of those
securities.
LEGAL HOLDERS
Our obligations, as well as the obligations of the trustee and the
obligations, if any, of any warrant agents and unit agents and any other third
parties employed by us, the trustee or any of those agents, run only to the
holders of the securities. We do not have obligations to investors who hold
indirect interests in global securities, in street name or by any other indirect
means. This will be the case whether an investor chooses to be an indirect owner
of a security or has no choice because we are issuing the securities only in
global form.
For example, once we make a payment or give a notice to the holder, we have
no further responsibility for that payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect owners but does not do so. Similarly, if we
want to obtain the approval of the holders for any purpose -- e.g., to amend the
indenture for a series of debt securities or the warrant agreement for a series
of warrants or to relieve us of the consequences of a default or of our
obligation to comply with a particular provision of the indenture -- we would
seek the approval only from the holders, and not the indirect owners, of the
relevant securities. Whether and how the holders contact the indirect owners is
up to the holders.
When we refer to "you" in this prospectus, we mean those who invest in the
securities being offered by this prospectus, whether they are the holders or
only indirect owners of those securities. When we refer to "your securities" in
this prospectus, we mean the securities in which you will hold a direct or
indirect interest.
SPECIAL CONSIDERATIONS FOR INDIRECT OWNERS
If you hold securities through a bank, broker or other financial
institution, either in book-entry form or in street name, you should check with
your own institution to find out:
-- how it handles securities payments and notices;
-- whether it imposes fees or charges;
-- whether and how you can instruct it to exercise any rights to purchase
or sell warrant property under a warrant or purchase contract property
under a purchase contract or to exchange or convert a security for or
into other property;
-- how it would handle a request for the holders' consent, if ever
required;
-- whether and how you can instruct it to send you securities registered
in your own name so you can be a holder, if that is permitted in the
future;
-- how it would exercise rights under the securities if there were a
default or other event triggering the need for holders to act to
protect their interests; and
-- if the securities are in book-entry form, how the depositary's rules
and procedures will affect these matters.
WHAT IS A GLOBAL SECURITY?
We will issue each security in book-entry form only. Each security issued
in book-entry form will be represented by a global security that we deposit with
and register in the name of one or more financial institutions or clearing
systems, or their nominees, which we select. A financial institution or clearing
system that we select for any security for this purpose is called the
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"depositary" for that security. A security will usually have only one depositary
but it may have more.
Each series of securities will have one or more of the following as the
depositaries:
-- The Depository Trust Company, New York, New York, which is known as
"DTC";
-- a financial institution holding the securities on behalf of Morgan
Guaranty Trust Company of New York, acting out of its Brussels,
Belgium, office, as operator of the Euroclear system, which is known
as "Euroclear";
-- a financial institution holding the securities on behalf of
Clearstream Banking, societe anonyme, Luxembourg, which is known as
"Clearstream, Luxembourg"; and
-- any other clearing system or financial institution named in the
applicable prospectus supplement.
The depositaries named above may also be participants in one another's systems.
Thus, for example, if DTC is the depositary for a global security, investors may
hold beneficial interests in that security through Euroclear or Clearstream,
Luxembourg, as DTC participants. The depositary or depositaries for your
securities will be named in your prospectus supplement; if none is named, the
depositary will be DTC.
A global security may represent one or any other number of individual
securities. Generally, all securities represented by the same global security
will have the same terms. We may, however, issue a global security that
represents multiple securities of the same kind, such as debt securities, that
have different terms and are issued at different times. We call this kind of
global security a master global security. Your prospectus supplement will not
indicate whether your securities are represented by a master global security.
A global security may not be transferred to or registered in the name of
anyone other than the depositary or its nominee, unless special termination
situations arise. We describe those situations below under "-- Holder's Option
to Obtain a Non-Global Security; Special Situations When a Global Security Will
Be Terminated". As a result of these arrangements, the depositary, or its
nominee, will be the sole registered owner and holder of all securities
represented by a global security, and investors will be permitted to own only
indirect interests in a global security. Indirect interests must be held by
means of an account with a broker, bank or other financial institution that in
turn has an account with the depositary or with another institution that does.
Thus, an investor whose security is represented by a global security will not be
a holder of the security, but only an indirect owner of an interest in the
global security.
If the prospectus supplement for a particular security indicates that the
security will be issued in global form only, then the security will be
represented by a global security at all times unless and until the global
security is terminated. We describe the situations in which this can occur below
under "-- Holder's Option to Obtain a Non-Global Security; Special Situations
When a Global Security Will Be Terminated". If termination occurs, we may issue
the securities through another book-entry clearing system or decide that the
securities may no longer be held through any book-entry clearing system.
SPECIAL CONSIDERATIONS FOR GLOBAL SECURITIES
As an indirect owner, an investor's rights relating to a global security
will be governed by the account rules of the depositary and those of the
investor's financial institution or other intermediary through which it holds
its interest (e.g., Euroclear or Clearstream, Luxembourg, if DTC is the
depositary), as well as general laws relating to securities transfers. We do not
recognize this type of investor or any intermediary as a holder of securities
and instead deal only with the depositary that holds the global security.
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If securities are issued only in the form of a global security, an investor
should be aware of the following:
-- An investor cannot cause the securities to be registered in his or her
own name, and cannot obtain non-global certificates for his or her
interest in the securities, except in the special situations we
describe below;
-- An investor will be an indirect holder and must look to his or her own
bank or broker for payments on the securities and protection of his or
her legal rights relating to the securities, as we describe above
under "-- Who Is the Legal Owner of a Registered Security?";
-- An investor may not be able to sell interests in the securities to
some insurance companies and other institutions that are required by
law to own their securities in non-book-entry form;
-- An investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the
securities must be delivered to the lender or other beneficiary of the
pledge in order for the pledge to be effective;
-- The depositary's policies will govern payments, deliveries, transfers,
exchanges, notices and other matters relating to an investor's
interest in a global security, and those policies may change from time
to time. We, the trustee and any warrant agents and unit agents will
have no responsibility for any aspect of the depositary's policies,
actions or records of ownership interests in a global security. We,
the trustee and any warrant and unit agents also do not supervise the
depositary in any way;
-- The depositary will require that those who purchase and sell interests
in a global security within its book-entry system use immediately
available funds and your broker or bank may require you to do so as
well; and
-- Financial institutions that participate in the depositary's book-entry
system and through which an investor holds its interest in the global
securities, directly or indirectly, may also have their own policies
affecting payments, deliveries, transfers, exchanges, notices and
other matters relating to the securities, and those policies may
change from time to time. For example, if you hold an interest in a
global security through Euroclear or Clearstream, Luxembourg, when DTC
is the depositary, Euroclear or Clearstream, Luxembourg, as
applicable, will require those who purchase and sell interests in that
security through them to use immediately available funds and comply
with other policies and procedures, including deadlines for giving
instructions as to transactions that are to be effected on a
particular day. There may be more than one financial intermediary in
the chain of ownership for an investor. We do not monitor and are not
responsible for the policies or actions or records of ownership
interests of any of those intermediaries.
HOLDER'S OPTION TO OBTAIN A NON-GLOBAL SECURITY; SPECIAL SITUATIONS WHEN A
GLOBAL SECURITY WILL BE TERMINATED
If we issue any series of securities in book-entry form but we choose to
give the beneficial owners of that series the right to obtain non-global
securities, any beneficial owner entitled to obtain non-global securities may do
so by following the applicable procedures of the depositary, any transfer agent
or registrar for that series and that owner's bank, broker or other financial
institution through which that owner holds its beneficial interest in the
securities. For example, in the case of a global security representing preferred
stock or depositary shares, a beneficial owner will be entitled to obtain a
non-global security representing its interest by making a written request to the
transfer agent or other agent designated by us. If you are entitled to request a
non-global certificate and wish to do so, you will need to allow sufficient lead
time to enable us or our agent to prepare the requested certificate.
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In addition, in a few special situations described below, a global security
will be terminated and interests in it will be exchanged for certificates in
non-global form representing the securities it represented. After that exchange,
the choice of whether to hold the securities directly or in street name will be
up to the investor. Investors must consult their own banks or brokers to find
out how to have their interests in a global security transferred on termination
to their own names, so that they will be holders. We have described the rights
of holders and street name investors above under "-- Who Is the Legal Owner of a
Registered Security?".
The special situations for termination of a global security are as follows:
-- if the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary within
60 days;
-- if we notify the trustee, warrant agent or unit agent, as applicable,
that we wish to terminate that global security; or
-- in the case of a global security representing debt securities, if an
event of default has occurred with regard to these debt securities and
has not been cured or waived.
If a global security is terminated, only the depositary, and not we, the
trustee for any debt securities, the warrant agent for any warrants or the unit
agent for any units, is responsible for deciding the names of the institutions
in whose names the securities represented by the global security will be
registered and, therefore, who will be the holders of those securities.
CONSIDERATIONS RELATING TO EUROCLEAR AND CLEARSTREAM, LUXEMBOURG
Euroclear and Clearstream, Luxembourg are securities clearance systems in
Europe. Both systems clear and settle securities transactions between their
participants through electronic, book-entry delivery of securities against
payment.
Euroclear and Clearstream, Luxembourg may be depositaries for a global
security. In addition, if DTC is the depositary for a global security, Euroclear
and Clearstream, Luxembourg may hold interests in the global security as
participants in DTC.
As long as any global security is held by Euroclear or Clearstream,
Luxembourg as depositary, you may hold an interest in the global security only
through an organization that participates, directly or indirectly, in Euroclear
or Clearstream, Luxembourg. If Euroclear or Clearstream, Luxembourg is the
depositary for a global security and there is no depositary in the United
States, you will not be able to hold interests in that global security through
any securities clearance system in the United States.
Payments, deliveries, transfers, exchanges, notices and other matters
relating to the securities made through Euroclear or Clearstream, Luxembourg
must comply with the rules and procedures of those systems. Those systems could
change their rules and procedures at any time. We have no control over those
systems or their participants and we take no responsibility for their
activities. Transactions between participants in Euroclear or Clearstream,
Luxembourg, on one hand, and participants in DTC, on the other hand, when DTC is
the depositary, would also be subject to DTC's rules and procedures.
SPECIAL TIMING CONSIDERATIONS FOR TRANSACTIONS IN EUROCLEAR AND CLEARSTREAM,
LUXEMBOURG
Investors will be able to make and receive through Euroclear and
Clearstream, Luxembourg payments, deliveries, transfers, exchanges, notices and
other transactions involving any securities held through those systems only on
days when those systems are open for business. Those systems may not be open for
business on days when banks, brokers and other institutions are open for
business in the United States.
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In addition, because of time-zone differences, U.S. investors who hold
their interests in the securities through these systems and wish to transfer
their interests, or to receive or make a payment or delivery or exercise any
other right with respect to their interests, on a particular day may find that
the transaction will not be effected until the next business day in Luxembourg
or Brussels, as applicable. Thus, investors who wish to exercise rights that
expire on a particular day may need to act before the expiration date. In
addition, investors who hold their interests through both DTC and Euroclear or
Clearstream, Luxembourg may need to make special arrangements to finance any
purchases or sales of their interests between the U.S. and European clearing
systems, and those transactions may settle later than would be the case for
transactions within one clearing system.
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CONSIDERATIONS RELATING TO SECURITIES ISSUED IN BEARER FORM
If we issue securities in bearer, rather than registered, form, those
securities will be subject to special provisions described in this section. This
section primarily describes provisions relating to debt securities issued in
bearer form. Other provisions may apply to securities of other kinds issued in
bearer form. To the extent the provisions described in this section are
inconsistent with those described elsewhere in this prospectus, they supersede
those described elsewhere with regard to any bearer securities. Otherwise, the
relevant provisions described elsewhere in this prospectus will apply to bearer
securities.
TEMPORARY AND PERMANENT BEARER GLOBAL SECURITIES
If we issue securities in bearer form, all securities of the same series
and kind will initially be represented by a temporary bearer global security,
which we will deposit with a common depositary for Euroclear and Clearstream,
Luxembourg. Euroclear and Clearstream, Luxembourg will credit the account of
each of their subscribers with the amount of securities the subscriber
purchases. We will promise to exchange the temporary bearer global security for
a permanent bearer global security, which we will deliver to the common
depositary upon the later of the following two dates:
-- the date that is 40 days after the later of (a) the completion of the
distribution of the securities as determined by the underwriter,
dealer or agent and (b) the closing date for the sale of the
securities by us; we may extend this date as described below under
"-- Extensions for Further Issuances"; and
-- the date on which Euroclear and Clearstream, Luxembourg provide us or
our agent with the necessary tax certificates described below under
"-- U.S. Tax Certificate Required".
Unless we say otherwise in the applicable prospectus supplement, owners of
beneficial interests in a permanent bearer global security will be able to
exchange those interests at their option, in whole but not in part, for:
-- non-global securities in bearer form with interest coupons attached,
if applicable; or
-- non-global securities in registered form without coupons attached.
A beneficial owner will be able to make this exchange by giving us or our
designated agent 60 days' prior written notice in accordance with the terms of
the securities.
EXTENSIONS FOR FURTHER ISSUANCES
Without the consent of the trustee, any holders or any other person, we may
issue additional securities identical to a prior issue from time to time. If we
issue additional securities before the date on which we would otherwise be
required to exchange the temporary bearer global security representing the prior
issue for a permanent bearer global security as described above, that date will
be extended until the 40th day after the completion of the distribution and the
closing, whichever is later, for the additional securities. Extensions of this
kind may be repeated if we sell additional identical securities. As a result of
these extensions, beneficial interests in the temporary bearer global security
may not be exchanged for interests in a permanent bearer global security until
the 40th day after the additional securities have been distributed and sold.
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U.S. TAX CERTIFICATE REQUIRED
We will not pay or deliver interest or other amounts in respect of any
portion of a temporary bearer global security unless and until Euroclear or
Clearstream, Luxembourg delivers to us or our agent a tax certificate with
regard to the owners of the beneficial interests in that portion of the global
security. Also, we will not exchange any portion of a temporary bearer global
security for a permanent bearer global security unless and until we receive from
Euroclear or Clearstream, Luxembourg a tax certificate with regard to the owners
of the beneficial interests in the portion to be exchanged. In each case, this
tax certificate must state that each of the relevant owners:
-- is not a United States person, as defined below under "-- Limitations
on Issuance of Bearer Securities";
-- is a foreign branch of a United States financial institution
purchasing for its own account or for resale, or is a United States
person who acquired the security through a financial institution of
this kind and who holds the security through that financial
institution on the date of certification, provided in either case that
the financial institution provides a certificate to us or the
distributor selling the security to it stating that it agrees to
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the U.S. Internal Revenue Code and the U.S. Treasury Regulations under
that Section; or
-- is a financial institution holding for purposes of resale during the
"restricted period", as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7). A financial institution of this kind, whether
or not it is also described in either of the two preceding bullet
points, must certify that it has not acquired the security for
purposes of resale directly or indirectly to a United States person or
to a person within the United States or its possessions.
The tax certificate must be signed by an authorized person satisfactory to us.
No one who owns an interest in a temporary bearer global security will receive
payment or delivery of any amount or property in respect of its interest, and
will not be permitted to exchange its interest for an interest in a permanent
bearer global security or a security in any other form, unless we or our agent
have received the required tax certificate on its behalf.
Special requirements and restrictions imposed by United States federal tax
laws and regulations will apply to bearer debt securities. We describe these
below under "-- Limitations on Issuance of Bearer Debt Securities".
LEGAL OWNERSHIP OF BEARER SECURITIES
Securities in bearer form are not registered in any name. Whoever is the
bearer of the certificate representing a security in bearer form is the legal
owner of that security. Legal title and ownership of bearer securities will pass
by delivery of the certificates representing the securities. Thus, when we use
the term "holder" in this prospectus with regard to bearer securities, we mean
the bearer of those securities.
The common depositary for Euroclear and Clearstream, Luxembourg will be the
bearer, and thus the holder and legal owner, of both the temporary and permanent
bearer global securities described above. Investors in those securities will own
beneficial interests in the securities represented by those global securities;
they will be only indirect owners, not holders or legal owners, of the
securities.
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As long as the common depositary is the bearer of any bearer security in
global form, the common depositary will be considered the sole legal owner and
holder of the securities represented by the bearer security in global form.
Ownership of beneficial interests in any bearer security in global form will be
shown on records maintained by Euroclear or Clearstream, Luxembourg, as
applicable, or by the common depositary on their behalf, and by the direct and
indirect participants in their systems, and ownership interests can be held and
transferred only through those records. We will pay any amounts owing with
respect to a bearer global security only to the common depositary.
Neither we, the trustee nor any agent will recognize any owner of indirect
interests as a holder or legal owner. Nor will we, the trustee or any agent have
any responsibility for the ownership records or practices of Euroclear or
Clearstream, Luxembourg, the common depositary or any direct or indirect
participants in those systems or for any payments, transfers, deliveries,
exchanges, notices or other transactions within those systems, all of which will
be subject to the rules and procedures of those systems and participants. If you
own an indirect interest in a bearer global security, you must look only to the
common depositary for Euroclear or Clearstream, Luxembourg, and to their direct
and indirect participants through which you hold your interest, for your
ownership rights. You should read the section above entitled "Legal Ownership
and Book-Entry Issuance" for more information about holding interests through
Euroclear and Clearstream, Luxembourg.
PAYMENT AND EXCHANGE OF NON-GLOBAL BEARER SECURITIES
Payments and deliveries owing on non-global bearer securities will be made,
in the case of interest payments, only to the holder of the relevant coupon
after the coupon is surrendered to the paying agent. In all other cases,
payments and deliveries will be made only to the holder of the certificate
representing the relevant security after the certificate is surrendered to the
paying agent.
Non-global bearer securities, with all unmatured coupons relating to the
securities, if any, may be exchanged for a like aggregate amount of non-global
bearer or registered securities of like kind. Non-global registered securities
may be exchanged for a like aggregate amount of non-global registered securities
of like kind, as described above in the sections on the different types of
securities we may offer. However, we will not issue bearer securities in
exchange for any registered securities.
Replacement certificates and coupons for non-global bearer securities will
not be issued in lieu of any lost, stolen or destroyed certificates and coupons
unless we and our transfer agent receive evidence of the loss, theft or
destruction, and an indemnity against liabilities, satisfactory to us and our
agent. Upon redemption or any other settlement before the stated maturity or
expiration, as well as upon any exchange, of a non-global bearer security, the
holder will be required to surrender all unmatured coupons to us or our
designated agent. If any unmatured coupons are not surrendered, we or our agent
may deduct the amount of interest relating to those coupons from the amount
otherwise payable or deliverable or we or our agent may demand an indemnity
against liabilities satisfactory to us and our agent.
We may make payments, deliveries and exchanges in respect of bearer
securities in global form in any manner acceptable to us and the depositary.
NOTICES
If we are required to give notice to the holders of bearer securities, we
will do so by publication in a daily newspaper of general circulation in a city
in Western Europe. The term "daily newspaper" means a newspaper that is
published on each day, other than a Saturday, Sunday or holiday, in the relevant
city. If these bearer securities are listed on the Luxembourg
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Stock Exchange and its rules so require, that city will be Luxembourg and that
newspaper will be the Luxemburger Wort, unless publication in that newspaper is
impractical. A notice of this kind will be presumed to have been received on the
date it is first published. If we cannot give notice as described in this
paragraph because the publication of any newspaper is suspended or it is
otherwise impractical to publish the notice, then we will give notice in another
form. That alternate form of notice will be deemed to be sufficient notice to
each holder. Neither the failure to give notice to a particular holder, nor any
defect in a notice given to a particular holder, will affect the sufficiency of
any notice given to another holder.
We may give any required notice with regard to bearer securities in global
form to the common depositary for the securities, in accordance with its
applicable procedures. If these provisions do not require that notice be given
by publication in a newspaper, we may omit giving notice by publication.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
In compliance with United States federal income tax laws and regulations,
bearer debt securities, including bearer debt securities in global form, will
not be offered, sold, resold or delivered, directly or indirectly, in the United
States or its possessions or to United States persons, as defined below, except
as otherwise permitted by U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D).
Any underwriters, dealers or agents participating in the offerings of bearer
debt securities, directly or indirectly, must agree that they will not, in
connection with the original issuance of any bearer debt securities or during
the restricted period applicable under the Treasury Regulations cited earlier,
offer, sell, resell or deliver, directly or indirectly, any bearer debt
securities in the United States or its possessions or to United States persons,
other than as permitted by the applicable Treasury Regulations described above.
In addition, any underwriters, dealers or agents must have procedures reasonably
designed to ensure that their employees or agents who are directly engaged in
selling bearer debt securities are aware of the above restrictions on the
offering, sale, resale or delivery of bearer debt securities.
We will make payments on bearer debt securities only outside the United
States and its possessions except as permitted by the applicable Treasury
Regulations described above.
Bearer debt securities and any coupons will bear the following legend:
"Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the
limitations provided in sections 165(j) and 1287(a) of the Internal Revenue
Code."
The sections referred to in this legend provide that, with exceptions, a United
States person will not be permitted to deduct any loss, and will not be eligible
for capital gain treatment with respect to any gain, realized on the sale,
exchange or redemption of that bearer debt security or coupon.
As used in this subsection entitled "-- Limitations on Issuance of Bearer
Debt Securities", the term "bearer debt securities" includes bearer debt
securities that are part of units. As used in this section entitled
"Considerations Relating to Securities Issued in Bearer Form", "United States
person" means:
-- a citizen or resident of the United States;
-- a corporation or partnership, including an entity treated as a
corporation or partnership for United States federal income tax
purposes, created or organized in or under the laws of the United
States, any state of the United States or the District of Columbia;
-- an estate the income of which is subject to United States federal
income taxation regardless of its source; or
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-- a trust if a court within the United States is able to exercise
primary supervision of the administration of the trust and one or more
United States persons have the authority to control all substantial
decisions of the trust.
"United States" means the United States of America, including the States
and the District of Columbia, and "possessions" of the United States include
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
CONSIDERATIONS RELATING TO INDEXED SECURITIES
We use the term "indexed securities" to mean debt securities, warrants and
purchase contracts whose value is linked to an underlying property or index, as
well as units that include any debt security, warrant or purchase contract of
this kind. Indexed securities may present a high level of risk, and those who
invest in some indexed securities may lose their entire investment. In addition,
the treatment of indexed securities for U.S. federal income tax purposes is
often unclear due to the absence of any authority specifically addressing the
issues presented by any particular indexed security. Thus, if you propose to
invest in indexed securities, you should independently evaluate the federal
income tax consequences of purchasing an indexed security that apply in your
particular circumstances. You should also read "United States Taxation" for a
discussion of U.S. tax matters.
INVESTORS IN INDEXED SECURITIES COULD LOSE THEIR INVESTMENT
The amount of principal and/or interest payable on an indexed debt
security, the cash value or physical settlement value of a physically settled
debt security and the cash value or physical settlement value of an indexed
warrant or purchase contract will be determined by reference to the price, value
or level of one or more securities, currencies, commodities or other properties,
any other financial, economic or other measure or instrument, including the
occurrence or non-occurrence of any event or circumstance, and/or one or more
indices or baskets of any of these items. We refer to each of these as an
"index". The direction and magnitude of the change in the price, value or level
of the relevant index will determine the amount of principal and/or interest
payable on an indexed debt security, the cash value or physical settlement value
of a physically settled debt security and the cash value or physical settlement
value of an indexed warrant or purchase contract. The terms of a particular
indexed debt security may or may not include a guaranteed return of a percentage
of the face amount at maturity or a minimum interest rate. An indexed warrant or
purchase contract generally will not provide for any guaranteed minimum
settlement value. Thus, if you purchase an indexed security, you may lose all or
a portion of the principal or other amount you invest and may receive no
interest on your investment.
THE ISSUER OF A SECURITY OR CURRENCY THAT SERVES AS AN INDEX COULD TAKE ACTIONS
THAT MAY ADVERSELY AFFECT AN INDEXED SECURITY
The issuer of a security that serves as an index or part of an index for an
indexed security will have no involvement in the offer and sale of the indexed
security and no obligations to the holder of the indexed security. The issuer
may take actions, such as a merger or sale of assets, without regard to the
interests of the holder. Any of these actions could adversely affect the value
of a security indexed to that security or to an index of which that security is
a component.
If the index for an indexed security includes a non-U.S. dollar currency or
other asset denominated in a non-U.S. dollar currency, the government that
issues that currency will also have no involvement in the offer and sale of the
indexed security and no obligations to the holder of the indexed security. That
government may take actions that could adversely affect the value of the
security. See "Considerations Relating to Securities Denominated or Payable in
or Linked to a Non-U.S. Dollar Currency -- Government Policy Can Adversely
Affect Currency Exchange
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Rates and an Investment in a Non-U.S. Dollar Security" below for more
information about these kinds of government actions.
AN INDEXED SECURITY MAY BE LINKED TO A VOLATILE INDEX, WHICH COULD HURT YOUR
INVESTMENT
Some indices are highly volatile, which means that their value may change
significantly, up or down, over a short period of time. The amount of principal
or interest that can be expected to become payable on an indexed debt security
or the expected settlement value of an indexed warrant or purchase contract may
vary substantially from time to time. Because the amounts payable with respect
to an indexed security are generally calculated based on the value or level of
the relevant index on a specified date or over a limited period of time,
volatility in the index increases the risk that the return on the indexed
security may be adversely affected by a fluctuation in the level of the relevant
index.
The volatility of an index may be affected by political or economic events,
including governmental actions, or by the activities of participants in the
relevant markets. Any of these events or activities could adversely affect the
value of an indexed security.
AN INDEX TO WHICH A SECURITY IS LINKED COULD BE CHANGED OR BECOME UNAVAILABLE
Some indices compiled by us or our affiliates or third parties may consist
of or refer to several or many different securities, commodities or currencies
or other instruments or measures. The compiler of such an index typically
reserves the right to alter the composition of the index and the manner in which
the value or level of the index is calculated. An alteration may result in a
decrease in the value of or return on an indexed security that is linked to the
index. The indices for our indexed securities may include published indices of
this kind or customized indices developed by us or our affiliates in connection
with particular issues of indexed securities.
A published index may become unavailable, or a customized index may become
impossible to calculate in the normal manner, due to events such as war, natural
disasters, cessation of publication of the index or a suspension or disruption
of trading in one or more securities, commodities or currencies or other
instruments or measures on which the index is based. If an index becomes
unavailable or impossible to calculate in the normal manner, the terms of a
particular indexed security may allow us to delay determining the amount payable
as principal or interest on an indexed debt security or the settlement value of
an indexed warrant or purchase contract, or we may use an alternative method to
determine the value of the unavailable index. Alternative methods of valuation
are generally intended to produce a value similar to the value resulting from
reference to the relevant index. However, it is unlikely that any alternative
method of valuation we use will produce a value identical to the value that the
actual index would produce. If we use an alternative method of valuation for a
security linked to an index of this kind, the value of the security, or the rate
of return on it, may be lower than it otherwise would be.
Some indexed securities are linked to indices that are not commonly used or
that have been developed only recently. The lack of a trading history may make
it difficult to anticipate the volatility or other risks associated with an
indexed security of this kind. In addition, trading in these indices or their
underlying stocks, commodities or currencies or other instruments or measures,
or options or futures contracts on these stocks, commodities or currencies or
other instruments or measures, may be limited, which could increase their
volatility and decrease the value of the related indexed securities or the rates
of return on them.
WE MAY ENGAGE IN HEDGING ACTIVITIES THAT COULD ADVERSELY AFFECT AN INDEXED
SECURITY
In order to hedge an exposure on a particular indexed security, we may,
directly or through our affiliates, enter into transactions involving the
securities, commodities or currencies or other instruments or measures that
underlie the index for that security, or involving derivative
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instruments, such as swaps, options or futures, on the index or any of its
component items. By engaging in transactions of this kind, we could adversely
affect the value of an indexed security. It is possible that we could achieve
substantial returns from our hedging transactions while the value of the indexed
security may decline.
INFORMATION ABOUT INDICES MAY NOT BE INDICATIVE OF FUTURE PERFORMANCE
If we issue an indexed security, we may include historical information
about the relevant index in the applicable prospectus supplement. Any
information about indices that we may provide will be furnished as a matter of
information only, and you should not regard the information as indicative of the
range of, or trends in, fluctuations in the relevant index that may occur in the
future.
WE MAY HAVE CONFLICTS OF INTEREST REGARDING AN INDEXED SECURITY
Goldman, Sachs & Co. and our other affiliates may have conflicts of
interest with respect to some indexed securities. Goldman, Sachs & Co. and our
other affiliates may engage in trading, including trading for hedging purposes,
for their proprietary accounts or for other accounts under their management, in
indexed securities and in the securities, commodities or currencies or other
instruments or measures on which the index is based or in other derivative
instruments related to the index or its component items. These trading
activities could adversely affect the value of indexed securities. We and our
affiliates may also issue or underwrite securities or derivative instruments
that are linked to the same index as one or more indexed securities. By
introducing competing products into the marketplace in this manner, we could
adversely affect the value of an indexed security.
Goldman, Sachs & Co. or another of our affiliates may serve as calculation
agent for the indexed securities and may have considerable discretion in
calculating the amounts payable in respect of the securities. To the extent that
Goldman, Sachs & Co. or another of our affiliates calculates or compiles a
particular index, it may also have considerable discretion in performing the
calculation or compilation of the index. Exercising discretion in this manner
could adversely affect the value of an indexed security based on the index or
the rate of return on the security.
CONSIDERATIONS RELATING TO SECURITIES DENOMINATED OR
PAYABLE IN OR LINKED TO A NON-U.S. DOLLAR CURRENCY
If you intend to invest in a non-U.S. dollar security -- e.g., a security
whose principal and/or interest is payable in a currency other than U.S. dollars
or that may be settled by delivery of or reference to a non-U.S. dollar currency
or property denominated in or otherwise linked to a non-U.S. dollar
currency -- you should consult your own financial and legal advisors as to the
currency risks entailed by your investment. Securities of this kind may not be
an appropriate investment for investors who are unsophisticated with respect to
non-U.S. dollar currency transactions.
The information in this prospectus is directed primarily to investors who
are U.S. residents. Investors who are not U.S. residents should consult their
own financial and legal advisors about currency-related risks particular to
their investment.
AN INVESTMENT IN A NON-U.S. DOLLAR SECURITY INVOLVES CURRENCY-RELATED RISKS
An investment in a non-U.S. dollar security entails significant risks that
are not associated with a similar investment in a security that is payable
solely in U.S. dollars and where settlement value is not otherwise based on a
non-U.S. dollar currency. These risks include the possibility of significant
changes in rates of exchange between the U.S. dollar and the various non-U.S.
dollar currencies or composite currencies and the possibility of the imposition
or modification of foreign
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exchange controls or other conditions by either the United States or non-U.S.
governments. These risks generally depend on factors over which we have no
control, such as economic and political events and the supply of and demand for
the relevant currencies in the global markets.
CHANGES IN CURRENCY EXCHANGE RATES CAN BE VOLATILE AND UNPREDICTABLE
Rates of exchange between the U.S. dollar and many other currencies have
been highly volatile, and this volatility may continue and perhaps spread to
other currencies in the future. Fluctuations in currency exchange rates could
adversely affect an investment in a security denominated in, or where value is
otherwise linked to, a specified currency other than U.S. dollars. Depreciation
of the specified currency against the U.S. dollar could result in a decrease in
the U.S. dollar-equivalent value of payments on the security, including the
principal payable at maturity or settlement value payable upon exercise. That in
turn could cause the market value of the security to fall. Depreciation of the
specified currency against the U.S. dollar could result in a loss to the
investor on a U.S. dollar basis.
GOVERNMENT POLICY CAN ADVERSELY AFFECT CURRENCY EXCHANGE RATES AND AN INVESTMENT
IN A NON-U.S. DOLLAR SECURITY
Currency exchange rates can either float or be fixed by sovereign
governments. From time to time, governments use a variety of techniques, such as
intervention by a country's central bank or imposition of regulatory controls or
taxes, to affect the exchange rate of their currencies. Governments may also
issue a new currency to replace an existing currency or alter the exchange rate
or exchange characteristics by devaluation or revaluation of a currency. Thus, a
special risk in purchasing non-U.S. dollar securities is that their yields or
payouts could be significantly and unpredictably affected by governmental
actions. Even in the absence of governmental action directly affecting currency
exchange rates, political or economic developments in the country issuing the
specified currency for a non-U.S. dollar security or elsewhere could lead to
significant and sudden changes in the exchange rate between the U.S. dollar and
the specified currency. These changes could affect the value of the security as
participants in the global currency markets move to buy or sell the specified
currency or U.S. dollars in reaction to these developments.
Governments have imposed from time to time and may in the future impose
exchange controls or other conditions, including taxes, with respect to the
exchange or transfer of a specified currency that could affect exchange rates as
well as the availability of a specified currency for a security at its maturity
or on any other payment date. In addition, the ability of a holder to move
currency freely out of the country in which payment in the currency is received
or to convert the currency at a freely determined market rate could be limited
by governmental actions.
NON-U.S. DOLLAR SECURITIES MAY PERMIT US TO MAKE PAYMENTS IN U.S. DOLLARS OR
DELAY PAYMENT IF WE ARE UNABLE TO OBTAIN THE SPECIFIED CURRENCY
Securities payable in a currency other than U.S. dollars may provide that,
if the other currency is subject to convertibility, transferability, market
disruption or other conditions affecting its availability at or about the time
when a payment on the securities comes due because of circumstances beyond our
control, we will be entitled to make the payment in U.S. dollars or delay making
the payment. These circumstances could include the imposition of exchange
controls or our inability to obtain the other currency because of a disruption
in the currency markets. If we made payment in U.S. dollars, the exchange rate
we would use would be determined in the manner described above under
"Description of Debt Securities We May Offer -- Payment Mechanics for Debt
Securities -- How We Will Make Payments Due in Other Currencies -- When the
Specified Currency Is Not Available". A determination of this kind may be based
on limited information and would involve significant discretion on the part of
our
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foreign exchange agent. As a result, the value of the payment in U.S. dollars an
investor would receive on the payment date may be less than the value of the
payment the investor would have received in the other currency if it had been
available, or may be zero. In addition, a government may impose extraordinary
taxes on transfers of a currency. If that happens, we will be entitled to deduct
these taxes from any payment on securities payable in that currency.
WE WILL NOT ADJUST NON-U.S. DOLLAR SECURITIES TO COMPENSATE FOR CHANGES IN
CURRENCY EXCHANGE RATES
Except as described above, we will not make any adjustment or change in the
terms of a non-U.S. dollar security in the event of any change in exchange rates
for the relevant currency, whether in the event of any devaluation, revaluation
or imposition of exchange or other regulatory controls or taxes or in the event
of other developments affecting that currency, the U.S. dollar or any other
currency. Consequently, investors in non-U.S. dollar securities will bear the
risk that their investment may be adversely affected by these types of events.
IN A LAWSUIT FOR PAYMENT ON A NON-U.S. DOLLAR SECURITY, AN INVESTOR MAY BEAR
CURRENCY EXCHANGE RISK
Our debt securities, warrants, purchase contracts and units will be
governed by New York law. Under Section 27 of the New York Judiciary Law, a
state court in the State of New York rendering a judgment on a security
denominated in a currency other than U.S. dollars would be required to render
the judgment in the specified currency; however, the judgment would be converted
into U.S. dollars at the exchange rate prevailing on the date of entry of the
judgment. Consequently, in a lawsuit for payment on a security denominated in a
currency other than U.S. dollars, investors would bear currency exchange risk
until judgment is entered, which could be a long time.
In courts outside of New York, investors may not be able to obtain judgment
in a specified currency other than U.S. dollars. For example, a judgment for
money in an action based on a non-U.S. dollar security in many other U.S.
federal or state courts ordinarily would be enforced in the United States only
in U.S. dollars. The date used to determine the rate of conversion of the
currency in which any particular security is denominated into U.S. dollars will
depend upon various factors, including which court renders the judgment.
INFORMATION ABOUT EXCHANGE RATES MAY NOT BE INDICATIVE OF FUTURE PERFORMANCE
If we issue a non-U.S. dollar security, we may include in the applicable
prospectus supplement a currency supplement that provides information about
historical exchange rates for the relevant non-U.S. dollar currency or
currencies. Any information about exchange rates that we may provide will be
furnished as a matter of information only, and you should not regard the
information as indicative of the range of, or trends in, fluctuations in
currency exchange rates that may occur in the future. That rate will likely
differ from the exchange rate used under the terms that apply to a particular
security.
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UNITED STATES TAXATION
This section describes the material United States federal income tax
consequences of owning the debt securities and preferred stock we are offering.
It is the opinion of Sullivan & Cromwell, United States tax counsel to The
Goldman Sachs Group, Inc. It applies to you only if you hold your securities as
capital assets for tax purposes. This section does not apply to you if you are a
member of a class of holders subject to special rules, such as:
-- a dealer in securities or currencies;
-- a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings;
-- a bank;
-- a life insurance company;
-- a tax-exempt organization;
-- a person that owns debt securities that are a hedge or that are hedged
against interest rate or currency risks;
-- a person that owns debt securities as part of a straddle or conversion
transaction for tax purposes; or
-- a person whose functional currency for tax purposes is not the U.S.
dollar.
This section is based on the U.S. Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations under the Internal
Revenue Code, published rulings and court decisions, all as currently in effect.
These laws are subject to change, possibly on a retroactive basis.
Please consult your own tax advisor concerning the consequences of owning these
securities in your particular circumstances under the Internal Revenue Code and
the laws of any other taxing jurisdiction.
TAXATION OF DEBT SECURITIES
This subsection describes the material United States federal income tax
consequences of owning, selling and disposing of the debt securities we are
offering. It deals only with debt securities that are due to mature 30 years or
less from the date on which they are issued. The United States federal income
tax consequences of owning debt securities that are due to mature more than 30
years from their date of issue will be discussed in an applicable prospectus
supplement.
UNITED STATES HOLDERS
This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a debt security
and you are:
-- a citizen or resident of the United States;
-- a domestic corporation;
-- an estate whose income is subject to United States federal income tax
regardless of its source; or
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-- a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
If you are not a United States holder, this section does not apply to you and
you should refer to "-- United States Alien Holders" below.
PAYMENTS OF INTEREST. Except as described below in the case of interest on
a discount debt security that is not qualified stated interest, each as defined
below under "-- Original Issue Discount", you will be taxed on any interest on
your debt security, whether payable in U.S. dollars or a non-U.S. dollar
currency, including a composite currency or basket of currencies other than U.S.
dollars, as ordinary income at the time you receive the interest or when it
accrues, depending on your method of accounting for tax purposes.
CASH BASIS TAXPAYERS
If you are a taxpayer that uses the cash receipts and disbursements method
of accounting for tax purposes and you receive an interest payment that is
denominated in, or determined by reference to, a non-U.S. dollar currency, you
must recognize income equal to the U.S. dollar value of the interest payment,
based on the exchange rate in effect on the date of receipt, regardless of
whether you actually convert the payment into U.S. dollars.
ACCRUAL BASIS TAXPAYERS
If you are a taxpayer that uses an accrual method of accounting for tax
purposes, you may determine the amount of income that you recognize with respect
to an interest payment denominated in, or determined by reference to, a non-U.S.
dollar currency by using one of two methods. Under the first method, you will
determine the amount of income accrued based on the average exchange rate in
effect during the interest accrual period or, with respect to an accrual period
that spans two taxable years, that part of the period within the taxable year.
If you elect the second method, you would determine the amount of income
accrued on the basis of the exchange rate in effect on the last day of the
accrual period, or, in the case of an accrual period that spans two taxable
years, the exchange rate in effect on the last day of the part of the period
within the taxable year. Additionally, under this second method, if you receive
a payment of interest within five business days of the last day of your accrual
period or taxable year, you may instead translate the interest accrued into U.S.
dollars at the exchange rate in effect on the day that you actually receive the
interest payment. If you elect the second method, it will apply to all debt
instruments that you hold at the beginning of the first taxable year to which
the election applies and to all debt instruments that you subsequently acquire.
You may not revoke this election without the consent of the United States
Internal Revenue Service.
