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EXHIBIT 2
(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.
(Face of Security continued on next page)
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CUSIP NO. 38141G716
THE GOLDMAN SACHS GROUP, INC.
MEDIUM-TERM NOTES, SERIES B
------------------
8% Reset YES Note due 2002
(Yield-Enhanced Security Subject to Mandatory Exchange for
Common Stock of Brocade Communications Systems, Inc.)
------------------
The following terms apply to this Security. Capitalized terms
that are not defined the first time they are used in this Security shall have
the meanings indicated elsewhere in this Security.
FACE AMOUNT: $ 3,386,658.
PRINCIPAL AMOUNT: on the Stated Maturity Date, this Security will be mandatorily
exchanged (i) for shares of Stock having an aggregate value, based on the
Final Stock Price, equal to the Payment Amount or (ii) at the option of the
Company, for cash in an amount equal to the Payment Amount, subject, in
either case (i) or (ii), to adjustment as provided on the face of this
Security. The Company may exercise its option to pay the cash amount in lieu
of delivering Stock by giving the Holder of this Security notice of its
election at least one Business Day prior to the Final Determination Date. If
the Company fails to give such notice, it will deliver or cause to be
delivered Stock on the Stated Maturity Date, except as set forth in the
immediately following sentence. If a Market Disruption Event has occurred on
the Final Determination Date or the Stated Maturity Date, or on any day in
between such dates, the Company may exercise its option to pay the cash
amount in lieu of delivering Stock, whether or not the Company has given the
Holder of this Security the notice referred to in the second sentence under
this heading.
PAYMENT AMOUNT: if the First-Year Stock Price is greater than or equal to the
Initial Stock Price:
- Face Amount Outstanding on
the Final Determination Date
times (1 + First-Year
Capped Return)
times (1 + Second-Year
Capped Return)
if the First-Year Stock Price is
less than the Initial Stock
Price:
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- Face Amount Outstanding
on the Final
Determination Date
times (1 + Two-Year
Capped Return).
STOCK and STOCK ISSUER:
common stock of Brocade
Communications Systems,
Inc., subject to adjustment
as provided on the face of
this Security.
INITIAL STOCK PRICE: $ 223.10
for one share of Stock.
FIRST-YEAR STOCK PRICE: the
Closing Price of one share
of Stock on the First-Year
Determination Date, subject
to adjustment as provided
on the face of this
Security.
FINAL STOCK PRICE: the
Closing Price of one share
of Stock on the Final
Determination Date, subject
to adjustment as provided
on the face of this
Security.
CAP RATE: 62%.
FIRST-YEAR CAPPED RETURN: the
lesser of:
- (First-Year Stock Price
-- Initial Stock Price)
Initial Stock Price
- or the Cap Rate
SECOND-YEAR CAPPED RETURN: the
lesser of:
- (Final Stock Price
-- First-Year Stock Price)
First-Year Stock Price
- or the Cap Rate
TWO-YEAR CAPPED RETURN: the
lesser of:
- (Final Stock Price
-- Initial Stock Price)
Initial Stock Price
- or the Cap Rate
INTEREST RATE: 8% per annum on
the Face Amount then
Outstanding
INTEREST PAYMENT DATES: each
January 12, April 12, July 12
and October 12, commencing
January 12, 2001
CALCULATION AGENT: Goldman,
Sachs & Co.
DEFEASANCE: neither full
defeasance nor covenant
defeasance applies to this
Security.
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OTHER TERMS:
All terms used in this Security that are not defined in this
Security but are defined in the Indenture referred to on the reverse of this
Security shall have the meanings assigned to them in the Indenture. References
in this Security to numbered sections are to numbered sections on the face of
this Security, unless the context requires otherwise. Section headings on the
face of this Security are for convenience only and shall not affect the
construction of this Security.
"Authorized Denomination" means, with respect to this
Security, a Face Amount of $2,231. A holder of this Security who purchases this
Security on the Trade Date must purchase an aggregate Face Amount of at least
$98,164.
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which the NASDAQ National Market System (or, if different, the
principal securities market in which the Stock is then quoted or traded) is not
open for trading or on which banking institutions in The City of New York
generally are authorized or obligated by law, regulation or executive order to
close.