When you actually receive an interest payment, including a payment
attributable to accrued but unpaid interest upon the sale or retirement of your
debt security, denominated in, or determined by reference to, a non-U.S. dollar
currency for which you accrued an amount of income, you will recognize ordinary
income or loss measured by the difference, if any, between the exchange rate
that you used to accrue interest income and the exchange rate in effect on the
date of receipt, regardless of whether you actually convert the payment into
U.S. dollars.
ORIGINAL ISSUE DISCOUNT. If you own a debt security, other than a
short-term debt security with a term of one year or less, it will be treated as
a discount debt security issued at an original issue discount if the amount by
which the debt security's stated redemption price at maturity exceeds its issue
price is more than a de minimis amount. Generally, a debt security's issue price
will be the first price at which a substantial amount of debt securities
included in the issue of which the debt security is a part is sold to persons
other than bond houses, brokers, or similar persons or organizations acting in
the capacity of underwriters, placement agents, or wholesalers. A debt
security's stated redemption price at maturity is the total of all payments
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provided by the debt security that are not payments of qualified stated
interest. Generally, an interest payment on a debt security is qualified stated
interest if it is one of a series of stated interest payments on a debt security
that are unconditionally payable at least annually at a single fixed rate, with
certain exceptions for lower rates paid during some periods, applied to the
outstanding principal amount of the debt security. There are special rules for
variable rate debt securities that are discussed below under "-- Variable Rate
Debt Securities".
In general, your debt security is not a discount debt security if the
amount by which its stated redemption price at maturity exceeds its issue price
is less than the de minimis amount of 0.25 percent of its stated redemption
price at maturity multiplied by the number of complete years to its maturity.
Your debt security will have de minimis original issue discount if the amount of
the excess is less than the de minimis amount. If your debt security has de
minimis original issue discount, you must include the de minimis amount in
income as stated principal payments are made on the debt security, unless you
make the election described below under "-- Election to Treat All Interest as
Original Issue Discount". You can determine the includible amount with respect
to each such payment by multiplying the total amount of your debt security's de
minimis original issue discount by a fraction equal to:
-- the amount of the principal payment made
divided by:
-- the stated principal amount of the debt security.
Generally, if your discount debt security matures more than one year from
its date of issue, you must include original issue discount in income before you
receive cash attributable to that income. The amount of original issue discount
that you must include in income is calculated using a constant-yield method, and
generally you will include increasingly greater amounts of original issue
discount in income over the life of your debt security. More specifically, you
can calculate the amount of original issue discount that you must include in
income by adding the daily portions of original issue discount with respect to
your discount debt security for each day during the taxable year or portion of
the taxable year that you hold your discount debt security. You can determine
the daily portion by allocating to each day in any accrual period a pro rata
portion of the original issue discount allocable to that accrual period. You may
select an accrual period of any length with respect to your discount debt
security and you may vary the length of each accrual period over the term of
your discount debt security. However, no accrual period may be longer than one
year and each scheduled payment of interest or principal on the discount debt
security must occur on either the first or final day of an accrual period.
You can determine the amount of original issue discount allocable to an
accrual period by:
-- multiplying your discount debt security's adjusted issue price at the
beginning of the accrual period by your debt security's yield to
maturity; and then
-- subtracting from this figure the sum of the payments of qualified
stated interest on your debt security allocable to the accrual period.
You must determine the discount debt security's yield to maturity on the basis
of compounding at the close of each accrual period and adjusting for the length
of each accrual period. Further, you determine your discount debt security's
adjusted issue price at the beginning of any accrual period by:
-- adding your discount debt security's issue price and any accrued
original issue discount for each prior accrual period; and then
-- subtracting any payments previously made on your discount debt
security that were not qualified stated interest payments.
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If an interval between payments of qualified stated interest on your
discount debt security contains more than one accrual period, then, when you
determine the amount of original issue discount allocable to an accrual period,
you must allocate the amount of qualified stated interest payable at the end of
the interval, including any qualified stated interest that is payable on the
first day of the accrual period immediately following the interval, pro rata to
each accrual period in the interval based on their relative lengths. In
addition, you must increase the adjusted issue price at the beginning of each
accrual period in the interval by the amount of any qualified stated interest
that has accrued prior to the first day of the accrual period but that is not
payable until the end of the interval. You may compute the amount of original
issue discount allocable to an initial short accrual period by using any
reasonable method if all other accrual periods, other than a final short accrual
period, are of equal length.
The amount of original issue discount allocable to the final accrual period
is equal to the difference between:
-- the amount payable at the maturity of your debt security, other than
any payment of qualified stated interest; and
-- your debt security's adjusted issue price as of the beginning of the
final accrual period.
ACQUISITION PREMIUM
If you purchase your debt security for an amount that is less than or equal
to the sum of all amounts, other than qualified stated interest, payable on your
debt security after the purchase date but is greater than the amount of your
debt security's adjusted issue price, as determined above, the excess is
acquisition premium. If you do not make the election described below under
"-- Election to Treat All Interest as Original Issue Discount", then you must
reduce the daily portions of original issue discount by an amount equal to:
-- the excess of your adjusted basis in the debt security immediately
after purchase over the adjusted issue price of the debt security
divided by:
-- the excess of the sum of all amounts payable, other than qualified
stated interest, on the debt security after the purchase date over the
debt security's adjusted issue price.
MARKET DISCOUNT
You will be treated as if you purchased your debt security, other than a
short-term debt security, at a market discount, and your debt security will be a
market discount debt security if the difference between the debt security's
stated redemption price at maturity or, in the case of a discount debt security,
the debt security's revised issue price, and the price you paid for your debt
security is equal to or greater than 0.25 percent of your debt security's stated
redemption price at maturity or revised issue price, respectively, multiplied by
the number of complete years to the debt security's maturity. To determine the
revised issue price of your debt security for these purposes, you generally add
any original issue discount that has accrued on your debt security to its issue
price.
If your debt security's stated redemption price at maturity or, in the case
of a discount debt security, its revised issue price, does not exceed the price
you paid for the debt security by 0.25 percent multiplied by the number of
complete years to the debt security's maturity, the excess constitutes de
minimis market discount, and the rules discussed below are not applicable to
you.
You must treat any gain you recognize on the maturity or disposition of
your market discount debt security as ordinary income to the extent of the
accrued market discount on your debt security. Alternatively, you may elect to
include market discount in income currently over the life of your debt security.
If you make this election, it will apply to all debt instruments with market
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discount that you acquire on or after the first day of the first taxable year to
which the election applies. You may not revoke this election without the consent
of the United States Internal Revenue Service. If you own a market discount debt
security and do not make this election, you will generally be required to defer
deductions for interest on borrowings allocable to your debt security in an
amount not exceeding the accrued market discount on your debt security until the
maturity or disposition of your debt security.
You will accrue market discount on your market discount debt security on a
straight-line basis unless you elect to accrue market discount using a
constant-yield method. If you make this election, it will apply only to the debt
security with respect to which it is made and you may not revoke it.
PRE-ISSUANCE ACCRUED INTEREST
An election may be made to decrease the issue price of your debt security
by the amount of pre-issuance accrued interest if:
-- a portion of the initial purchase price of your debt security is
attributable to pre-issuance accrued interest;
-- the first stated interest payment on your debt security is to be made
within one year of your debt security's issue date; and
-- the payment will equal or exceed the amount of pre-issuance accrued
interest.
If this election is made, a portion of the first stated interest payment
will be treated as a return of the excluded pre-issuance accrued interest and
not as an amount payable on your debt security.
DEBT SECURITIES SUBJECT TO CONTINGENCIES INCLUDING OPTIONAL REDEMPTION
Your debt security is subject to a contingency if it provides for an
alternative payment schedule or schedules applicable upon the occurrence of a
contingency or contingencies, other than a remote or incidental contingency,
whether such contingency relates to payments of interest or of principal. In
such a case, you must determine the yield and maturity of your debt security by
assuming that the payments will be made according to the payment schedule most
likely to occur if:
-- the timing and amounts of the payments that comprise each payment
schedule are known as of the issue date; and
-- one of such schedules is significantly more likely than not to occur.
If there is no single payment schedule that is significantly more likely
than not to occur, other than because of a mandatory sinking fund, you must
include income on your debt security in accordance with the general rules that
govern contingent payment obligations. These rules will be discussed in the
applicable prospectus supplement.
Notwithstanding the general rules for determining yield and maturity, if
your debt security is subject to contingencies, and either you or we have an
unconditional option or options that, if exercised, would require payments to be
made on the debt security under an alternative payment schedule or schedules,
then:
-- in the case of an option or options that we may exercise, we will be
deemed to exercise or not exercise an option or combination of options
in the manner that minimizes the yield on your debt security; and
-- in the case of an option or options that you may exercise, you will be
deemed to exercise or not exercise an option or combination of options
in the manner that maximizes the yield on your debt security.
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If both you and we hold options described in the preceding sentence, those
rules will apply to each option in the order in which they may be exercised. You
may determine the yield on your debt security for the purposes of those
calculations by using any date on which your debt security may be redeemed or
repurchased as the maturity date and the amount payable on the date that you
chose in accordance with the terms of your debt security as the principal amount
payable at maturity.
If a contingency, including the exercise of an option, actually occurs or
does not occur contrary to an assumption made according to the above rules then,
except to the extent that a portion of your debt security is repaid as a result
of this change in circumstances and solely to determine the amount and accrual
of original issue discount, you must redetermine the yield and maturity of your
debt security by treating your debt security as having been retired and reissued
on the date of the change in circumstances for an amount equal to your debt
security's adjusted issue price on that date.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
You may elect to include in gross income all interest that accrues on your
debt security using the constant-yield method described above, with the
modifications described below. For purposes of this election, interest will
include stated interest, original issue discount, de minimis original issue
discount, market discount, de minimis market discount and unstated interest, as
adjusted by any amortizable bond premium, described below under "-- Debt
Securities Purchased at a Premium", or acquisition premium.
If you make this election for your debt security, then, when you apply the
constant-yield method:
-- the issue price of your debt security will equal your cost;
-- the issue date of your debt security will be the date you acquired it;
and
-- no payments on your debt security will be treated as payments of
qualified stated interest.
Generally, this election will apply only to the debt security for which you
make it; however, if the debt security has amortizable bond premium, you will be
deemed to have made an election to apply amortizable bond premium against
interest for all debt instruments with amortizable bond premium, other than debt
instruments the interest on which is excludible from gross income, that you hold
as of the beginning of the taxable year to which the election applies or any
taxable year thereafter. Additionally, if you make this election for a market
discount debt security, you will be treated as having made the election
discussed above under "-- Market Discount" to include market discount in income
currently over the life of all debt instruments that you currently own or later
acquire. You may not revoke any election to apply the constant-yield method to
all interest on a debt security or the deemed elections with respect to
amortizable bond premium or market discount debt securities without the consent
of the United States Internal Revenue Service.
VARIABLE RATE DEBT SECURITIES
Your debt security will be a variable rate debt security if:
-- your debt security's issue price does not exceed the total
noncontingent principal payments by more than the lesser of:
1. .015 multiplied by the product of the total noncontingent principal
payments and the number of complete years to maturity from the issue
date; or
2. 15 percent of the total noncontingent principal payments; and
-- your debt security provides for stated interest, compounded or paid at
least annually, only at:
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1. one or more qualified floating rates;
2. a single fixed rate and one or more qualified floating rates;
3. a single objective rate; or
4. a single fixed rate and a single objective rate that is a qualified
inverse floating rate.
Your debt security will have a variable rate that is a qualified floating rate
if:
-- variations in the value of the rate can reasonably be expected to
measure contemporaneous variations in the cost of newly borrowed funds
in the currency in which your debt security is denominated; or
-- the rate is equal to such a rate multiplied by either:
1. a fixed multiple that is greater than 0.65 but not more than 1.35; or
2. a fixed multiple greater than 0.65 but not more than 1.35, increased
or decreased by a fixed rate; and
-- the value of the rate on any date during the term of your debt
security is set no earlier than three months prior to the first day on
which that value is in effect and no later than one year following
that first day.
If your debt security provides for two or more qualified floating rates
that are within 0.25 percentage points of each other on the issue date or can
reasonably be expected to have approximately the same values throughout the term
of the debt security, the qualified floating rates together constitute a single
qualified floating rate.
Your debt security will not have a qualified floating rate, however, if the
rate is subject to certain restrictions (including caps, floors, governors, or
other similar restrictions) unless such restrictions are fixed throughout the
term of the debt security or are not reasonably expected to significantly affect
the yield on the debt security.
Your debt security will have a variable rate that is a single objective
rate if:
-- the rate is not a qualified floating rate;
-- the rate is determined using a single, fixed formula that is based on
objective financial or economic information that is not within the
control of or unique to the circumstances of the issuer or a related
party; and
-- the value of the rate on any date during the term of your debt
security is set no earlier than three months prior to the first day on
which that value is in effect and no later than one year following
that first day.
Your debt security will not have a variable rate that is an objective rate,
however, if it is reasonably expected that the average value of the rate during
the first half of your debt security's term will be either significantly less
than or significantly greater than the average value of the rate during the
final half of your debt security's term.
An objective rate as described above is a qualified inverse floating rate
if:
-- the rate is equal to a fixed rate minus a qualified floating rate and
-- the variations in the rate can reasonably be expected to inversely
reflect contemporaneous variations in the cost of newly borrowed
funds.
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Your debt security will also have a single qualified floating rate or an
objective rate if interest on your debt security is stated at a fixed rate for
an initial period of one year or less followed by either a qualified floating
rate or an objective rate for a subsequent period, and either:
-- the fixed rate and the qualified floating rate or objective rate have
values on the issue date of the debt security that do not differ by
more than 0.25 percentage points or
-- the value of the qualified floating rate or objective rate is intended
to approximate the fixed rate.
In general, if your variable rate debt security provides for stated
interest at a single qualified floating rate or objective rate, or one of those
rates after a single fixed rate for an initial period, all stated interest on
your debt security is qualified stated interest. In this case, the amount of
original issue discount, if any, is determined by using, in the case of a
qualified floating rate or qualified inverse floating rate, the value as of the
issue date of the qualified floating rate or qualified inverse floating rate or,
for any other objective rate, a fixed rate that reflects the yield reasonably
expected for your debt security.
If your variable rate debt security does not provide for stated interest at
a single qualified floating rate or a single objective rate, and also does not
provide for interest payable at a fixed rate other than a single fixed rate for
an initial period, you generally must determine the interest and original issue
discount accruals on your debt security by:
-- determining a fixed rate substitute for each variable rate provided
under your variable rate debt security;
-- constructing the equivalent fixed rate debt instrument, using the
fixed rate substitute described above;
-- determining the amount of qualified stated interest and original issue
discount with respect to the equivalent fixed rate debt instrument;
and
-- adjusting for actual variable rates during the applicable accrual
period.
When you determine the fixed rate substitute for each variable rate provided
under the variable rate debt security, you generally will use the value of each
variable rate as of the issue date or, for an objective rate that is not a
qualified inverse floating rate, a rate that reflects the reasonably expected
yield on your debt security.
If your variable rate debt security provides for stated interest either at
one or more qualified floating rates or at a qualified inverse floating rate,
and also provides for stated interest at a single fixed rate other than at a
single fixed rate for an initial period, you generally must determine interest
and original issue discount accruals by using the method described in the
previous paragraph. However, your variable rate debt security will be treated,
for purposes of the first three steps of the determination, as if your debt
security had provided for a qualified floating rate, or a qualified inverse
floating rate, rather than the fixed rate. The qualified floating rate, or
qualified inverse floating rate, that replaces the fixed rate must be such that
the fair market value of your variable rate debt security as of the issue date
approximates the fair market value of an otherwise identical debt instrument
that provides for the qualified floating rate, or qualified inverse floating
rate, rather than the fixed rate.
SHORT-TERM DEBT SECURITIES
In general, if you are an individual or other cash-basis United States
holder of a short-term debt security, you are not required to accrue original
issue discount, as specially defined below for the purposes of this paragraph,
for United States federal income tax purposes unless you elect to do so.
However, you may be required to include any stated interest in income as you
receive it. If you are an accrual basis taxpayer, a taxpayer in a special class,
including, but not limited to, a regulated investment company, common trust
fund, or a certain type of pass-through entity, or a cash basis taxpayer who so
elects, you will be required to accrue original issue discount on short-term
debt securities on either a straight-line basis or under the constant-yield
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method, based on daily compounding. If you are not required and do not elect to
include original issue discount in income currently, any gain you realize on the
sale or retirement of your short-term debt security will be ordinary income to
the extent of the accrued original issue discount, which will be determined on a
straight-line basis unless you make an election to accrue the original issue
discount under the constant-yield method, through the date of sale or
retirement. However, if you are not required and do not elect to accrue original
issue discount on your short-term debt securities, you will be required to defer
deductions for interest on borrowings allocable to your short-term debt
securities in an amount not exceeding the deferred income until the deferred
income is realized.
When you determine the amount of original issue discount subject to these
rules, you must include all interest payments on your short-term debt security,
including stated interest, in your short-term debt security's stated redemption
price at maturity.
NON-U.S. DOLLAR CURRENCY DISCOUNT DEBT SECURITIES
If your discount debt security is denominated in, or determined by
reference to, a non-U.S. dollar currency, you must determine original issue
discount for any accrual period on your discount debt security in the non-U.S.
dollar currency and then translate the amount of original issue discount into
U.S. dollars in the same manner as stated interest accrued by an accrual basis
United States holder, as described above under "-- Payments of Interest". You
may recognize ordinary income or loss when you receive an amount attributable to
original issue discount in connection with a payment of interest or the sale or
retirement of your debt security.
DEBT SECURITIES PURCHASED AT A PREMIUM. If you purchase your debt security
for an amount in excess of its principal amount, you may elect to treat the
excess as amortizable bond premium. If you make this election, you will reduce
the amount required to be included in your income each year with respect to
interest on your debt security by the amount of amortizable bond premium
allocable to that year, based on your debt security's yield to maturity. If your
debt security is denominated in, or determined by reference to, a non-U.S.
dollar currency, you will compute your amortizable bond premium in units of the
non-U.S. dollar currency and your amortizable bond premium will reduce your
interest income in units of the non-U.S. dollar currency. Gain or loss
recognized that is attributable to changes in exchange rates between the time
your amortized bond premium offsets interest income and the time of the
acquisition of your debt security is generally taxable as ordinary income or
loss. If you make an election to amortize bond premium, it will apply to all
debt instruments, other than debt instruments the interest on which is
excludible from gross income, that you hold at the beginning of the first
taxable year to which the election applies or that you thereafter acquire, and
you may not revoke it without the consent of the United States Internal Revenue
Service. See also "-- Original Issue Discount -- Election to Treat All Interest
as Original Issue Discount" above.
PURCHASE, SALE AND RETIREMENT OF THE DEBT SECURITIES. Your tax basis in
your debt security will generally be the U.S. dollar cost, as defined below, of
your debt security, adjusted by:
-- adding any original issue discount, market discount, de minimis
original issue discount and de minimis market discount previously
included in income with respect to your debt security; and then
-- subtracting any payments on your debt security that are not qualified
stated interest payments and any amortizable bond premium applied to
reduce interest on your debt security.
If you purchase your debt security with non-U.S. dollar currency, the U.S.
dollar cost of your debt security will generally be the U.S. dollar value of the
purchase price on the date of purchase. However, if you are a cash basis
taxpayer, or an accrual basis taxpayer if you so elect, and your debt security
is traded on an established securities market, as defined in the applicable U.S.
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Treasury regulations, the U.S. dollar cost of your debt security will be the
U.S. dollar value of the purchase price on the settlement date of your purchase.
You will generally recognize gain or loss on the sale or retirement of your
debt security equal to the difference between the amount you realize on the sale
or retirement and your tax basis in your debt security. If your debt security is
sold or retired for an amount in non-U.S. dollar currency, the amount you
realize will be the U.S. dollar value of such amount on:
-- the date payment is received, if you are a cash basis taxpayer and the
debt securities are not traded on an established securities market, as
defined in the applicable Treasury regulations;
-- the date of disposition, if you are an accrual basis taxpayer; or
-- the settlement date for the sale, if you are a cash basis taxpayer, or
an accrual basis taxpayer that so elects, and the debt securities are
traded on an established securities market, as defined in the
applicable Treasury regulations.
You will recognize capital gain or loss when you sell or retire your debt
security, except to the extent:
-- described above under "-- Original Issue Discount -- Short-Term Debt
Securities" or "-- Market Discount";
-- attributable to accrued but unpaid interest;
-- the rules governing contingent payment obligations apply; or
-- attributable to changes in exchange rates as described below.
Capital gain of a noncorporate United States holder is generally taxed at a
maximum rate of 20% where the property is held more than one year.
You must treat any portion of the gain or loss that you recognize on the
sale or retirement of a debt security as ordinary income or loss to the extent
attributable to changes in exchange rates. However, you take exchange gain or
loss into account only to the extent of the total gain or loss you realize on
the transaction.
EXCHANGE OF AMOUNTS IN OTHER THAN U.S. DOLLARS. If you receive non-U.S.
dollar currency as interest on your debt security or on the sale or retirement
of your debt security, your tax basis in the non-U.S. dollar currency will equal
its U.S. dollar value when the interest is received or at the time of the sale
or retirement. If you purchase non-U.S. dollar currency, you generally will have
a tax basis equal to the U.S. dollar value of the non-U.S. dollar currency on
the date of your purchase. If you sell or dispose of a non-U.S. dollar currency,
including if you use it to purchase debt securities or exchange it for U.S.
dollars, any gain or loss recognized generally will be ordinary income or loss.
INDEXED AND OTHER DEBT SECURITIES. The applicable prospectus supplement
will discuss any special United States federal income tax rules with respect to
contingent non-U.S. dollar currency debt securities, debt securities the
payments on which are determined by reference to any index and other debt
securities that are subject to the rules governing contingent payment
obligations which are not subject to the rules governing variable rate debt
securities and with respect to any renewable and extendible debt securities and
any debt securities providing for the periodic payment of principal over the
life of the debt security.
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UNITED STATES ALIEN HOLDERS
This subsection describes the tax consequences to a United States alien
holder. You are a United States alien holder if you are the beneficial owner of
a debt security and are, for United States federal income tax purposes:
-- a nonresident alien individual;
-- a foreign corporation;
-- a foreign partnership; or
-- an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from a debt
security.
If you are a United States holder, this section does not apply to you.
This discussion assumes that the debt security or coupon is not subject to
the rules of Section 871(h)(4)(A) of the Internal Revenue Code, relating to
interest payments that are determined by reference to the income, profits,
changes in the value of property or other attributes of the debtor or a related
party.
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below, if you are a United States alien
holder of a debt security or coupon:
-- we and other payors will not be required to deduct United States
withholding tax from payments of principal, premium, if any, and
interest, including the original issue discount, to you if, in the
case of interest:
1. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled
to vote;
2. you are not a controlled foreign corporation that is related to the
Company through stock ownership, and in the case of a debt security
other than a bearer debt security:
a. you certify to us or a U.S. payor, under penalties of perjury,
that you are not a United States holder and provide your name and
address; or
b. a non-U.S. securities clearing organization, bank or other
financial institution that holds customers' securities in the
ordinary course of its trade or business and holds the debt
security certifies to us or a U.S. payor under penalties of
perjury that a similar statement has been received from you by it
or by a similar financial institution between it and you and
furnishes the payor with a copy thereof; and
3. in the case of a bearer debt security, the debt security is offered,
sold and delivered in compliance with the restrictions described
above under "Considerations Relating to Securities Issued in Bearer
Form" and payments on the debt security are made in accordance with
the procedures described in that section; and
-- no deduction for any United States federal withholding tax will be
made from any gain that you realize on the sale or exchange of your
debt security or coupon.
Further, a debt security or coupon held by an individual who at death is not a
citizen or resident of the United States will not be includible in the
individual's gross estate for United States federal estate tax purposes if:
-- the decedent did not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company
entitled to vote at the time of death; and
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-- the income on the debt security would not have been effectively
connected with a U.S. trade or business of the decedent at the same
time.
If you receive a payment after December 31, 2000, recently finalized U.S.
Treasury regulations will apply. Under these final withholding regulations,
after December 31, 2000, you may use an alternative method to satisfy the
certification requirement described above. Additionally, if you are a partner in
a foreign partnership, after December 31, 2000, you, in addition to the foreign
partnership, must provide the certification described above and the partnership
must provide certain information. The United States Internal Revenue Service
will apply a look-through rule in the case of tiered partnerships.
U.S. BACKUP WITHHOLDING AND INFORMATION REPORTING
UNITED STATES HOLDERS
In general, if you are a noncorporate United States holder, we and other
payors are required to report to the United States Internal Revenue Service all
payments of principal, any premium and interest on your debt security, and the
accrual of original issue discount on a discount debt security. In addition, the
proceeds of the sale of your debt security before maturity within the United
States will be reported to the United States Internal Revenue Service.
Additionally, backup withholding at a rate of 31% will apply to any payments,
including payments of original issue discount, if you fail to provide an
accurate taxpayer identification number, or you are notified by the United
States Internal Revenue Service that you have failed to report all interest and
dividends required to be shown on your federal income tax returns.
UNITED STATES ALIEN HOLDERS
You are generally exempt from backup withholding and information reporting
with respect to any payments of principal, premium or interest, including
original issue discount, made by us and other payors provided that in the case
of debt securities other than bearer debt securities, you provide the
certification described above under "-- United States Alien Holders", and
provided further that the payor does not have actual knowledge that you are a
United States person. See "-- United States Alien Holders" above for a
discussion of the rules under the final withholding regulations. We and other
payors, however, may report payments of interest on your debt securities on
Internal Revenue Service Form 1042-S.
In general, payment of the proceeds from the sale of debt securities to or
through a United States office of a broker is subject to both U.S. backup
withholding and information reporting. If, however, you are a United States
alien holder, you will not be subject to information reporting and backup
withholding if you certify as to your non-U.S. status, under penalties of
perjury, or otherwise establish an exemption. Payments of the proceeds from the
sale by a United States alien holder of a debt security made to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding. However, information reporting, but not backup withholding,
may apply to a payment made outside the United States of the proceeds of a sale
of a debt security through an office outside the United States if the broker is:
-- a United States person;
-- a controlled foreign corporation for United States tax purposes;
-- a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified
three-year period; or
-- with respect to payments made after December 31, 2000, a foreign
partnership, if at any time during its tax year:
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1. one or more of its partners are "U.S. persons", as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership; or
2. at any time during its tax year, the foreign partnership is engaged
in a U.S. trade or business,
unless the broker has documentary evidence in its records that you are a
non-U.S. person or you otherwise establish an exemption.
TAXATION OF PREFERRED STOCK
This subsection describes the material United States federal income tax
consequences of owning, selling and disposing of the preferred stock and
depositary shares that we may offer. When we refer to preferred stock in this
subsection, we mean both preferred stock and depositary shares.
UNITED STATES HOLDERS
This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a share of
preferred stock and you are:
-- a citizen or resident of the United States;
-- a domestic corporation;
-- an estate whose income is subject to United States federal income tax
regardless of its source; or
-- a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
If you are not a United States holder, this subsection does not apply to you and
you should refer to "-- United States Alien Holders" below.
DISTRIBUTIONS ON PREFERRED STOCK. You will be taxed on distributions on
preferred stock as ordinary dividend income to the extent paid out of our
current or accumulated earnings and profits for United States federal income tax
purposes. If you are taxed as a corporation, except as described in the next
subsection, dividends would be eligible for the 70% dividends-received
deduction.
You generally will not be taxed on any portion of a distribution not paid
out of our current or accumulated earnings and profits if your tax basis in the
preferred stock is greater than or equal to the amount of the distribution.
However, you would be required to reduce your tax basis (but not below zero) in
the preferred stock by the amount of the distribution, and would recognize
capital gain to the extent that the distribution exceeds your tax basis in the
preferred stock. Further, if you are a corporation, you would not be entitled to
a dividends-received deduction on this portion of a distribution.
LIMITATIONS ON DIVIDENDS-RECEIVED DEDUCTION. Corporate shareholders may
not be entitled to take the 70% dividends-received deduction in all
circumstances. Prospective corporate investors in preferred stock should
consider the effect of:
-- Section 246A of the Internal Revenue Code, which reduces the
dividends-received deduction allowed to a corporate shareholder that
has incurred indebtedness that is "directly attributable" to an
investment in portfolio stock such as preferred stock;
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-- Section 246(c) of the Internal Revenue Code, which, among other
things, disallows the dividends-received deduction in respect of any
dividend on a share of stock that is held for less than the minimum
holding period (generally at least 46 days during the 90 day period
beginning on the date which is 45 days before the date on which such
share becomes ex-dividend with respect to such dividend); and
-- Section 1059 of the Internal Revenue Code, which, under certain
circumstances, reduces the basis of stock for purposes of calculating
gain or loss in a subsequent disposition by the portion of any
"extraordinary dividend" (as defined below) that is eligible for the
dividends-received deduction.
EXTRAORDINARY DIVIDENDS. If you are a corporate shareholder, you will be
required to reduce your tax basis (but not below zero) in the preferred stock by
the nontaxed portion of any "extraordinary dividend" if you have not held your
stock for more than two years before the earliest of the date such dividend is
declared, announced, or agreed. Generally, the nontaxed portion of an
extraordinary dividend is the amount excluded from income by operation of the
dividends-received deduction. An extraordinary dividend on the preferred stock
generally would be a dividend that:
-- equals or exceeds 5% of the corporate shareholder's adjusted tax basis
in the preferred stock, treating all dividends having ex-dividend
dates within an 85 day period as one dividend; or
-- exceeds 20% of the corporate shareholder's adjusted tax basis in the
preferred stock, treating all dividends having ex-dividend dates
within a 365 day period as one dividend.
In determining whether a dividend paid on the preferred stock is an
extraordinary dividend, a corporate shareholder may elect to substitute the fair
market value of the stock for its tax basis for purposes of applying these tests
if the fair market value as of the day before the ex-dividend date is
established to the satisfaction of the Secretary of the Treasury. An
extraordinary dividend also includes any amount treated as a dividend in the
case of a redemption that is either non-pro rata as to all stockholders or in
partial liquidation of the company, regardless of the stockholder's holding
period and regardless of the size of the dividend. Any part of the nontaxed
portion of an extraordinary dividend that is not applied to reduce the corporate
shareholder's tax basis as a result of the limitation on reducing its basis
below zero would be treated as capital gain and would be recognized in the
taxable year in which the extraordinary dividend is received.
If you are a corporate shareholder, please consult your tax advisor with respect
to the possible application of the extraordinary dividend provisions of the
federal income tax law to your ownership or disposition of preferred stock in
your particular circumstances.
REDEMPTION PREMIUM. If we may redeem your preferred stock at a redemption
price in excess of its issue price, the entire amount of the excess may
constitute an unreasonable redemption premium that will be treated as a
constructive dividend. You generally must take this constructive dividend into
account each year in the same manner as original issue discount would be taken
into account if the preferred stock were treated as a debt security for United
States federal income tax purposes. See "-- Taxation of Debt
Securities -- United States Holders -- Original Issue Discount" above for a
discussion of the special tax rules for original issue discount. A corporate
shareholder would be entitled to a dividends-received deduction for any
constructive dividends unless the special rules denying a dividends-received
deduction described above in "-- Limitations on Dividends-Received Deduction"
apply. A corporate shareholder would also be required to take these constructive
dividends into account when applying the extraordinary dividend rules described
above. Thus, a corporate shareholder's
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receipt of a constructive dividend may cause some or all stated dividends to be
treated as extraordinary dividends. The applicable prospectus supplement for
preferred stock that is redeemable at a price in excess of its issue price will
indicate whether tax counsel believes that a shareholder must include any
redemption premium in income.
SALE OR EXCHANGE OF PREFERRED STOCK OTHER THAN BY REDEMPTION. If you sell
or otherwise dispose of your preferred stock (other than by redemption), you
will generally recognize capital gain or loss equal to the difference between
the amount realized upon the disposition and your adjusted tax basis of the
preferred stock. Capital gain of a noncorporate United States holder is
generally taxed at a maximum rate of 20% where the preferred stock is held more
than one year.
REDEMPTION OF PREFERRED STOCK. If we are permitted to and redeem your
preferred stock, it generally would be a taxable event. You would be treated as
if you had sold your preferred stock if the redemption:
-- results in a complete termination of your stock interest in the
company;
-- is substantially disproportionate with respect to you; or
-- is not essentially equivalent to a dividend with respect to you.
In determining whether any of these tests has been met, shares of stock
considered to be owned by you by reason of certain constructive ownership rules
set forth in Section 318 of the Internal Revenue Code, as well as shares
actually owned, must be taken into account.
If we redeem your preferred stock in a redemption that meets one of the
tests described above, you generally would recognize taxable gain or loss equal
to the sum of the amount of cash and fair market value of property (other than
stock of us or a successor to us) received by you less your tax basis in the
preferred stock redeemed. This gain or loss would be long-term capital gain or
capital loss if you have held the preferred stock for more than one year.
If a redemption does not meet any of the tests described above, you
generally would be taxed on the cash and fair market value of the property you
receive as a dividend to the extent paid out of our current and accumulated
earnings and profits. Any amount in excess of our current or accumulated
earnings and profits would first reduce your tax basis in the preferred stock
and thereafter would be treated as capital gain. If a redemption of the
preferred stock is treated as a distribution that is taxable as a dividend, your
basis in the redeemed preferred stock would be transferred to the remaining
shares of our stock that you own, if any.
Special rules apply if we redeem preferred stock for our debt securities.
We will discuss these rules in an applicable prospectus supplement if we have
the option to redeem your preferred stock for our debt securities.
UNITED STATES ALIEN HOLDERS
This section summarizes certain United States federal income and estate tax
consequences of the ownership and disposition of preferred stock by a United
States alien holder. You are a United States alien holder if you are, for United
States federal income tax purposes:
-- a nonresident alien individual;
-- a foreign corporation;
-- a foreign partnership; or
-- an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from
preferred stock.
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DIVIDENDS. Except as described below, if you are a United States alien
holder of preferred stock, dividends paid to you are subject to withholding of
United States federal income tax at a 30% rate or at a lower rate if you are
eligible for the benefits of an income tax treaty that provides for a lower
rate. Under currently effective U.S. Treasury regulations, for purposes of
determining if dividends are subject to the 30% withholding tax, dividends paid
to an address in a foreign country are presumed to be paid to a resident of that
country, unless the person making the payment has knowledge to the contrary.
Under current interpretations of U.S. Treasury regulations, this presumption
also applies for purposes of determining whether a lower withholding rate
applies under an income tax treaty.
Under U.S. Treasury regulations that will generally apply to dividends paid
after December 31, 2000, you must satisfy certain certification requirements in
order to claim the benefit of a lower treaty rate. Additionally, if you are a
partner in a foreign partnership, you, in addition to the foreign partnership,
must satisfy the certification requirements and the partnership must provide
certain information as well. The United States Internal Revenue Service will
apply a look-through rule in the case of tiered partnerships.
If you are eligible for a reduced rate of United States withholding tax
under a tax treaty, you may obtain a refund of any amounts withheld in excess of
that rate by filing a refund claim with the United States Internal Revenue
Service.
If the dividends are "effectively connected" with your conduct of a trade
or business within the United States, and, if required by a tax treaty, the
dividends are attributable to a permanent establishment that you maintain in the
United States, then the dividends generally are not subject to withholding tax.
Instead, "effectively connected" dividends are taxed at rates applicable to
United States citizens, resident aliens and domestic United States corporations.
If you are a corporate United States alien holder, "effectively connected"
dividends that you receive may, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or at a lower rate if you are
eligible for the benefits of an income tax treaty that provides for a lower
rate.
GAIN ON DISPOSITION OF PREFERRED STOCK. If you are a United States alien
holder, you generally will not be subject to United States federal income tax on
gain that you recognize on a disposition of preferred stock unless:
-- the gain is "effectively connected" with your conduct of a trade or
business in the United States, and the gain is attributable to a
permanent establishment that you maintain in the United States, if
that is required by an applicable income tax treaty as a condition for
subjecting you to United States taxation on a net income basis;
-- you are an individual, you hold the preferred stock as a capital
asset, you are present in the United States for 183 or more days in
the taxable year of the sale and certain other conditions exist; or
-- we are or have been a United States real property holding corporation
for federal income tax purposes and you held, directly or indirectly,
at any time during the five-year period ending on the date of
disposition, more than 5% of your class of preferred stock and you are
not eligible for any treaty exemption.
If you are a corporate United States alien holder, "effectively connected"
gains that you recognize may also, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or at a lower rate if you are
eligible for the benefits of an income tax treaty that provides for a lower
rate.
We have not been, are not and do not anticipate becoming a United States
real property holding corporation for United States federal income tax purposes.
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FEDERAL ESTATE TAXES. Preferred stock held by a United States alien holder
at the time of death will be included in the holder's gross estate for United
States federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise.
U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING
UNITED STATES HOLDERS
In general, dividend payments, or other taxable distributions, made within
the United States to you will be subject to information reporting requirements
and backup withholding tax at the rate of 31% if you are a non-corporate United
States person and you:
-- fail to provide an accurate taxpayer identification number;
-- are notified by the United States Internal Revenue Service that you
have failed to report all interest or dividends required to be shown
on your federal income tax returns; or
-- in certain circumstances, fail to comply with applicable certification
requirements.
If you sell your preferred stock outside the United States through a
non-U.S. office of a non-U.S. broker, and the sales proceeds are paid to you
outside the United States, then U.S. backup withholding and information
reporting requirements generally will not apply to that payment. However, U.S.
information reporting, but not backup withholding, will apply to a payment of
sales proceeds, even if that payment is made outside the United States, if you
sell your preferred stock through a non-U.S. office of a broker that:
-- is a United States person;
-- derives 50% or more of its gross income for a specified three-year
period from the conduct of a trade or business in the United States;
-- is a "controlled foreign corporation" as to the United States; or
-- with respect to payments made after December 31, 2000, is a foreign
partnership, if at any time during its tax year:
1. one or more of its partners are U.S. persons, as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership; or
2. at any time during its tax year the foreign partnership is engaged in
a U.S. trade or business.
You generally may obtain a refund of any amounts withheld under the U.S.
backup withholding rules that exceed your income tax liability by filing a
refund claim with the United States Internal Revenue Service.
UNITED STATES ALIEN HOLDERS
Under currently applicable law, if you are a United States alien holder,
dividends paid to you at an address outside the United States will not be
subject to U.S. information reporting requirements or backup withholding tax.
Beginning with respect to payments made after December 31, 2000, a United States
alien holder will be entitled to this exemption only if the United States alien
holder provides a Form W-8 (or satisfies certain documentary evidence
requirements for establishing that it is a United States alien holder) or
otherwise establishes an exemption.
If you sell your preferred stock outside of the United States through a
non-U.S. office of a non-U.S. broker, and the sales proceeds are paid to you
outside the United States, then U.S.
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backup withholding and information reporting requirements generally will not
apply to that payment. However, U.S. information reporting, but not backup
withholding, will apply to a payment of sales proceeds, even if that payment is
made outside the United States, if you sell your preferred stock through a
non-U.S. office of a broker that:
-- is a United States person;
-- derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States;
-- is a "controlled foreign corporation" as to the United States; or
-- with respect to payments made after December 31, 2000, is a foreign
partnership, if at any time during its tax year:
1. one or more of its partners are "U.S. persons", as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interests in the partnership; or
2. at any time during its tax year, the foreign partnership is engaged
in a U.S. trade or business,
unless the broker has documentary evidence in its files that you are a non-U.S.
person or you otherwise establish an exemption.
If you receive payments of the proceeds of a sale of preferred stock to or
through a U.S. office of a broker, the payment is subject to both United States
backup withholding and information reporting unless you certify, under penalties
of perjury, that you are a non-U.S. person or you otherwise establish an
exemption.
You generally may obtain a refund of any amounts withheld under the U.S.
backup withholding rules that exceed your income tax liability by filing a
refund claim with the United States Internal Revenue Service.
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PLAN OF DISTRIBUTION
INITIAL OFFERING AND SALE OF SECURITIES
We may sell the securities from time to time in their initial offering as
follows:
-- through agents;
-- to dealers or underwriters for resale;
-- directly to purchasers; or
-- through a combination of any of these methods of sale.
In addition, we may issue the securities as a dividend or distribution or
in a subscription rights offering to our existing security holders. In some
cases, we or dealers acting with us or on our behalf may also purchase
securities and reoffer them to the public by one or more of the methods
described above. This prospectus may be used in connection with any offering of
our securities through any of these methods or other methods described in the
applicable prospectus supplement.
The securities we distribute by any of these methods may be sold to the
public, in one or more transactions, either:
-- at a fixed price or prices, which may be changed;
-- at market prices prevailing at the time of sale;
-- at prices related to prevailing market prices; or
-- at negotiated prices.
We may solicit offers to purchase securities directly from the public from
time to time. We may also designate agents from time to time to solicit offers
to purchase securities from the public on our behalf. The prospectus supplement
relating to any particular offering of securities will name any agents
designated to solicit offers, and will include information about any commissions
we may pay the agents, in that offering. Agents may be deemed to be
"underwriters" as that term is defined in the Securities Act.
From time to time, we may sell securities to one or more dealers acting as
principals. The dealers, who may be deemed to be "underwriters" as that term is
defined in the Securities Act, may then resell those securities to the public.
We may sell securities from time to time to one or more underwriters, who
would purchase the securities as principal for resale to the public, either on a
firm-commitment or best-efforts basis. If we sell securities to underwriters, we
may execute an underwriting agreement with them at the time of sale and will
name them in the applicable prospectus supplement. In connection with those
sales, underwriters may be deemed to have received compensation from us in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of the securities for whom they may act as agents. Underwriters
may resell the securities to or through dealers, and those dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from purchasers for whom they may act as agents.
The applicable prospectus supplement will include any required information about
underwriting compensation we pay to underwriters, and any discounts, concessions
or commissions underwriters allow to participating dealers, in connection with
an offering of securities.
If we offer securities in a subscription rights offering to our existing
security holders, we may enter into a standby underwriting agreement with
dealers, acting as standby underwriters. We may pay the standby underwriters a
commitment fee for the securities they commit to purchase
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on a standby basis. If we do not enter into a standby underwriting arrangement,
we may retain a dealer-manager to manage a subscription rights offering for us.
We may authorize underwriters, dealers and agents to solicit from third
parties offers to purchase securities under contracts providing for payment and
delivery on future dates. The applicable prospectus supplement will describe the
material terms of these contracts, including any conditions to the purchasers'
obligations, and will include any required information about commissions we may
pay for soliciting these contracts.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that they may enter into with us, to indemnification by us against
certain liabilities, including liabilities under the Securities Act.
In connection with an offering, the underwriters may purchase and sell
securities in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
securities than they are required to purchase in an offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the securities while an
offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased securities
sold by or for the account of that underwriter in stabilizing or short-covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the securities. As a result, the price of the
securities may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on an exchange or
automated quotation system, if the securities are listed on that exchange or
admitted for trading on that automated quotation system, or in the
over-the-counter market or otherwise.
The underwriters, dealers and agents, as well as their associates, may be
customers of or lenders to, and may engage in transactions with and perform
services for, The Goldman Sachs Group, Inc. and its subsidiaries in the ordinary
course of business. In addition, we expect to offer the securities to or through
our affiliates, as underwriters, dealers or agents. Among our affiliates,
Goldman, Sachs & Co. may offer the securities for sale in the United States and
Goldman Sachs International and Goldman Sachs (Asia) L.L.C. may offer the
securities for sale outside the United States. Our affiliates may also offer the
securities in other markets through one or more selling agents, including one
another.
Goldman, Sachs & Co. is a subsidiary of The Goldman Sachs Group, Inc. Rule
2720 of the Conduct Rules of the National Association of Securities Dealers,
Inc. imposes certain requirements when an NASD member, such as Goldman, Sachs &
Co., distributes an affiliated company's securities. Goldman, Sachs & Co. has
advised The Goldman Sachs Group, Inc. that each particular offering of
securities in which it participates will comply with the applicable requirements
of Rule 2720.
Goldman, Sachs & Co. will not confirm initial sales to accounts over which
it exercises discretionary authority without the prior written approval of the
customer.
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MARKET-MAKING RESALES BY AFFILIATES
This prospectus may be used by Goldman, Sachs & Co. in connection with
offers and sales of the securities in market-making transactions. In a
market-making transaction, Goldman, Sachs & Co. may resell a security it
acquires from other holders, after the original offering and sale of the
security. Resales of this kind may occur in the open market or may be privately
negotiated, at prevailing market prices at the time of resale or at related or
negotiated prices. In these transactions, Goldman, Sachs & Co. may act as
principal or agent, including as agent for the counterparty in a transaction in
which Goldman, Sachs & Co. acts as principal, or as agent for both
counterparties in a transaction in which Goldman, Sachs & Co. does not act as
principal. Goldman, Sachs & Co. may receive compensation in the form of
discounts and commissions, including from both counterparties in some cases.
Other affiliates of The Goldman Sachs Group, Inc. may also engage in
transactions of this kind and may use this prospectus for this purpose. These
other affiliates may include Goldman Sachs International and Goldman Sachs
(Asia) L.L.C.
The aggregate initial offering price specified on the cover of this
prospectus relates to the initial offering of the securities not yet issued as
of the date of this prospectus. This amount does not include the securities to
be sold in market-making transactions. The latter include securities to be
issued after the date of this prospectus, as well as securities previously
issued.
The Goldman Sachs Group, Inc. does not expect to receive any proceeds from
market-making transactions. The Goldman Sachs Group, Inc. does not expect that
Goldman, Sachs & Co. or any other affiliate that engages in these transactions
will pay any proceeds from its market-making resales to The Goldman Sachs Group,
Inc.
Information about the trade and settlement dates, as well as the purchase
price, for a market-making transaction will be provided to the purchaser in a
separate confirmation of sale.
Unless The Goldman Sachs Group, Inc. or an agent informs you in your
confirmation of sale that your security is being purchased in its original
offering and sale, you may assume that you are purchasing your security in a
market-making transaction.
MATTERS RELATING TO INITIAL OFFERING AND MARKET-MAKING RESALES
Each series of securities will be a new issue, and there will be no
established trading market for any security prior to its original issue date. We
may not list any particular series of securities on a securities exchange or
quotation system. We have been advised by Goldman, Sachs & Co. that it intends
to make a market in the securities, and any underwriters to whom we sell
securities for public offering may also make a market in those securities.
However, neither Goldman, Sachs & Co. nor any underwriter that makes a market is
obligated to do so, and any of them may stop doing so at any time without
notice. No assurance can be given as to the liquidity or trading market for any
of the securities.
Unless otherwise indicated in the applicable prospectus supplement or
confirmation of sale, the purchase price of the securities will be required to
be paid in immediately available funds in New York City.
In this prospectus, the terms "this offering" means the initial offering of
the securities made in connection with their original issuance. This term does
not refer to any subsequent resales of securities in market-making transactions.
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EMPLOYEE RETIREMENT INCOME SECURITY ACT
This section is only relevant to you if you are an insurance company or the
fiduciary of a pension plan or an employee benefit plan proposing to invest in
the securities.
The Goldman Sachs Group, Inc. and certain of its affiliates may each be
considered a "party in interest" within the meaning of the U.S. Employee
Retirement Income Security Act of 1974, as amended, which we call "ERISA", or a
"disqualified person" within the meaning of the U.S. Internal Revenue Code of
1986, as amended, with respect to many employee benefit plans. Prohibited
transactions within the meaning of ERISA or the Internal Revenue Code may arise,
for example, if the debt securities, warrants or purchase contracts, or any
units including debt securities, warrants and/or purchase contracts, are
acquired by or with the assets of a pension or other employee benefit plan for
which The Goldman Sachs Group, Inc. or any of its affiliates is a service
provider, unless those securities are acquired under an exemption for
transactions effected on behalf of that plan by a "qualified professional asset
manager" or an "in-house asset manager" or under any other available exemption.
The assets of a pension or other employee benefit plan may include assets held
in the general account of an insurance company that are deemed to be "plan
assets" under ERISA.
If you are an insurance company or the fiduciary of a pension plan or an
employee benefit plan and propose to invest in the securities described in this
prospectus, you should consult your legal counsel.
VALIDITY OF THE SECURITIES
The validity of the securities offered by this prospectus has been passed
upon for The Goldman Sachs Group, Inc. by Sullivan & Cromwell, New York, New
York. The opinion of Sullivan & Cromwell was based on certain assumptions about
future actions required to be taken by The Goldman Sachs Group, Inc. and the
trustee, warrant or unit agent or preferred stock depositary, if any, in
connection with the issuance and sale of each security, about the specific terms
of each security and its governing documents and about other matters that may
affect the validity of the securities but which could not be ascertained on the
date of that opinion.
In connection with particular offerings of the securities in the future,
the validity of those securities may be passed upon for The Goldman Sachs Group,
Inc. by one of its General Counsel, Robert J. Katz or Gregory K. Palm, and for
any underwriters or agents by Sullivan & Cromwell or other counsel named in the
applicable prospectus supplement.
Sullivan & Cromwell has in the past represented and continues to represent
Goldman Sachs on a regular basis and in a variety of matters, including
offerings of our common stock and debt securities. Sullivan & Cromwell also
performed services for The Goldman Sachs Group, Inc. in connection with the
offering of the securities described in this prospectus.
EXPERTS
The financial statements of Goldman Sachs as of November 27, 1998 and
November 26, 1999 and for each of the three years in the period ended November
26, 1999 incorporated by reference in this prospectus and the financial
statement schedule incorporated by reference in the registration statement have
been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The historical income statement, balance sheet and common share data set
forth in "Selected Consolidated Financial Data" for each of the five fiscal
years in the period ended November 26, 1999 incorporated by reference in this
prospectus have been so included in
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reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
With respect to the unaudited condensed consolidated financial statements
of Goldman Sachs as of and for the three months ended February 25, 2000 and for
the three months ended February 26, 1999 incorporated by reference in this
prospectus, PricewaterhouseCoopers LLP reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report dated April 5, 2000 incorporated by
reference herein states that they did not audit and they do not express an
opinion on the unaudited condensed consolidated financial statements.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
PricewaterhouseCoopers LLP is not subject to the liability provisions of Section
11 of the Securities Act of 1933 for their report on the unaudited condensed
consolidated financial statements because this report is not a "report" or a
"part" of the registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the
Securities Act of 1933.
CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
We have included or incorporated by reference in this prospectus statements
that may constitute "forward-looking statements" within the meaning of the safe
harbor provisions of The Private Securities Litigation Reform Act of 1995. These
forward-looking statements are not historical facts but instead represent only
our belief regarding future events, many of which, by their nature, are
inherently uncertain and outside of our control. It is possible that our actual
results may differ, possibly materially, from the anticipated results indicated
in these forward-looking statements.
Information regarding important factors that could cause actual results to
differ, perhaps materially, from those in our forward-looking statements is
contained under the caption "Item 1: Business -- Certain Factors That May Affect
Our Business" in our Annual Report on Form 10-K for the fiscal year ended
November 26, 1999, which is incorporated in this prospectus by reference. See
"Available Information" above for information about how to obtain a copy of this
Annual Report.
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- -------------------------------------------------------
- -------------------------------------------------------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the securities it describes, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.
----------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information................... ii
Prospectus Summary...................... 1
Ratio of Earnings to Fixed Charges...... 4
Description of Debt Securities We May
Offer................................. 5
Description of Warrants We May Offer.... 27
Description of Purchase Contracts We May
Offer................................. 33
Description of Units We May Offer....... 38
Description of Preferred Stock We May
Offer................................. 43
Legal Ownership and Book-Entry
Issuance.............................. 50
Considerations Relating to Securities
Issued in Bearer Form................. 56
Considerations Relating to Indexed
Securities............................ 60
Considerations Relating to Securities
Denominated or Payable in or Linked to
a Non-U.S. Dollar Currency............ 62
United States Taxation.................. 65
Plan of Distribution.................... 83
Employee Retirement Income Security
Act................................... 86
Validity of the Securities.............. 86
Experts................................. 86
Cautionary Statement Pursuant to the
Private Securities Litigation Reform
Act of 1995........................... 87
</TABLE>
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
$25,000,000,000
THE GOLDMAN SACHS
GROUP, INC.
Debt Securities
Warrants
Purchase Contracts
Units
Preferred Stock
Depositary Shares
----------------------
[GOLDMAN SACHS LOGO]
----------------------
GOLDMAN, SACHS & CO.
-------------------------------------------------------
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<PAGE> 95
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of the expenses (all of which are estimated
other than the SEC registration fee and NASD fees) to be incurred by the
Registrant in connection with the distribution of the securities registered
under this registration statement:
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC registration fee........................................ $3,696,000
NASD fees................................................... 30,500
Legal fees and expenses..................................... 500,000
Fees and expenses of qualification under state securities
laws (including legal fees)............................... 10,000
Accounting fees and expenses................................ 25,000
Printing fees............................................... 1,500,000
Rating agency fees.......................................... 150,000
Trustee's fees and expenses................................. 10,000
Miscellaneous............................................... 78,500
----------
Total.................................................. $6,000,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee of or agent to the Registrant. The
statute provides that it is not exclusive of other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise. Section 6.4 of the
Registrant's by-laws provides for indemnification by the Registrant of any
director or officer (as such term is defined in the by-laws) of the Registrant
who is or was a director of any of its subsidiaries, is or was a member of the
Shareholders' Committee acting pursuant to the Shareholders' Agreement, dated as
of May 7, 1999, or, at the request of the registrant, is or was serving as a
director or officer of, or in any other capacity for, any other enterprise, to
the fullest extent permitted by law. The by-laws also provide that the
Registrant shall advance expenses to a director or officer and, if reimbursement
of such expenses is demanded in advance of the final disposition of the matter
with respect to which such demand is being made, upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it is
ultimately determined that the director or officer is not entitled to be
indemnified by the Registrant. To the extent authorized from time to time by the
board of directors of the Registrant, the Registrant may provide to any one or
more employees of the Registrant, one or more officers, employees and other
agents of any subsidiary or one or more directors, officers, employees and other
agents of any other enterprise, rights of indemnification and to receive payment
or reimbursement of expenses, including attorneys' fees, that are similar to the
rights conferred in the by-laws of the Registrant on directors and officers of
the Registrant or any subsidiary or other enterprise. The by-laws do not limit
the power of the Registrant or its board of directors to provide other
indemnification and expense reimbursement rights to directors, officers,
employees, agents and other persons otherwise than pursuant to the by-laws.
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The Registrant has entered into agreements with certain directors, officers and
employees who are asked to serve in specified capacities at subsidiaries and
other entities.
The Registrant has entered into an agreement that provides indemnification
to its directors and officers and to the directors and certain officers of the
general partner of The Goldman Sachs Group, L.P., members of its Management
Committee or its Partnership Committee or the former Executive Committee of The
Goldman Sachs Group, L.P. and all other persons requested or authorized by the
Registrant's board of directors or the board of directors of the general partner
of The Goldman Sachs Group, L.P. to take actions on behalf of the Registrant,
The Goldman Sachs Group, L.P. or the general partner of The Goldman Sachs Group,
L.P. in connection with the plan of incorporation and certain registration
statements for all losses, damages, costs and expenses incurred by the
indemnified person arising out of the relevant registration statements or the
transactions contemplated by the plan of incorporation. The registrant has also
entered into a similar indemnification agreement with its directors, some of its
officers and all other persons requested or authorized by the Registrant's board
of directors or any committee thereof to take actions on behalf of the
Registrant in connection with this registration statement and certain other
registration statements. These agreements are in addition to the Registrant's
indemnification obligations under its by-laws.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock repurchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. The Registrant's amended and restated certificate of incorporation
provides for such limitation of liability.
Policies of insurance are maintained by the Registrant under which its
directors and officers are insured, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of, and certain liabilities which might be imposed as a result of,
actions, suits or proceedings to which they are parties by reason of being or
having been such directors or officers.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Distribution Agreement for Medium-Term Notes of The
Goldman Sachs Group, Inc.
1.2 Form of Underwriting Agreement for senior debt securities of
The Goldman Sachs Group, Inc.****
1.3 Form of Underwriting Agreement for subordinated debt
securities of The Goldman Sachs Group, Inc.****
1.4 Form of Underwriting Agreement for warrants of The Goldman
Sachs Group, Inc.****
1.5 Form of Underwriting Agreement for purchase contracts of The
Goldman Sachs Group, Inc.****
1.6 Form of Underwriting Agreement for units of The Goldman
Sachs Group, Inc.****
1.7 Form of Underwriting Agreement for preferred stock and
depositary shares of The Goldman Sachs Group, Inc.****
2.1 Plan of Incorporation.*
2.2 Agreement and Plan of Merger of The Goldman Sachs
Corporation into The Goldman Sachs Group, Inc.**
</TABLE>
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<TABLE>
<S> <C>
2.3 Agreement and Plan of Merger of The Goldman Sachs Group, L.P. into The Goldman Sachs Group, Inc.**
4.1 Indenture, dated as of May 19, 1999, between The Goldman Sachs Group, Inc. and The Bank of New York, as
trustee, with respect to senior debt securities of The Goldman Sachs Group, Inc.*****
4.2 Form of Subordinated Debt Indenture between The Goldman Sachs Group, Inc. and The Bank of New York, as
trustee, with respect to subordinated debt securities of The Goldman Sachs Group, Inc.
4.3 Form of senior debt securities of The Goldman Sachs Group, Inc. (included in Exhibit 4.1).
4.4 Form of subordinated debt securities of The Goldman Sachs Group, Inc. (included in Exhibit 4.2).
4.5 Form of Floating Rate Medium-Term Note.***
4.6 Form of Fixed Rate Medium-Term Note.***
4.7 Form of Mandatory Exchangeable Note.***
4.8 Form of Exchangeable Note.***
4.9 Specimen Master Medium-Term Note.
4.10 Form of Warrant Agreement for debt warrants, including form of debt warrant.****
4.11 Form of Warrant Agreement for universal warrants, including form of universal warrant.****
4.12 Form of Deposit Agreement, including form of depositary receipt.****
4.13 Form of Prepaid Unit Agreement, including form of prepaid unit certificate.****
4.14 Form of Non-Prepaid Unit Agreement, including form of non-prepaid unit.****
4.15 Form of Prepaid Purchase Contract.****
4.16 Form of Non-Prepaid Purchase Contract.****
5.1 Opinion of Sullivan & Cromwell.
8.1 Tax Opinion of Sullivan & Cromwell.
12.1 Statement re computation of ratios of earnings to fixed charges.******
15.1 Letter re Unaudited Interim Financial Information.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consents of Sullivan & Cromwell (included in Exhibits 5.1 and 8.1).
24.1 Power of Attorney.
25.1 Statement of Eligibility of senior debt trustee.
25.2 Statement of Eligibility of subordinated debt trustee.
</TABLE>
- ---------------
* Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-1 (No. 333-74449).
** Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-1 (No. 333-75213).
*** Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-1 (No. 333-75321).
**** To be filed as an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
II-3
<PAGE> 98
***** Incorporated by reference to Exhibit 6 of the Registrant's registration
statement on Form 8-A, filed on June 29, 1999 (File No. 001-14965).
****** Incorporated by reference to Exhibit 12.1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended November 26, 1999 (File No.
001-14965), and to Exhibit 12.1 to the Registrant's Quarterly Report on
Form 10-Q for the period ended February 25, 2000 (File No. 001-14965).
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any fact or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in this registration statement; notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Securities and Exchange Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-4
<PAGE> 99
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
(c) The undersigned Registrant hereby undertakes to file an
application for the purpose of determining the eligibility of any
trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act in accordance with the rules and regulations prescribed by
the Commission under Section 305(b)(2) of the Act, if necessary.
II-5
<PAGE> 100
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, New York, on the 2nd day of May, 2000.
THE GOLDMAN SACHS GROUP, INC.
By: /s/ DAVID A. VINIAR
--------------------------------------
Name: David A. Viniar
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 2nd day of May, 2000.
<TABLE>
<CAPTION>
TITLE SIGNATURE
----- ---------
<S> <C>
Director, Chairman of the Board and Chief Executive *
Officer (Principal Executive Officer) -----------------------------------------------------
Henry M. Paulson, Jr.
Director and Vice Chairman *
-----------------------------------------------------
Robert J. Hurst
Director, President and Co-Chief *
Operating Officer -----------------------------------------------------
John A. Thain
Director, President and Co-Chief *
Operating Officer -----------------------------------------------------
John L. Thornton
Director *
-----------------------------------------------------
Sir John Browne
Director *
-----------------------------------------------------
John H. Bryan
Director *
-----------------------------------------------------
James A. Johnson
Director *
-----------------------------------------------------
Ruth J. Simmons
</TABLE>
II-6
<PAGE> 101
<TABLE>
<CAPTION>
TITLE SIGNATURE
----- ---------
<S> <C>
Director *
-----------------------------------------------------
John L. Weinberg
Chief Financial Officer (Principal *
Financial Officer) -----------------------------------------------------
David A. Viniar
Principal Accounting Officer *
-----------------------------------------------------
Sarah G. Smith
*By: /s/ DAVID A. VINIAR
- -----------------------------------------------------
Name: David A. Viniar
Attorney-in-Fact
</TABLE>
II-7
<PAGE> 102
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ------------
<C> <S> <C>
1.1 Form of Distribution Agreement for Medium-Term Notes of The
Goldman Sachs Group, Inc.
1.2 Form of Underwriting Agreement for senior debt securities of
The Goldman Sachs Group, Inc.****
1.3 Form of Underwriting Agreement for subordinated debt
securities of The Goldman Sachs Group, Inc.****
1.4 Form of Underwriting Agreement for warrants of The Goldman
Sachs Group, Inc.****
1.5 Form of Underwriting Agreement for purchase contracts of The
Goldman Sachs Group, Inc.****
1.6 Form of Underwriting Agreement for units of The Goldman
Sachs Group, Inc.****
1.7 Form of Underwriting Agreement for preferred stock and
depositary shares of The Goldman Sachs Group, Inc.****
2.1 Plan of Incorporation.*
2.2 Agreement and Plan of Merger of The Goldman Sachs
Corporation into The Goldman Sachs Group, Inc.**
2.3 Agreement and Plan of Merger of The Goldman Sachs Group,
L.P. into The Goldman Sachs Group, Inc.**
4.1 Indenture, dated as of May 19, 1999, between The Goldman
Sachs Group, Inc. and The Bank of New York, as trustee, with
respect to senior debt securities of The Goldman Sachs
Group, Inc.*****
4.2 Form of Subordinated Debt Indenture between The Goldman
Sachs Group, Inc. and The Bank of New York, as trustee, with
respect to subordinated debt securities of The Goldman Sachs
Group, Inc. .
4.3 Form of senior debt securities of The Goldman Sachs Group,
Inc. (included in Exhibit 4.1).
4.4 Form of subordinated debt securities of The Goldman Sachs
Group, Inc. (included in Exhibit 4.2).
4.5 Form of Floating Rate Medium-Term Note.***
4.6 Form of Fixed Rate Medium-Term Note.***
4.7 Form of Mandatory Exchangeable Note.***
4.8 Form of Exchangeable Note.***
4.9 Specimen Master Medium-Term Note.
4.10 Form of Warrant Agreement for debt warrants, including form
of debt warrant.****
4.11 Form of Warrant Agreement for universal warrants, including
form of universal warrant.****
4.12 Form of Deposit Agreement, including form of depositary
receipt.****
4.13 Form of Prepaid Unit Agreement, including form of prepaid
unit certificate.****
4.14 Form of Non-Prepaid Unit Agreement.****
4.15 Form of Prepaid Purchase Contract.****
4.16 Form of Non-Prepaid Purchase Contract.****
5.1 Opinion of Sullivan & Cromwell.
</TABLE>
<PAGE> 103
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ------------
<C> <S> <C>
8.1 Tax Opinion of Sullivan & Cromwell.
12.1 Statement re computation of ratios of earnings to fixed
charges.******
15.1 Letter re Unaudited Interim Financial Information.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consents of Sullivan & Cromwell (included in Exhibits 5.1
and 8.1).
24.1 Power of Attorney.
25.1 Statement of Eligibility of senior debt trustee.
25.2 Statement of Eligibility of subordinated debt trustee.
</TABLE>
- ---------------
* Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-1 (No. 333-74449).
** Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-1 (No. 333-75213).
*** Incorporated by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-1 (No. 333-75321).
**** To be filed as an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
***** Incorporated by reference to Exhibit 6 to the Registrant's registration
statement on Form 8-A filed on June 29, 1999 (File No. 001-14965).
****** Incorporated by reference to Exhibit 12.1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended November 26, 1999 (File No.
001-14965), and to Exhibit 12.1 of the Registrant's Quarterly Report on
Form 10-Q for the period ended February 25, 2000 (File No. 001-14965).
<PAGE> 1
Exhibit 1.1
THE GOLDMAN SACHS GROUP, INC.
$25,000,000,000
MEDIUM-TERM NOTES, SERIES B
DISTRIBUTION AGREEMENT
May __, 2000
Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
The Goldman Sachs Group, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell from time to time its Medium-Term Notes, Series B
(the "Securities") in an amount having an aggregate initial offering price of up
to $25,000,000,000 (or such greater amount as the Company may specify in a
notice to the Agents from time to time) and agrees with each Agent as set forth
in this Agreement. Each of the terms "the Agents", "such Agent", "any Agent",
"an Agent", "each Agent", "the Purchasing Agent" and "the Selling Agent", when
used in this Agreement or in any Terms Agreement (as defined below) or in the
Annexes hereto, shall mean Goldman, Sachs & Co. except at any time when more
than one Agent is acting as such hereunder, as contemplated in Section 10
hereof.
The Company acknowledges and agrees that Goldman, Sachs & Co. may use
the Prospectus (as defined below) in connection with offers and sales of the
Securities as contemplated in the Prospectus under the caption "Plan of
Distribution -- Plan of Distribution for Market-Making Resales by Affiliates"
("Secondary Market Transactions"). The Company further acknowledges and agrees
that Goldman, Sachs & Co. is under no obligation to effect any Secondary Market
Transactions and, if it does so, it may discontinue effecting such transactions
at any time without providing any notice to the Company. The term "Agent",
whenever used in this Agreement, shall include Goldman, Sachs & Co., whether
acting in its capacity as an Agent or acting in connection with a Secondary
Market Transaction, except as may be specifically provided otherwise herein.
Subject to the terms and conditions stated herein and to the reservation
by the Company of the right to sell Securities directly on its own behalf, the
Company hereby (i) appoints each Agent as an agent of the Company for the
purpose of soliciting and receiving offers to purchase Securities from the
Company pursuant to Section 2(a) hereof and (ii) agrees that, except as
otherwise contemplated herein, whenever it determines to sell Securities
directly to any Agent as principal, it will enter into a separate agreement
(each a "Terms Agreement"), substantially in the form of Annex I hereto or in
such other form as may be agreed by the parties to that particular agreement,
relating to such sale in accordance with Section 2(b) hereof. This Distribution
Agreement shall not be construed to create either an obligation on the part of
the Company to sell any Securities or an obligation of any of the Agents to
purchase Securities as principal.
The Securities will be issued under an indenture, dated as of May 19,
1999 (as it may be amended from time to time, the "Indenture"), between the
Company and The Bank of New York, as trustee (including any successor trustee
thereunder, the "Trustee"). The Securities shall have the maturity
<PAGE> 2
ranges, interest rates, if any, redemption provisions and other terms set forth
in the Prospectus referred to below as it may be amended or supplemented from
time to time. The Securities will be issued, and the terms and rights thereof
established, from time to time by the Company in accordance with the Indenture.
The Company succeeded to the business of The Goldman Sachs Group, L.P.,
a Delaware limited partnership ("Group"), in a series of transactions, referred
to herein as the "Incorporation Transactions", that were consummated on May 7,
1999. For purposes of the provisions of Annex III hereof, references to the
Company with respect to any time before the consummation of the Incorporation
Transactions shall be deemed to be references to Group.
1. The Company represents and warrants to, and agrees with, each
Agent that:
(a) A registration statement on Form S-3 (File No. 333-_____)
and two registration statements on Form S-1 (File Nos. 333-30288 and
333-75321) in respect of the Securities have been filed with the
Securities and Exchange Commission (the "Commission"); such registration
statements and any post-effective amendments thereto, each in the form
heretofore delivered to such Agent, excluding exhibits to such
registration statements, but including all documents incorporated by
reference in the prospectus included in the latest registration
statement, have been declared effective by the Commission in such form;
no other document with respect to such registration statements or any
such incorporated document has heretofore been filed or transmitted for
filing with the Commission (other than the prospectuses filed pursuant
to Rule 424(b) of the rules and regulations of the Commission under the
Securities Act of 1933, as amended (the "Act"), each in the form
heretofore delivered to the Agents); and no stop order suspending the
effectiveness of any such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in any such registration
statement or filed with the Commission pursuant to Rule 424(a) of the
rules and regulations of the Commission under the Act is hereinafter
called a "Preliminary Prospectus"; the various parts of such
registration statements, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in the
latest registration statement at the time such latest registration
statement became effective but excluding all Forms T-1, each as amended
at the time such part became effective, are hereinafter collectively
called the "Registration Statement"; the prospectus contained in such
latest registration statement (including the prospectus supplement dated
the date of this Agreement) relating to the Securities, in the form in
which it has most recently been filed, or transmitted for filing, with
the Commission on or prior to the date of this Agreement, is hereinafter
called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the applicable
form under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any supplement to the Prospectus that
sets forth only the terms of a particular issue of the Securities is
hereinafter called a "Pricing Supplement"; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the
date of such Preliminary Prospectus or Prospectus, as the case may be,
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated therein by reference; any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a)
or 15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as amended
or supplemented shall be deemed to refer to and include the Prospectus
as amended or supplemented (including by the applicable
2
<PAGE> 3
Pricing Supplement filed in accordance with Section 4(a) hereof) in
relation to Securities to be sold pursuant to this Agreement, in the
form filed or transmitted for filing with the Commission pursuant to
Rule 424(b) under the Act and in accordance with Section 4(a) hereof,
including any documents incorporated by reference therein as of the date
of such filing);
(b) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which
they are made, not misleading;
(c) The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), as applicable, and the rules and
regulations of the Commission thereunder and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by
any Agent expressly for use in the Prospectus as amended or supplemented
to relate to a particular issuance of Securities;
(d) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus as amended or supplemented
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus as
amended or supplemented; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus as
amended or supplemented, there has not been any change in the partners'
capital or capital stock, as applicable, or long-term debt of the
Company or any of its subsidiaries or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position, partners'
capital or stockholders' equity, as applicable, or results of operations
of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus as
amended or supplemented;
3
<PAGE> 4
(f) The Company has an authorized capitalization as set forth in
the Prospectus as amended or supplemented, and all of the issued shares
of capital stock of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable;
(g) The Securities have been duly authorized, and, when issued
and delivered pursuant to this Agreement and any Terms Agreement, will
have been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company entitled
to the benefits provided by the Indenture; the Indenture has been duly
authorized and duly qualified under the Trust Indenture Act and
constitutes a valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and the Indenture conforms and the Securities of any
particular issuance of Securities will conform to the descriptions
thereof contained in the Prospectus as amended or supplemented to relate
to such issuance of Securities;
(h) The issue and sale of the Securities, the compliance by the
Company with all of the provisions of the Securities, the Indenture,
this Agreement and any Terms Agreement and the consummation of the
transactions contemplated herein and therein will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the property
or assets of the Company is subject, nor will such action result in any
violation of the provisions of the certificate of incorporation or the
by-laws of the Company or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Company or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any court
or governmental agency or body is required for the solicitation of
offers to purchase Securities, the issue and sale of the Securities or
the consummation by the Company of the other transactions contemplated
by this Agreement, any Terms Agreement or the Indenture, except such as
have been, or will have been prior to the Commencement Date (as defined
in Section 3 hereof), obtained under the Act or the Trust Indenture Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the solicitation by such Agent of offers to
purchase Securities from the Company and with purchases of Securities by
such Agent as principal, as the case may be, in each case in the manner
contemplated hereby;
(i) Neither the Company nor any of its subsidiaries is in
violation of its organizational documents or in default in the
performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound;
(j) The statements set forth in the Prospectus under the captions
"Description of Notes We May Offer", "Description of Debt Securities We
May Offer", "Securities Issued in Bearer Form" and "Legal Ownership and
Book-Entry Issuance", insofar as they purport to constitute a summary of
the terms of the Securities, and under the captions "United States
Taxation" and "Plan of Distribution", insofar as they purport to
describe the provisions of the laws and documents referred to therein,
are accurate, complete and fair;
(k) Other than as set forth in the Prospectus as amended or
supplemented, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or to which any
property of the Company or any of its subsidiaries is subject, which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the
4
<PAGE> 5
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others;
(l) The Company is not and, after giving effect to each offering
and sale of the Securities, will not be an "investment company", as such
term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(m) Immediately after any sale of Securities by the Company
hereunder or under any Terms Agreement, the aggregate amount of
Securities which shall have been issued and sold by the Company
hereunder or under any Terms Agreement and of any debt securities of the
Company (other than such Securities) that shall have been issued and
sold pursuant to the Registration Statement will not exceed the amount
of debt securities registered under the Registration Statement;
(n) The Company and its subsidiaries possess all concessions,
permits, licenses, consents, exemptions, franchises, authorizations,
orders, registrations, qualifications and other approvals issued by the
appropriate Federal, state and foreign governments, governmental or
regulatory authorities, self-regulatory organizations and all courts or
other tribunals, and are members in good standing of each Federal, state
or foreign exchange, board of trade, clearing house or association and
self-regulatory or similar organization necessary to conduct their
respective businesses as described in the Prospectus as amended or
supplemented; and
(o) PricewaterhouseCoopers LLP, who have certified certain
financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder.
2. (a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth,
each of the Agents hereby severally and not jointly agrees, as agent of
the Company, to use its reasonable efforts to solicit and receive offers
to purchase the Securities from the Company upon the terms and
conditions set forth in the Prospectus as amended or supplemented from
time to time. So long as this Agreement shall remain in effect with
respect to any Agent, the Company shall not, without the consent of such
Agent, solicit or accept offers to purchase, or sell, any debt
securities with a maturity at the time of original issuance of 12 months
or more except pursuant to this Agreement or any Terms Agreement, or
except in an offering of Securities that are not and are not required to
be registered under the Act or except in connection with a firm
commitment underwriting pursuant to an underwriting agreement that does
not provide for a continuous offering of medium-term debt securities
(other than in Secondary Market Transactions). However, the Company
reserves the right to sell, and may solicit and accept offers to
purchase, Securities directly on its own behalf in transactions with
persons other than broker-dealers, and, in the case of any such sale not
resulting from a solicitation made by any Agent, no commission will be
payable with respect to such sale. These provisions shall not limit
Section 4(f) hereof or any similar provision included in any Terms
Agreement.
Procedural details relating to the issue and delivery of
Securities, the solicitation of offers to purchase Securities and the
payment in each case therefor shall be as set forth in the
Administrative Procedure attached hereto as Annex II as it may be
amended from time to time by written agreement between the Agents and
the Company (the "Administrative Procedure"). The provisions of the
Administrative Procedure shall apply to all transactions contemplated
hereunder
5
<PAGE> 6
other than those made pursuant to a Terms Agreement. Each Agent and the
Company agree to perform the respective duties and obligations
specifically provided to be performed by each of them in the
Administrative Procedure. The Company will furnish to the Trustee a copy
of the Administrative Procedure as from time to time in effect.
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase the Securities. As
soon as practicable, but in any event not later than one business day in
New York City, after receipt of notice from the Company, the Agents will
suspend solicitation of offers to purchase Securities from the Company
until such time as the Company has advised the Agents that such
solicitation may be resumed. During such period, the Company shall not
be required to comply with the provisions of Sections 4(h), 4(i), 4(j)
and 4(k). Upon advising the Agents that such solicitation may be
resumed, however, the Company shall simultaneously provide the documents
required to be delivered by Sections 4(h), 4(i), 4(j) and 4(k), and the
Agents shall have no obligation to solicit offers to purchase the
Securities until such documents have been received by the Agents. In
addition, any failure by the Company to comply with its obligations
hereunder, including its obligations to deliver the documents required
by Sections 4(h), 4(i), 4(j) and 4(k), shall automatically terminate the
Agents' obligations hereunder, including their obligations to solicit
offers to purchase the Securities hereunder as agent or to purchase
Securities hereunder as principal.
The Company agrees to pay each Agent a commission, at the
time of settlement of any sale of a Security by the Company as a result
of a solicitation made by such Agent, in an amount equal to the
following applicable percentage of the principal amount of such Security
sold:
<TABLE>
<CAPTION>
Commission
(percentage of
aggregate
principal amount
Range of Maturities of Securities sold)
------------------- -------------------
<S> <C>
From 1 year to 1 1/2years .100%
From 1 1/2years to 2 years .150%
From 2 years to less than 3 years .175%
From 3 years to less than 4 years .250%
From 4 years to less than 5 years .300%
From 5 years to less than 6 years .350%
From 6 years to less than 7 years .375%
From 7 years to less than 10 years .400%
From 10 years to less than 12 years .475%
From 12 years to less than 20 years .550%
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Commission
(percentage of
aggregate
principal amount
Range of Maturities of Securities sold)
------------------- -------------------
<S> <C>
From 20 years to less than 30 years .600%
From 30 years to less than 40 years .750%
40 years and more .900%
</TABLE>
(b) Each sale of Securities by the Company to any Agent as
principal shall be made in accordance with the terms of this Agreement
and (unless the Company and such Agent shall otherwise agree) a Terms
Agreement which will provide for the sale of such Securities by the
Company to, and the purchase thereof by, such Agent; a Terms Agreement
may also specify certain provisions relating to the reoffering of such
Securities by such Agent; the commitment of any Agent to purchase
Securities as principal, whether pursuant to any Terms Agreement or
otherwise, shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall
be subject to the terms and conditions herein set forth; each Terms
Agreement shall specify the principal amount of Securities to be
purchased by any Agent pursuant thereto, the price to be paid to the
Company for such Securities, any provisions relating to rights of, and
default by, underwriters acting together with such Agent in the
reoffering of the Securities and the time and date and place of delivery
of and payment for such Securities; such Terms Agreement shall also
specify any requirements for opinions of counsel, accountants' letters
and officers' certificates pursuant to Section 4 hereof and such Terms
Agreement may also include such other provisions (including provisions
that modify this Agreement insofar as it sets forth the agreement
between the Company and such Agent) as the Company and such Agent may
agree upon. Each Agent proposes to offer Securities purchased by it as
principal from the Company for sale at prevailing market prices or
prices related thereto at the time of sale, which may be equal to,
greater than or less than the price at which such Securities are
purchased by such Agent from the Company.
For each sale of Securities by the Company to an Agent as
principal that is not made pursuant to a Terms Agreement, the procedural
details relating to the issue and delivery of such Securities and
payment therefor shall be as set forth in the Administrative Procedure.
For each such sale of Securities by the Company to an Agent as principal
that is not made pursuant to a Terms Agreement, the Company agrees to
pay such Agent a commission (or grant an equivalent discount) as
provided in Section 2(a) hereof and in accordance with the schedule set
forth therein.
Each time and date of delivery of and payment for
Securities to be purchased from the Company by an Agent as principal,
whether set forth in a Terms Agreement or in accordance with the
Administrative Procedure, is referred to herein as a "Time of Delivery".
(c) Each Agent agrees, with respect to any Security denominated
in a currency other than U.S. dollars, and whether acting as agent, as
principal under any Terms Agreement or otherwise (including, in the case
of Goldman, Sachs & Co., in any Secondary Market Transaction), not to
solicit offers to purchase or otherwise offer, sell or deliver such
Security, directly or indirectly, in, or to residents of, the country
issuing such currency, except as permitted by applicable law.
7
<PAGE> 8
3. The documents required to be delivered pursuant to Section 6 hereof
on the Commencement Date (as defined below) shall be delivered to the Agents at
the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004,
at 11:00 a.m., New York City time, on the date of this Agreement, which date and
time of such delivery may be postponed by agreement between the Agents and the
Company but in no event shall be later than the day prior to the date on which
solicitation of offers to purchase Securities is commenced or on which any Terms
Agreement is executed (such time and date being referred to herein as the
"Commencement Date").