"Closing Price" means, with respect to any security on any
day, the closing sale price or last reported sale price, regular way, for the
security on a per-share or other unit basis (i) on the principal national
securities exchange on which such security is listed for trading on such day,
(ii) in the event such security is not listed on any national securities
exchange, on the Nasdaq National Market System on such day or (iii) in the event
such security is not quoted in the Nasdaq National Market System on such day, on
such other U.S. national market system that is the primary market for the
trading of such security; provided, however, that, in the event such security is
not listed or quoted as described in clause (i), (ii) or (iii) above, the
Closing Price with respect to such security will be the average, as determined
by the Calculation Agent, of the bid prices for such security obtained from as
many dealers in such security selected by the Calculation Agent (which may
include the Calculation Agent or any Affiliate of such agent or of the Company)
as will make such bid prices available to the Calculation Agent (provided that
the number of such dealers need not exceed three).
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"Default Amount" means, on any day, an amount, in U.S.
dollars, equal to the cost of having a Qualified Financial Institution expressly
assume, as of such day, the due and punctual payment of the principal of and any
interest on this Security, and the performance or observance of every covenant
hereof and of the Indenture on the part of the Company to be performed or
observed with respect to this Security (or to undertake other obligations
providing substantially equivalent economic value to the Holder of this Security
as the Company's obligations hereunder). Such cost will equal (i) the lowest
amount that a Qualified Financial Institution (selected as provided below) would
charge to effect such assumption (or undertaking) plus (ii) the reasonable
expenses (including reasonable attorneys' fees) incurred by the Holder of this
Security in preparing any documentation necessary for such assumption (or
undertaking). During the Default Quotation Period, each of the Holder of this
Security and the Company may request a Qualified Financial Institution to
provide a quotation of the amount it would charge to effect such assumption (or
undertaking) and notify the other in writing of such quotation. The amount
referred to in clause (i) of this paragraph will equal the lowest (or, if there
is only one, the only) quotation so obtained, and as to which notice is so
given, during the Default Quotation Period; provided, however, that, with
respect to any quotation, the party not obtaining such quotation may object, on
reasonable and significant grounds, to the effectuation of such assumption (or
undertaking) by the Qualified Financial Institution providing such quotation and
notify the other party in writing of such grounds within two Business Days after
the last day of the Default Quotation Period, in which case such quotation will
be disregarded in determining the Default Amount. The "Default Quotation Period"
will be the period beginning on the day the Default Amount first becomes due and
payable and ending on the third Business Day after such due day, unless no such
quotation is so obtained, or unless every such quotation so obtained is objected
to within five Business Days after such due day as provided above, in which case
the Default Quotation Period will continue until the third Business Day after
the first Business Day on which prompt notice is given of such a quotation as
provided above, unless such quotation is objected to as provided above within
five Business Days after such first Business Day, in which case the Default
Quotation Period will continue as provided in this sentence. Notwithstanding the
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foregoing, if the Default Quotation Period (and the subsequent two Business Day
objection period) has not ended prior to the Final Determination Date, then the
Default Amount will equal the Principal Amount.
"Determination Date" means either the First-Year Determination
Date or the Final Determination Date, as applicable.
"Distribution Property" means securities, cash and/or other
property distributed in any Reorganization Event in respect of the relevant
Reference Amount and, in the case of a Spin-Off Event, includes such Reference
Amount.
"Ex-Dividend Date" for any dividend or other distribution in
respect of the Stock shall mean the first day on which the Stock trades without
the right to receive such dividend or other distribution.
"Final Determination Date" means the fifth Business Day prior
to October 12, 2002; provided, however, that if a Market Disruption Event occurs
or is continuing on that fifth prior Business Day, the Final Determination Date
will be the next succeeding Business Day on which a Market Disruption Event does
not occur and is not continuing; provided, further, that in no event will the
Final Determination Date be later than October 12, 2002 or, if October 12, 2002
is not a Business Day, later than the first Business Day after October 12, 2002.
"First-Year Determination Date" means the fifth Business Day
prior to October 12, 2001; provided, however, that if a Market Disruption Event
occurs or is continuing on that fifth prior Business Day, the First-Year
Determination Date will be the next succeeding Business Day on which a Market
Disruption Event does not occur and is not continuing; provided, further, that
in no event will the First-Year Determination Date be later than October 12,
2001 or, if October 12, 2001 is not a Business Day, later than the first
Business Day after October 12, 2001.
"Market Disruption Event" means, with respect to the Stock,
(i) a suspension, absence or material limitation of trading of the Stock in the
primary market for the Stock for more than two hours of trading or during the
one-half
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hour period preceding the close of trading in such market, (ii) a suspension,
absence or material limitation of trading in option contracts related to the
Stock, if available, in the primary market for such contracts for more than two
hours of trading or during the one-half hour period preceding the close of
trading in such market or (iii) the Stock does not trade in what was the primary
market for the Stock, in each case (i), (ii) and (iii) as determined by the
Calculation Agent; provided, however, that no such event described in clause
(i), (ii) or (iii) will be a Market Disruption Event unless the Calculation
Agent also determines that such event materially interferes with the ability of
the Company or any of its Affiliates to unwind all or a material portion of any
hedge that any of them effects with respect to this Security. For purposes of
determining whether a Market Disruption Event has occurred, (a) a limitation on
the hours or numbers of days of trading in the relevant market will not
constitute a Market Disruption Event if it results from an announced change in
the regular business hours of such market, (b) a decision to permanently
discontinue trading in the relevant option contracts will not constitute a
Market Disruption Event, (c) a suspension or limitation of trading in option
contracts related to the Stock, if available, in the primary market for such
contracts, by reason of (1) a price change exceeding limits set by such market,
(2) an imbalance of orders relating to such contracts or (3) a disparity in bid
and ask quotes relating to such contracts, will, in each case (1), (2) and (3),
constitute a suspension or material limitation of trading in option contracts
related to the Stock and (d) an "absence of trading" in the primary market on
which option contracts related to the Stock are traded will not include any time
when such market is itself closed for trading under ordinary circumstances.
References to the Stock in this paragraph will also be deemed to refer to any
Distribution Property consisting of securities.
"Original Issue Date" means October 13, 2000.
"Qualified Financial Institution" means, at any time, a
financial institution organized under the laws of any jurisdiction in the United
States of America, Europe or Japan that at such time has outstanding debt
obligations with a stated maturity of one year or less from the date of issue
and rated A-1 or higher by Standard & Poor's Ratings Group (or any successor) or
P-1 or higher by Moody's
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Investors Service, Inc. (or any successor) or, in either case, such other
comparable rating, if any, then used by such rating agency.
"Reference Amount" means the amounts and types of property
deliverable on the Stated Maturity Date for each $2,231 of the Face Amount
exchanged pursuant to clause (i) of "Principal Amount" above. Initially, the
Reference Amount will be ten shares of Stock and shall be adjusted, as to the
amount(s) and/or type(s) of property comprising the same, by the Calculation
Agent as provided in sections 5 through 12.
"Stated Maturity Date" means October 12, 2002 or, if such day
is not a Business Day, the next succeeding Business Day; provided, however, that
if the fifth Business Day preceding October 12, 2002 is not the Final
Determination Date, the Stated Maturity Date will be the fifth Business Day
succeeding the Final Determination Date; provided, further, that in no event
will the Stated Maturity Date be later than the fifth Business Day after October
12, 2002 or, if October 12, 2002 is not a Business Day, later than the sixth
Business Day after October 12, 2002.
"Trade Date" means October 5, 2000.
-----------------------
1. Promise to Pay Principal and Interest
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
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co., as nominee for The Depository Trust Company, or registered assigns, as
principal, the Stock, cash and/or other property as provided above under
"Principal Amount" and elsewhere on the face of this security on the Stated
Maturity Date, subject to the other provisions of this Security, and to pay
interest on the Outstanding Face Amount, from the Original Issue Date or from
the most recent date to which interest has been paid or duly provided for, on
January 12, April 12, July 12 and October 12 (each an "Interest Payment Date")
in each year,
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commencing on January 12, 2001, and at the Maturity of the principal at the rate
of 8% per annum, until the principal of this Security is paid or made available
for payment. Any such instalment of interest that is overdue at any time shall
also bear interest, at the effective Federal Funds rate (to the extent that
payment of such interest shall be legally enforceable), from the dates such
amounts are due until they are paid or made available for payment.
Notwithstanding the foregoing, (i) if the Stated Maturity Date does not occur on
October 12, 2002, then the Interest Payment Date that would otherwise occur on
October 12, 2002 shall instead occur on the Stated Maturity Date and (ii)
interest on any overdue amount shall be payable on demand.
2. Payment of Interest
The interest so payable, and punctually paid or made available
for payment, on any Interest Payment Date will, as provided in the 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 Payment Date. If this Security is a Global Security, the
Regular Record Date for an Interest Payment Date shall be the first Business Day
before such Interest Payment Date. If this Security is not a Global Security,
the Regular Record date for an Interest Payment Date shall be the fifteenth
calendar day (whether or not a Business Day) next preceding such Interest
Payment Date. Any interest so payable, but not punctually paid or made available
for payment, on any Interest Payment Date will forthwith cease to be payable to
the Holder on such Regular Record Date and such Defaulted Interest 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 the Holder of this Security 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 the Indenture.