4. The Company covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement to the Registration
Statement or the Prospectus (A) prior to the Commencement Date which
shall be disapproved by any Agent promptly after reasonable notice
thereof, (B) after the date of any Terms Agreement or other agreement by
an Agent to purchase Securities as principal and prior to the related
Time of Delivery which shall be disapproved by any Agent party to such
Terms Agreement or so purchasing as principal promptly after reasonable
notice thereof or (C) during the period beginning on the Commencement
Date and continuing for as long as may be required under applicable law,
in the reasonable judgment of Goldman, Sachs & Co. after consultation
with the Company, in order to offer and sell any Securities in Secondary
Market Transactions as contemplated by the Prospectus (the "Secondary
Transactions Period") which shall be disapproved by Goldman, Sachs & Co.
promptly after reasonable notice thereof;
(ii) to prepare, with respect to any Securities to be sold
by the Company through or to such Agent pursuant to this Agreement, a
Pricing Supplement with respect to such Securities in a form previously
approved by such Agent and to file such Pricing Supplement pursuant to
Rule 424(b)(3) under the Act not later than the close of business of the
Commission on the fifth business day after the date on which such
Pricing Supplement is first used;
(iii) to make no amendment or supplement to the
Registration Statement or Prospectus, other than any Pricing Supplement,
at any time prior to having afforded each Agent a reasonable opportunity
to review and comment thereon;
(iv) to file promptly all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities (including, in
the case of Goldman, Sachs & Co., in any Secondary Market Transactions
during the Secondary Transactions Period), and during such same period
to advise such Agent, promptly after the Company receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or has become effective or any supplement to the
Prospectus or any amended Prospectus (other than any Pricing Supplement
that relates to Securities not purchased through or by such Agent) has
been filed with the Commission, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
prospectus relating to the Securities, of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amendment or
supplement of the Registration Statement or Prospectus or for additional
information; and
(v) in the event of the issuance of any such stop order or
of any such order preventing or suspending the use of any such
prospectus or suspending any such qualification, to use promptly its
best efforts to obtain its withdrawal;
8
<PAGE> 9
(b) Promptly from time to time to take such action as such Agent
may reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as such Agent may
request and to comply with such laws so as to permit the continuance of
sales and dealings therein for as long as may be necessary to complete
the distribution or sale of the Securities (including, in the case of
Goldman, Sachs & Co., in any Secondary Market Transactions during the
Secondary Transactions Period); provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) (i) To furnish such Agent with copies of the Registration
Statement and each amendment thereto and with copies of the Prospectus
as each time amended or supplemented, other than any Pricing Supplement
(except as provided in the Administrative Procedure), in the form in
which it is filed with the Commission pursuant to Rule 424 under the
Act, and with copies of the documents incorporated by reference therein,
all in such quantities as such Agent may reasonably request from time to
time;
(ii) if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Securities
(including Securities purchased from the Company by such Agent as
principal and including, in the case of Goldman, Sachs & Co., in any
Secondary Market Transactions during the Secondary Transactions Period)
and if at such time any event shall have occurred as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus
or to file under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Act, the Exchange Act or
the Trust Indenture Act, to notify such Agent and request such Agent, in
its capacity as agent of the Company, to suspend solicitation of offers
to purchase Securities from the Company (and, if so notified, such Agent
shall cease such solicitations as soon as practicable, but in any event
not later than one business day later); and if the Company shall decide
to amend or supplement the Registration Statement or the Prospectus as
then amended or supplemented, to so advise such Agent promptly by
telephone (with confirmation in writing) and to prepare and cause to be
filed promptly with the Commission an amendment or supplement to the
Registration Statement or the Prospectus as then amended or supplemented
that will correct such statement or omission or effect such compliance;
(iii) notwithstanding paragraph (ii) above, if during the
period specified in such paragraph such Agent continues to own
Securities purchased from the Company by such Agent as principal or such
Agent is otherwise required to deliver a prospectus in respect of
transactions in the Securities (including, in the case of Goldman, Sachs
& Co., in any Secondary Market Transactions during the Secondary
Transactions Period), the Company shall promptly prepare and file with
the Commission such an amendment or supplement and furnish without
charge to such Agent as many copies as it may from time to time during
such period reasonably request of such amendment or supplement;
provided, however, that the Company may elect, upon notice to Goldman,
Sachs & Co., not to comply with this paragraph (iii) with respect to any
Secondary Market Transaction, but only for a period or periods that the
Company reasonably determines are necessary in order to avoid premature
disclosure of material, non-public information, unless, notwithstanding
such election, such disclosure would otherwise be required under this
Agreement; and provided, further, that no such period or periods
described in the preceding proviso shall exceed 90 days in the aggregate
during any period of 12 consecutive calendar months. Upon
9
<PAGE> 10
receipt of any such notice, Goldman, Sachs & Co. shall cease using the
Prospectus or any amendment or supplement thereto in connection with
Secondary Market Transactions until it receives notice from the Company
that it may resume using such document (or such document as it may be
amended or supplemented);
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158 under the Act);
(e) So long as any Securities are outstanding, to furnish to such
Agent copies of all reports or other communications (financial or other)
furnished to stockholders generally, and to deliver to such Agent (i) as
soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is
listed; and (ii) such additional information concerning the business and
financial condition of the Company as such Agent may from time to time
reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to
the Commission);
(f) That, from the date of any Terms Agreement with such Agent or
other agreement by such Agent to purchase Securities as principal and
continuing to and including the later of (i) the termination of the
trading restrictions for the Securities purchased thereunder, as
notified to the Company by such Agent, and (ii) the related Time of
Delivery, the Company will not, without the prior written consent of
such Agent, offer, sell, contract to sell or otherwise dispose of any
debt securities of the Company which both mature more than 12 months
after such Time of Delivery and are substantially similar to the
Securities;
(g) That each acceptance by the Company of an offer to purchase
Securities hereunder (including any purchase from the Company by such
Agent as principal not pursuant to a Terms Agreement), and each
execution and delivery by the Company of a Terms Agreement with such
Agent, shall be deemed to be an affirmation to such Agent that the
representations and warranties of the Company contained in or made
pursuant to this Agreement are true and correct as of the date of such
acceptance or of such Terms Agreement, as the case may be, as though
made at and as of such date, and an undertaking that such
representations and warranties will be true and correct as of the
settlement date for the Securities relating to such acceptance or as of
the Time of Delivery relating to such sale, as the case may be, as
though made at and as of such date (except that such representations and
warranties shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented relating to such Securities);
(h) That reasonably in advance of each time the Registration
Statement or the Prospectus shall be amended or supplemented (other than
by a Pricing Supplement), each time a document filed under the Act or
the Exchange Act is incorporated by reference into the Prospectus and
each time the Company sells Securities to such Agent as principal
pursuant to a Terms Agreement and such Terms Agreement specifies the
delivery of an opinion or opinions by Sullivan & Cromwell, counsel to
the Agents, as a condition to the purchase of Securities pursuant to
such Terms Agreement, the Company shall furnish to such counsel such
papers and information as they may reasonably request to enable them to
furnish to such Agent the opinion or opinions referred to in Section
6(b) hereof;
10
<PAGE> 11
(i) That each time the Registration Statement or the Prospectus
shall be amended or supplemented (other than by a Pricing Supplement),
each time a document filed under the Act or the Exchange Act is
incorporated by reference into the Prospectus and each time the Company
sells Securities to such Agent as principal pursuant to a Terms
Agreement and such Terms Agreement specifies the delivery of an opinion
under this Section 4(i) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish or cause to
be furnished forthwith to such Agent a written opinion of one of the
Company's General Counsel, Robert J. Katz, Esq. or Gregory K. Palm,
Esq., or other counsel for the Company satisfactory to such Agent, dated
the date of such amendment, supplement or incorporation or the Time of
Delivery relating to such sale, as the case may be, in form satisfactory
to such Agent, to the effect that such Agent may rely on the opinion of
such counsel referred to in Section 6(c) hereof which was last furnished
to such Agent to the same extent as though it were dated the date of
such letter authorizing reliance (except that the statements in such
last opinion shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date) or, in lieu of
such opinion, an opinion of the same tenor as the opinion of such
counsel referred to in Section 6(c) hereof but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented to
such date;
(j) That each time the Registration Statement or the Prospectus
shall be amended or supplemented and each time that a document filed
under the Act or the Exchange Act is incorporated by reference into the
Prospectus, in either case to set forth financial information included
in or derived from the Company's consolidated financial statements or
accounting records, and each time the Company sells Securities to such
Agent as principal pursuant to a Terms Agreement and such Terms
Agreement specifies the delivery of a letter under this Section 4(j) as
a condition to the purchase of Securities pursuant to such Terms
Agreement, the Company shall cause the independent certified public
accountants who have certified the financial statements of the Company
and its subsidiaries included or incorporated by reference in the
Registration Statement forthwith to furnish such Agent a letter, dated
the date of such amendment, supplement or incorporation or the Time of
Delivery relating to such sale, as the case may be, in form satisfactory
to such Agent, of the same tenor as the letter referred to in Section
6(d) hereof but modified to relate to the Registration Statement and the
Prospectus as amended or supplemented to the date of such letter, with
such changes as may be necessary to reflect changes in the financial
statements and other information derived from the accounting records of
the Company, to the extent such financial statements and other
information are available as of a date not more than five business days
prior to the date of such letter; provided, however, that, with respect
to any financial information or other matter, such letter may reconfirm
as true and correct at such date as though made at and as of such date,
rather than repeat, statements with respect to such financial
information or other matter made in the letter referred to in Section
6(d) hereof which was last furnished to such Agent;
(k) That each time the Registration Statement or the Prospectus
shall be amended or supplemented (other than by a Pricing Supplement),
each time a document filed under the Act or the Exchange Act is
incorporated by reference into the Prospectus and each time the Company
sells Securities to such Agent as principal and the applicable Terms
Agreement specifies the delivery of a certificate under this Section
4(k) as a condition to the purchase of Securities pursuant to such Terms
Agreement, the Company shall furnish or cause to be furnished forthwith
to such Agent a certificate, dated the date of such supplement,
amendment or incorporation or the Time of Delivery relating to such
sale, as the case may be, in such form and executed by such officers of
the Company as shall be satisfactory to such Agent, to the effect that
the statements contained
11
<PAGE> 12
in the certificates referred to in Section 6(i) hereof which was last
furnished to such Agent are true and correct at such date as though made
at and as of such date (except that such statements shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented to such date), or, in lieu of such certificate,
certificates of the same tenor as the certificates referred to in said
Section 6(i) but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date; and
(l) To offer to any person who has agreed to purchase Securities
from the Company as the result of an offer to purchase solicited by such
Agent the right to refuse to purchase and pay for such Securities if, on
the related settlement date fixed pursuant to the Administrative
Procedure, any condition set forth in Section 6(a), 6(e), 6(f), 6(g) or
6(h) hereof shall not have been satisfied (it being understood that the
judgment of such person with respect to the impracticability or
inadvisability of such purchase of Securities shall be substituted, for
purposes of this Section 4(l), for the respective judgments of an Agent
with respect to certain matters referred to in Sections 6(e) and 6(g)
hereof, and that such Agent shall have no duty or obligation whatsoever
to exercise the judgment permitted under such Sections 6(e) and 6(g) on
behalf of any such person).
5. The Company covenants and agrees with each Agent that the
Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all
other expenses in connection with the preparation, printing and filing
of the Registration Statement, any Preliminary Prospectus, the
Prospectus and any Pricing Supplements and all other amendments and
supplements thereto and the mailing and delivering of copies thereof to
such Agent; (ii) the fees, disbursements and expenses of counsel for the
Agents in connection with the establishment of the program contemplated
hereby, any opinions to be rendered by such counsel hereunder and under
any Terms Agreement and the transactions contemplated hereunder and
under any Terms Agreement; (iii) the cost of printing, producing or
reproducing this Agreement, any Terms Agreement, any Indenture, closing
documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the
Securities; (iv) all expenses in connection with the qualification of
the Securities for offering and sale under state securities laws as
provided in Section 4(b) hereof, including the fees and disbursements of
counsel for the Agents in connection with such qualification and in
connection with the Blue Sky and legal investment surveys; (v) any fees
charged by securities rating services for rating the Securities; (vi)
any filing fees incident to, and the fees and disbursements of counsel
for the Agents in connection with, any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities (other than, in the case of Goldman, Sachs & Co., in any
Secondary Market Transactions); (vii) the cost of preparing the
Securities; (viii) the fees and expenses of any Trustee and any agent of
any Trustee and any transfer or paying agent of the Company and the fees
and disbursements of counsel for any Trustee or such agent in connection
with any Indenture and the Securities; (ix) any advertising expenses
connected with the solicitation of offers to purchase and the sale of
Securities so long as such advertising expenses have been approved by
the Company; and (x) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. Except as provided in
Sections 7 and 8 hereof, each Agent shall pay all other expenses it
incurs.
6. The obligation of any Agent, as agent of the Company, at any time
("Solicitation Time") to solicit offers to purchase the Securities from the
Company and the obligation of any Agent to purchase
12
<PAGE> 13
Securities from the Company as principal, pursuant to any Terms Agreement or
otherwise, shall in each case be subject, in such Agent's discretion, to the
condition that all representations and warranties and other statements of the
Company herein (and, in the case of an obligation of an Agent under a Terms
Agreement, in or incorporated by reference in such Terms Agreement) are true and
correct at and as of the Commencement Date and any applicable date referred to
in Section 4(k) hereof that is prior to such Solicitation Time or Time of
Delivery, as the case may be, and at and as of such Solicitation Time or at and
as of both such Time of Delivery and Time of Sale, as the case may be ("Time of
Sale" shall mean, with respect to any obligation of an Agent to purchase
Securities as principal, the time when the related Terms Agreement becomes
effective or if there is no Terms Agreement, the time when the Agent otherwise
becomes committed to purchase the Securities); the condition that prior to such
Solicitation Time or Time of Delivery, as the case may be, the Company shall
have performed all of its obligations hereunder theretofore to be performed; and
the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to such
Solicitation Time or Time of Delivery, as the case may be, the
Prospectus as amended or supplemented (including the Pricing Supplement)
with respect to such Securities shall have been filed with the
Commission pursuant to Rule 424(b) under the Act within the applicable
time period prescribed for such filing by the rules and regulations
under the Act and in accordance with Section 4(a) hereof; (ii) no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and (iii) all requests for
additional information on the part of the Commission shall have been
complied with to the reasonable satisfaction of such Agent;
(b) Sullivan & Cromwell, counsel to the Agents, shall have
furnished to such Agent (i) such opinion or opinions, dated the
Commencement Date, to the effect that the matters set forth in the
Prospectus under the caption "United States Taxation", insofar as they
purport to describe the provisions of the laws referred to therein, are
accurate, complete and fair and with respect to the matters covered in
paragraphs (i), (ii), (iv), (v), (viii), (ix) and (x) of subsection (c)
below, as well as such other related matters as such Agent may
reasonably request, and (ii) if and to the extent requested by such
Agent, with respect to each applicable date referred to in Section 4(h)
hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, an opinion or opinions, dated such
applicable date, to the effect that such Agent may rely on the opinion
or opinions which were last furnished to such Agent pursuant to this
Section 6(b) to the same extent as though it or they were dated the date
of such letter authorizing reliance (except that the statements in such
last opinion or opinions shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date)
or, in any case, in lieu of such an opinion or opinions, an opinion or
opinions of the same tenor as the opinion or opinions referred to in
clause (i) but modified to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date; and in each case
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Either Robert J. Katz, Esq. or Gregory K. Palm, Esq., each a
General Counsel of the Company, or other counsel for the Company
satisfactory to such Agent, shall have furnished to such Agent such
counsel's written opinions, dated the Commencement Date and each
applicable date referred to in Section 4(i) hereof that is on or prior
to such Solicitation Time or Time of Delivery, as the case may be, in
form and substance satisfactory to such Agent, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority
13
<PAGE> 14
to own its properties and conduct its business as described in
the Prospectus as amended or supplemented;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus as amended or supplemented and all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and
non-assessable;
(iii) To the best of such counsel's knowledge and other
than as set forth in the Prospectus as amended or supplemented,
there are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or to which any
property of the Company or any of its subsidiaries is subject,
that is reasonably likely, individually or in the aggregate, to
have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results
of operations of the Company and its subsidiaries; and to the
best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;
(iv) This Agreement and any applicable Terms Agreement
have been duly authorized, executed and delivered by the Company;
(v) [USE THE FOLLOWING IF THE OPINION IS BEING DELIVERED
AT ANY TIME OF DELIVERY -- The Indenture has been duly
authorized, executed and delivered by the Company; the Securities
being delivered at such Time of Delivery have been duly
authorized, executed, authenticated, issued and delivered by the
Company; and the Indenture and such Securities constitute valid
and legally binding obligations of the Company enforceable in
accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; the Indenture and such Securities
conform to the descriptions thereof in the Prospectus as amended
or supplemented; and the Indenture has been duly qualified under
the Trust Indenture Act;]
[USE THE FOLLOWING IF THE OPINION IS NOT BEING DELIVERED
AT A TIME OF DELIVERY --The Indenture has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors'
rights and to general equity principles; the Series has been duly
authorized and established in conformity with the Indenture and,
when the terms of a particular Security and of its issuance and
sale have been duly authorized and established by all necessary
corporate action in conformity with the Indenture, and such
Security has been duly prepared, executed, authenticated and
issued in accordance with the Indenture and delivered against
payment in accordance with this Agreement, such Security will
constitute a valid and legally binding obligation of the Company
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the
Indenture conforms to the description thereof in the Prospectus
as amended or supplemented and has been duly qualified under the
Trust Indenture Act;]
(vi) The issue and sale of the Securities by the Company,
the compliance by the Company with all of the provisions of the
Securities, the Indenture, this Agreement and any applicable
Terms Agreement and the consummation by the Company of the
transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any
14
<PAGE> 15
of the terms or provisions of, or constitute a default under, any
material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which the
Company is then a party or by which the Company is then bound or
to which any of the property or assets of the Company is then
subject, nor will such action result in any violation of the
provisions of the certificate of incorporation or the by-laws of
the Company as then in effect or any statute, or any order, rule
or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties, in each case as then in effect; provided, however,
that for the purposes of this paragraph (vi), such counsel need
not express any opinion with respect to Federal or state
securities laws, fraudulent transfer laws, other antifraud laws
and the Employee Retirement Income Security Act of 1974, as
amended, and related laws; and provided, further, that insofar as
the compliance by the Company with all the provisions of such
Securities, the Indenture, this Agreement and any applicable
Terms Agreement and the consummation of the transactions herein
and therein contemplated is concerned, such counsel need not
express any opinion as to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights (it being understood that, in the
case of any opinion to be delivered at a Time of Delivery, the
term "Securities" as used in this paragraph (vi) shall mean the
Securities to be delivered at such time);
(vii) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of the United States of America or
the State of New York is required for the issue and sale of the
Securities in accordance with this Agreement or the consummation
by the Company of the other transactions contemplated by this
Agreement, any applicable Terms Agreement, the Securities or the
Indenture, except the registration of the Securities under the
Act, and the qualification of the Securities under the Trust
Indenture Act, each of which has been obtained or made, and such
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the solicitation by the Agents of
offers to purchase Securities from the Company and in connection
with any offers and sales by an Agent of Securities purchased by
it as principal, in each case in the manner contemplated hereby
(it being understood that, in the case of any opinion to be
delivered at a Time of Delivery, the term "Securities" as used in
this paragraph (vii) shall mean the Securities to be delivered at
such time);
(viii) The statements set forth in the Prospectus as
amended or supplemented under the captions "Description of Notes
We May Offer", "Description of Debt Securities We May Offer",
"Securities Issued in Bearer Form" and "Legal Ownership and
Book-Entry Issuance", insofar as they purport to constitute a
summary of the terms of the Securities described therein, and
under the captions "United States Taxation" and "Plan of
Distribution", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate,
complete and fair (it being understood that, in the case of any
opinion to be delivered at a Time of Delivery, the term
"Securities" as used in this paragraph (viii) shall mean the
Securities to be delivered at such time);
(ix) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company" as such term is defined in the Investment Company Act
(it being understood that, in the case of any opinion to be
delivered at a Time of Delivery, the term "Securities" as used in
this paragraph (ix) shall mean the Securities to be delivered at
such time); and
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(x) The Registration Statement and the Prospectus as
amended and supplemented and any further amendments and
supplements thereto made by the Company prior to the date of such
opinion (other than the financial statements and related
schedules therein, other financial data therein derived from the
Company's accounting records and the statement of the eligibility
and qualification of the Trustee under the Indenture, as to which
such counsel need not express any opinion) comply as to form in
all material respects with the requirements of the Act and the
Trust Indenture Act and the rules and regulations thereunder;
although he does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those
referred to in the opinion in paragraphs (ii) and (viii) of this
Section 6(c), he has no reason to believe that, as of its
effective date, the Registration Statement or any further
amendment thereto made by the Company prior to the date of such
opinion (other than the financial statements and related
schedules therein, other financial data therein derived from the
Company's accounting records and the statement of the eligibility
and qualification of the Trustee under the Indenture, as to which
such counsel need not express any opinion), contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date and as of the time
and date of delivery of such opinion, the Prospectus as then
amended or supplemented (other than the financial statements and
related schedules therein, other financial data therein derived
from the Company's accounting records and the statement of the
eligibility and qualification of the Trustee under the Indenture,
as to which such counsel need not express any opinion) contained
or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements
therein, in light of the circumstances in which they were made,
not misleading; and such counsel does not know of any amendment
to the Registration Statement required to be filed or any
contracts or other documents of a character required to be filed
as an exhibit to the Registration Statement or to any document or
required to be incorporated by reference into the Prospectus as
amended or supplemented or to be described in the Registration
Statement or the Prospectus as amended or supplemented which are
not filed, incorporated by reference or described as required;
In rendering such opinion, such counsel may state that he
expresses no opinion as to the laws of any jurisdiction other than the
Federal laws of the United States, the laws of the State of New York and
the General Corporation Law of the State of Delaware; that, insofar as
such opinion involves factual matters, he has relied upon certificates
of officers of the Company and its subsidiaries and certificates of
public officials and other sources believed by such counsel to be
responsible; that he has assumed that the Indenture has been duly
authorized, executed and delivered by the Trustee, that any Securities
then being delivered conform to the forms thereof examined by him (or
members of the Company's legal department acting under his supervision),
that the Trustee's certificates of authentication of any Securities then
being delivered have been manually signed by one of the Trustee's
authorized signatories and that the signatures on all documents examined
by him (or members of the Company's legal department acting under his
supervision) are genuine (assumptions that he has not independently
verified); and that a judgment for money in an action based in any
country denominated in a foreign currency may not be enforced in such
currency. In addition, such counsel may state that he has examined, or
has caused members of the Company's legal department to examine, such
corporate and partnership records, certificates and other documents, and
such questions of law, as he has considered necessary or appropriate for
the purposes of such opinion. Furthermore, in any opinion to be
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<PAGE> 17
delivered otherwise than at a Time of Delivery, such counsel may also
state that he has assumed that, after his opinion is delivered, the
authorization of the Securities will not be modified or rescinded; there
will not be any change in law affecting the validity, legally binding
character or enforceability of the Securities or any other matters
covered by such opinion; the issue, sale, delivery and performance of
the Securities by the company will comply with applicable law and any
applicable order under a registration and will not result in any breach
or violation of, or any default under or conflict with, any agreement or
instrument binding on the Company; and the Securities will not include
any alternative or additional terms that are not specified in the forms
of Securities examined by him and that either would result in any
conflict, breach, violation or default of the kind described in
paragraph (vi) above or would require any consent, approval,
authorization, order, registration or qualification of the kind
described in paragraph (vii) above to be obtained or made;
(d) Not later than 10:00 a.m., New York City time, on the
Commencement Date and on each applicable date referred to in Section
4(j) hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, the independent certified public
accountants who have certified the financial statements of the Company
and its subsidiaries included or incorporated by reference in the
Registration Statement shall have furnished to such Agent a letter,
dated the Commencement Date or such applicable date, as the case may be,
in form and substance satisfactory to such Agent, to the effect set
forth in Annex III hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended or
supplemented prior to the date of the Pricing Supplement relating to the
Securities to be delivered at the relevant Time of Delivery any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus as amended or supplemented prior
to the date of the Pricing Supplement relating to the Securities to be
delivered at the relevant Time of Delivery and (ii) since the respective
dates as of which information is given in the Prospectus as amended or
supplemented prior to the date of the Pricing Supplement relating to the
Securities to be delivered at the relevant Time of Delivery there shall
not have been any change in the partners' capital or capital stock, as
applicable, or long-term debt of the Company or any of its subsidiaries
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position, partners'
capital or stockholders' equity, as applicable, or results of operations
of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented prior to the
date of the Pricing Supplement relating to the Securities to be
delivered at the relevant Time of Delivery, the effect of which, in any
such case described in clause (i) or (ii), is in the judgment of such
Agent so material and adverse as to make it impracticable or inadvisable
to proceed with the solicitation by such Agent of offers to purchase
Securities from the Company or the purchase by such Agent of Securities
from the Company as principal, as the case may be, on the terms and in
the manner contemplated in the Prospectus as amended or supplemented
prior to the date of the Pricing Supplement relating to the Securities
to be delivered at the relevant Time of Delivery;
(f) On or after the date hereof or on any applicable Terms
Agreement (i) no downgrading shall have occurred in the rating accorded
the Company's debt securities by any "nationally recognized statistical
rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization
shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of the Company's
debt securities;
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<PAGE> 18
(g) On or after the date hereof or on any applicable Terms
Agreement there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on
the New York Stock Exchange; (ii) a suspension or material limitation in
trading in the Company's securities on the New York Stock Exchange;
(iii) a general moratorium on commercial banking activities in New York
declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iv) in the judgment
of such Agent makes it impracticable or inadvisable to proceed with the
solicitation of offers to purchase Securities or the purchase of the
Securities from the Company as principal pursuant to the applicable
Terms Agreement or otherwise, as the case may be, on the terms and in
the manner contemplated in the Prospectus;
(h) (i) With respect to any Security denominated in a currency
other than the U.S. dollar, more than one currency or a composite
currency or any Security the principal or interest of which is indexed
to such currency, currencies or composite currency, there shall not have
occurred a suspension or material limitation in foreign exchange trading
in such currency, currencies or composite currency by a major
international bank, a general moratorium on commercial banking
activities in the country or countries issuing such currency, currencies
or composite currency, the outbreak or escalation of hostilities
involving, the occurrence of any material adverse change in the existing
financial, political or economic conditions of, or the declaration of
war or a national emergency by, the country or countries issuing such
currency, currencies or composite currency or the imposition or proposal
of exchange controls by any governmental authority in the country or
countries issuing such currency, currencies or composite currency; and
(ii) with respect to any Security linked to the capital stock of an
issuer other than the Company, additional conditions comparable to those
set forth in Sections 6(e), 6(f) and 6(g) shall have been satisfied with
respect to such issuer (with such additional conditions being identical
to those in Sections 6(e), (f) and (g), except that, for this purpose,
all references to the Company in such sections shall be deemed to mean
such other issuer and, if the principal trading market for such other
issuer's capital stock is not the New York Stock Exchange, the reference
to the New York Stock Exchange in Section 6(g)(i) shall be deemed to
mean either the New York Stock Exchange or such principal trading market
and in Section 6(g)(ii) shall be deemed to mean only such principal
trading market), it being understood that nothing in this clause (ii)
shall limit or otherwise affect conditions in Sections 6(e), (f) and
(g), which shall apply in addition to any conditions applicable pursuant
to this clause (ii); and
(i) The Company shall have furnished or caused to be furnished to
such Agent certificates of officers of the Company dated the
Commencement Date and each applicable date referred to in Section 4(k)
hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, in such form and executed by such officers
of the Company as shall be satisfactory to such Agent, as to the
accuracy of the representations and warranties of the Company herein at
and as of the Commencement Date or such applicable date, as the case may
be (and in the case of any certificates provided on a Time of Delivery,
also at and as of the applicable Time of Sale), as to the performance by
the Company of all of its obligations hereunder to be performed at or
prior to the Commencement Date or such applicable date, as the case may
be, as to the matters set forth in subsections (a) and (e) of this
Section 6, and as to such other matters as such Agent may reasonably
request.
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7. (a) The Company will indemnify and hold harmless each Agent against
any losses, claims, damages or liabilities, joint or several, to which
such Agent may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus, the Prospectus
as amended or supplemented or any other prospectus relating to the
Securities, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such Agent for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the Prospectus, the Prospectus
as amended or supplemented or any other prospectus relating to the
Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such
Agent expressly for use therein.
(b) Each Agent will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of
a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration
Statement, the Prospectus, the Prospectus as amended or supplemented or
any other prospectus relating to the Securities, or any such amendment
or supplement, in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified
party, in connection with the
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defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry
of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
under this Section 7 (whether or not the indemnified party is an actual
or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim
and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and each Agent on the other from the offering of the
Securities to which such loss, claim, damage or liability (or action in
respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion
as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and each Agent on the
other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and each Agent
on the other shall be deemed to be in the same proportion as the total
net proceeds from the sale of Securities (before deducting expenses)
received by the Company bear to the total commissions or discounts
received by such Agent from the Company in respect thereof. The relative
fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading relates to information supplied by the Company on the one
hand or by any Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and each Agent agree that it
would not be just and equitable if contribution pursuant to this
subsection (d) were determined by per capita allocation (even if all
Agents were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), an Agent shall
not be required to contribute any amount in excess of the amount by
which the total public offering price at which the Securities purchased
by or through it were sold exceeds the amount of any damages which such
Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The obligations of
each of the Agents under this subsection (d) to contribute are several
in
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proportion to the respective purchases made by or through it to which
such loss, claim, damage or liability (or action in respect thereof)
relates and are not joint.
(e) The obligations of the Company under this Section 7 shall be
in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Agent within the meaning of the Act; and the
obligations of each Agent under this Section 7 shall be in addition to
any liability which such Agent may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the
Company and to each person, if any, who controls the Company within the
meaning of the Act.
8. Each Agent, in soliciting offers to purchase Securities from the
Company and in performing the other obligations of such Agent hereunder (other
than in respect of any purchase by an Agent as principal, pursuant to a Terms
Agreement or otherwise), is acting solely as agent for the Company and not as
principal. Each Agent will make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase Securities from
the Company was solicited by such Agent and has been accepted by the Company,
but such Agent shall not have any liability to the Company in the event such
purchase is not consummated for any reason. If the Company shall default on its
obligation to deliver Securities to a purchaser whose offer it has accepted, the
Company shall (i) hold each Agent harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (ii)
notwithstanding such default, pay to the Agent that solicited such offer any
commission to which it would be entitled in connection with such sale.
9. The respective indemnities, agreements, representations, warranties
and other statements by any Agent and the Company set forth in or made pursuant
to this Agreement shall remain in full force and effect regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Agent or any controlling person of any Agent, or the Company, or any
officer or director or any controlling person of the Company, and shall survive
each delivery of and payment for any of the Securities.
10. (a) The provisions of this Agreement relating to the solicitation of
offers to purchase Securities from the Company may be suspended or terminated at
any time by the Company as to any Agent or by any Agent as to such Agent upon
the giving of written notice of such suspension or termination to such Agent or
the Company, as the case may be. In the event of such suspension or termination
with respect to any Agent, (i) this Agreement shall remain in full force and
effect with respect to any Agent as to which such suspension or termination has
not occurred, (ii) this Agreement shall remain in full force and effect with
respect to the rights and obligations of any party which have previously accrued
or which relate to Securities which are already issued, agreed to be issued or
the subject of a pending offer at the time of such suspension or termination
(including all Securities that may be the subject of a Secondary Market
Transaction at any time during the Secondary Transactions Period) and (iii) in
any event, this Agreement shall remain in full force and effect insofar as the
fourth paragraph of Section 2(a) and Sections 4(d), 4(e), 5, 7, 8 and 9 hereof
are concerned.
(b) The Company, in its sole discretion, may appoint one or more
additional parties to act as Agents hereunder from time to time. Any such
appointment shall be made in a writing signed by the Company and the party so
appointed. Such appointment shall become effective in accordance with its terms
after the execution and delivery of such writing by the Company and such other
party. When such
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appointment is effective, such other party shall be deemed to be one of the
Agents referred to in, and to have the rights and obligations of an Agent under,
this Agreement, subject to the terms and conditions of such appointment. The
Company shall deliver a copy of such appointment to each other Agent promptly
after it becomes effective.
11. The following terms shall apply to any Terms Agreement if provided
for therein:
(a) If any Agent shall default in its obligation to purchase the
Securities which it has agreed to purchase pursuant to such Terms Agreement, the
Representatives named in such Term Agreement may in their discretion arrange for
the Representatives or another party or other parties to purchase such
Securities on the terms provided by such Term Agreement. If within thirty-six
hours after such default by any Agent the Representatives do not arrange for the
purchase of such Securities, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to the Representatives to purchase such Securities on such
terms. In the event that, within the respective prescribed periods, the
Representatives notify the Company that they have so arranged for the purchase
of such Securities, or the Company notifies the Representatives that it has so
arranged for the purchase of such Securities, the Representatives or the Company
shall have the right to postpone the Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in the
Representatives' opinion may thereby be made necessary. The term "Agent" as used
with respect to such Terms Agreement shall include any person substituted under
this Section 11 (if applicable) with like effect as if such person had
originally been a party to such Terms Agreement.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Agent or Agents by the Representatives and the
Company as provided in subsection (a) above, the aggregate principal amount of
such Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities covered by such Terms
Agreement, then the Company shall have the right to require each non-defaulting
Agent to purchase the principal amount of Securities which such Agent agreed to
purchase pursuant to such Terms Agreement and, in addition, to require each
non-defaulting Agent to purchase its pro rata share (based on the principal
amount of Securities which such Agent agreed to purchase pursuant to such Terms
Agreement) of the Securities of such defaulting Agent or Agents for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Agent from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Agent or Agents by the Representative and the Company
as provided in subsection (a) above, the aggregate principal amount of
Securities pursuant to such Terms Agreement which remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities under such
Terms Agreement, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Agents to purchase Securities of
a defaulting Agent or Agents, then this Agreement shall thereupon terminate,
without liability on the part of any non-defaulting Agent or the Company, except
for the expenses to be borne by the Company and the Agents as provided in
Section 5 hereof and the indemnity and contribution agreement in Section 7
hereof; but nothing herein shall relieve a defaulting Agent from liability for
its default.
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12. Except as otherwise specifically provided herein or in the
Administrative Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in writing,
and shall be sufficient in all respects when delivered or sent by facsimile
transmission, personal delivery or registered mail to 85 Broad Street, New York,
New York 10004, Facsimile Transmission No. (212) 363-7609, Attention: Credit
Department; if to any Agent other than Goldman, Sachs & Co., shall be sufficient
in all respects when delivered or sent by facsimile transmission if to Goldman,
Sachs & Co., or registered mail to the facsimile number or address provided by
such Agent to the Company in the document appointing such Agent as an Agent
under this Agreement; and if to the Company, shall be sufficient in all respects
when delivered or sent by facsimile transmission, personal delivery or
registered mail to 10 Hanover Square, 20th Floor, New York, New York 10005,
Facsimile No. (212) 902-3325, Attention: Treasury Department. Any such
statements, requests, notices or advices shall take effect upon receipt thereof.
13. This Agreement and any Terms Agreement shall be binding upon, and
inure solely to the benefit of, each Agent and the Company and, to the extent
provided in Sections 7, 8 and 9 hereof, the officers and directors of the
Company and any person who controls any Agent or the Company, and their
respective personal representatives, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement or any
Terms Agreement. No purchaser of any of the Securities through or from any Agent
hereunder shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence in this Agreement and any Terms
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. THIS AGREEMENT AND ANY TERMS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and any Terms Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be an original, but all of such respective counterparts shall
together constitute one and the same instrument.
23
<PAGE> 24
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, whereupon this letter and the
acceptance by you thereof shall constitute a binding agreement between the
Company and you in accordance with its terms.
Very truly yours,
The Goldman Sachs Group, Inc.
By:
---------------------------------------
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
- -----------------------------------
(Goldman, Sachs & Co.)
24
<PAGE> 25
ANNEX I
THE GOLDMAN SACHS GROUP, INC.
$25,000,000,000
MEDIUM-TERM NOTES, SERIES B
TERMS AGREEMENT
, 2000
Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
[INSERT NAMES OF ANY OTHER PURCHASERS]
Ladies and Gentlemen:
The Goldman Sachs Group, Inc. (the "Company") proposes, subject to the
terms and conditions stated herein and in the Distribution Agreement, dated May
__, 2000 (the "Distribution Agreement"), between the Company on the one hand and
Goldman, Sachs & Co. and any other party acting as Agent thereunder on the
other, to issue and sell to you the securities specified in the Schedule hereto
(the "Purchased Securities"). Each of the provisions of the Distribution
Agreement not specifically related to the solicitation by the Agents, as agents
of the Company, of offers to purchase Securities is incorporated herein by
reference in its entirety, and shall be deemed to be part of this Terms
Agreement to the same extent as if such provisions had been set forth in full
herein. Nothing contained herein or in the Distribution Agreement shall make any
party hereto an agent of the Company or make such party subject to the
provisions therein relating to the solicitation of offers to purchase Securities
from the Company, solely by virtue of its execution of this Terms Agreement.
Each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Terms Agreement, except that each
representation and warranty in Section 1 of the Distribution Agreement which
makes reference to the Prospectus shall be deemed to be a representation and
warranty as of the date of the Distribution Agreement in relation to the
Prospectus (as therein defined), and also a representation and warranty as of
the date of this Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Securities.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to you and you agree to purchase from the Company the Purchased
Securities, at the time and place, in the principal amount and at the purchase
price set forth in the Schedule hereto.
<PAGE> 26
If the foregoing is in accordance with your understanding, please sign
and return to us ...... counterparts hereof, and upon acceptance hereof by you
this letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
Very truly yours,
The Goldman Sachs Group, Inc.
By:
-------------------------------------
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
- --------------------------------------
(Goldman, Sachs & Co.)
[Name(s) of other purchasers]
By:
-----------------------------------
Name:
Title:
-2-
<PAGE> 27
SCHEDULE TO ANNEX I
Title of Purchased Securities:
Medium-Term Notes, Series B
Aggregate Principal Amount:
[$ .................... or units of other Specified Currency]
[Price to Public:]
Purchase Price by Goldman, Sachs & Co. [Name(s) of other purchasers]:
% of the principal amount of the Purchased Securities [, plus accrued
interest from ............... to ...............] [and accrued amortization,
if any, from ................. to ................]
Method of and Specified Funds for Payment of Purchase Price:
[By certified or official bank check or checks, payable to the order of
the Company, in [[New York] Clearing House] [immediately available] funds]
[By wire transfer to a bank account specified by the Company in [next
day] [immediately available] funds]
Indenture:
Indenture, dated as of May 19, 1999, between the Company and The Bank
of New York, as Trustee
Time of Delivery:
Closing Location for Delivery of Securities:
Maturity:
Interest Rate:
[ %] [Zero Coupon] [Describe applicable floating rate provisions]
Interest Payment Dates:
[months and dates]
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall
be delivered as a condition to the Closing:
[(1) The opinion or opinions of counsel to the Agents referred to in
Section 4(h).]
[(2) The opinion of counsel to the Company referred to
in Section 4(i).]
[(3) The accountants' letter referred to in Section 4(j).]
[(4) The officers' certificate referred to in Section 4(k).]
Other Provisions (including Syndicate Provisions, if applicable):
[The provisions of Section 11 of the Distribution Agreement shall apply
with respect to this Term Agreement, and the Representatives referred to in
Section 11 shall be ____________]
[expense reimbursement upon termination]
I-1
<PAGE> 28
ANNEX II
THE GOLDMAN SACHS GROUP, INC.
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated May __, 2000 (the "Distribution Agreement"),
between The Goldman Sachs Group, Inc., a Delaware corporation (the "Company") on
the one hand and Goldman, Sachs & Co. and any other party acting as Agent
thereunder, on the other, to which this Administrative Procedure is attached as
Annex II. Capitalized terms used herein and not defined herein shall have the
meanings given such terms in the Distribution Agreement, the Prospectus as
amended or supplemented, the Indenture or the Securities. To the extent the
procedures set forth below conflict with the provisions of the Securities, the
Indenture or the Distribution Agreement, the relevant provisions of the
Securities, the Indenture and the Distribution Agreement shall control.
The procedures to be followed with respect to the settlement of sales of
Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. The terms and settlement details related to a
purchase of Securities by an Agent, as principal, from the Company will be set
forth in a Terms Agreement pursuant to the Distribution Agreement, unless the
Company and such Agent otherwise agree as provided in Section 2(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An Agent, in relation
to a purchase of a Security by a purchaser solicited by such Agent, is referred
to herein as the "Selling Agent" and, in relation to a purchase of a Security by
such Agent as principal other than pursuant to a Terms Agreement, as the
"Purchasing Agent".
The Company will advise each Agent in writing of those persons with whom
such Agent is to communicate regarding offers to purchase Securities and the
related settlement details.
Each Security will be issued only in fully registered form and will be
represented by either a global security (a "Global Security") delivered to the
Trustee, as agent for The Depository Trust Company (the "Depositary"), and
recorded in the book-entry system maintained by the Depositary (a "Book-Entry
Security"), or a certificate issued in definitive form (a "Certificated
Security") delivered to a person designated by an Agent, as set forth in the
applicable Pricing Supplement. An owner of a Book-Entry Security will not be
entitled to receive a certificate representing such a Security, except as
provided in the Indenture.
Book-Entry Securities will be issued in accordance with the
Administrative Procedure set forth in Part I hereof, and Certificated Securities
will be issued in accordance with the Administrative Procedure set forth in Part
II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by the Depositary, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representations from the Company and the Trustee to the Depositary, dated the
date of the Distribution Agreement, and a Medium-Term Note Certificate Agreement
between the Trustee and the Depositary, dated as of April 14, 1989 (the
"Certificate Agreement"), and its obligations as a participant in the
Depositary, including the Depositary's Same-Day Funds Settlement System
("SDFS").
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<PAGE> 29
Posting Rates by the Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Book-Entry Securities that
may be sold as a result of the solicitation of offers by an Agent. The Company
may establish a fixed set of interest rates and maturities for an offering
period ("posting"). If the Company decides to change already posted rates, it
will promptly advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
Acceptance of Offers by the Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Book-Entry Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Book-Entry Securities as a
Purchasing Agent. The Company will have the sole right to accept offers to
purchase Book-Entry Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent,
as the case may be, of its acceptance or rejection of an offer to purchase
Book-Entry Securities. If the Company accepts an offer to purchase Book-Entry
Securities, it will confirm such acceptance in writing to the Selling Agent or
Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to the Company by Agent and Settlement
Procedures:
A. After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate promptly, but in no event
later than the time set forth under "Settlement Procedure Timetable" below, the
following details of the terms of such offer (the "Sale Information") to the
Company by telephone (confirmed in writing) or by facsimile transmission or
other acceptable written means:
(1) Principal Amount of Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency (it being understood that currently the Depositary
accepts deposits of Global Securities denominated in U.S.
dollars only);
(7) The Exchange Rate Agent and the Exchange Rate Determination
Date, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as
the case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable or repayable Book-Entry Security, such of the
following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par),
(iii) Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary of the
Redemption Commencement Date,
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<PAGE> 30
(iv) Repayment date, and
(v) Repayment price;
(12) If an Original Issue Discount Book-Entry Security, the total
amount of Original Issue Discount, the yield to Maturity and the
initial accrual period of Original Issue Discount;
(13) If a Floating Rate Book-Entry Security, such of the following as
are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity and Index Currency,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Base Rate,
(vii) Initial Interest Rate,
(viii) Interest Reset Dates,
(ix) Calculation Dates,
(x) Interest Determination Dates,
(xi) Interest Payment Dates,
(xii) Regular Record Dates, and
(xiii) Calculation Agent;
(14) Name, address and taxpayer identification number of the
registered Holder(s);
(15) Denomination of certificates to be delivered at settlement;
(16) Book-Entry Security or Certificated Security; and
(17) Selling Agent or Purchasing Agent.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by facsimile transmission or other acceptable written
means. The Trustee will assign a CUSIP number to the Global Security from a list
of CUSIP numbers previously delivered to the Trustee by the Company representing
such Book-Entry Security and then advise the Company and the Selling Agent or
Purchasing Agent, as the case may be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through the
Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such information
to such Agent and Standard & Poor's Ratings Group (or such other entity that
assigns CUSIP numbers or any other identification designations being used for
the relevant Securities):
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such Book-Entry
Security;
(3) Whether such Global Security will represent any other Book-Entry
Security (to the extent known at such time);
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<PAGE> 31
(4) Number of the participant account maintained by the Depositary
on behalf of the Selling Agent or Purchasing Agent, as the case
may be;
(5) The interest payment period; and
(6) Initial Interest Payment Date for such Book-Entry Security,
number of days by which such date succeeds the record date for
the Depositary's purposes (which in the case of Floating Rate
Securities that reset daily or weekly shall be the date five
calendar days immediately preceding the applicable Interest
Payment Date and in the case of all other Book-Entry Securities
shall be the Regular Record Date, as defined in the Security)
and, if calculable at that time, the amount of interest payable
on such Interest Payment Date.
D. The Trustee will complete and authenticate the Global Security
previously delivered by the Company representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Trustee's
participant account at the Depositary.
F. The Trustee will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary to (i) debit such
Book-Entry Security to the Trustee's participant account and credit such
Book-Entry Security to such Agent's participant account and (ii) debit such
Agent's settlement account and credit the Trustee's settlement account for an
amount equal to the price of such Book-Entry Security less such Agent's
commission or discount, as the case may be. The entry of such a deliver order
shall constitute a representation and warranty by the Trustee to the Depositary
that (a) the Global Security representing such Book-Entry Security has been
issued and authenticated and (b) the Trustee is holding such Global Security
pursuant to the Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to debit such
Book-Entry Security to such Agent's participant account and credit such
Book-Entry Security to the participant accounts of the participants with respect
to such Book-Entry Security and (ii) to debit the settlement accounts of such
participants and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders described
in Settlement Procedures "F" and "G" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will transfer to
the account of the Company maintained at Citibank, N.A., New York, New York, or
such other account as the Company may have previously specified to the Trustee,
in funds available for immediate use in the amount transferred to the Trustee in
accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a statement
setting forth the principal amount of Book-Entry Securities outstanding as of
that date under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security to
the purchaser either by transmitting to the participants with respect to such
Book-Entry Security a confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written confirmation to such
purchaser.
L. The Depositary will, at any time, upon request of the Company or the
Trustee, promptly furnish to the Company or the Trustee a list of the names and
addresses of the participants for whom the Depositary has credited Book-Entry
Securities.
Preparation of Pricing Supplement:
II-4
<PAGE> 32
If the Company accepts an offer to purchase a Book-Entry Security, it
will prepare a Pricing Supplement reflecting the terms of such Book-Entry
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
as the case may be, at least ten copies of such Pricing Supplement, not later
than 5:00 p.m., New York City time, on the business day following the Trade Date
(as defined below), or if the Company and the purchaser agree to settlement on
the business day following the date of acceptance of such offer, not later than
noon, New York City time, on such date. The Company will arrange to have the
Pricing Supplement filed with the Commission not later than the close of
business of the Commission on the fifth business day following the date on which
such Pricing Supplement is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry Security
a written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Book-Entry Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of sale or
(b) the Book-Entry Security.
Date of Settlement:
The receipt by the Company of immediately available funds in payment for
a Book-Entry Security and the authentication and issuance of the Global Security
representing such Book-Entry Security shall constitute "settlement" with respect
to such Book-Entry Security. All orders of Book-Entry Securities solicited by a
Selling Agent or made by a Purchasing Agent and accepted by the Company on a
particular date (the "Trade Date") will be settled on a date (the "Settlement
Date") which is the third business day after the Trade Date pursuant to the
"Settlement Procedure Timetable" set forth below, unless the Company and the
purchaser agree to settlement on another business day which shall be no earlier
than the next business day after the Trade Date.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by a Selling Agent and
accepted by the Company for settlement on the third business day after the Trade
Date, Settlement Procedures "A" through "I" set forth above shall be completed
as soon as possible but not later than the respective times (New York City time)
set forth below:
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<PAGE> 33
SETTLEMENT
PROCEDURE TIME
A 5:00 p.m. on the business day following the Trade Date or 10:00 a.m.
on the business day prior to the Settlement Date, whichever
is earlier
B 12:00 noon on the second business day immediately preceding the
Settlement Date
C 2:00 p.m. on the second business day immediately preceding the
Settlement Date
D 9:00 a.m. on the Settlement Date
E 10:00 a.m. on the Settlement Date
F-G 2:00 p.m. on the Settlement Date
H 4:45 p.m. on the Settlement Date
I 5:00 p.m. on the Settlement Date
If the initial interest rate for a Floating Rate Book-Entry Security has
not been determined at the time that Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be completed as soon as such rate has
been determined but no later than 2:00 p.m. on the second business day
immediately preceding the Settlement Date. Settlement Procedure "H" is subject
to extension in accordance with any extension of Fedwire closing deadlines and
in the other events specified in the SDFS operating procedures in effect on the
Settlement Date.
If settlement of a Book-Entry Security is rescheduled or canceled, the
Trustee, upon obtaining knowledge thereof, will deliver to the Depositary,
through the Depositary's Participation Terminal System, a cancellation message
to such effect by no later than 2:00 p.m. on the business day immediately
preceding the scheduled Settlement Date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Security pursuant to Settlement Procedure "F", the Trustee may
deliver to the Depositary, through the Depositary's Participant Terminal System,
as soon as practicable a withdrawal message instructing the Depositary to debit
such Book-Entry Security to the Trustee's participant account, provided that the
Trustee's participant account contains a principal amount of the Global Security
representing such Book-Entry Security that is at least equal to the principal
amount to be debited. If a withdrawal message is processed with respect to all
the Book-Entry Securities represented by a Global Security, the Trustee will
mark such Global Security "canceled", make appropriate entries in the Trustee's
records and send such canceled Global Security to the Company. The CUSIP number
assigned to such Global Security shall, in accordance with CUSIP Service Bureau
procedures, be canceled and not immediately reassigned. If a withdrawal message
is processed with respect to one or more, but not all, of the Book-Entry
Securities represented by a Global Security, the Trustee will exchange such
Global Security for two Global Securities, one of which shall represent such
Book-Entry Security or Securities and shall be canceled immediately after
issuance and the other of which shall represent the remaining Book-Entry
Securities previously represented by the surrendered Global Security and shall
bear the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Security is not timely paid to
the participants with respect to such Book-Entry Security by the beneficial
purchaser thereof (or a person, including an indirect participant in the
Depositary, acting on behalf of such purchaser), such participants and, in turn
the Agent
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<PAGE> 34
for such Book-Entry Security may enter deliver orders through the Depositary's
Participant Terminal System debiting such Book-Entry Security to such
participant's account and crediting such Book-Entry Security to such Agent's
account and then debiting such Book-Entry Security to such Agent's participant
account and crediting such Book-Entry Security to the Trustee's participant
account and shall notify the Company and the Trustee thereof. Thereafter, the
Trustee will (i) immediately notify the Company of such order and the Company
shall transfer to such Agent funds available for immediate use in an amount
equal to the price of such Book-Entry Security which was credited to the account
of the Company maintained at the Trustee in accordance with Settlement Procedure
I, and (ii) deliver the withdrawal message and take the related actions
described in the preceding paragraph. If such failure shall have occurred for
any reason other than default by the applicable Agent to perform its obligations
hereunder or under the Distribution Agreement, the Company will reimburse such
Agent on an equitable basis for the loss of its use of funds during the period
when the funds were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to settle with respect
to a Book-Entry Security, the Depositary may take any actions in accordance with
its SDFS operating procedures then in effect. In the event of a failure to
settle with respect to one or more, but not all, of the Book-Entry Securities to
have been represented by a Global Security, the Trustee will provide, in
accordance with Settlement Procedure "D", for the authentication and issuance of
a Global Security representing the other Book-Entry Securities to have been
represented by such Global Security and will make appropriate entries in its
records. The Company will, from time to time, furnish the Trustee with a
sufficient quantity of Securities.
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
Posting Rates by Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Certificated Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already posted
rates, it will promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
Acceptance of Offers by Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Certificated Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Certificated Securities as
a Purchasing Agent. The Company will have the sole right to accept offers to
purchase Certificated Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent,
as the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the Company accepts an offer to purchase
Certificated Securities, it will confirm such acceptance in writing to the
Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to Company by Agent:
After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate the following details of
the terms of such offer (the "Sale Information")
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<PAGE> 35
to the Company by telephone (confirmed in writing) or by facsimile transmission
or other acceptable written means:
(1) Principal Amount of Certificated Securities to be purchased;
(2) If a Fixed Rate Certificated Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency;
(7) The Exchange Rate Agent and the Exchange Rate Determination
Date, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as
the case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable or repayable Certificated Security, such of the
following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par),
(iii) Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary of the
Redemption Commencement Date,
(iv) Repayment date, and
(v) Repayment price;
(12) If an Original Issue Discount Certificated Security, the total
amount of Original Issue Discount, the yield to Maturity and the
initial accrual period of Original Issue Discount;
(13) If a Floating Rate Certificated Security, such of the following
as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity and Index Currency,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Base Rate,
(vii) Initial Interest Rate,
(viii) Interest Reset Dates,
(ix) Calculation Dates,
(x) Interest Determination Dates,
(xi) Interest Payment Dates,
(xii) Regular Record Dates, and
(xiii) Calculation Agent;
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<PAGE> 36
(14) Name, address and taxpayer identification number of the
registered owner(s);
(15) Denomination of certificates to be delivered at settlement;
(16) Book-Entry Security or Certificated Security; and
(17) Selling Agent or Purchasing Agent.
Preparation of Pricing Supplement by Company:
If the Company accepts an offer to purchase a Certificated Security, it
will prepare a Pricing Supplement reflecting the terms of such Certificated
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
as the case may be, at least ten copies of such Pricing Supplement, not later
than 5:00 p.m., New York City time, on the business day following the Trade
Date, or if the Company and the purchaser agree to settlement on the date of
acceptance of such offer, not later than noon, New York City time, on such date.
The Company will arrange to have the Pricing Supplement filed with the
Commission not later than the close of business of the Commission on the fifth
business day following the date on which such Pricing Supplement is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Certificated
Security a written confirmation of the sale and delivery and payment
instructions. In addition, the Selling Agent will deliver to such purchaser or
its agent the Prospectus as amended or supplemented (including the Pricing
Supplement, as applicable) in relation to such Certificated Security prior to or
together with the earlier of the delivery to such purchaser or its agent of (a)
the confirmation of sale or (b) the Certificated Security.
Date of Settlement:
All offers of Certificated Securities solicited by a Selling Agent or
made by a Purchasing Agent and accepted by the Company will be settled on a date
(the "Settlement Date") which is the third business day after the date of
acceptance of such offer, unless the Company and the purchaser agree to
settlement (a) on another business day after the acceptance of such offer or (b)
with respect to an offer accepted by the Company prior to 10:00 a.m., New York
City time, on the date of such acceptance.
Instruction from Company to Trustee for Preparation of Certificated Securities:
After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by telephone (confirmed in writing) or by facsimile
transmission or other acceptable written means.
The Company will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated Securities
no later than 2:15 p.m., New York City time, on the Settlement Date. Such
instruction will be given by the Company prior to 3:00 p.m., New York City time,
on the business day immediately preceding the Settlement Date unless the
Settlement Date is the date of acceptance by the Company of the offer to
purchase Certificated Securities in which case such instruction will be given by
the Company by 11:00 a.m., New York City time.
Preparation and Delivery of Certificated Securities by Trustee and Receipt of
Payment Therefor:
The Trustee will prepare each Certificated Security and appropriate
receipts that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser
solicited by a Selling Agent, the Trustee will, by 2:15 p.m., New York City
time, on the Settlement Date, deliver the Certificated Securities
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<PAGE> 37
to the Selling Agent for the benefit of the purchaser of such Certificated
Securities against delivery by the Selling Agent of a receipt therefor. On the
Settlement Date the Selling Agent will deliver payment for such Certificated
Securities in immediately available funds to the Company in an amount equal to
the issue price of the Certificated Securities less the Selling Agent's
commission; provided that the Selling Agent reserves the right to withhold
payment for which it has not received funds from the purchaser. The Company
shall not use any proceeds advanced by a Selling Agent to acquire securities.
In the case of a sale of Certificated Securities to a Purchasing Agent,
the Trustee will, by 2:15 p.m., New York City time, on the Settlement Date,
deliver the Certificated Securities to the Purchasing Agent against delivery of
payment for such Certificated Securities in immediately available funds to the
Company in an amount equal to the issue price of the Certificated Securities
less the Purchasing Agent's discount.
Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) fails to make payment to
the Selling Agent for a Certificated Security, the Selling Agent will promptly
notify the Trustee and the Company thereof by telephone (confirmed in writing)
or by facsimile transmission or other acceptable written means. The Selling
Agent will immediately return the Certificated Security to the Trustee.
Immediately upon receipt of such Certificated Security by the Trustee, the
Company will return to the Selling Agent an amount equal to the amount
previously paid to the Company in respect of such Certificated Security. The
Company will reimburse the Selling Agent on an equitable basis for its loss of
the use of funds during the period when they were credited to the account of the
Company.
The Trustee will cancel the Certificated Security in respect of which
the failure occurred, make appropriate entries in its records and, unless
otherwise instructed by the Company, destroy the Certificated Security.
II-10
<PAGE> 38
ANNEX III
ACCOUNTANTS' LETTER
Pursuant to Sections 4(j) and 6(d), as the case may be, of the
Distribution Agreement, the Company's independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) audited or examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified Public
Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the Agents;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's Quarterly Report(s) on Form
10-Q covering periods after the latest full fiscal year and incorporated
by reference into the Prospectus as indicated in their reports thereon
copies of which have been furnished to the Agents; and on the basis of
specified procedures including inquiries of officials of the Company,
who have responsibility for financial and accounting matters regarding
whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all
material respects with the applicable accounting requirements of the Act
and the Exchange Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus and/or
included or incorporated by reference in Item 6 of the Company's Annual
Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the
audited consolidated financial statements for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d), respectively, of Regulation S-K;
III-1
<PAGE> 39
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of
the latest audited financial statements included or incorporated by
reference in the Prospectus as amended or supplemented, inquiries of
officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements
of cash flows included in the Prospectus and/or incorporated by
reference in the Company's Quarterly Report(s) on Form 10-Q
covering periods after the latest full fiscal year and
incorporated by reference in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Exchange Act and the related published rules
and regulations, or (ii) any material modifications should be
made to the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements
of cash flows included in the Prospectus and/or included in the
Company's Quarterly Report(s) on Form 10-Q incorporated by
reference in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus as most recently amended or
supplemented and referred to in clause (B) were not determined on
a basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal
year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or
III-2
<PAGE> 40
other items specified by the Agents, or any increases in any
items specified by the Agents, in each case as compared with
amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the
Prospectus to the specified date referred to in clause (E) there
were any decreases in consolidated total revenues or consolidated
revenues, net of interest expense, pre-tax earnings or total or
per share amounts of consolidated net income or other items
specified by the Agents, or any increases in any items specified
by the Agents, in each case as compared with the comparable items
in the comparable period of the preceding year and with any other
period of corresponding length specified by the Agents, except in
each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Agents
which are derived from the general accounting records of the Company and
its subsidiaries which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Agents or in
documents incorporated by reference in the Prospectus specified by the
Agents, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
All references in this Annex III to the Prospectus shall be deemed to refer to
the Prospectus (including the documents incorporated by reference therein) as
defined in the Distribution Agreement as of the Commencement Date referred to in
Section 6(d) thereof and to the Prospectus as amended or supplemented (including
the documents incorporated by reference therein) as of the date of the
amendment, supplement or incorporation or the Time of Delivery relating to the
Terms Agreement requiring the delivery of such letter under Section 4(j)
thereof.
III-3
<PAGE> 1
EXHIBIT 4.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Goldman Sachs Group, Inc.
TO
The Bank of New York
Trustee
--------------
SUBORDINATED DEBT INDENTURE
Dated as of , 2000
--------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE GOLDMAN SACHS GROUP, INC.
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310
THROUGH 318, INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C>
Section 310(a)(1)......................................... 609
(a) (2).............................................. 609
(a) (3).............................................. Not Applicable
(a) (4).............................................. Not Applicable
(b).................................................... 608
Section 311(a)......................................... 613
(b).................................................... 613
Section 312(a)......................................... 701
702
(b).................................................... 702
(c).................................................... 702
Section 313(a)......................................... 703
(b).................................................... 703
(c).................................................... 703
(d).................................................... 703
Section 314(a)......................................... 704
(a) (4).............................................. 101
(b).................................................... Not Applicable
(c) (1).............................................. 102
(c) (2).............................................. 102
(c)(3)Not Applicable
(d).................................................... Not Applicable
(e).................................................... 102
Section 315(a)......................................... 601
(b).................................................... 602
(c).................................................... 601
(d).................................................... 601
(e).................................................... 514
Section 316(a)......................................... 101
(a)(1)(A).............................................. 502
512
(a)(1)(B).............................................. 513
(a)(2)................................................. Not Applicable
(b).................................................... 508
(c).................................................... 104
Section 317(a)(1)...................................... 503
(a)(2)................................................. 504
(b).................................................... 1003
Section 318(a)......................................... 107
</TABLE>
- -------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
----------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PARTIES ................................................................. 1
RECITALS OF THE COMPANY ................................................. 1
</TABLE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
<TABLE>
<CAPTION>
<S> <C>
SECTION 101. Definitions ................................................ 1
Act ................................................................... 2
Affiliate ............................................................. 2
control ............................................................... 2
Applicable Procedures ................................................. 2
Board of Directors .................................................... 2
Board Resolution ...................................................... 2
Business Day .......................................................... 2
Commission ............................................................ 2
Company ............................................................... 3
Company Request or Company Order ...................................... 3
Corporate Trust Office ................................................ 3
corporation ........................................................... 3
Covenant Defeasance ................................................... 3
Defaulted Interest .................................................... 3
Defeasance ............................................................ 3
Depositary ............................................................ 3
Event of Default ...................................................... 3
Exchange Act .......................................................... 3
Expiration Date ....................................................... 3
Global Security ....................................................... 3
Holder ................................................................ 3
Indenture ............................................................. 3
interest .............................................................. 4
Interest Payment Date ................................................. 4
Investment Company Act ................................................ 4
Maturity .............................................................. 4
Notice of Default ..................................................... 4
Officers' Certificate ................................................. 4
Opinion of Counsel .................................................... 4
Original Issue Discount Security ...................................... 4
Outstanding ........................................................... 4
Paying Agent .......................................................... 5
Person ................................................................ 6
Place of Payment ...................................................... 6
</TABLE>
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NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Predecessor Security ......................................... 6
Proceeding ................................................... 6
Redemption Date .............................................. 6
Redemption Price ............................................. 6
Regular Record Date .......................................... 6
Responsible Officer .......................................... 6
Securities ................................................... 6
Securities Act ............................................... 6
Security Register and Security Registrar ..................... 6
Senior Debt .................................................. 6
Special Record Date .......................................... 7
Stated Maturity .............................................. 7
Subsidiary ................................................... 7
Trust Indenture Act .......................................... 7
Trustee ...................................................... 7
U.S. Government Obligation ................................... 7
Vice President ............................................... 7
SECTION 102. Compliance Certificates and Opinions ..................... 7
SECTION 103. Form of Documents Delivered to Trustee ................... 8
SECTION 104. Acts of Holders; Record Dates ............................ 8
SECTION 105. Notices, Etc., to Trustee and Company .................... 10
SECTION 106. Notice to Holders; Waiver ................................ 11
SECTION 107. Conflict with Trust Indenture Act ........................ 11
SECTION 108. Effect of Headings and Table of Contents ................. 12
SECTION 109. Successors and Assigns ................................... 12
SECTION 110. Separability Clause ...................................... 12
SECTION 111. Benefits of Indenture .................................... 12
SECTION 112. Governing Law ............................................ 12
SECTION 113. Legal Holidays ........................................... 12
</TABLE>
ARTICLE TWO
SECURITY FORMS
<TABLE>
<CAPTION>
<S> <C>
SECTION 201. Forms Generally .......................................... 13
SECTION 202. Form of Face of Security ................................. 13
SECTION 203. Form of Reverse of Security .............................. 15
SECTION 204. Form of Legend for Global Securities ..................... 19
SECTION 205. Form of Trustee's Certificate of Authentication .......... 19
</TABLE>
ARTICLE THREE
THE SECURITIES
<TABLE>
<CAPTION>
<S> <C>
SECTION 301. Amount Unlimited; Issuable in Series ..................... 19
</TABLE>
-ii-
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 302. Denominations ............................................ 22
SECTION 303. Execution, Authentication, Delivery and Dating ........... 23
SECTION 304. Temporary Securities ..................................... 24
SECTION 305. Registration, Registration of Transfer and Exchange ...... 25
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities ......... 27
SECTION 307. Payment of Interest; Interest Rights Preserved ........... 27
SECTION 308. Persons Deemed Owners .................................... 29
SECTION 309. Cancellation ............................................. 29
SECTION 310. Computation of Interest .................................. 29
SECTION 311. CUSIP Numbers ............................................ 30
</TABLE>
ARTICLE FOUR
SATISFACTION AND DISCHARGE
<TABLE>
<CAPTION>
<S> <C>
SECTION 401. Satisfaction and Discharge of Indenture .................. 30
SECTION 402. Application of Trust Money ............................... 31
</TABLE>
ARTICLE FIVE
REMEDIES
<TABLE>
<CAPTION>
<S> <C>
SECTION 501. Events of Default ........................................ 31
SECTION 502. Acceleration of Maturity; Rescission and Annulment ....... 33
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee ................................... 34
SECTION 504. Trustee May File Proofs of Claim ......................... 35
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities ............................................... 35
SECTION 506. Application of Money Collected ........................... 35
SECTION 507. Limitation on Suits ...................................... 36
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert ......... 36
SECTION 509. Restoration of Rights and Remedies ....................... 37
SECTION 510. Rights and Remedies Cumulative ........................... 37
SECTION 511. Delay or Omission Not Waiver ............................. 37
SECTION 512. Control by Holders ....................................... 37
SECTION 513. Waiver of Past Defaults .................................. 38
SECTION 514. Undertaking for Costs .................................... 38
SECTION 515. Waiver of Usury, Stay or Extension Laws .................. 38
</TABLE>
ARTICLE SIX
THE TRUSTEE
<TABLE>
<CAPTION>
<S> <C>
SECTION 601. Certain Duties and Responsibilities ...................... 39
SECTION 602. Notice of Defaults ....................................... 39
</TABLE>
-iii-
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 603. Certain Rights of Trustee ................................ 39
SECTION 604. Not Responsible for Recitals or Issuance of Securities ... 40
SECTION 605. May Hold Securities ...................................... 41
SECTION 606. Money Held in Trust ...................................... 41
SECTION 607. Compensation and Reimbursement ........................... 41
SECTION 608. Conflicting Interests .................................... 42
SECTION 609. Corporate Trustee Required; Eligibility .................. 42
SECTION 610. Resignation and Removal; Appointment of Successor ........ 42
SECTION 611. Acceptance of Appointment by Successor ................... 44
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business .............................................. 45
SECTION 613. Preferential Collection of Claims Against Company ........ 45
</TABLE>
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
<TABLE>
<CAPTION>
<S> <C>
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders 46
SECTION 702. Preservation of Information; Communications to Holders ... 46
SECTION 703. Reports by Trustee ....................................... 46
SECTION 704. Reports by Company ....................................... 47
</TABLE>
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms ..... 47
SECTION 802. Successor Substituted .................................... 48
</TABLE>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
<TABLE>
<CAPTION>
<S> <C>
SECTION 901. Supplemental Indentures Without Consent of Holders ....... 48
SECTION 902. Supplemental Indentures With Consent of Holders .......... 50
SECTION 903. Execution of Supplemental Indentures ..................... 51
SECTION 904. Effect of Supplemental Indentures ........................ 51
SECTION 905. Conformity with Trust Indenture Act ...................... 51
SECTION 906. Reference in Securities to Supplemental Indentures ....... 51
SECTION 907. Subordination Unimpaired ................................. 52
</TABLE>
ARTICLE TEN
COVENANTS
<TABLE>
<CAPTION>
<S> <C>
SECTION 1001. Payment of Principal, Premium and Interest ............... 52
</TABLE>
-iv-
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1002. Maintenance of Office or Agency ......................... 52
SECTION 1003. Money for Securities Payments to Be Held in Trust ....... 53
SECTION 1004. Statement by Officers as to Default ..................... 54
SECTION 1005. Waiver of Certain Covenants ............................. 54
</TABLE>
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
<TABLE>
<CAPTION>
<S> <C>
SECTION 1101. Applicability of Article ................................ 54
SECTION 1102. Election to Redeem; Notice to Trustee ................... 55
SECTION 1103. Selection by Trustee of Securities to Be Redeemed ....... 55
SECTION 1104. Notice of Redemption .................................... 56
SECTION 1105. Deposit of Redemption Price ............................. 57
SECTION 1106. Securities Payable on Redemption Date ................... 57
SECTION 1107. Securities Redeemed in Part ............................. 57
</TABLE>
ARTICLE TWELVE
SINKING FUNDS
<TABLE>
<CAPTION>
<S> <C>
SECTION 1201. Applicability of Article ................................ 58
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities ... 58
SECTION 1203. Redemption of Securities for Sinking Fund ............... 58
</TABLE>
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
<TABLE>
<CAPTION>
<S> <C>
SECTION 1301. Company's Option to Effect Defeasance or
Covenant Defeasance ..................................... 59
SECTION 1302. Defeasance and Discharge ................................ 59
SECTION 1303. Covenant Defeasance ..................................... 59
SECTION 1304. Conditions to Defeasance or Covenant Defeasance ......... 60
SECTION 1305. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Miscellaneous Provisions . 62
SECTION 1306. Reinstatement ........................................... 63
</TABLE>
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
<TABLE>
<CAPTION>
<S> <C>
SECTION 1401. Securities Subordinate to Senior Debt ................... 63
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc. ......... 64
SECTION 1403. Prior Payment to Senior Debt Upon Acceleration
of Securities ........................................... 65
SECTION 1404. No Payment When Senior Debt in Default .................. 65
</TABLE>
-v-
<PAGE> 8
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1405. Payment Permitted in Certain Situations ................. 66
SECTION 1406. Subrogation to Rights of Holders of Senior Debt ......... 67
SECTION 1407. Provisions Solely to Define Relative Rights ............. 67
SECTION 1408. Trustee to Effectuate Subordination ..................... 68
SECTION 1409. No Waiver of Subordination Provisions ................... 68
SECTION 1410. Notice to Trustee ....................................... 68
SECTION 1411. Reliance on Judicial Order or Certificate of
Liquidating Agent .................................. 69
SECTION 1412. Trustee Not Fiduciary for Holders of Senior Debt ........ 69
SECTION 1413. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights ................... 69
SECTION 1414. Article Applicable to Paying Agents ..................... 69
TESTIMONIUM ............................................................ 68
SIGNATURES AND SEALS ................................................... 68
ACKNOWLEDGEMENTS ....................................................... 69
</TABLE>
-vi-
<PAGE> 9
SUBORDINATED DEBT INDENTURE, dated as of , 2000, between The Goldman
Sachs Group, Inc., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company"), having its principal office
at 85 Broad Street, New York, New York 10004 and The Bank of New York, a New
York banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture;
<PAGE> 10
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(6) when used with respect to any Security, the words "convert",
"converted" and "conversion" are intended to refer to the right of the
Holder or the Company to convert or exchange such Security into or for
securities or other property in accordance with such terms, if any, as may
hereafter be specified for such Security as contemplated by Section 301,
and these words are not intended to refer to any right of the Holder or the
Company to exchange such Security for other Securities of the same series
and like tenor pursuant to Section 304, 305, 306, 906 or 1107 or another
similar provision of this Indenture, unless the context otherwise requires;
and references herein to the terms of any Security that may be converted
mean such terms as may be specified for such Security as contemplated in
Section 301.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" of a Depositary means, with respect to any matter
at any time, the policies and procedures of such Depositary, if any, that are
applicable to such matter at such time.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close; provided that, when used with respect to any
Security, "Business Day" may have such other meaning, if any, as may be
specified for such Security as contemplated by Section 301.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of
-2-
<PAGE> 11
this instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any two of the following: a Chairman of the
Board, a Vice Chairman of the Board, a President, a Vice President, a Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary of the Company,
or any other officer or officers of the Company designated in writing by or
pursuant to authority of the Board of Directors and delivered to the Trustee
from time to time.
"Corporate Trust Office" means the principal office of the Trustee in New
York, New York at which at any particular time its corporate trust business
shall be administered, which at the date hereof is located at 101 Barclay
Street, Floor 21 West, New York, New York 10286.
"corporation" means a corporation, association, company (including a
limited liability company), joint-stock company, business trust or other similar
entity.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
that is designated to act as Depositary for such Securities as contemplated by
Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto
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entered into pursuant to the applicable provisions hereof, including, for all
purposes of this instrument and any such supplemental indenture, the provisions
of the Trust Indenture Act that are deemed to be a part of and govern this
instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular series of Securities
established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an instalment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an instalment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
501(4).
"Officers' Certificate" means a certificate signed by any two of the
following: a Chairman of the Board, a Vice Chairman of the Board, a President, a
Vice President, a Treasurer, an Assistant Treasurer, a Secretary or an Assistant
Secretary of the Company, or any other officer or officers of the Company
designated in a writing by or pursuant to authority of the Board of Directors
and delivered to the Trustee from time to time. One of the officers signing an
Officers' Certificate given pursuant to Section 1004 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if
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the Company shall act as its own Paying Agent) for the Holders of such
Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302;
(4) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; and
(5) Securities as to which any property deliverable upon conversion
thereof has been delivered (or such delivery has been duly provided for),
or as to which any other particular conditions have been satisfied, in each
case as may be provided for such Securities as contemplated in Section 301;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall
be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated
in one or more foreign currencies, composite currencies or currency units which
shall be deemed to be Outstanding shall be the U.S. dollar equivalent,
determined as of such date in the manner provided as contemplated by Section
301, of the principal amount of such Security (or, in the case of a Security
described in Clause (A) or (B) above, of the amount determined as provided in
such Clause), and (D) Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, waiver or other action, only
Securities which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
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<PAGE> 14
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series
and subject to Section 1002, means the place or places where the principal of
and any premium and interest on the Securities of that series are payable as
specified as contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means any
vice president, any assistant secretary, any assistant treasurer, any trust
officer, any assistant trust officer or any other officer of the Trustee, in
each case, located in the Corporate Trust Office of the Trustee, and also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute successor
thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Debt" means all indebtedness and obligations (other than the
Securities) of, or guaranteed or assumed by, the Company that are for borrowed
money or are evidenced by bonds, debentures, notes or other similar instruments,
whether outstanding on the date of this Indenture or thereafter created,
incurred, assumed or guaranteed, and all amendments, renewals, extensions,
modifications and refundings of such indebtedness and obligations, unless in any
such case the instrument by which such indebtedness or obligations are
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<PAGE> 15
created, incurred, assumed or guaranteed by the Company, or are evidenced,
provides that they are subordinate, or are not superior, in right of payment to
the Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any instalment
of principal thereof or interest thereon, means the date specified in such
Security as the fixed date on which the principal of such Security or such
instalment of principal or interest is due and payable.
"Subsidiary" means any Person a majority of the combined voting power of
the total outstanding ownership interests in which is, at the time of
determination, beneficially owned or held, directly or indirectly, by the
Company or one or more other Subsidiaries. For this purpose, "voting power"
means power to vote in an ordinary election of directors (or, in the case of a
Person that is not a corporation, ordinarily to appoint or approve the
appointment of Persons holding similar positions), whether at all times or only
as long as no senior class of ownership interests has such voting power by
reason of any contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"U.S. Government Obligation" has the meaning specified in Section 1304.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act; provided, however, that no such opinion shall be required in
connection with the issuance of Securities of any Series. Each such certificate
or opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust Indenture Act and
any other requirements set forth in this Indenture.
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Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of, or representation by, counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company stating
that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may
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be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders of Securities of such series, provided that the Company may not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Securities of the relevant series
on such record date, and no other Holders, shall be entitled to take the
relevant action, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on
or prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of such series on such record date. Nothing in
this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
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after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities of the relevant series in the manner set forth in
Section 106.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
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SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Trustee Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
Where this Indenture provides for Notice of any event to a Holder of a
Global Security, such notice shall be sufficiently given if given to the
Depositary for such Security (or its designee), pursuant to its Applicable
Procedures, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice.
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SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Debt and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Maturity of
any Security, or any date on which a Holder has the right to convert his
Security, shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of
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this Indenture or of the Securities (other than a provision of any Security
which specifically states that such provision shall apply in lieu of this
Section)) payment of interest or principal (and premium, if any), or conversion
of such Security need not be made at such Place of Payment on such date, but may
be made on the next succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Interest Payment Date or Redemption
Date, or at the Maturity, or on such date for conversion, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. Form of Face of Security.
[Insert any legend required by the Internal Revenue Code and the
regulations thereunder.]
The Goldman Sachs Group, Inc.
...............................................................
No. ......... $ ........
The Goldman Sachs Group, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes
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<PAGE> 22
any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to............................, or registered
assigns, the principal sum of ...................................... Dollars on
........................................................ [if the Security is to
bear interest prior to Maturity, insert -- , and to pay interest thereon from
............. or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on ............ and
............ in each year, commencing ........., and at the Maturity thereof, at
the rate of ....% per annum, until the principal hereof is paid or made
available for payment [if applicable, insert -- , provided that any principal
and premium, and any such instalment of interest, which is overdue shall bear
interest at the rate of ...% per annum (to the extent that the payment of such
interest shall be legally enforceable), from the dates such amounts are due
until they are paid or made available for payment, and such interest shall be
payable on demand]. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the ....... or ....... (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest so payable, but not punctually paid or duly provided for, on
any Interest Payment Date will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid in any other lawful manner not inconsistent with the requirements of any
securities exchange on which this Security may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture].
[If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of ....% per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are due
until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert -- any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in New York, New York, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, against surrender of this
Security in the case of any payment due at the Maturity of the principal thereof
(other than any payment of interest that first becomes payable on a day other
than an Interest Payment Date); provided, however, that at the option of the
Company, payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register;
and provided, further, that if this Security is a Global Security, payment may
be made pursuant to the Applicable Procedures of the Depositary as permitted in
said Indenture.
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<PAGE> 23
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
The Goldman Sachs Group, Inc.
By:
--------------------------------
Name:
Title:
Attest:
.........................................
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Subordinated Debt Indenture, dated as of ________, 2000 (herein
called the "Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Bank of New York, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Debt and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [if applicable, insert -- , limited in aggregate principal
amount to $...........].
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' nor more than 60 days' notice, at any
time [if applicable, insert -- on or after .........., 20..], as a whole or in
part, at the election of the Company, at
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<PAGE> 24
the following Redemption Prices (expressed as percentages of the principal
amount): If redeemed [if applicable, insert -- on or before ...............,
...%, and if redeemed] during the 12-month period beginning ............. of the
years indicated,
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
- ----- ---------- ---- ----------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest instalments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If the Security is subject to redemption of any kind, insert -- In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Debt, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such actions as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt, whether now outstanding or hereafter
created, incurred, assumed or guaranteed, and waives reliance by each such
holder upon said provisions.