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3. No Fractional Shares
No fractional shares will be delivered in exchange for this
Security. If more than one Security of this series and of like tenor are to be
exchanged for Stock on the same date and by the same Holder, the number of full
shares that will be delivered upon exchange will be calculated on the basis of
the aggregate number of such Securities. If this Security is a Global Security
and the Holder requests that two or more portions of this Security be separately
exchanged for Stock on the Stated Maturity Date, the number of full shares that
will be delivered upon exchange will be calculated separately with respect to
each such requested portion, on the basis of the Face Amount thereof to be
exchanged. In lieu of any fractional share otherwise deliverable in exchange for
this Security, the Holder shall be entitled to receive an amount in cash equal
to the value of such fractional share based on the Closing Price of the relevant
security on the Final Determination Date. With respect to any security other
than a share of capital stock, a fractional share shall be deemed to mean any
denomination other than an authorized denomination for such security.
4. Principal Amount
The principal of this Security that becomes due and payable on
the Stated Maturity Date shall be the shares of Stock, together with any cash
payable in lieu of any fractional share and after giving effect to any
adjustment as provided on the face of this Security, that the Company is
obligated to deliver (or cause to be delivered) in exchange for this Security on
the Stated Maturity Date, unless the Company elects to exchange this Security
for cash as provided under "Principal Amount", in which case such principal
shall be the cash amount that must be paid in exchange for this Security on the
Stated Maturity Date. The principal of this Security that becomes due and
payable upon acceleration of the Maturity hereof after an Event of Default has
occurred pursuant to the Indenture shall be the Default Amount. When the cash,
Stock or other property referred to above in this section 4 has been paid or
delivered as provided herein (or such payment or delivery has been made
available), the principal of this Security (or the portion hereof being
exchanged, as the case may be) shall be deemed to have been paid in full,
whether or not this Security shall have been surrendered for payment or
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cancellation. References to the payment of the principal of this Security on any
day shall be deemed to mean the payment or delivery of cash, Stock or other
property that is payable or deliverable on such day as provided in this
Security. Notwithstanding the foregoing, solely for the purpose of determining
whether any consent, waiver, notice or other action to be given or taken by
Holders of Outstanding Securities pursuant to the Indenture has been given or
taken by Holders of Outstanding Securities in the requisite aggregate principal
amount, the principal amount of this Security on any day will be deemed to equal
the Face Amount then Outstanding. In addition, the principal amount hereof on
which interest accrues on any day shall be the Face Amount then Outstanding.
This Security shall cease to be Outstanding as provided in the definition of
such term in the Indenture or when the principal of this Security shall be
deemed to have been paid in full as provided above and all interest payable on
this Security has been paid (or such payment of interest has been made
available). In addition, if the Outstanding Face Amount on the Stated Maturity
Date is lower than the Face Amount deemed to be Outstanding on the Final
Determination Date, then the amount of property to be delivered or paid on the
Stated Maturity Date will be proportionately reduced.
5. Antidilution Adjustment.
The Calculation Agent shall adjust the Reference Amount as
provided in this Security in respect of each event for which adjustment is
required under sections 6 through 11 (and not in respect of any other event).
(If more than one such event occurs, the Calculation Agent shall adjust the
Reference Amount as so provided for each such event, sequentially, in the order
in which such events occur, and on a cumulative basis.)
Notwithstanding any provision of this Security, if an event
for which adjustment is required under sections 6 through 11 occurs, the
Calculation Agent may make the adjustment and any related determinations and
calculations in a manner that differs from that specified in this Security as
necessary to achieve an equitable result. Upon written request by the Holder to
the Calculation Agent, the Calculation Agent will provide the Holder with such
information about adjustments made pursuant to this Security as such agent
determines is appropriate.
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(a) On the First-Year Determination Date. If there occurs an
event requiring adjustment under sections 6 through 11 on the First-Year
Determination Date, the Calculation Agent will make the adjustment, no later
than the First-Year Determination Date, by: (i) adjusting the Reference Amount
in respect of the event for which adjustment is required under sections 6
through 11, (ii) determining the First-Year Stock Price based on the adjusted
Reference Amount and (iii) calculating the First-Year Capped Return.