[If applicable, insert -- The Indenture contains provisions for defeasance
at any time of the entire indebtedness of this Security or certain restrictive
covenants and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
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<PAGE> 25
[If the Security is an Original Issue Discount Security, insert -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium and interest, if any, on the Securities of this series
shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of all series to be affected (considered together as one
class for this purpose). The Indenture also contains provisions (i) permitting
the Holders of a majority in principal amount of the Securities at the time
Outstanding of all series to be affected under the Indenture (considered
together as one class for this purpose), on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and (ii) permitting the Holders of a majority in
principal amount of the Securities at the time Outstanding of any series to be
affected under the Indenture (with each such series considered separately for
this purpose), on behalf of the Holders of all Securities of such series, to
waive certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or trustee, or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee indemnity reasonably satisfactory to
it, and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities of this series at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and
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<PAGE> 26
unconditional, to pay the principal of and any premium and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal amount of Securities
of this series and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Security is a Global Security and is subject to the provisions of the
Indenture relating to Global Securities, including the limitations in Section
305 thereof on transfers and exchanges of Global Securities.
This Security and the Indenture shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
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<PAGE> 27
SECTION 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated herein and referred
to in the within-mentioned Indenture.
Dated:
The Bank of New York,
As Trustee
By
---------------------
Authorized Signatory
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
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<PAGE> 28
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and
except for any Securities which, pursuant to Section 303, are deemed never
to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of
the series is payable;
(5) the rate or rates at which any Securities of the series shall
bear interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date for any such interest payable on any
Interest Payment Date;
(6) the place or places where the principal of and any premium
and interest on any Securities of the series shall be payable and the
manner in which any payment may be made;
(7) the period or periods within which, the price or prices at
which and the terms and conditions upon which any Securities of the series
may be redeemed, in whole or in part, at the option of the Company and, if
other than by a Board Resolution, the manner in which any election by the
Company to redeem the Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem or purchase
any Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which any Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(10) if the amount of principal of or any premium or interest on
any Securities of the series may be determined with reference to an index
or pursuant to a formula, the manner in which such amounts shall be
determined;
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<PAGE> 29
(11) if other than the currency of the United States of America,
the currency, currencies, composite currency, composite currencies or
currency units in which the principal of or any premium or interest on any
Securities of the series shall be payable and the manner of determining the
equivalent thereof in the currency of the United States of America for any
purpose, including for the purposes of making payment in the currency of
the United States of America and applying the definition of "Outstanding"
in Section 101;
(12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company
or the Holder thereof, in one or more currencies, composite currencies or
currency units other than that or those in which such Securities are stated
to be payable, the currency, currencies, composite currency, composite
currencies or currency units in which the principal of or any premium or
interest on such Securities as to which such election is made shall be
payable, the periods within which and the terms and conditions upon which
such election is to be made and the amount so payable (or the manner in
which such amount shall be determined);
(13) if other than the entire principal amount thereof, the
portion of the principal amount of any Securities of the series which shall
be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502;
(14) if the principal amount payable at the Stated Maturity of
any Securities of the series will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which shall be deemed to be
the principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall
be due and payable upon any Maturity other than the Stated Maturity or
which shall be deemed to be Outstanding as of any date prior to the Stated
Maturity (or, in any such case, the manner in which such amount deemed to
be the principal amount shall be determined);
(15) if applicable, that the Securities of the series, in whole
or any specified part, shall be defeasible pursuant to Section 1302 or
Section 1303 or both such Sections, any provisions to permit a pledge of
obligations other than U.S. Government Obligations (or the establishment of
other arrangements) to satisfy the requirements of Section 1304(1) for
defeasance of such Securities and, if other than by a Board Resolution, the
manner in which any election by the Company to defease such Securities
shall be evidenced;
(16) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities
and, in such case, the respective Depositaries for such Global Securities,
the form of any legend or legends which shall be borne by any such Global
Security in addition to or in lieu of that set forth in Section 204, any
addition to, elimination of or other change in the circumstances set forth
in Clause (2) of the last paragraph of Section 305 in which any such Global
Security may be exchanged in whole or in part for Securities registered,
and any transfer of such Global Security in whole or in part may be
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<PAGE> 30
registered, in the name or names of Persons other than the Depositary for
such Global Security or a nominee thereof and any other provisions
governing exchanges or transfers of any such Global Security;
(17) any addition to, elimination of or other change in the
Events of Default which applies to any Securities of the series and any
change in the right of the Trustee or the requisite Holders of such
Securities to declare the principal amount thereof due and payable pursuant
to Section 502;
(18) any addition to, elimination of or other change in the
covenants set forth in Article Ten which applies to Securities of the
series;
(19) any provisions necessary to permit or facilitate the
issuance, payment or conversion of any Securities of the series that may be
converted into securities or other property other than Securities of the
same series and of like tenor, whether in addition to, or in lieu of, any
payment of principal or other amount and whether at the option of the
Company or otherwise; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior Debt as
provided in Article Fourteen.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any multiple thereof.
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<PAGE> 31
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by a Chairman of
the Board, a Vice Chairman of the Board, a President or a Vice President of the
Company (or any other officer of the Company designated in writing by or
pursuant to authority of the Board of Directors and delivered to the Trustee
from time to time), under its corporate seal reproduced thereon attested by a
Secretary or Assistant Secretary of the Company. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such form
has been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
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<PAGE> 32
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
Securities of the same series, of any authorized denominations and of like tenor
and aggregate principal amount. Until so exchanged, the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.
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<PAGE> 33
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of like tenor and aggregate
principal amount.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue, register
the transfer of or exchange any Securities of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
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<PAGE> 34
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a nominee
thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, and subject
to such applicable provisions, if any, as may be specified as contemplated
by Section 301, no Global Security may be exchanged in whole or in part for
Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depositary
for such Global Security or a nominee thereof unless (A) such Depositary
has notified the Company that it (i) is unwilling or unable to continue as
Depositary for such Global Security or (ii) has ceased to be a clearing
agency registered under the Exchange Act, (B) there shall have occurred and
be continuing an Event of Default with respect to such Global Security or
(C) the Company has executed and delivered to the Trustee a Company Order
stating that such Global Security shall be exchanged in whole for
Securities that are not Global Securities (in which case such exchange
shall promptly be effected by the Trustee). If the Company receives a
notice of the kind specified in Clause (A) above or has delivered a Company
Order of the kind specified in Clause (C) above, it may, in its sole
discretion, designate a successor Depositary for such Global Security
within 60 days after receiving such notice or delivery of such order, as
the case may be. If the Company designates a successor Depositary as
aforesaid, such Global Security shall promptly be exchanged in whole for
one or more other Global Securities registered in the name of the successor
Depositary, whereupon such designated successor shall be the Depositary for
such successor Global Security or Global Securities and the provisions of
Clauses (1), (2), (3) and (4) of this Section shall continue to apply
thereto.
(3) Subject to Clause (2) above and to such applicable provisions, if
any, as may be specified as contemplated by Section 301, any exchange of a
Global Security for other Securities may be made in whole or in part, and
all Securities issued in exchange for a Global Security or any portion
thereof shall be registered in such names as the Depositary for such Global
Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 304, 306, 906 or
1107 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name
of a Person other than the Depositary for such Global Security or a nominee
thereof.
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<PAGE> 35
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to
any Securities of a series, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest (or, if no business is conducted by the Trustee at its
Corporate Trust Office on such date, at 5:00 P.M. New York City time on such
date).
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted
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Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
payable on any Securities of a series to the Persons in whose names such
Securities (or their respective Predecessor Securities) are registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each of such Securities and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed pay ment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given to each Holder of such
Securities in the manner set forth in Section 106, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
such Securities (or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on any
Securities of a series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Except as may otherwise be provided in this Section 307 or as contemplated
in Section 301 with respect to any Securities of a series, the Person to whom
interest shall be payable on any Security that first becomes payable on a day
that is not an Interest Payment Date shall be the Holder of such Security on the
day such interest is paid.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
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In the case of any Security which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Security whose Maturity is prior to such Interest Payment Date), interest
whose Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable. Notwithstanding the
foregoing, the terms of any Security that may be converted may provide that the
provisions of this paragraph do not apply, or apply with such additions, changes
or omissions as may be provided thereby, to such Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by a Company
Order; provided, however, that the Trustee shall not be required to destroy such
canceled Securities.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.
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SECTION 311. CUSIP Numbers.
The Company in issuing the Securities may use CUSIP numbers (if then
generally in use) and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders, provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities. Any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of conversion, registration of transfer or
exchange of any Security expressly provided for herein or in the terms of such
Security), and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
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and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose money in an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and any
premium and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee. All
moneys deposited with the Trustee pursuant to Section 401 (and held by it or any
Paying Agent) for the payment of Securities subsequently converted shall be
returned to the Company upon Company Request.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
Fourteen or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
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(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
10% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days (provided that, if any Person becomes the successor to the
Company pursuant to Article Eight and such Person is a corporation,
partnership or trust organized and validly existing under the law of a
jurisdiction outside the United States, each reference in this Clause 5 to
an applicable Federal or State law of a particular kind shall be deemed to
refer to such law or any applicable comparable law of such non-U.S.
jurisdiction, for as long as such Person is the successor to the Company
hereunder and is so organized and existing); or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
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under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in
furtherance of any such action (provided that, if any Person becomes the
successor to the Company pursuant to Article Eight and such Person is a
corporation, partnership or trust organized and validly existing under the
law of a jurisdiction outside the United States, each reference in this
Clause 6 to an applicable Federal or State law of a particular kind shall
be deemed to refer to such law or any applicable comparable law of such
non-U.S. jurisdiction, for as long as such Person is the successor to the
Company hereunder and is so organized and existing); or
(7) any other Event of Default provided with respect to Securities of
that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
501(5) or 501(6)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount of all the Securities of that
series (or, in the case of any Security of that series which specifies an amount
to be due and payable thereon upon acceleration of the Maturity thereof, such
amount as may be specified by the terms thereof) to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable. If an Event of Default
specified in Section 501(5) or 501(6) with respect to Securities of any series
at the time Outstanding occurs, the principal amount of all the Securities of
that series (or, in the case of any Security of that series which specifies an
amount to be due and payable thereon upon acceleration of the Maturity thereof,
such amount as may be specified by the terms thereof) shall automatically, and
without any declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
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(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
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SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
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SECOND: Subject to Article Fourteen, to the payment of the amounts
then due and unpaid for principal of and any premium and interest on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and pay able on such Securities for principal
and any premium and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to it against the costs, expenses and liabilities
to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date), and, if the
terms of such Security so provide, to convert such Security
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in accordance with its terms, and to institute suit for the enforcement of any
such payment and, if applicable, any such right to convert, and such rights
shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
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(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs,
including reasonable attorneys' fees and expenses, against any such party
litigant, in the manner and to the extent provided in the Trust Indenture Act;
provided that neither this Section nor the Trust Indenture Act shall be deemed
to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Company or the Trustee or, if
applicable, in any suit for the enforcement of the right to convert any Security
in accordance with its terms.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
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(4) the Trustee may consult with counsel of its selection and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(8) the Trustee shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Indenture;
(9) the Trustee shall not be deemed to have notice of any default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of
the Trustee, and such notice references the Securities and this Indenture;
and
(10) the rights, privileges, protections, immunities and benefits
given to the Trustee, including its rights to be indemnified, are extended
to, and shall be enforceable by, the Trustee in each of its capacities
hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee does not assume any responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The
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Trustee shall not be accountable for the use or application by the Company of
Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 608 and 613, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as shall
be agreed in writing between the parties for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify each of the Trustee or any predecessor Trustee for,
and to hold it harmless against, any and all losses, liabilities, damages,
claims or expenses including taxes (other than taxes imposed on the income
of the Trustee) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim (whether asserted by the Company, a
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 501(5) or Section 501(6), the expenses
(including the
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reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
applicable Federal or State bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a trustee under this Indenture with
respect to Securities of more than one series.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such, has a combined
capital and surplus of at least $50,000,000 and has its Corporate Trust Office
in the Borough of Manhattan, The City of New York. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
and to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee with respect to the Securities of any series shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 60 days after the giving of such
notice of resignation, the resigning Trustee may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
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The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of a notice of removal pursuant to this paragraph, the Trustee being
removed may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all
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others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring
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Trustee shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates.
Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than May 15 and November 15 in each year,
a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders of Securities of each series as of the
immediately preceding May 1 or November 1, as the case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
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Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 1 and shall be dated as
of May 1 in each calendar year, commencing in 2001.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange and
of any delisting thereof.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
shall be organized and validly existing under the laws of any domestic or
foreign jurisdiction and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal
of and any premium and interest on all the Securities and the performance
or observance of every covenant of this Indenture on the part of the
Company to be performed or observed and, for each Security that by its
terms provides for conversion, shall have provided for the right to convert
such Security in accordance with its terms;
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(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or any
Subsidiary as a result of such transaction as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a pledge, lien or other similar encumbrance which would
not be permitted by this Indenture, the Company or such successor Person,
as the case may be, shall take such steps as shall be necessary effectively
to secure the Securities equally and ratably with (or prior to) all
indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
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(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events
of Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change or elimination (A) shall neither (i) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (ii) modify the
rights of the Holder of any such Security with respect to such provision or
(B) shall become effective only when there is no such Security Outstanding;
or
(6) to secure the Securities pursuant to the requirements of Section
801(3) or Section 1005 or otherwise; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 611; or
(9) to add to or change any of the provisions of this Indenture with
respect to any Securities that by their terms may be converted into
securities or other property other than Securities of the same series and
of like tenor, in order to permit or facilitate the issuance, payment or
conversion of such Securities; or
(10) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture,
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provided that such action pursuant to this Clause (9) shall not adversely
affect the interests of the Holders of Securities of any series in any
material respect.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of a majority in principal amount of
the Outstanding Securities of all series affected by such supplemental indenture
(considered together as one class for this purpose), by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security affected
thereby,
(1) change the Stated Maturity of the principal of, or any instalment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security or any other Security which would be due
and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502, or permit the Company to redeem any Security if,
absent such supplemental indenture, the Company would not be permitted to
do so, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date), or
(2) if any Security provides that the Holder may require the Company
to repurchase or convert such Security, impair such Holder's right to
require repurchase or conversion of such Security on the terms provided
therein, or
(3) reduce the percentage in principal amount of the Outstanding
Securities of any one or more series (considered separately or together as
one class, as applicable), the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(4) modify any of the provisions of this Section, Section 513 or
Section 1006, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1006, or the
deletion of this proviso, in accordance with the requirements of Sections
611 and 901(8).
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A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
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SECTION 907. Subordination Unimpaired.
This Indenture may not be amended at any time to alter the
subordination, as provided herein, of any of the Securities then Outstanding
without the written consent of each holder of Senior Debt then outstanding that
would be adversely affected thereby.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange, where Securities may be surrendered
for conversion and where notices and demands to or upon the Company in respect
of the Securities of that series and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
With respect to any Global Security, and except as otherwise may be
specified for such Global Security as contemplated by Section 301, the Corporate
Trust Office of the Trustee shall be the Place of Payment where such Global
Security may be presented or surrendered for payment or for registration of
transfer or exchange, or where successor Securities may be delivered in exchange
therefor, provided, however, that any such payment, presentation, surrender or
delivery effected pursuant to the Applicable Procedures of the
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Depositary for such Global Security shall be deemed to have been effected at the
Place of Payment for such Global Security in accordance with the provisions of
this Indenture.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit (or, if the
Company has deposited any trust funds with a trustee pursuant to Section
1304(1), cause such trustee to deposit) with a Paying Agent a sum sufficient to
pay such amount, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease;
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provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may, at the expense of the Company, cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1005. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for
Securities of a specific series, the Company may, with respect to the Securities
of any one or more series, omit in any particular instance to comply with any
term, provision or condition set forth in any covenant provided pursuant to
Section 301(18), 901(2) or 901(7) for the benefit of the Holders of such series
or in Article Eight if, before the time for such compliance, the Holders of a
majority in principal amount of the Outstanding Securities of all series
affected by such waiver (considered together as one class for this purpose)
shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for such Securities) in
accordance with this Article.
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SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
established in or pursuant to a Board Resolution or in another manner specified
as contemplated by Section 301 for such Securities. In case of any redemption at
the election of the Company of less than all the Securities of any series
(including any such redemption affecting only a single Security), the Company
shall, at least 60 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date, of the principal amount of Securities of such
series to be redeemed and, if applicable, of the tenor of the Securities to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed
(unless all the Securities of such series and of a specified tenor are to be
redeemed or unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security. If less than all the Securities of
such series and of a specified tenor are to be redeemed (unless such redemption
affects only a single Security), the particular Securities to be redeemed shall
be selected not more than 60 days prior to the Redemption Date by the Trustee,
from the Outstanding Securities of such series and specified tenor not
previously called for redemption in accordance with the preceding sentence.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed shall be treated
by the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption as aforesaid and,
in case of any Securities selected for partial redemption as aforesaid, the
principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
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For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 days nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall identify the Securities to be redeemed
(including CUSIP numbers, if any) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series
consisting of a single Security are to be redeemed, the principal amount of
the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is to be surrendered
for payment of the Redemption Price,
(6) for any Securities that by their terms may be converted, the terms
of conversion, the date on which the right to convert the Security to be
redeemed will terminate and the place or places where such Securities may
be surrendered for conversion, and
(7) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
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SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date, other than any Securities called for
redemption on that date which have been converted prior to the date of such
deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any Predecessor Security to receive interest as provided in the
last paragraph of Section 307 or in the terms of such Security) be paid to the
Company upon Company Request or, if then held by the Company, shall be
discharged from such trust.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, instalments of interest whose Stated Maturity is on
or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
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ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the
terms of any Securities is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of such Securities is herein referred to as an "optional sinking fund
payment". If provided for by the terms of any Securities, the cash amount of any
sinking fund payment may be subject to reduction as provided in Section 1202.
Each sinking fund payment shall be applied to the redemption of Securities as
provided for by the terms of such Securities.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been converted in accordance with their terms
or which have been redeemed either at the election of the Company pursuant to
the terms of such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to any
Securities of such series required to be made pursuant to the terms of such
Securities as and to the extent provided for by the terms of such Securities;
provided that the Securities to be so credited have not been previously so
credited. The Securities to be so credited shall be received and credited for
such purpose by the Trustee at the Redemption Price, as specified in the
Securities so to be redeemed (or at such other prices as may be specified for
such Securities as contemplated in Section 301), for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 90 days (or such shorter period as shall be satisfactory
to the Trustee) prior to each sinking fund payment date for any Securities, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for such Securities pursuant to
the terms of such Securities, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities pursuant to Section 1202 and
will also deliver to the Trustee any Securities to be so delivered. Not less
than 60 days prior to each such sinking fund payment date, the Trustee shall
select the Securities to be redeemed upon such sinking fund payment date in the
manner specified in
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Section 1103 and cause notice of the redemption thereof to be given in the name
of and at the expense of the Company in the manner provided in Section 1104.
Such notice having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section 1302
or Section 1303 applied to any Securities or any series of Securities, as the
case may be, designated pursuant to Section 301 as being defeasible pursuant to
such Section 1302 or 1303, in accordance with any applicable requirements
provided pursuant to Section 301 and upon compliance with the conditions set
forth below in this Article. Any such election shall be evidenced by a Board
Resolution or in another manner specified as contemplated by Section 301 for
such Securities.
SECTION 1302. Defeasance and Discharge.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Company shall be deemed to have been discharged from its obligations, and the
provisions of Article Fourteen shall cease to be effective, with respect to such
Securities as provided in this Section on and after the date the conditions set
forth in Section 1304(1) are satisfied (hereinafter called "Defeasance"). For
this purpose, such Defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by such Securities and
to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder: (1) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 1304 and as more fully
set forth in such Section, payments in respect of the principal of and any
premium and interest on such Securities when payments are due, (2) the Company's
obligations with respect to such Securities under Sections 304, 305, 306, 1002
and 1003, (3) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and (4) this Article. Subject to compliance with this Article, the
Company may exercise its option (if any) to have this Section applied to any
Securities notwithstanding the prior exercise of its option (if any) to have
Section 1303 applied to such Securities.
SECTION 1303. Covenant Defeasance.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, (1)
the Company shall be
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released from its obligations under Section 801(3) and any covenants provided
pursuant to Section 301(18), 901(2) or 901(7) for the benefit of the Holders of
such Securities, (2) the occurrence of any event specified in Sections 501(4)
(with respect to Section 801(3), and any such covenants provided pursuant to
Section 301(18), 901(2) or 901(7)) and 501(7) shall be deemed not to be or
result in an Event of Default and (3) the provisions of Article Fourteen shall
cease to be effective, in each case with respect to such Securities as provided
in this Section on and after the date the conditions set forth in Section 1304
are satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that, with respect to such Securities, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such specified Section (to the extent
so specified in the case of Section 501(4)) or Article Fourteen, whether
directly or indirectly by reason of any reference elsewhere herein to any such
Section or Article or by reason of any reference in any such Section or Article
to any other provision herein or in any other document, but the remainder of
this Indenture and such Securities shall be unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section
1302 or Section 1303 to any Securities or any series of Securities, as the case
may be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefits of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (C) such other
obligations or arrangements as may be specified as contemplated by Section
301 with respect to such Securities, or (D) a combination thereof, in each
case sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied
by the Trustee (or any such other qualifying trustee) to pay and discharge,
the principal of and any premium and interest on such Securities on the
respective Stated Maturities, in accordance with the terms of this
Indenture and such Securities. As used herein, "U.S. Government Obligation"
means (x) any security which is (i) a direct obligation of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case (i) or (ii), is not callable or redeemable
at the option of the issuer thereof, and (y) any depositary receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified
in Clause (x) above and held by such bank for the account of the holder
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of such depositary receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation which is so
specified and held, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (A)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this instrument, there
has been a change in the applicable Federal income tax law, in either case
(A) or (B) to the effect that, and based thereon such opinion shall confirm
that, the Holders of such Securities will not recognize gain or loss for
Federal income tax purposes as a result of the deposit, Defeasance and
discharge to be effected with respect to such Securities and will be
subject to Federal income tax on the same amount, in the same manner and at
the same times as would be the case if such deposit, Defeasance and
discharge were not to occur.
(3) In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of such Securities will not recognize gain or loss for
Federal income tax purposes as a result of the deposit and Covenant
Defeasance to be effected with respect to such Securities and will be
subject to Federal income tax on the same amount, in the same manner and at
the same times as would be the case if such deposit and Covenant Defeasance
were not to occur.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Securities or any other
Securities shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in Sections 501(5) and
(6), at any time on or prior to the 90th day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied
until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all Securities are in default within the meaning of such
Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
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(8) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act unless such trust shall be
registered under the Investment Company Act or exempt from registration
thereunder.
(9) No event or condition shall exist that, pursuant to the provisions
of Article Fourteen, would prevent the Company from making payments of the
principal of (and any premium) or interest on the Securities of such series
on the date of such deposit or at any time on or prior to the 90th day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until after such 90th day).
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
(11) The Company shall have delivered to the Trustee an Opinion of
Counsel substantially to the effect that (x) the trust funds deposited
pursuant to this Section will not be subject to any rights of holders of
Senior Debt, including those arising under Article Fourteen, and (y) after
the 90th day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, except that if a court
were to rule under any such law in any case or proceeding that the trust
funds remained property of the Company, no opinion is given as to the
effect of such laws on the trust funds except the following: (A) assuming
such trust funds remained in the possession of the trustee with whom such
funds were deposited prior to such court ruling to the extent not paid to
Holders of such Securities, such trustee would hold, for the benefit of
such Holders, a valid and perfected security interest in such trust funds
that is not avoidable in bankruptcy or otherwise, (B) such Holders would be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds were used and (C) no property, rights in property
or other interests granted to such trustee for the Trustee or such Holders
in exchange for or with respect to any such funds would be subject to any
prior rights of holders of Senior Debt, including those arising under
Article Fourteen.
SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee or other qualifying trustee (solely for purposes of this
Section and Section 1306, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1304 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law. Money and U.S. Government
Obligations (including the proceeds thereof) so held in trust shall not be
subject to the provisions of Article Fourteen, provided that the applicable
conditions of the Section 1304 have been satisfied.
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The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1304 with
respect to any Securities which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.
SECTION 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1302 or 1303 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1305 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. Securities Subordinate to Senior Debt.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the indebtedness represented
by the Securities and the payment of the principal of (and premium, if any) and
interest on each and all of the Securities are hereby expressly made subordinate
and subject in right of payment to the prior payment in full of all Senior Debt.
Notwithstanding the foregoing, if a deposit referred to in Section
1304(1) is made pursuant to Section 1302 or Section 1303 with respect to any
Securities (and provided all other conditions set out in Section 1302 or 1303,
as applicable, shall have been satisfied with respect to such Securities), then,
following the 90th day after such deposit, no money or U.S. Government
Obligations so deposited, and no proceeds thereon, will be
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subject to any rights of holders of Senior Debt, including any such rights
arising under this Article Fourteen.
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company, then and in any
such event the holders of Senior Debt shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior Debt
(including any interest accruing thereon after the commencement of any such case
or proceeding), or provision shall be made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior Debt,
before the Holders of the Securities are entitled to receive any payment on
account of principal of (or premium, if any) or interest on the Securities, and
to that end the holders of Senior Debt shall be entitled to receive, for
application to the payment thereof, any payment or distribution of any kind or
character, whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of the
Securities, which may be payable or deliverable in respect of the Securities in
any such case, proceeding, dissolution, liquidation or other winding up event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Debt is paid in full or payment thereof provided
for, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt. Any taxes that have been withheld or deducted from
any payment or distribution in respect of the Securities, or any taxes that
ought to have been withheld or deducted from any such payment or distribution
that have been remitted to the relevant taxing authority, shall not be
considered to be an amount that the Trustee or the Holder of any Security
receives for purposes of this Section.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
or other entity, provided for by a plan of reorganization or readjustment which
are subordinated in right of payment to all Senior Debt which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the
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Securities are so subordinated as provided in this Article. The consolidation of
the Company with, or the merger of the Company into, or the conveyance, transfer
or lease by the Company of its properties and assets substantially as an
entirety, to another Person upon the terms and conditions set forth in Article
Eight, or the liquidation or dissolution of the Company following any such
conveyance or transfer, shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Section if the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance, transfer or lease of such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in Article Eight.
SECTION 1403. Prior Payment to Senior Debt Upon Acceleration of Securities.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of Senior Debt shall
be entitled to receive payment in full of all amounts due or to become due on or
in respect of all Senior Debt or provision shall be made for such payment in
cash, before the Holders of the Securities are entitled to receive any payment
(including any payment which may be payable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities) by the Company on account of the principal of (or premium, if any)
or interest on the Securities or on account of the purchase or other acquisition
of Securities; provided, however, that nothing in this Section shall prevent the
satisfaction of any sinking fund payment in accordance with Article Twelve by
delivering and crediting pursuant to Section 1202 Securities which have been
acquired (upon redemption or otherwise) prior to such declaration of
acceleration.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
SECTION 1404. No Payment When Senior Debt in Default.
Subject to the last paragraph of this Section, (a) (i) in the event
and during the continuation of any default in the payment of principal of (or
premium, if any) or interest on any Senior Debt beyond any applicable grace
period with respect thereto, or (ii) in the event that any event of default with
respect to any Senior Debt shall have occurred and be continuing permitting the
holders of such Senior Debt (or a trustee on behalf of the holders thereof) to
declare such Senior Debt due and payable prior to the date on which it would
otherwise have become due and payable, whether or not such Senior Debt has been
so accelerated (provided that, in the case of Clause (i) or Clause (ii), if such
default in payment or event of default shall have been cured or waived or shall
have ceased to exist and any such declaration of acceleration shall have been
rescinded or annulled, then such default in payment or event of default, as the
case may be, shall be deemed not to have occurred for the purposes of this
Section), or (b) in the event that any judicial proceeding shall be pending with
respect to any such default in payment or event of default that shall be deemed
to have occurred for the purpose of this Section, then no payment (including any
payment which may be payable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of the Securities) shall be
made by the
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Company on account of principal of (or premium, if any) or interest on the
Securities or on account of the purchase or other acquisition of Securities;
provided, however, that nothing in this Section shall prevent the satisfaction
of any sinking fund payment in accordance with Article Twelve by delivering and
crediting pursuant to Section 1202 Securities which have been acquired (upon
redemption or otherwise) prior to such default in payment.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
provisions of this Section, and if such fact shall, at or prior to the time of
such payment, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment shall be paid over and delivered
forthwith to the Company.
No default in payment or event of default with respect to any Senior
Debt shall be deemed to be a default in payment or event of default of the kind
specified in Clause (a)(i) or (a)(ii) of this Section, and no judicial
proceeding with respect to any such default in payment or event of default shall
be deemed to be a judicial proceeding of the kind specified in Clause (b) of
this Section, if (x) the Company shall be disputing the occurrence or
continuation of such default in payment or event of default, or any obligation
purportedly giving rise to such default in payment or event of default, and (y)
no final judgment holding that such default in payment or event of default has
occurred and is continuing shall have been issued. For this purpose, a "final
judgment" means a judgment that is issued by a court having jurisdiction over
the Company or its property, is binding on the Company or its property, is in
full force and effect and is not subject to judicial appeal or review (including
because the time within which a party may seek appeal or review has expired),
provided that, if any such judgment has been issued but is subject to judicial
appeal or review, it shall nevertheless be deemed to be a final judgment unless
the Company shall in good faith be prosecuting such appeal or a proceeding for
such review and shall have obtained a stay of execution pending such appeal or
review. Notwithstanding the foregoing, this paragraph shall not apply to any
default in payment or event of default with respect to any Senior Debt as to
which the Company has waived the application of this paragraph in the instrument
evidencing such Senior Debt or by which such Senior Debt is created, incurred,
assumed or guaranteed by the Company.
SECTION 1405. Payment Permitted in Certain Situations.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1402 or under the conditions
described in Section 1403 or 1404, from making payments at any time of or on
account of the principal of (and premium, if any) or interest on the Securities,
or on account of the purchase or other acquisition of Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of (and premium, if any) or interest
on the Securities or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.
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SECTION 1406. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all Senior Debt or the provision for
such payment in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Debt, the Holders of the Securities shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Debt pursuant to the provisions of this Article (equally and ratably with
the holders of indebtedness of the Company which by its express terms is
subordinated to indebtedness of the Company to substantially the same extent as
the Securities are subordinated to the Senior Debt and is entitled to like
rights of subrogation) to the rights of the holders of such Senior Debt to
receive payments and distributions of cash, property and securities applicable
to the Senior Debt until the principal of (and premium, if any) and interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Debt of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of Senior Debt by
Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Debt and the Holders of the Securities,
be deemed to be a payment or distribution by the Company to or on account of the
Senior Debt.
SECTION 1407. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Debt on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional (and which, subject to the rights under this
Article of the holders of Senior Debt, is intended to rank equally with all
other general obligations of the Company), to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on the Securities
as and when the same shall become due and payable in accordance with their
terms; or (b) affect the relative rights against the Company of the Holders of
the Securities and creditors of the Company other than the holders of Senior
Debt; or (c) prevent the Trustee or the Holder of any Security from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
Senior Debt to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 1408. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
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SECTION 1409. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any non-compliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
SECTION 1410. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 601, shall be entitled in all respects to assume that no such facts
exist.
Subject to the provisions of Section 601, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Debt (or a trustee therefor) to establish that
such notice has been given by a holder of Senior Debt (or a trustee therefor).
In the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
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SECTION 1411. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Debt and other indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.
SECTION 1412. Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders or creditors
if it shall in good faith pay over or distribute to Holders of Securities or to
the Company or to any other Person cash, property or securities to which any
holders of Senior Debt shall be entitled by virtue of this Article or otherwise.
With respect to the holders of Senior Debt, the Trustee undertakes to perform or
to observe only such of its covenants or obligations as are specifically set
forth in this Article and no implied covenants or obligations with respect to
holders of Senior Debt shall be read into this Indenture against the Trustee.
SECTION 1413. Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
SECTION 1414. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
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-----------------------------
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE GOLDMAN SACHS GROUP, INC.
By
---------------------------
Attest:
- -------------------------
THE BANK OF NEW YORK
By
---------------------------
Attest:
- -------------------------
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the .... day of ..........., ...., before me personally came
..........................., to me known, who, being by me duly sworn, did
depose and say that he is .................... of The Goldman Sachs Group, Inc.,
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
...............
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the .... day of ..........., ...., before me personally came
..........................., to me known, who, being by me duly sworn, did
depose and say that he is .................... of .................., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
...............
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<PAGE> 1
Exhibit 4.9
Specimen Master Medium-Term Note
(Face of Security)
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR
A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE GOLDMAN SACHS GROUP, INC., OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY IS A MASTER NOTE WITHIN THE MEANING SPECIFIED HEREIN.
<PAGE> 2
THE GOLDMAN SACHS GROUP, INC.
MEDIUM-TERM NOTES, SERIES B
(Master Note)
This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and represents one or more obligations of The Goldman
Sachs Group, Inc., a corporation duly organized and existing under the laws of
the State of Delaware (hereinafter called the "Company", which term includes any
successor Person under the Indenture) (each such obligation, a "Supplemental
Obligation"). The terms of each Supplemental Obligation are and will be
reflected in this Security and in a pricing supplement to the Company's
prospectus, dated February 16, 2000, relating to such Supplemental Obligation,
which supplement and prospectus are on file with the Trustee hereinafter
referred to and which supplement is identified on Schedule A hereto (each such
pricing supplement, together with such prospectus, a "Pricing Supplement"). With
respect to each Supplemental Obligation, the provisions of the applicable
Pricing Supplement are hereby incorporated by reference herein and are deemed to
be a part of this Security as of the Original Issue Date specified on Schedule
A. Each reference to "this Security" or a "Security of this series" includes and
shall be deemed to refer to each Supplemental Obligation.
With respect to each Supplemental Obligation, every term of this Security
is subject to modification, amendment or elimination through the incorporation
of the applicable Pricing Supplement by reference, whether or not the phrase
"unless otherwise provided in the Pricing Supplement" or language of similar
import precedes the term of this Security so modified, amended or eliminated. It
is the intent of the parties hereto that, in the case of any conflict between
the terms of a Pricing Supplement and the terms herein, the terms of the Pricing
Supplement shall control over the terms herein with respect to the relevant
Supplemental Obligation. Without limiting the foregoing, in the case of each
Supplemental Obligation, the Holder of this Security is directed to the
applicable Pricing Supplement for a description of certain terms of such
Supplemental Obligation, including, in the case of any such obligation that is
designated in the applicable Pricing Supplement as an "indexed note" (an
"Indexed Note"), the manner of determining the principal amount of and interest,
if any, on
(Face of Security continued on next page)
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<PAGE> 3
such Supplemental Obligation, the dates, if any, on which the principal amount
of and interest, if any, on such Supplemental Obligation is determined and
payable, the amount payable upon any acceleration of such Supplemental
Obligation and the principle amount of such Supplemental Obligation deemed to be
Outstanding for purposes of determining whether Holders of the requisite
principle amount of Securities have made or given any request, demand,
authorization, direction, notice, consent, waiver or other action under the
Indenture.
Terms that are used and not defined in this Security but that are defined
in the Indenture are used herein as defined therein.
This Security is a "Master Note", which term means a Global Security that
provides for incorporation therein of the terms of Supplemental Obligations by
reference to the applicable Pricing Supplements, substantially as contemplated
herein.
---------------------
The Company, for value received, hereby promises to pay to CEDE & CO., as
nominee for The Depository Trust Company, or registered assigns: (i) on each
principal payment date, including each amortization date, redemption date,
repayment date or maturity date, as applicable, of each Supplemental Obligation,
the principal amount then due and payable for each such Supplemental Obligation,
and (ii) on each interest payment date and at maturity, the interest then due
and payable, if any, with respect to each Supplemental Obligation.
With respect to each Supplemental Obligation, the Company shall pay the
principal amount specified in the applicable Pricing Supplement on the Stated
Maturity shown therein, and shall pay interest on such principal, from the date
specified therein as the "Original Issue Date" (or in a comparable manner) (the
"Original Issue Date" for such Supplemental Obligation) or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or duly
provided for, on the Interest Payment Date(s) in each year, commencing on the
first such date that is at least 15 calendar days after the Original Issue Date,
and at the Maturity of such principal, as follows:
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<PAGE> 4
(i) in the case of a Supplemental Obligation for which the interest rate is
designated as fixed in the applicable Pricing Supplement (a "Fixed Rate Note"),
at a rate per annum equal to the annual rate specified in such Pricing
Supplement until the principal of such Supplemental Obligation is paid or made
available for payment and (to the extent that the payment of such interest shall
be legally enforceable) at the rate per annum equal to the rate at which the
principal then bears interest on any overdue premium or installment of interest
from the date any such overdue amount first becomes due until it is paid or made
available for payment, provided that interest on any principal, premium or
installment of interest that is overdue shall be payable on demand;
(ii) in the case of a Supplemental Obligation for which the interest rate
is designated as floating in the applicable Pricing Supplement (a "Floating Rate
Note"), at a rate per annum determined in accordance with the applicable
provisions of Section 3A on the reverse hereof, with such rate being dependent
in part upon whether rate specified as the "base rate" (or in a comparable
manner) in the applicable Pricing Supplement (the "Base Rate" for such
Supplemental Obligation) is the commercial paper rate, the prime rate, LIBOR,
EURIBOR, the treasury rate, the CMT rate, the CD rate, the federal funds rate or
the 11th district rate, until the principal of such Supplemental Obligation is
paid or made available for payment and (to the extent that the payment of such
interest shall be legally enforceable) at the rate at which the principal then
bears interest on any overdue premium or installment of interest from the date
any such overdue amount first becomes due until it is paid or made available for
payment, provided that interest on any principal, premium or installment of
interest that is overdue shall be payable on demand; and
(iii) in the case of a Supplemental Obligation that is an Indexed Note, at
such rate or in such manner, if any, as may be specified in the applicable
Pricing Supplement.
With respect to each Supplemental Obligation that is a Fixed Rate Note and
unless otherwise specified in the applicable Pricing Supplement, interest (other
than interest on overdue amounts) shall be payable by the Company, semi-annually
on May 15 and November 15 of each year.
(Face of Security continued on next page)
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With respect to each Supplemental Obligation that is a Floating Rate Note
and unless otherwise specified in the applicable Pricing Supplement, interest
(other than interest on overdue amounts) shall be payable:
- if the interest reset period specified in the applicable Pricing
Supplement (the "Interest Reset Period" for such Supplemental
Obligation) is daily, weekly or monthly, on the third Wednesday of
each month or on the third Wednesday of March, June, September and
December of each year, as specified in the applicable Pricing
Supplement;
- if the Interest Reset Period is quarterly, on the third Wednesday
of March, June, September and December of each year;
- if the Interest Reset Period is semi-annually, on the third
Wednesday of the two months specified in the applicable Pricing
Supplement;
- and if the Interest Reset Period is annually, on the third
Wednesday of the month specified in the applicable Pricing
Supplement
provided that, unless otherwise specified in the applicable Pricing Supplement,
the following sentence shall apply with respect to any such day on which
interest would otherwise be payable, other than any such day on which the
Maturity of the principal of such Floating Rate Note falls: If any such day is
not a Business Day (as defined in Section 3C(b) on the reverse hereof) the day
on which interest should be payable shall be deferred to the next succeeding
Business Day, provided that, if the Base Rate is LIBOR or EURIBOR and such next
succeeding Business Day falls in the next calendar month, the day on which
interest should be payable shall be advanced to the next preceding Business Day.
With respect to each Supplemental Obligation that is an Indexed Note, such
interest, if any, will be payable on the dates specified in the applicable
Pricing Supplement.
Each date so determined or provided for in the preceding three paragraphs
(or the applicable Pricing
(Face of Security continued on next page)
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Supplement) is hereinafter referred to as an "Interest Payment Date".
Interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture and unless otherwise
provided in the applicable Pricing Supplement, be paid to the person in whose
name this Security (or one or more predecessor Securities) is registered at the
close of business on the 15th day (whether or not a Business Day) next preceding
such Interest Payment Date (the "Regular Record Date"). Any interest so payable,
but not punctually paid or duly provided for, on any Interest Payment Date will
forthwith cease to be payable to the Holder on such Regular Record Date and such
Defaulted Interest either may be paid to the Person in whose name this Security
(or one or more predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to the Holder of this Security not
less than 10 days prior to such Special Record Date, or may be paid in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which this Security may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture. With respect to any
Supplemental Obligation, references herein to the "Holder" mean the Holder of
this Security.
CURRENCY OF PAYMENT
Payment of principal of (and premium, if any) and interest on any
Supplemental Obligation will be made in the currency designated as the
"specified currency" for such payment (or in a comparable manner) in the
applicable Pricing Supplement (the "Specified Currency" for any payment on such
Supplemental Obligation), except as provided in this and the next three
paragraphs. For each Supplemental Obligation, any payment shall be made in the
Specified Currency for such payment unless, at the time of such payment, such
currency is not legal tender for the payment of public and private debts in the
country issuing such currency on the Original Issue Date, in which case the
Specified Currency for such payment shall be such coin or currency as at the
time of such payment is legal tender for the payment of public and private debts
in such country, except as provided in the next sentence. If the euro is the
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Specified Currency for any payment, the Specified Currency for such payment
shall be such coin or currency as at the time of payment is legal tender for the
payment of public and private debts in all EMU Countries (as defined in Section
3C(b) on the reverse hereof), provided that, if on any day there are not at
least two EMU Countries, or if on any day there are at least two EMU Countries
but no coin or currency is legal tender for the payment of public and private
debts in all EMU Countries, then the Specified Currency for such payment shall
be deemed not to be available to the Company on such day.
Except as provided in the next paragraph, any payment to be made on a
Supplemental Obligation in a Specified Currency other than U.S. dollars will be
made in U.S. dollars if the Person entitled to receive such payment transmits a
written request for such payment to be made in U.S. dollars to the Trustee at
its Corporate Trust Office, Attention: Corporation Trust Trustee Administration,
on or before the fifth Business Day before the payment is to be made. Such
written request may be mailed, hand delivered, telecopied or delivered in any
other manner approved by the Trustee. Any such request made with respect to any
payment on a Supplemental Obligation payable to a particular Holder will remain
in effect for all later payments on such Supplemental Obligation payable to such
Holder, unless such request is revoked on or before the fifth Business Day
before a payment is to be made, in which case such revocation shall be effective
for such and all later payments. In the case of any payment of interest payable
on an Interest Payment Date, such written request must be made by the Person who
is the registered Holder of this Security on the relevant Regular Record Date.
The U.S. dollar amount of any payment made pursuant to the preceding
paragraph will be determined by the Exchange Rate Agent (as defined in Section
3C(a) on the reverse hereof) based upon the highest bid quotation received by
the Exchange Rate Agent as of 11:00 A.M., New York City time, on the second
Business Day preceding the applicable payment date, from three (or, if three are
not available, then two) recognized foreign exchange dealers selected by the
Exchange Rate Agent in The City of New York, in each case for the purchase by
the quoting dealer, for U.S. dollars and for settlement on such payment date of
an amount of such Specified Currency for such payment equal to the aggregate
amount of such Specified Currency payable on
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such payment date to all Holders of Securities of this or any other series who
elect to receive U.S. dollar payments on such payment date, and at which the
applicable dealer commits to execute a contract. If the Exchange Rate Agent
determines that two such bid quotations are not available on such second
Business Day, such payment will be made in the Specified Currency for such
payment. All currency exchange costs associated with any payment in U.S. dollars
on this Security will be borne by the Holder entitled to receive such payment,
by deduction from such payment.
Notwithstanding the foregoing, if any amount payable on a Supplemental
Obligation is payable on any day (including at Maturity) in a Specified Currency
other than U.S. dollars, and if such Specified Currency is not available to the
Company on the two Business Days before such day, due to the imposition of
exchange controls, disruption in a currency market or any other circumstances
beyond the control of the Company, the Company will be entitled to satisfy its
obligation to pay such amount in such Specified Currency by making such payment
in U.S. dollars. The amount of such payment in U.S. dollars shall be determined
by the Exchange Rate Agent on the basis of the noon buying rate for cable
transfers in The City of New York for such Specified Currency (the "Exchange
Rate") as of the latest day before the day on which such payment is to be made.
Any payment made under such circumstances in U.S. dollars where the required
payment is in other than U.S. dollars will not constitute an Event of Default
under the Indenture or this Security.
MANNER OF PAYMENT - U.S. DOLLARS
Except as provided in the next paragraph, payment of any amount payable
on any Supplemental Obligation in U.S. dollars will be made at the office or
agency of the Company maintained for that purpose in The City of New York (or at
any other office or agency maintained by the Company for that purpose), against
surrender (in the manner provided below) of this Security in the case of any
payment due at Maturity of the principal of such Supplemental Obligation (other
than any payment of interest that first becomes due on an Interest Payment
Date); provided, however, that, at the option of the Company and subject to the
next paragraph, payment of interest may be made by check mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register.
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Payment of any amount payable on any Supplemental Obligation in U.S.
dollars will be made by wire transfer of immediately available funds to an
account maintained by the payee with a bank located in the Borough of Manhattan,
The City of New York, if (i) the principal of such Supplemental Obligation is at
least $1,000,000 and (ii) the Holder entitled to receive such payment transmits
a written request for such payment to be made in such manner to the Trustee at
its Corporate Trust Office, Attention: Corporation Trust Trustee Administration,
on or before the fifth Business Day before the day on which such payment is to
be made; provided that, in the case of any such payment due at the Maturity of
the principal of such Supplemental Obligation (other than any payment of
interest that first becomes due on an Interest Payment Date), this Security must
be surrendered (in the manner provided below) at the office or agency of the
Company maintained for that purpose in The City of New York (or at any other
office or agency maintained by the Company for that purpose) in time for the
Paying Agent to make such payment in such funds in accordance with its normal
procedures. Any such request made with respect to any payment on such
Supplemental Obligation payable to a particular Holder will remain in effect for
all later payments on such Supplemental Obligation payable to such Holder,
unless such request is revoked on or before the fifth Business Day before a
payment is to be made, in which case such revocation shall be effective for such
and all later payments. In the case of any payment of interest payable on a
Supplemental Obligation on an Interest Payment Date, such written request must
be made by the Person who is the registered Holder of this Security on the
relevant Regular Record Date. The Company will pay any administrative costs
imposed by banks in connection with making payments by wire transfer with
respect to this Security, but any tax, assessment or other governmental charge
imposed upon any payment will be borne by the Holder of this Security and may be
deducted from the payment by the Company or the Paying Agent.
MANNER OF PAYMENT - OTHER SPECIFIED CURRENCIES
Payment of any amount payable on any Supplemental Obligation in a Specified
Currency other than U.S. dollars will be made by wire transfer of immediately
available funds to such account as is maintained in such Specified Currency at a
bank or other financial institution acceptable to the Company and the Trustee
and as shall have been designated at
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least five Business Days prior to the applicable payment date by the Person
entitled to receive such payment, provided that, in the case of any such payment
due at the Maturity of the principal of such Supplemental Obligation (other than
any payment of interest that first becomes due on an Interest Payment Date),
this Security must be surrendered (in the manner provided below) at the office
or agency of the Company maintained for that purpose in The City of New York (or
at any other office or agency maintained by the Company for that purpose) in
time for the Paying Agent to make such payment in such funds in accordance with
its normal procedures. Such account designation shall be made by transmitting
the appropriate information to the Trustee at its Corporate Trust Office in the
Borough of Manhattan, The City of New York, by mail, hand delivery, telecopier
or in any other manner approved by the Trustee. Unless revoked, any such account
designation made with respect to any Supplemental Obligation by the Holder
hereof will remain in effect with respect to any further payments with respect
to such Supplemental Obligation payable to such Holder. If a payment in a
Specified Currency other than U.S. dollars with respect to any Supplemental
Obligation cannot be made by wire transfer because the required account
designation has not been received by the Trustee on or before the requisite date
or for any other reason, the Company will cause a notice to be given to the
Holder of this Security at its registered address requesting an account
designation pursuant to which such wire transfer can be made and such payment
will be made within five Business Days after the Trustee's receipt of such a
designation meeting the requirements specified above, with the same force and
effect as if made on the due date. The Company will pay any administrative costs
imposed by banks in connection with making payments by wire transfer with
respect to this Security, but any tax, assessment or other governmental charge
imposed upon any payment will be borne by the Holder of this Security and may be
deducted from the payment by the Company or the Paying Agent.
MANNER OF PAYMENT - PAYMENTS PURSUANT TO THE APPLICABLE
PROCEDURES OF THE DEPOSITARY; SURRENDER OF THIS
SECURITY
Notwithstanding any provision of this Security or the Indenture, the
Company may make any and all payments of principal, premium and interest on this
Security pursuant to
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the Applicable Procedures of the Depositary for this Security as permitted
in the Indenture.
Notwithstanding the foregoing, whenever the provisions hereof require
that this Security be surrendered against payment of the principal of a
Supplemental Obligation, such surrender may be effected by means of an
appropriate adjustment to Schedule A hereto to reflect the discharge of such
Supplemental Obligation, with such adjustment to be made by the Trustee in a
manner not inconsistent with the Applicable Procedures of the Depositary for
this Security, and in such circumstances this Security need not actually be
surrendered. This paragraph shall apply only to a Master Note.
PAYMENTS DUE ON A BUSINESS DAY
Unless otherwise specified in the applicable Pricing Supplement for a
Supplemental Obligation, if any amount of principal, premium or interest would
otherwise be due on such Supplemental Obligation on a day (the "Specified Day")
that is not a Business Day for such Supplemental Obligation, such amount may be
paid or made available for payment on the next succeeding Business Day (unless
the Base Rate for such Supplemental Obligation is LIBOR or EURIBOR and such next
succeeding Business Day falls in the next calendar month, in which case such
amount may be paid or made available for payment on the next preceding Business
Day) with the same force and effect as if such amount were paid on the Specified
Day. The provisions of this paragraph shall apply to this Security in lieu of
the provisions of Section 113 of the Indenture.
---------------------
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: April 14, 2000
THE GOLDMAN SACHS GROUP, INC.
By /s/ Dan H. Jester
---------------------------
Name: Dan H. Jester
Title: Vice President and
Treasurer
This is one of the Securities of the series designated herein and referred to in
the Indenture
THE BANK OF NEW YORK, as
Trustee
By /s/ Carlos J. Capellan
-----------------------------
Authorized Officer
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(Reverse of Security)
1. SECURITIES AND INDENTURE
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or more
series under an Indenture, dated as of May 19, 1999 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Bank of New York, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered.
In the case of the acquisition of all or a portion of a Supplemental
Obligation by the Company or any Affiliate thereof, the Company or such
Affiliate may submit to the Trustee such evidence of such acquisition as is
reasonably acceptable to the Trustee, whereupon the Trustee, at the Company's
direction, shall reduce the principal amount of such Supplemental Obligation in
Schedule A hereto by such acquired amount, and the principal amount of such
Supplemental Obligation shall be reduced accordingly for all purposes of this
Security.
2. SERIES AND DENOMINATIONS
This Security is one of the series designated on the face hereof,
limited to an aggregate principal amount not to exceed $22,000,000,000 (or the
equivalent thereof in any other currency or currencies or currency units), which
amount may be increased at the option of the Company if in the future it
determines that it may wish to sell additional Securities of this series.
References herein to "this series" mean the series of securities designated on
the face hereof.
The Securities of this series are issuable only in registered form
without coupons in "Authorized Denominations", which term shall have the
following meaning. For each Supplemental Obligations having a principal amount
payable in U.S. dollars, the Authorized Denominations shall
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be $1,000 and multiples thereof, unless otherwise provided in the applicable
Pricing Supplement. For each Supplemental Obligation having a principal amount
payable in a Specified Currency other than U.S. dollars, the Authorized
Denominations shall be the amount of such Specified Currency equivalent, at the
Exchange Rate on the first Business Day next preceding the date on which the
Company accepts the offer to purchase such Security, to $1,000 and any multiple
thereof, unless otherwise provided in the applicable Pricing Supplement.
3A. INTEREST RATE ON FLOATING RATE NOTES
Unless otherwise provided in the applicable Pricing Supplement, the
provisions of this Section 3A shall apply with respect to each Supplemental
Obligation that is a Floating Rate Note.
(a) INTEREST RATE RESET. The interest rate on such Supplemental
Obligation will be reset from time to time, as provided in this Section 3A, and
each date upon which such rate is reset as so provided is hereinafter called an
"Interest Reset Date" for such Supplemental Obligation. Unless otherwise
specified in the applicable Pricing Supplement, the Interest Reset Dates with
respect to such Supplemental Obligation will be as follows:
(i) if the Interest Reset Period is daily, each
Business Day;
(ii) if the Interest Reset Period is weekly and the Base Rate
is not the treasury rate, the Wednesday of each week;
(iii) if the Interest Reset Period is weekly and the Base Rate
is the treasury rate, except as otherwise provided in the definition of
"Treasury Interest Determination Date" in Section 3A(m) below, the
Tuesday of each week;
(iv) if the Interest Reset Period is monthly, the third
Wednesday of each month;
(v) if the Interest Reset Period is quarterly, the third
Wednesday of each March, June, September and December;
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(vi) if the Interest Reset Period is semi-annual, the third
Wednesday of each of two months in each year specified under "interest
reset period (or in a comparable manner) in the applicable Pricing
Supplement; and
(vii) if the Interest Reset Period is annual, the third
Wednesday of the month in each year specified under "interest reset
period" (or in a comparable manner) in the applicable Pricing
Supplement;
provided, however, that (x) the Base Rate in effect from the Original Issue Date
to but excluding the first Interest Reset Date will be the rate specified as the
"initial base rate" (or in a comparable manner) in the applicable Pricing
Supplement (the "Initial Base Rate" for such Supplemental Obligation) and (y) if
the Interest Reset Period is daily or weekly, the Base Rate in effect for each
day following the second Business Day immediately prior to an Interest Payment
Date to but excluding such Interest Payment Date, and for each day following the
second Business Day immediately prior to the day of Maturity of the principal of
such Supplemental Obligation to but excluding such day of Maturity, will be the
Base Rate in effect on such applicable second Business Day; and provided,
further, that, if any Interest Reset Date would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be the next succeeding day that is
a Business Day, except that, unless otherwise specified on the face hereof, if
the Base Rate is LIBOR or EURIBOR and such next succeeding Business Day falls in
the next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Business Day.
Subject to applicable provisions of law and except as
otherwise specified herein or in the applicable Pricing Supplement, on each
Interest Reset Date the interest rate on a Supplemental Obligation shall be the
rate determined in accordance with such of the following Sections 3A(b) through
3A(j) as provide for determination of the Base Rate for such Supplemental
Obligation. The Calculation Agent (as defined in Section 3C(a) below)shall
determine the interest rate of such Supplemental Obligation in accordance with
the applicable Section below.
Unless the Base Rate is LIBOR or EURIBOR, the Calculation
Agent will determine the interest rate of such Supplemental Obligation that
takes effect on any Interest
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Reset Date on a day no later than the Calculation Date (as defined in Section
3A(m) below) corresponding to such Interest Reset Date. However, the Calculation
Agent need not wait until the Calculation Date to determine such interest rate
if the rate information it needs to make such determination in the manner
specified in the applicable provisions of Sections 3A(b) through 3A(j) hereof is
available from the relevant sources specified in such applicable provisions.
Upon request of the Holder to the Calculation Agent, the Calculation Agent
will provide the interest rate then in effect on such Supplemental Obligation
and, if determined, the interest rate that will become effective on the next
Interest Reset Date.
(b) DETERMINATION OF COMMERCIAL PAPER RATE. If the Base Rate for such
Supplemental Obligation is the commercial paper rate, the Base Rate that takes
effect on any Interest Reset Date shall equal the Money Market Yield (as defined
in Section 3A(m) below) of the rate, for the second Business Day immediately
preceding such Interest Reset Date (the "Commercial Paper Interest Determination
Date"), for commercial paper having the Index Maturity, as published in
H.15(519) (as defined in Section 3A(m) below) under the heading "Commercial
Paper -- Nonfinancial". If the commercial paper rate cannot be determined as
described above, the following procedures will apply in determining the
commercial paper rate:
(i) If the rate described above does not appear in H.15(519)
at 3:00 P.M., New York City time, on the Calculation Date corresponding
to such Commercial Paper Interest Determination Date (unless the
calculation is made earlier and the rate is available from that source
at that time), then the commercial paper rate will be the rate, for
such Commercial Paper Interest Determination Date, for commercial paper
having the maturity specified as the "index maturity" (or in a
comparable manner) in the applicable Pricing Supplement (the "Index
Maturity" for such Supplemental Obligation), as published in H.15 Daily
Update (as defined in Section 3A(m) below) or any other recognized
electronic source used for displaying that rate, under the heading
"Commercial Paper -- Nonfinancial".
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(ii) If the rate described in clause (i) above does not appear
in H.15(519), H.15 Daily Update or another recognized electronic source
at 3:00 P.M., New York City time, on such Calculation Date (unless the
calculation is made earlier and the rate is available from one of those
sources at that time), the commercial paper rate will be the Money
Market Yield of the arithmetic mean of the following offered rates for
U.S. dollar commercial paper that has the Index Maturity and is placed
for an industrial issuer whose bond rating is "AA", or the equivalent,
from a nationally recognized rating agency: the rates offered as of
11:00 A.M., New York City time, on such Commercial Paper Interest
Determination Date by three leading U.S. dollar commercial paper
dealers in New York City selected by the Calculation Agent.
(iii) If fewer than three dealers selected by the Calculation
Agent are quoting as described in clause (ii) above, the commercial
paper rate shall be the commercial paper rate in effect on such
Commercial Paper Interest Determination Date (or, in the case of the
first Interest Reset Date, the Initial Base Rate).
The Base Rate determined in accordance with this Section 3A(b) will be
adjusted by the addition or subtraction of the Spread, if any, or by multiplying
such Base Rate by the Spread Multiplier, if any.
(c) DETERMINATION OF PRIME RATE. If the Base Rate for such Supplemental
Obligation is the prime rate, the Base Rate that takes effect on any Interest
Reset Date shall equal the rate, for the second Business Day immediately
preceding such Interest Reset Date (the "Prime Interest Determination Date"),
published in H.15(519) under the heading "Bank Prime Loan". If the prime rate
cannot be determined as described above, the following procedures will apply in
determining the prime rate:
(i) If the rate described above does not appear in H.15(519)
at 3:00 P.M., New York City time, on the Calculation Date corresponding
to such Prime Interest Determination Date (unless the calculation is
made earlier and the rate is available from that source at that time),
then the prime rate will be the rate, for such Prime Interest
Determination Date, as published in H.15
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Daily Update or another recognized electronic source used for the
purpose of displaying that rate, under the heading "Bank Prime Loan".
(ii) If the rate described in clause (i) above does not appear
in H.15(519), H.15 Daily Update or another recognized electronic source
at 3:00 P.M., New York City time, on such Calculation Date (unless the
calculation is made earlier and the rate is available from one of those
sources at that time), then the prime rate will be the arithmetic mean
of the following rates as they appear on the Reuters Screen US PRIME 1
Page (as defined in Section 3A(m) below): the rate of interest publicly
announced by each bank appearing on that page as that bank's prime rate
or base lending rate, as of 11:00 A.M., New York City time, on such
Prime Interest Determination Date.
(iii) If fewer than four of the rates referred to in clause
(ii) above appear on the Reuters Screen US PRIME 1 Page, the prime rate
will be the arithmetic mean of the prime rates or base lending rates,
as of the close of business on such Prime Interest Determination Date,
of three major banks in New York City selected by the Calculation
Agent. For this purpose, the Calculation Agent will use rates quoted on
the basis of the actual number of days in the year divided by a 360-day
year.
(iv) If fewer than three banks selected by the Calculation
Agent are quoting as described in clause (iii) above, the prime rate
shall be the prime rate in effect on such Prime Interest Determination
Date (or, in the case of the first Interest Reset Date, the Initial
Base Rate).
The Base Rate determined in accordance with this Section 3A(c) will be
adjusted by the addition or subtraction of the Spread, if any, or by multiplying
such Base Rate by the Spread Multiplier, if any.
(d) DETERMINATION OF LIBOR. If the Base Rate for such Supplemental
Obligation is LIBOR, the Base Rate that takes effect on any Interest Reset Date
shall be LIBOR on the corresponding LIBOR Interest Determination Date (as
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defined in Section 3A(m) below) and shall be determined in
accordance with the following provisions:
LIBOR will be either of the following rates, whichever appears in the
applicable Pricing Supplement:
(x) the offered rate appearing on the Telerate
LIBOR Page (as defined in Section 3A(m) below); or
(y) the arithmetic mean of the offered rates appearing on the
Reuters Screen LIBOR Page (as defined in Section 3A(m) below) unless
that page by its terms cites only one rate, in which case that rate;
in either case, as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date for deposits of the currency specified as the "index
currency" (or in a comparable manner) in the applicable Pricing Supplement (the
"Index Currency" for such Supplemental Obligation) having the Index Maturity
beginning on such Interest Reset Date. If no reference page is specified in the
applicable Pricing Supplement, Telerate LIBOR Page will apply to such
Supplemental Obligation:
(i) If Telerate LIBOR Page is specified in the applicable
Pricing Supplement and the rate referenced in clause (x) above does not
appear on that page, or if Reuters Screen LIBOR Page is specified in
the applicable Pricing Supplement and fewer than two of the rates
referenced in clause (y) above appear on that page or no rate appears
on any page on which only one rate normally appears, then LIBOR will be
determined on the basis of the rates, at approximately 11:00 A.M.,
London time, on such LIBOR Interest Determination Date, at which
deposits of the following kind are offered to prime banks in the London
interbank market by four major banks in that market selected by the
Calculation Agent: deposits of the Index Currency having the Index
Maturity beginning on such Interest Reset Date and in a Representative
Amount (as defined in Section 3A(m) below). The Calculation Agent will
request the principal London office of each such bank to provide a
quotation of its rate. If at least two quotations are provided, LIBOR
for such
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LIBOR Interest Determination Date will be the arithmetic mean of the
quotations.
(ii) If fewer than two quotations are provided as described in
clause (i) above, LIBOR for such LIBOR Interest Determination Date will
be the arithmetic mean of the rates for loans of the following kind to
leading European banks quoted, at approximately 11:00 A.M. in the
principal financial center for the country issuing the Index Currency,
on such LIBOR Interest Determination Date, by three major banks in that
financial center selected by the Calculation Agent: loans of the Index
Currency having the Index Maturity beginning on such Interest Reset
Date and in a Representative Amount.
(iii) If fewer than three banks selected by the Calculation
Agent are quoting as described in clause (ii) above, LIBOR will be the
LIBOR in effect on such LIBOR Interest Determination Date (or, in the
case of the first Interest Reset Date, the Initial Base Rate).
The Base Rate determined in accordance with this Section 3A(d) will be
adjusted by the addition or subtraction of the Spread, if any, or by multiplying
such Base Rate by the Spread Multiplier, if any. If the Base Rate is LIBOR and
no currency is specified in the applicable Pricing Supplement as the index
currency, the Index Currency shall be U.S. dollars.
(e) DETERMINATION OF EURIBOR. If the Base Rate for such Supplemental
Obligation is EURIBOR, the Base Rate that takes effect on any Interest Reset
Date shall equal the interest rate for deposits in euros designated as "EURIBOR"
and sponsored jointly by the European Banking Federation and ACI -- the
Financial Market Association (or any company established by the joint sponsors
for purposes of compiling and publishing that rate) on the second Euro Business
Day (as defined in Section 3C(b) below) before such Interest Reset Date (a
"EURIBOR Interest Determination Date"), and will be determined in accordance
with the following provisions:
(i) EURIBOR will be the offered rate for deposits in euros
having the Index Maturity beginning on
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such Interest Reset Date, as that rate appears on Telerate Page 248 (as
defined in Section 3A(m) below) as of 11:00 A.M., Brussels time, on
such EURIBOR Interest Determination Date.
(ii) If the rate described in clause (i) above does not appear
on Telerate Page 248, EURIBOR will be determined on the basis of the
rates, at approximately 11:00 A.M., Brussels time, on such EURIBOR
Interest Determination Date, at which deposits of the following kind
are offered to prime banks in the Euro-Zone (as defined in Section
3C(b) below) interbank market by the principal Euro-Zone office of each
of four major banks in that market selected by the Calculation Agent:
euro deposits having the Index Maturity beginning on such Interest
Reset Date and in a Representative Amount. The Calculation Agent will
request the principal Euro-Zone office of each of these banks to
provide a quotation of its rate. If at least two quotations are
provided, EURIBOR for such EURIBOR Interest Determination Date will be
the arithmetic mean of such quotations.
(iii) If fewer than two quotations are provided as described
in clause (ii) above, EURIBOR for such EURIBOR Interest Determination
Date will be the arithmetic mean of the rates for loans of the
following kind to leading Euro-Zone banks quoted, at approximately
11:00 A.M., Brussels time, on such EURIBOR Interest Determination Date,
by three major banks in the Euro-Zone selected by the Calculation
Agent: loans of euros having the Index Maturity beginning on such
Interest Reset Date and in a Representative Amount.
(iv) If fewer than three banks selected by the Calculation
Agent are quoting as described in clause (iii) above, EURIBOR shall be
the EURIBOR in effect on such EURIBOR Interest Determination Date (or,
in the case of the first Interest Reset Date, the Initial Base Rate).
The Base Rate determined in accordance with this Section 3A(e) will be
adjusted by the addition or subtraction of the Spread, if any, or by multiplying
such Base Rate by the Spread Multiplier, if any.
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(f) DETERMINATION OF TREASURY RATE. If the Base Rate for such
Supplemental Obligation is the treasury rate, the Base Rate that takes effect on
any Interest Reset Date shall equal the rate for the auction on the
corresponding Treasury Interest Determination Date (as defined in Section 3A(m)
below) of direct obligations of the United States ("Treasury Bills") having the
Index Maturity, as that rate appears on Telerate Page 56 or 57 under the heading
"Investment Rate". If the treasury rate cannot be determined as described above,
the following procedures will apply in determining the treasury rate:
(i) If the rate described above does not appear on either
Telerate Page 56 or 57 at 3:00 P.M., New York City time, on the
Calculation Date corresponding to such Treasury Interest Determination
Date (unless the calculation is made earlier and the rate is available
from that source at that time), the treasury rate will be the Bond
Equivalent Yield (as defined in Section 3A(m) below) of the rate, for
such Treasury Interest Determination Date and for Treasury Bills having
the Index Maturity, as published in H.15 Daily Update, or another
recognized electronic source used for displaying that rate, under the
heading "U.S. Government Securities/Treasury Bills/Auction High".
(ii) If the rate described in clause (i) above does not appear
in H.15 Daily Update or another recognized electronic source at 3:00
P.M., New York City time, on such Calculation Date (unless the
calculation is made earlier and the rate is available from one of those
sources at that time), the Treasury Rate will be the Bond Equivalent
Yield of the auction rate, for such Treasury Interest Determination
Date and for Treasury Bills having the Index Maturity, as announced by
the U.S. Department of the Treasury.
(iii) If the auction rate described in clause (ii) above is
not so announced by 3:00 P.M., New York City time, on such Calculation
Date, or if no such auction is held for the relevant week, then the
Treasury Rate will be the Bond Equivalent Yield of the rate, for such
Treasury Interest Determination Date and for Treasury Bills having a
remaining maturity closest to the Index Maturity, as published in
H.15(519) under the heading "U.S. Government Securities/Treasury
Bills/Secondary Market".
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(iv) If the rate described in clause (iii) above does not
appear in H.15(519) at 3:00 P.M., New York City time, on such
Calculation Date (unless the calculation is made earlier and the rate
is available from one of those sources at that time), then the treasury
rate will be the rate, for such Treasury Interest Determination Date
and for Treasury Bills having a remaining maturity closest to the Index
Maturity, as published in H.15 Daily Update, or another recognized
electronic source used for displaying that rate, under the heading
"U.S. Government Securities/Treasury Bills/Secondary Market".
(v) If the rate described in clause (iv) above does not appear
in H.15 Daily Update or another recognized electronic source at 3:00
P.M., New York City time, on such Calculation Date (unless the
calculation is made earlier and the rate is available from one of those
sources at that time), the treasury rate will be the Bond Equivalent
Yield of the arithmetic mean of the following secondary market bid
rates for the issue of Treasury Bills with a remaining maturity closest
to the Index Maturity: the rates bid as of approximately 3:30 P.M., New
York City time, on such Treasury Interest Determination Date, by three
primary U.S. government securities dealers in New York City selected by
the Calculation Agent.
(vi) If fewer than three dealers selected by the Calculation
Agent are quoting as described in clause (v) above, the Treasury Rate
shall be the treasury rate in effect on such Treasury Interest
Determination Date (or, in the case of the first Interest Reset Date,
the Initial Base Rate).
The Base Rate determined in accordance with this Section 3A(f) will be
adjusted by the addition or subtraction of the Spread, if any, or by multiplying
such Base Rate by the Spread Multiplier, if any, specified.
(g) DETERMINATION OF CMT RATE. If the Base Rate for such Supplemental
Obligation is the CMT rate, the Base Rate that takes effect on any Interest
Reset Date shall equal the CMT rate on the second Business Day immediately
preceding such Interest Reset Date (the "CMT Interest Determination Date"). "CMT
rate" means the following rate displayed on the Designated CMT Telerate Page (as
defined in
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Section 3A(m) below) under the heading " . . . Treasury
Constant Maturities . . . Federal Reserve Board Release
H.15 . . . Mondays Approximately 3:45 P.M.", under the
column for the Designated CMT Index Maturity (as defined in
Section 3A(m) below):
(x) if the Designated CMT Telerate Page is Telerate Page 7051,
the rate for such CMT Interest Determination Date; or
(y) if the Designated CMT Telerate Page is Telerate Page 7052,
the weekly or monthly average, as specified on the face hereof, for the
week that ends immediately before the week in which such CMT Interest
Determination Date falls, or for the month that ends immediately before
the month in which such CMT Interest Determination Date falls, as
applicable.
If the CMT rate cannot be determined as described above, the following
procedures will apply in determining the CMT rate:
(i) If the applicable rate described above is not displayed on
the relevant Designated CMT Telerate Page at 3:00 P.M., New York City
time, on the Calculation Date corresponding to such CMT Interest
Determination Date (unless the calculation is made earlier and the rate
is available from that source at that time), then the CMT rate will be
the applicable Treasury constant maturity rate described above -- i.e.,
for the Designated CMT Index Maturity and for either such CMT Interest
Determination Date or the weekly or monthly average, as applicable --
as published in H.15(519).
(ii) If the applicable rate described in clause (i) above does
not appear in H.15(519) at 3:00 P.M., New York City time, on such
Calculation Date (unless the calculation is made earlier and the rate
is available from that source at that time), then the CMT rate will be
the Treasury constant maturity rate, or other U.S. Treasury rate, for
the Designated CMT Index Maturity and with reference to such CMT
Interest Determination Date, that:
(a) is published by the Board of Governors
of the Federal Reserve System, or the U.S. Department
of the Treasury, and
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(b) is determined by the Calculation Agent to be
comparable to the applicable rate formerly displayed on the
Designated CMT Telerate Page and published in H.15(519).
(iii) If the rate described in clause (ii) above does not
appear in H.15(519) at 3:00 P.M., New York City time, on such
Calculation Date (unless the calculation is made earlier and the rate
is available from that source at that time), then the CMT rate will be
the yield to maturity of the arithmetic mean of the following secondary
market offered rates for the most recently issued Treasury Notes (as
defined in Section 3A(m) below) having an original maturity of
approximately the Designated CMT Index Maturity, having a remaining
term to maturity of not less than the Designated CMT Index Maturity
minus one year and in a Representative Amount: the offered rates, as of
approximately 3:30 P.M., New York City time, on such CMT Interest
Determination Date, of three primary U.S. government securities dealers
in New York City selected by the Calculation Agent. In selecting such
offered rates, the Calculation Agent will request quotations from five
such primary dealers and will disregard the highest quotation -- or, if
there is equality, one of the highest -- and the lowest quotation --
or, if there is equality, one of the lowest.
(iv) If the Calculation Agent is unable to obtain three
quotations of the kind described in clause (iii) above, the CMT rate
will be the yield to maturity of the arithmetic mean of the following
secondary market offered rates for Treasury Notes having an original
maturity longer than the Designated CMT Index Maturity, having a
remaining term to maturity closest to the Designated CMT Index Maturity
and in a Representative Amount: the offered rates, as of approximately
3:30 P.M., New York City time, on such CMT Interest Determination Date,
of three primary U.S. government securities dealers in New York City
selected by the Calculation Agent. In selecting such offered rates, the
Calculation Agent will request quotations from five such primary
dealers and will disregard the highest quotation -- or, if there is
equality, one of the highest -- and the lowest quotation -- or, if
there is equality, one of the lowest. If two Treasury Notes with an
original maturity longer than the CMT
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<PAGE> 26
Designated Index Maturity have remaining terms to maturity that are
equally close to the Designated CMT Index Maturity, the Calculation
Agent will obtain quotations for the Treasury Note with the shorter
remaining term to maturity.
(v) If fewer than five but more than two such primary dealers
are quoting as described in clause (iv) above, then the CMT rate for
such CMT Interest Determination Date will be based on the arithmetic
mean of the offered rates so obtained, and neither the highest nor the
lowest of such quotations will be disregarded.
(vi) If two or fewer primary dealers selected by the
Calculation Agent are quoting as described in clause (v) above, the CMT
rate shall be the CMT rate in effect on such CMT Interest Determination
Date (or, in the case of the first Interest Reset Date, the Initial
Base Rate).
The Base Rate determined in accordance with this Section 3A(g) will be
adjusted by the addition or subtraction of the Spread, if any, or by multiplying
such Base Rate by the Spread Multiplier, if any.
(h) DETERMINATION OF CD RATE. If the Base Rate for such Supplemental
Obligation is the CD rate, the Base Rate that takes effect on any Interest Reset
Date shall equal the rate, on the second Business Day immediately preceding such
Interest Reset Date (the "CD Interest Determination Date"), for negotiable U.S.
dollar certificates of deposit having the Index Maturity as published in
H.15(519) under the heading "CDs (Secondary Market)". If the CD rate cannot be
determined as described above, the following procedures will apply in
determining the CD rate:
(i) If the rate described above does not appear in H.15(519)
at 3:00 P.M., New York City time, on the Calculation Date corresponding
to such CD Interest Determination Date (unless the calculation is made
earlier and the rate is available from that source at that time), then
the CD rate shall be the rate described above as published in H.15
Daily Update, or another recognized electronic source used for
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displaying that rate, under the heading "CDs (Secondary Market)".
(ii) If the rate described in clause (i) above does not appear
in H.15(519), H.15 Daily Update or another recognized electronic source
at 3:00 P.M., New York City time, on such Calculation Date (unless the
calculation is made earlier and the rate is available from one of those
sources at that time), then the CD rate shall be the arithmetic mean of
the following secondary market offered rates for negotiable U.S. dollar
certificates of deposit of major U.S. money center banks having a
remaining maturity closest to the Index Maturity and in a
Representative Amount: the rates offered as of 10:00 A.M., New York
City time, on such CD Interest Determination Date, by three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in
New York City, as selected by the Calculation Agent.
(iii) If fewer than three dealers selected by the Calculation
Agent are quoting as described in clause (ii) above, the CD rate will
be the CD rate in effect on such CD Interest Determination Date (or, in
the case of the first Base Reset Date, the Initial Base Rate).
The Base Rate determined in accordance with this Section 3A(h) will be
adjusted by the addition or subtraction of the Spread, if any, or by multiplying
such Base Rate by the Spread Multiplier, if any.
(i) DETERMINATION OF FEDERAL FUNDS RATE. If the Base Rate for
such Supplemental Obligation is the federal funds rate, the Base Rate that takes
effect on any Interest Reset Date shall equal the rate, on the second Business
Day immediately preceding such Interest Reset Date (the "Federal Funds Interest
Determination Date"), for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)", as that rate is displayed on Telerate Page
120. If the federal funds rate cannot be determined as described above, the
following procedures will apply in determining the federal funds rate:
(i) If the rate described above is not displayed on Telerate
Page 120 at 3:00 P.M., New York City time, on the Calculation Date
corresponding to such Federal Funds Interest Determination Date (unless
the
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calculation is made earlier and the rate is available from that source
at that time), then the federal funds rate will be the rate described
above as published in H.15 Daily Update, or another recognized
electronic source used for displaying that rate, under the heading
"Federal Funds (Effective)".
(ii) If the rate described in clause (i) above is not
displayed on Telerate Page 120 and does not appear in H.15 (519), H.15
Daily Update or another recognized electronic source at 3:00 P.M., New
York City time, on such Calculation Date (unless the calculation is
made earlier and the rate is available from one of those sources at
that time), the federal funds rate will be the arithmetic mean of the
rates for the last transaction in overnight, U.S. dollar federal funds
arranged, before 9:00 A.M., New York City time, on such Federal Funds
Interest Determination Date, by three leading brokers of U.S. dollar
federal funds transactions in New York City selected by the Calculation
Agent.
(iii) If fewer than three brokers selected by the Calculation
Agent are quoting as described in clause (ii) above, the federal funds
rate will be the federal funds rate in effect on such Federal Funds
Interest Determination Date (or, in the case of the first Interest
Reset Date, the Initial Base Rate).
The interest rate determined in accordance with this Section 3A(i) will
be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.
(j) DETERMINATION OF 11TH DISTRICT RATE. If the Base Rate for such
Supplemental Obligation is the 11th district rate (which term refers to the
Eleventh Federal Home Loan District Cost of Funds Rate), the Base Rate that
takes effect on any Interest Reset Date shall equal the 11th district rate on
the 11th District Interest Determination Date (as defined in Section 3A(m)
below) corresponding to such Interest Reset Date. The 11th district rate on any
11th District Interest Determination Date shall be the rate equal to the monthly
weighted average cost of funds for the calendar month immediately before such
date, as displayed on Telerate Page 7058 under the heading "11th District" as of
11:00 A.M., San Francisco time, on such date. If the 11th
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<PAGE> 29
district rate cannot be determined as described above, the following procedures
will apply in determining the 11th district rate:
(i) If the rate described above does not appear on Telerate
Page 7058 on such 11th District Interest Determination Date, then the
11th district rate on such date will be the monthly weighted average
cost of funds paid by institutions that are members of the Eleventh
Federal Home Loan District for the calendar month immediately preceding
such date, as most recently announced by the Federal Home Loan Bank of
San Francisco as such monthly weighted average cost of funds.
(ii) If the Federal Home Loan Bank of San Francisco fails to
announce the cost of funds described in clause (i) above on or before
such 11th District Interest Determination Date, the 11th district rate
that takes effect on such Interest Reset Date will be the 11th district
rate in effect on such 11th District Interest Determination Date (or,
in the case of the first Interest Reset Date, the Initial Base Rate).
The interest rate determined in accordance with this Section 3A(j)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.
(k) MINIMUM AND MAXIMUM LIMITS. Notwithstanding the foregoing, the
rate at which interest accrues on such Supplemental Obligation (i) shall not at
any time be higher than the maximum rate, if any, or less than the minimum rate,
if any, specified in the applicable Pricing Supplement, in each case on an
accrual basis, and (ii) shall not at any time be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
(l) CALCULATION OF INTEREST. Payments of interest on such Supplemental
Obligation with respect to any Interest Payment Date or at the Maturity of the
principal thereof will include interest accrued to but excluding such Interest
Payment Date or the date of such Maturity, as the case may be. Accrued interest
from the date of issue or from the last date to which interest has been paid or
duly provided for shall be calculated by the Calculation Agent by
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multiplying the principal amount for such Supplemental Obligation by an accrued
interest factor. Such accrued interest factor shall be computed by adding the
interest factors calculated for each day from and including the Original Issue
Date or from and including the last date to which interest has been paid or duly
provided for, to but excluding the date for which accrued interest is being
calculated. The interest factor for each such day shall be expressed as a
decimal and computed by dividing the interest rate (also expressed as a decimal)
in effect on such day by 360, if the Base Rate is the commercial paper rate,
prime rate, LIBOR, EURIBOR, CD rate, federal funds rate or 11th district rate,
or by the actual number of days in the year, if the Base Rate is the treasury
rate or CMT rate.