(b) On the Final Determination Date. If there occurs an event
requiring adjustment under sections 6 through 11 on the Final Determination
Date, the Calculation Agent will make the adjustment, no later than the Final
Determination Date, by: (i) adjusting the Reference Amount in respect of the
event for which adjustment is required under sections 6 through 11, (ii)
determining the Final Stock Price based on the adjusted Reference Amount, (iii)
calculating the Second-Year Capped Return or Two-Year Capped Return, as
applicable, and the Payment Amount, (iv) dividing the Payment Amount by the
Closing Price of one share of Stock on the Final Determination Date with the
resulting number being the number of shares of Stock deliverable in exchange for
this Security on the Stated Maturity Date, subject to the other provisions
hereof (or, if the Reference Amount is adjusted pursuant to section 11 of this
Security so as to consist of amounts of more than one type of property, dividing
the Payment Amount by the sum of the respective Closing Prices or other values
for all such amounts of property comprising the Reference Amount on the Final
Determination Date, determined as provided in such section 11, with the
resulting number being the number of Reference Amounts deliverable in exchange
for this Security on the Stated Maturity Date, subject to the other provisions
hereof) and (v) if the Company elects to deliver cash in exchange for this
Security on the Stated Maturity Date as provided under "Principal Amount" above,
then the Company will deliver cash in the Payment Amount as calculated in clause
(iii) above.
6. Stock Splits.
If the Stock is subject to a stock split, then at the opening
of business on the first day on which the Stock trades without the right to
receive the stock split, the
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Calculation Agent will adjust the Reference Amount to equal the sum of the
Reference Amount in effect immediately prior to such adjustment plus the product
of (i) the number of new shares issued in the stock split with respect to one
share of the Stock and (ii) the Reference Amount in effect immediately prior to
such adjustment. The Reference Amount will not be adjusted on a particular
Determination Date in respect of such event, however, unless such first day
occurs either (i) after the Trade Date and on or before the First-Year
Determination Date, in the case of the First-Year Determination Date, or (ii)
after the First-Year Determination Date and on or before the Final Determination
Date, in the case of the Final Determination Date.
7. Reverse Stock Splits.
If the Stock is subject to a reverse stock split, then once
the reverse stock split becomes effective, the Calculation Agent will adjust the
Reference Amount to equal the product of the Reference Amount in effect
immediately prior to such adjustment and the quotient of (i) the number of
shares of outstanding Stock resulting from the reverse stock split divided by
(ii) the number of shares of Stock outstanding immediately before the reverse
stock split becomes effective. The Reference Amount will not be adjusted on a
particular Determination Date in respect of such event, however, unless the
reverse stock split becomes effective either (i) after the Trade Date and on or
before the First-Year Determination Date, in the case of the First-Year
Determination Date, or (ii) after the First-Year Determination Date and on or
before the Final Determination Date, in the case of the Final Determination
Date.
8. Stock Dividends.
If the Stock is subject to a stock dividend that is given
ratably to all holders of the Stock, then at the opening of business on the
Ex-Dividend Date, the Calculation Agent will adjust the Reference Amount to
equal the Reference Amount in effect immediately prior to such adjustment plus
the product of (i) the number of shares issued in the Stock dividend with
respect to one share of the Stock and (ii) the Reference Amount in effect
immediately prior to such adjustment. The Reference Amount will not be adjusted
on a particular Determination Date in respect of such event, however, unless
such Ex-Dividend Date
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occurs either (i) after the Trade Date and on or before the First-Year
Determination Date, in the case of the First-Year Determination Date, or (ii)
after the First-Year Determination Date and on or before the Final Determination
Date, in the case of the Final Determination Date.
9. Other Dividends and Distributions.
There will be no adjustments to the Reference Amount to
reflect dividends or other distributions paid with respect to the Stock other
than (i) stock dividends as provided in section 8, (ii) dividends or other
distributions constituting Spin-Off Events as provided in section 11, (iii)
issuances of transferable rights or warrants as provided in section 10 and (iv)
Extraordinary Dividends as provided in this section 9. A dividend or other
distribution with respect to the Stock will be deemed to be an "Extraordinary
Dividend" if the per share value of such dividend or other distribution exceeds
the per share value of the immediately preceding dividend or distribution with
respect to the Stock, if any, that is not an Extraordinary Dividend by an amount
equal to at least 10% of the Closing Price of the Stock on the Business Day
immediately preceding the Ex-Dividend Date for such Extraordinary Dividend. If
an Extraordinary Dividend occurs with respect to the Stock, the Calculation
Agent will adjust the Reference Amount to equal the product of (a) the