All percentages resulting from any calculation with respect to such
Supplemental Obligation will be rounded upward or downward, as appropriate, to
the next higher or lower one hundred-thousandth of a percentage point (e.g.,
9.876541% (or .09876541) being rounded down to 9.87654% (or .0987654) and
9.876545% (or .09876545) being rounded up to 9.87655% (or .0987655)). All
amounts used in or resulting from any calculation with respect to such
Supplemental Obligation will be rounded upward or downward, as appropriate, to
the nearest cent, in the case of U.S. dollars, or to the nearest corresponding
hundredth of a unit, in the case of a currency other than U.S. dollars, with
one-half cent or one-half of a corresponding hundredth of a unit or more being
rounded upward.
(m) DEFINITIONS OF CALCULATION TERMS. As used with respect to such
Supplemental Obligation, the following terms have the meanings set forth below:
"Bond Equivalent Yield" means a yield expressed as a percentage and
calculated in accordance with the following formula:
Bond Equivalent Yield = D x N
---------- x 100,
360 - (D x M)
where
- "D" equals the annual rate for Treasury Bills
quoted on a bank discount basis and expressed as a
decimal;
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- "N" equals 365 or 366, as the case may be; and
- "M" equals the actual number of days in the period from and
including the relevant Interest Reset Date to but excluding
the next succeeding Interest Reset Date.
The "Calculation Date" corresponding to any Commercial Paper Interest
Determination Date, Prime Interest Determination Date, LIBOR Interest
Determination Date, EURIBOR Interest Determination Date, Treasury Interest
Determination Date, CMT Interest Determination Date, CD Interest Determination
Date, Federal Funds Interest Determination Date or 11th District Interest
Determination Date, as the case may be, means the earlier of:
(i) the tenth day after such interest determination date or,
if any such day is not a Business Day, the next succeeding Business
Day; and
(ii) the Business Day immediately preceding the Interest
Payment Date or the date of Maturity of the principal hereof, whichever
is the day on which the next payment of interest will be due.
The Calculation Date corresponding to any Interest Reset Date means the
Calculation Date corresponding to the relevant interest determination date
immediately preceding such Interest Reset Date.
"Designated CMT Index Maturity" means, if the Base Rate is the
CMT Rate, the Index Maturity for such Security and will be the original period
to maturity of a U.S. Treasury security -- either 1, 2, 3, 5, 7, 10, 20 or 30
years -- specified on the face hereof, provided that, if no such original
maturity period is so specified, the Designated CMT Index Maturity will be 2
years.
"Designated CMT Telerate Page" means, if the Base Rate is the
CMT Rate, the Telerate Page specified in the applicable Pricing Supplement that
displays Treasury constant maturities as reported in H.15(519), provided that,
if no Telerate Page is so specified, then the applicable page will be Telerate
Page 7052 and provided, further, that if Telerate Page 7052 applies but it is
not specified in the applicable Pricing Supplement whether the weekly or monthly
average applies, the weekly average will apply.
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The "11th District Interest Determination Date" corresponding to a
particular Interest Reset Date will be the last working day, in the first
calendar month immediately preceding such Interest Reset Date, on which the
Federal Home Loan Bank of San Francisco publishes the monthly average cost of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District for the second calendar month immediately preceding such Interest Reset
Date.
"H.15(519)" means the weekly statistical release entitled "Statistical
Release H.15 (519)", or any successor publication, published by the Board of
Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15 (519) available through
the worldwide web site of the Board of Governors of the Federal Reserve System,
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
The "LIBOR Interest Determination Date" corresponding to any Interest Reset
Date means the second London Business Day preceding such Interest Reset Date,
unless the Index Currency is pounds sterling, in which case the LIBOR Interest
Determination Date will be the Interest Reset Date.
"London Business Day" means any day on which dealings in the Index Currency
are transacted in the London interbank market.
"Money Market Yield" means a yield expressed as a percentage and calculated
in accordance with the following formula:
Money Market Yield = D x 360 x 100,
-------------
360 - (D x M)
where
- "D" equals the per annum rate for commercial paper
quoted on a bank discount basis and expressed as a
decimal; and
- "M" equals the actual number of days in the period
from and including the relevant Interest Reset
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<PAGE> 33
Date to but excluding the next succeeding Interest Reset Date.
"Representative Amount" means an amount that, in the Calculation Agent's
judgment, is representative of a single transaction in the relevant market at
the relevant time.
"Reuters Screen LIBOR Page" means the display on the Reuters Monitor Money
Rates Service, or any successor service, on the page designated as "LIBOR" or
any replacement page or pages on which London interbank rates of major banks for
the Index Currency are displayed.
"Reuters Screen US PRIME 1 Page" means the display on the "US PRIME 1" page
on the Reuters Monitor Money Rates Service, or any successor service, or any
replacement page or pages on that service, for the purpose of displaying prime
rates or base lending rates of major U.S. banks.
"Telerate LIBOR Page" means Telerate Page 3750 or any replacement page or
pages on which London interbank rates of major banks for the Index Currency are
displayed.
"Telerate Page" means the display on Bridge Telerate, Inc., or any
successor service, on the page or pages specified on the face hereof, or any
replacement page or pages on that service.
The "Treasury Interest Determination Date" corresponding to any Interest
Reset Date means the day of the week in which such Interest Reset Date falls on
which Treasury bills would normally be auctioned. If, as the result of a legal
holiday, an auction is so held on the Friday in the week immediately preceding
the week in which such Interest Reset Day falls, such Friday will be the
corresponding Treasury Interest Determination Date. If an auction date shall
fall on a day that would otherwise be an Interest Reset Date, then such Interest
Reset Date shall instead be the first Business Day immediately following such
auction date.
"Treasury Notes" means direct, noncallable, fixed rate obligations of the
U.S. government.
References in this Security to a particular heading or headings on any of
Designated CMT Telerate Page,
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<PAGE> 34
H.15(519), H.15 Daily Update, Reuters Screen LIBOR Page, Reuters Screen US Prime
1 Page, Telerate LIBOR Page or Telerate Page include any successor or
replacement heading or headings as determined by the Calculation Agent.
3B. INTEREST RATE ON INDEXED NOTES
In the case of any Supplemental Obligation that is an Indexed Note, the
manner of calculating interest payable thereon shall be determined as provided
in the applicable Pricing Supplement.
3C. PAYMENTS - OTHER TERMS
The provisions of this Section 3C apply to all Supplemental
Obligations.
(a) CALCULATION AGENT AND EXCHANGE RATE AGENT. With respect to any
Supplemental Obligation, the "Calculation Agent" or the "Exchange Ratio Agent"
shall initially mean the Person (if any) named as such agent in the applicable
Pricing Supplement, provided that the Company may, in its sole discretion,
appoint any other institution (including any Affiliate of the Company) to serve
as any such agent for such Supplemental Obligation from time to time. The
Company will give the Trustee prompt written notice of any change in any such
appointment. Insofar as this Security or the applicable Pricing Supplement
provides for any such agent to obtain rates, quotes or other data from a bank,
dealer or other institution for use in making any determination hereunder, such
agent may do so from any institution or institutions of the kind contemplated
hereby notwithstanding that any one or more of such institutions are any such
agent, Affiliates of any such agent or Affiliates of the Company.
All determinations made by the Calculation Agent or the Exchange Rate
Agent with regard to a Supplemental Obligation may be made by such agent in its
sole discretion and, absent manifest error, shall be conclusive for all purposes
and binding on the Holder of this Security and the Company. Neither the
Calculation Agent nor the Exchange Rate Agent shall have any liability therefor.
(b) OTHER DEFINITIONS. "Business Day" means, for any Supplemental
Obligation, a day that meets the requirements set forth in each of clauses (i)
through (iv)
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below, in each case to the extent such requirements apply to such Supplemental
Obligation as specified below:
(i) is a Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking
institutions in The City of New York generally
are authorized or obligated by law, regulation or
executive order to close;
(ii) if the Base Rate is LIBOR, is also a London
Business Day;
(iii) if the Specified Currency for payment of
principal of or interest on such Security is
other than U.S. dollars or euros, is also a day
on which banking institutions in the principal
financial center of the country issuing such
Specified Currency generally are not authorized
or obligated by law, regulation or executive
order to close;
(iv) if the Base Rate is EURIBOR or if the Specified
Currency for payment of principal of or interest
on such Security is euros, or the Base Rate is
LIBOR for which the Index Currency is euros, is
also a Euro Business Day; and
(v) solely with respect to any payment or other
action to be made or taken at any Place of
Payment outside The City of New York, is a
Monday, Tuesday, Wednesday, Thursday or Friday
that is not a day on which banking institutions
in such Place of Payment generally are authorized
or obligated by law, regulation or executive
order to close.
Solely when used in the third paragraph under the heading "Currency of Payment"
on the face of this Security, the meaning of the term "Business Day" shall be
determined as if the Base Rate for the relevant Supplemental Obligation is
neither LIBOR nor EURIBOR. With respect to any particular location, the close of
business on any day on which business
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<PAGE> 36
is not being conducted at that location shall be deemed to mean 5:00 P.M., New
York City time, on that day.
"EMU Countries" means, at any time, the countries (if any) then
participating in the European Economic and Monetary Union (or any successor
union) pursuant to the Treaty on European Union of February 1992 (or any
successor treaty), as it may be amended from time to time.
"Euro Business Day" means any day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System, or any successor
system, is open for business.
"Euro-Zone" means, at any time, the region comprised of the EMU
Countries.
References in this Security to U.S. dollars shall mean, as of any time,
the coin or currency that is then legal tender for the payment of public and
private debts in the United States of America.
References in this Security to the euro shall mean, as of any time, the
coin or currency (if any) that is then legal tender for the payment of public
and private debts in all EMU Countries.
With respect to any Supplemental Obligation, references in this
Security to a particular currency other than U.S. dollars and euros shall mean,
as of any time, the coin or currency that is then legal tender for the payment
of public and private debts in the country issuing such currency on the Original
Issue Date for such Supplemental Obligation.
4. REDEMPTION AT THE COMPANY'S OPTION
Unless a redemption commencement date is specified in the applicable
Pricing Supplement, a Supplemental Obligation shall not be redeemable at the
option of the Company before the Stated Maturity of the principal thereof. If a
redemption commencement date is so specified, and unless otherwise specified in
the applicable Pricing Supplement, such Supplemental Obligation is subject to
redemption upon not less than 30 days' nor more than 60 days' notice at any time
and from time to time on or after the redemption commencement date, in each case
as a whole or
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<PAGE> 37
in part, at the election of the Company and at the redemption price specified in
the applicable Pricing Supplement (expressed as a percentage of the principal
amount of such Supplemental Obligation to be redeemed), together with accrued
interest to the Redemption Date, but interest installments due on or prior to
such Redemption Date will be payable to the Holder of this Security, or one or
more Predecessor Securities, of record at the close of business on the relevant
record date, all as provided in the Indenture.
5. REPAYMENT AT THE HOLDER'S OPTION
Except as otherwise may be provided in the applicable Pricing
Supplement, if one or more repayment dates are specified in the applicable
Pricing Supplement, the principal of a Supplemental Obligation will be repayable
in whole or in part in an amount equal to any Authorized Denomination (provided
that the remaining principal amount of any Supplemental Obligation surrendered
for partial repayment shall at least equal an Authorized Denomination), on any
such repayment date, in each case at the option of the Holder and at the
applicable repayment price specified in the applicable Pricing Supplement
(expressed as a percentage of the principal amount to be repaid), together with
accrued interest to the applicable repayment date (but interest installments due
on or prior to such repayment date will be payable to the Holder of this
Security, or one or more predecessor securities, of record at the close of
business on the relevant Regular Record Date as provided in the Indenture). With
respect to any Supplemental Obligation, if the applicable Pricing Supplement
provides for more than one repayment date and the Holder exercises its option to
elect repayment, the Holder shall be deemed to have elected repayment on the
earliest repayment date after all conditions to such exercise have been
satisfied, and references herein to the applicable repayment date shall mean
such earliest repayment date.
In order for the exercise of such option to be effective and the
principal amount of a Supplemental Obligation to be repaid, the Company must
receive at the applicable address of the Trustee set forth below (or at such
other place or places of which the Company shall from time to time notify the
Holder of this Security), on any Business Day not later than the 15th, and not
earlier than the 25th, calendar day prior to the applicable repayment
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-37-
<PAGE> 38
date (or, if either such calendar day is not a Business Day, the next succeeding
Business Day), either (i) the form below entitled "Option to Elect Repayment"
duly completed and signed, or (ii) a facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc., a commercial bank or a trust company in the United
States of America setting forth (a) the name, address and telephone number of
the Holder of this Security, (b) the principal amount of such Supplemental
Obligation and the portion thereof to be repaid, (c) a statement that the option
to elect repayment is being exercised thereby and (d) a guarantee stating that
the Company will receive the form below entitled "Option to Elect Repayment"
duly completed and signed, not later than five Business Days after the date of
such facsimile transmission or letter (provided that such form duly completed
and signed is received by the Company by such fifth Business Day). Any such
election shall be irrevocable. The address to which such deliveries are to be
made is The Bank of New York, Attention: Corporation Trust Trustee
Administration, 101 Barclay Street, New York, New York 10286 (or at such other
places as the Company or the Trustee shall notify the Holder of this Security).
All questions as to the validity, eligibility (including time of receipt) and
acceptance of any Supplemental Obligation for repayment will be determined by
the Company, whose determination will be final and binding. Notwithstanding the
foregoing, the option of the Holder to elect repayment may be exercised in
accordance with the Applicable Procedures of the Depositary for this Security at
least 15 calendar days prior to the applicable repayment date and the option of
the Holder to elect repayment may be exercised in any such manner as the Company
may approve.
6. TRANSFER AND EXCHANGE
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar, duly executed by the Holder hereof or his or
her attorney duly authorized in writing, and thereupon one or more new
Securities of this series and
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-38-
<PAGE> 39
of like tenor, of Authorized Denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
Authorized Denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company nor
the Trustee nor any such agent shall be affected by notice to the contrary.
This Security shall be subject to the provisions of the Indenture
relating to Global Securities, including the limitations in Section 305 thereof
on transfers and exchanges of Global Securities.
This Security is a Master Note and may be exchanged at any time, solely
upon the request of the Company to the Trustee, for one or more Global
Securities in the same aggregate principal amount, each of which may or may not
be a Master Note, as requested by the Company. Each such replacement Global
Security that is a Master Note shall reflect such of the Supplemental
Obligations as the Company shall request. Each such replacement Global Security
that is not a Master Note shall represent one (and only one) Supplemental
Obligation as requested by the Company, and such Global Security shall be
appropriately modified so as to reflect the terms of such Supplemental
Obligation.
7. DEFEASANCE
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of a Security of this series or certain restrictive
covenants and Events of
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<PAGE> 40
Default with respect to a Security of this series, in each case upon compliance
with certain conditions set forth in the Indenture. If so specified in the
applicable Pricing Supplement, either or both of such provisions are applicable
to a Supplemental Obligation, as so specified.
8. REMEDIES
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee indemnity reasonably satisfactory to
it, and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities of this series at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
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<PAGE> 41
9. MODIFICATION AND WAIVER
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of all series to be affected (considered together as one
class for this purpose). The Indenture also contains provisions (i) permitting
the Holders of a majority in principal amount of the Securities at the time
Outstanding of all series to be affected under the Indenture (considered
together as one class for this purpose), on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and (ii) permitting the Holders of a majority in
principal amount of the Securities at the time Outstanding of any series to be
affected under the Indenture (with each such series considered separately for
this purpose), on behalf of the Holders of all Securities of such series, to
waive certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
10. GOVERNING LAW
THIS SECURITY AND THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(Reverse of Security continued on next page)
-41-
<PAGE> 42
MASTER NOTE CUSIP NO. __________
SUPPLEMENTAL OBLIGATION: __________
Pricing Supplement No. and Date: ________________
Original Issue Date: ________________
THE GOLDMAN SACHS GROUP, INC.
MEDIUM-TERM NOTE, SERIES B
(Master Note)
OPTION TO ELECT REPAYMENT
TO BE COMPLETED ONLY IF THE SUPPLEMENTAL OBLIGATION
REFERENCED IN THIS NOTICE
IS REPAYABLE AT THE OPTION OF THE HOLDER AND
THE HOLDER ELECTS TO EXERCISE SUCH RIGHT
The undersigned hereby irrevocably requests and instructs the Company to
repay the Supplemental Obligation referred to in this notice (or the portion
thereof specified below) at the applicable repayment price, together with
interest to the repayment date, all as provided for in such Supplemental
Obligation, to the undersigned, whose name, address and telephone number are as
follows:
- -------------------------------------------------------------------------------
(please print name of the undersigned)
- -------------------------------------------------------------------------------
(please print address of the undersigned)
- -------------------------------------------------------------------------------
(please print telephone number of the undersigned)
If such Supplemental Obligation provides for more than one repayment date,
the undersigned requests repayment on the earliest repayment date after the
requirements for exercising this option have been satisfied, and references in
this notice to the repayment date mean such earliest repayment date. Terms used
in this notice that are defined in the Security specified above are used herein
as defined therein.
For such Supplemental Obligation to be repaid the Company must receive at
the applicable address of the Trustee set forth below or at such other place or
places of which the Company or the Trustee shall from time to time notify the
Holder of such Security, any Business Day not
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<PAGE> 43
later than the 15th or earlier than the 25th calendar day prior to the Repayment
Date (or, if either such calendar day is not a Business Day, the next succeeding
Business Day), (i) this "Option to Elect Repayment" form duly completed and
signed, or (ii) a facsimile transmission or letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc., a
commercial bank or a trust company in the United States of America setting forth
(a) the name, address and telephone number of the Holder of such Security, (b)
the principal amount of such Supplemental Obligation and the amount of such
Supplemental Obligation to be repaid, (c) a statement that the option to elect
repayment is being exercised thereby and (d) a guarantee stating that the form
entitled "Option to Elect Repayment" on the addendum to such Security duly
completed and signed will be received by the Company not later than five
Business Days after the date of such facsimile transmission or letter (provided
that such form duly completed and signed are received by the Company by such
fifth Business Day). The address to which such deliveries are to be made is:
The Bank of New York
Attention: Corporation Trust Trustee Administration
101 Barclay Street
New York, New York 10286
or at such other places as the Company or the Trustee shall notify the holder of
such Security.
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<PAGE> 44
If less than the entire principal amount of such Supplemental
Obligation is to be repaid, specify the portion thereof (which shall equal any
Authorized Denomination) that the Holder elects to have repaid:
----------------------
Date:
----------------------------- ------------------------------
Notice: The signature to this
Option to Elect Repayment must
correspond with the name of
the Holder as written on the
face of such Security in every
particular without alteration
or enlargement or any other
change whatsoever.
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-44-
<PAGE> 45
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with the right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - __________ Custodian _________
(Cust) (Minor)
under Uniform Gifts to Minors Act
------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
-----------------------------
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-45-
<PAGE> 46
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
------------
- --------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print or Typewrite Name and Address
Including Postal Zip Code of Assignee)
- --------------------------------------------------------------------------------
the attached Security and all rights thereunder, and hereby irrevocably
constitutes and appoints
--------------------------------------------------------
- --------------------------------------------------------------------------------
to transfer said Security on the books of the Company, with full power of
substitution in the premises.
Dated:
-----------------------
Signature Guaranteed
- ----------------------------- ------------------------------
NOTICE: Signature must be NOTICE: The signature to this
guaranteed. assignment must correspond with
the name of the Holder as
written upon the face of the
attached Security in every
particular, without alteration
or enlargement or any change
whatever.
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-46-
<PAGE> 47
SCHEDULE A
<TABLE>
<CAPTION>
Effective
Principal Amount Decrease Increase Date of
Pricing of Supplemental Original in Principal in Principal Increase or Fiscal Agent
Supplement No. Obligation Issue Date Amount Amount Decrease Notation
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- 47 -
<PAGE> 1
Exhibit 5.1
[Letterhead of Sullivan & Cromwell]
May 3, 2000
The Goldman Sachs Group, Inc.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933
(the "Act") by The Goldman Sachs Group, Inc., a Delaware corporation (the
"Company"), of $25,000,000,000 aggregate amount of its senior and subordinated
debt securities, warrants, purchase contracts, units comprised of the foregoing,
preferred stock and depositary shares representing preferred stock
(collectively, the "Securities"), we, as your counsel, have examined such
corporate records, certificates and other documents, including the resolutions
of the Company's board of directors authorizing the issuance of the Securities
(the "Resolutions"), and such questions of law, as we have
<PAGE> 2
The Goldman Sachs Group, Inc. -2-
considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion:
(1) Debt Securities. The indenture relating to the senior debt
securities, which is dated as of May 19, 1999, has been duly
authorized, executed and delivered by the Company, and the indenture
relating to the subordinated debt securities, in the form filed as an
exhibit to the Registration Statement, has been duly authorized by the
Company. When the Registration Statement has become effective under the
Act, when the indenture relating to the subordinated debt securities
has been duly executed and delivered substantially in the form so
filed, when the terms of the debt securities and of their issuance and
sale have been duly established in conformity with the applicable
indentures so as not to violate any applicable law or result in a
default under or breach of any agreement or instrument binding upon the
Company, and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the
Company, and when the debt securities have been duly executed and
authenticated in accordance with the
<PAGE> 3
The Goldman Sachs Group, Inc. -3-
applicable indentures and issued and sold as contemplated in the
Registration Statement, and if all the foregoing actions are taken
pursuant to the authority granted in the Resolutions, the debt
securities will constitute valid and legally binding obligations of the
Company, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles. The debt securities covered by the opinion in this
paragraph include any debt securities that may be issued as part of the
units or upon exercise or otherwise pursuant to the terms of any other
Securities, as well as any purchase contracts that may be issued under
the indentures relating to the debt securities.
(2) Warrants. When the Registration Statement has become
effective under the Act, when the terms of the warrant agreements under
which the warrants are to be issued have been duly established and the
warrant agreements have been duly executed and delivered, when the
terms of the warrants and of their issuance and
<PAGE> 4
The Goldman Sachs Group, Inc. -4-
sale have been duly established in conformity with the applicable
warrant agreements and when the warrants have been duly executed and
authenticated in accordance with the applicable warrant agreements and
issued and sold as contemplated in the Registration Statement, and if
all the foregoing actions are taken pursuant to the authority granted
in the Resolutions and so as not to violate any applicable law or
result in a default under or breach of any agreement or instrument
binding upon the Company, and so as to comply with any requirement or
restriction imposed by any court or governmental body having
jurisdiction over the Company, the warrants will constitute valid and
legally binding obligations of the Company, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles. The warrants covered by the
opinion in this paragraph include any warrants that may be issued as
part of the units or upon exercise or otherwise pursuant to the terms
of any other Securities.
<PAGE> 5
The Goldman Sachs Group, Inc. -5-
(3) Purchase Contracts. When the Registration Statement has
become effective under the Act, when the terms of the governing
instruments or agreements under which the purchase contracts are to be
issued have been duly established and the governing documents have been
duly executed and delivered, when the terms of the purchase contracts
and of their issuance and sale have been duly established in conformity
with the applicable governing documents and when the purchase contracts
have been duly executed and authenticated in accordance with the
applicable governing documents and issued and sold as contemplated in
the Registration Statement, and if all the foregoing actions are taken
pursuant to the authority granted in the Resolutions and so as not to
violate any applicable law or result in a default under or breach of
any agreement or instrument binding upon the Company, and so as to
comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company, the purchase
contracts will constitute valid and legally binding obligations of the
Company, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization,
<PAGE> 6
The Goldman Sachs Group, Inc. -6-
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles. The
purchase contracts covered by the opinion in this paragraph include any
purchase contracts that may be issued as part of the units or upon
exercise or otherwise pursuant to the terms of any other Securities,
but they do not include any purchase contracts to be issued under the
indentures relating to the debt securities.
(4) Units. When the Registration Statement has become
effective under the Act, when the terms of the unit agreements under
which the units are to be issued have been duly established and the
unit agreements have been duly executed and delivered, when the terms
of the units and of their issuance and sale have been duly established
in conformity with the applicable unit agreements and when the units
have been duly executed and authenticated in accordance with the
applicable unit agreements and issued and sold as contemplated in the
Registration Statement, and if all the foregoing actions are taken
pursuant to the authority granted in the Resolutions and so as not to
violate any applicable
<PAGE> 7
The Goldman Sachs Group, Inc. -7-
law or result in a default under or breach of any agreement or
instrument binding upon the Company, and so as to comply with any
requirement or restriction imposed by any court or governmental body
having jurisdiction over the Company, the units will constitute valid
and legally binding obligations of the Company, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles. The units covered by the
opinion in this paragraph include any units that may be issued upon
exercise or otherwise pursuant to the terms of any other Securities.
(5) Preferred Stock. When the Registration Statement has
become effective under the Act, when the terms of the preferred stock
and of its issuance and sale have been duly established in conformity
with the Company's certificate of incorporation so as not to violate
any applicable law or result in a default under or breach of any
agreement or instrument binding upon the Company, and so as to comply
with any requirement
<PAGE> 8
The Goldman Sachs Group, Inc. -8-
or restriction imposed by any court or governmental body having
jurisdiction over the Company, when an appropriate certificate of
designations with respect to the preferred stock has been duly filed
with the Secretary of State of the State of Delaware and when the
preferred stock has been duly issued and sold as contemplated by the
Registration Statement, and if all the foregoing actions are taken
pursuant to the authority granted in the Resolutions, the preferred
stock will be validly issued, fully paid and non-assessable. The
preferred stock covered in the opinion in this paragraph includes any
preferred stock that may be represented by depositary shares or may be
issued upon exercise or otherwise pursuant to the terms of any other
Securities.
(6) Depositary Shares. When the Registration Statement has
become effective under the Act, when the terms of the deposit agreement
under which the depositary shares are to be issued have been duly
established and the deposit agreement has been duly executed and
delivered, when the terms of the
<PAGE> 9
The Goldman Sachs Group, Inc. -9-
depositary shares and of their issuance and sale have been duly
established in conformity with the deposit agreement, when the
preferred stock represented by the depositary shares has been duly
delivered to the depositary and when the depositary receipts evidencing
the depositary shares have been duly issued against deposit of the
preferred stock in accordance with the deposit agreement and issued and
sold as contemplated by the Registration Statement, and if all the
foregoing actions are taken pursuant to the authority granted in the
Resolutions and so as not to violate any applicable law or result in a
default under or breach of any agreement or instrument binding upon the
Company, and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the
Company, the depositary receipts evidencing the depositary shares will
be validly issued and will entitle the holders thereof to the rights
specified in the depositary shares and the deposit agreement, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
<PAGE> 10
The Goldman Sachs Group, Inc. -10-
affecting creditors' rights and to general equity principles. The
depositary shares covered by the opinion in this paragraph include any
depositary shares that may be issued upon exercise of or otherwise
pursuant to any other Securities.
We note that, as of the date of this opinion, a judgment for money in
an action based on a Security denominated in a foreign currency or currency unit
in a Federal or state court in the United States ordinarily would be enforced in
the United States only in United States dollars. The date used to determine the
rate of conversion of the foreign currency or currency unit in which a
particular Security is denominated into United States dollars will depend upon
various factors, including which court renders the judgment. In the case of a
Security denominated in a foreign currency, a state court in the State of New
York rendering a judgment on such Security would be required under Section 27 of
the New York Judiciary Law to render such judgment in the foreign currency in
which the Security is denominated, and such judgment would be converted into
United States dollars at the exchange rate prevailing on the date of entry of
the judgment.
<PAGE> 11
The Goldman Sachs Group, Inc. -11-
The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the General Corporation Law of the
State of Delaware, and we are expressing no opinion as to the effect of the laws
of any other jurisdiction.
We have relied as to certain matters on information obtained from public
officials, officers of the Company and other sources believed by us to be
responsible. We have assumed, without independent verification, that the
indenture relating to the senior debt securities has been duly authorized,
executed and delivered by the trustee thereunder, that all other governing
documents under which the Securities are to be issued, as well as the purchase
contracts, if applicable, will have been duly authorized, executed and delivered
by all parties thereto other than the Company and that the signatures on
documents examined by us are genuine. We have further assumed that the issuance
or delivery by the Company of any securities other than the Securities, or of
any other property, upon exercise or otherwise pursuant to the terms of the
Securities will be effected pursuant to the authority granted in the Resolutions
and so as not to violate any applicable law or result in a default under or
breach of any agreement or
<PAGE> 12
The Goldman Sachs Group, Inc. -12-
instrument binding on the Company, and so as to comply with any requirement or
restriction imposed by any court or governmental body having jurisdiction over
the Company. Finally, we have assumed that the authority granted in the
Resolutions will remain in effect at all relevant times.
We are expressing no opinion as to any obligations that parties other
than the Company may have under or in respect of the Securities or as to the
effect that their performance of such obligations may have upon any of the
matters referred to above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
the Securities" in the Prospectus. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE> 1
Exhibit 8.1
[Letterhead of Sullivan & Cromwell]
May 3, 2000
The Goldman Sachs Group, Inc.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
As counsel to The Goldman Sachs Group, Inc. (the "Company") in
connection with the issuance of up to $25,000,000,000 aggregate offering price
of the Company's Debt Securities, Warrants, Purchase Contracts, Units, Preferred
Stock or Depositary Shares pursuant to the Prospectus which forms a part of the
Registration Statement of the Company to which this opinion is filed as an
exhibit, we hereby confirm to you that the discussions set forth under the
heading "United States Taxation" therein is our opinion, subject to the
limitations set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "United
States Taxation" in the Prospectus. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE> 1
Exhibit 15.1
May 2, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: The Goldman Sachs Group, Inc.
Registration Statement on Form S-3
Commissioners:
We are aware that our report dated April 5, 2000 on our review of the condensed
consolidated financial statements of The Goldman Sachs Group, Inc. and
Subsidiaries (the "Company") as of February 25, 2000 and for the three months
ended February 25, 2000 and February 26, 1999, which was included in the
Company's Quarterly Report on Form 10-Q for the period ended February 25, 2000,
is incorporated by reference into this Registration Statement on Form S-3.
Pursuant to Rule 436(c) under the Securities Act of 1933, that report should not
be considered a part of this Registration Statement prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent to the incorporation by reference in the Prospectus constituting part
of this Registration Statement on Form S-3 of our reports dated January 21,
2000, on our audits of the consolidated financial statements, selected
consolidated financial data and the financial statement schedule of The Goldman
Sachs Group, Inc. and Subsidiaries (the "Company"), which reports were included
or incorporated by reference in the Company's Annual Report on Form 10-K for the
fiscal year ended November 26, 1999. We also consent to the references to our
firm under the caption "Experts".
PricewaterhouseCoopers LLP
New York, New York
May 2, 2000.
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John A. Thain, Robert J. Katz, Gregory
K. Palm, David A. Viniar and Esta E. Stecher and each of them severally, his or
her true and lawful attorney-in-fact with power of substitution and
resubstitution to sign in his or her name, place and stead, in any and all
capacities, to do any and all things and to execute any and all instruments
that such attorney deems necessary or advisable under the Securities Act of 1933
(the "Securities Act"), and any rules, regulations and requirements of the U.S.
Securities and Exchange Commission (the "Commission"), in connection with the
registration, from time to time, under the Securities Act of (i) senior debt
securities and subordinated debt securities of The Goldman Sachs Group, Inc.
(the "Company"), in one or more series, which may be convertible into or
exchangeable for shares of preferred stock of the Company and/or depositary
shares representing such shares, (ii) warrants, purchase contracts and/or other
securities of the Company to purchase or sell, or whose cash value is
determined by reference to or is linked to the performance or level of, one or
more of the following (a) securities of one or more entities (including the
Company), (b) one or more currencies, (c) one or more commodities, (d) one or
more indices or baskets of securities, currencies, commodities or other
financial, economic or other measures or instruments (including the occurrence
or non-occurrence of any event or circumstance) and/or (e) any other financial,
economic or other measure or instrument (including the occurrence or
non-occurrence of any event or circumstance), (iii) shares of preferred stock
of the Company in one or more series and depositary shares representing such
shares, (iv) common securities and/or preferred securities of one or more
business, trusts, partnerships or other entities that may be formed from time
to time by the Company, (v) guarantees of the Company with respect to any of
the above referenced securities, and/or (vi) units comprised of any combination
of the securities referred to above, in the initial aggregate offering price
(or the equivalent thereof in any other currency, currencies or currency units)
of up to $25,000,000,000 (collectively, the "Offered Securities"), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign his or her name, in his or her respective capacity as a
member of the Board of Directors or officer of the Company, to one or more
registration statements on such form or forms as may be appropriate to be filed
with the Commission with respect to the Offered Securities as any of them may
deem appropriate, to any and all amendments (including post-effective
amendments) to such registration statements, to any related registration
statements under Rule 462 of the Securities Act and to any other documents
filed with the Commission, as fully for all intents and purposes as he or she
might or could do in person, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, and his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have duly subscribed this Power of
Attorney this 20th day of March, 2000:
Title Signature
----- ---------
Director, Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer) /s/ HENRY M. PAULSON, JR.
--------------------------------
Henry M. Paulson, Jr.
Director and Vice Chairman /s/ ROBERT J. HURST
--------------------------------
Robert J. Hurst
Director, President and Co-Chief Operating
Officer /s/ JOHN A. THAIN
--------------------------------
John A. Thain
Director, President and Co-Chief Operating
Officer /s/ JOHN L. THORNTON
--------------------------------
John L. Thornton
Director /s/ JOHN BROWNE
--------------------------------
Sir John Browne
Director /s/ JOHN H. BRYAN
--------------------------------
John H. Bryan
Director /s/ JAMES A. JOHNSON
--------------------------------
James A. Johnson
Director /s/ RUTH J. SIMMONS
--------------------------------
Ruth J. Simmons
Director /s/ JOHN L. WEINBERG
--------------------------------
John L. Weinberg
Chief Financial Officer (Principal Financial /s/ DAVID A. VINIAR
Officer) --------------------------------
David A. Viniar
Principal Accounting Officer /s/ SARAH G. SMITH
--------------------------------
Sarah G. Smith
<PAGE> 1
Exhibit 25.1
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
---------------------------
The Goldman Sachs Group, Inc.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-4019460
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
85 Broad Street 10004
New York, New York (Zip code)
(Address of principal executive offices)
</TABLE>
---------------------------
Senior Debt Securities
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State 2 Rector Street, New York, N.Y. 10006,
of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 26th day of April, 2000.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
-------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
<PAGE> 4
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1999, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
In Thousands
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin........................................ $3,247,576
Interest-bearing balances................................................................. 6,207,543
Securities:
Held-to-maturity securities............................................................... 827,248
Available-for-sale securities............................................................. 5,092,464
Federal funds sold and Securities purchased under
agreements to resell...................................................................... 5,306,926
Loans and lease financing receivables:
Loans and leases, net of unearned
income.................................................................................. 37,734,000
LESS: Allowance for loan and
lease losses............................................................................ 575,224
LESS: Allocated transfer risk
reserve................................................................................. 13,278
Loans and leases, net of unearned income,
allowance, and reserve.................................................................. 37,145,498
Trading Assets............................................................................... 8,573,870
Premises and fixed assets (including capitalized
leases)................................................................................... 723,214
Other real estate owned...................................................................... 10,962
Investments in unconsolidated subsidiaries and
associated companies...................................................................... 215,006
Customers' liability to this bank on acceptances
outstanding............................................................................... 682,590
Intangible assets............................................................................ 1,219,736
Other assets................................................................................. 2,542,157
-----------
Total assets................................................................................. $71,794,790
===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices...................................................................... $27,551,017
Noninterest-bearing...................................................................... 11,354,172
Interest-bearing......................................................................... 16,196,845
In foreign offices, Edge and Agreement
subsidiaries, and IBFs................................................................. 27,950,004
Noninterest-bearing...................................................................... 639,410
Interest-bearing......................................................................... 27,310,594
Federal funds purchased and Securities sold under
agreements to repurchase................................................................. 1,349,708
Demand notes issued to the U.S.Treasury..................................................... 300,000
Trading liabilities......................................................................... 2,339,554
Other borrowed money:
With remaining maturity of one year or less.............................................. 638,106
With remaining maturity of more than one year
through three years.................................................................... 449
With remaining maturity of more than three years......................................... 31,080
Bank's liability on acceptances executed and
outstanding.............................................................................. 684,185
Subordinated notes and debentures........................................................... 1,552,000
Other liabilities........................................................................... 3,704,252
-----------
Total liabilities........................................................................... 66,100,355
===========
EQUITY CAPITAL
Common stock................................................................................ 1,135,284
Surplus..................................................................................... 866,947
Undivided profits and capital reserves...................................................... 3,765,900
Net unrealized holding gains (losses) on
available-for-sale securities............................................................ (44,599)
Cumulative foreign currency translation adjustments......................................... (29,097)
----------
Total equity capital........................................................................ 5,694,435
-----------
Total liabilities and equity capital........................................................ $71,794,790
===========
</TABLE>
-2-
<PAGE> 6
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi
Alan R. Griffith Directors
Gerald L. Hassell
- -------------------------------------------------------------------------------
-3-
<PAGE> 1
Exhibit 25.2
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
---------------------------
The Goldman Sachs Group, Inc.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-4019460
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
85 Broad Street 10004
New York, New York (Zip code)
(Address of principal executive offices)
</TABLE>
---------------------------
Subordinated Debt Securities
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State 2 Rector Street, New York, N.Y. 10006,
of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 26th day of April, 2000.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
----------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
<PAGE> 4
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1999, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
In Thousands
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.......................................... $3,247,576
Interest-bearing balances................................................................... 6,207,543
Securities:
Held-to-maturity securities................................................................. 827,248
Available-for-sale securities............................................................... 5,092,464
Federal funds sold and Securities purchased under
agreements to resell........................................................................ 5,306,926
Loans and lease financing receivables:
Loans and leases, net of unearned
income.................................................................................... 37,734,000
LESS: Allowance for loan and
lease losses.............................................................................. 575,224
LESS: Allocated transfer risk
reserve................................................................................... 13,278
Loans and leases, net of unearned income,
allowance, and reserve.................................................................... 37,145,498
Trading Assets................................................................................. 8,573,870
Premises and fixed assets (including capitalized
leases)..................................................................................... 723,214
Other real estate owned........................................................................ 10,962
Investments in unconsolidated subsidiaries and
associated companies........................................................................ 215,006
Customers' liability to this bank on acceptances
outstanding................................................................................. 682,590
Intangible assets.............................................................................. 1,219,736
Other assets................................................................................... 2,542,157
-----------
Total assets................................................................................... $71,794,790
===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices........................................................................ $27,551,017
Noninterest-bearing........................................................................ 11,354,172
Interest-bearing........................................................................... 16,196,845
In foreign offices, Edge and Agreement
subsidiaries, and IBFs................................................................... 27,950,004
Noninterest-bearing........................................................................ 639,410
Interest-bearing........................................................................... 27,310,594
Federal funds purchased and Securities sold under
agreements to repurchase................................................................... 1,349,708
Demand notes issued to the U.S.Treasury....................................................... 300,000
Trading liabilities........................................................................... 2,339,554
Other borrowed money:
With remaining maturity of one year or less................................................ 638,106
With remaining maturity of more than one year
through three years...................................................................... 449
With remaining maturity of more than three years........................................... 31,080
Bank's liability on acceptances executed and
outstanding................................................................................ 684,185
Subordinated notes and debentures............................................................. 1,552,000
Other liabilities............................................................................. 3,704,252
-----------
Total liabilities............................................................................. 66,100,355
===========
EQUITY CAPITAL
Common stock.................................................................................. 1,135,284
Surplus....................................................................................... 866,947
Undivided profits and capital reserves........................................................ 3,765,900
Net unrealized holding gains (losses) on
available-for-sale securities.............................................................. (44,599)
Cumulative foreign currency translation adjustments........................................... (29,097)
-----------
Total equity capital.......................................................................... 5,694,435
-----------
Total liabilities and equity capital.......................................................... $71,794,790
===========
</TABLE>
-2-
<PAGE> 6
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi
Alan R. Griffith Directors
Gerald L. Hassell
________________________________________________________________________________
-3-
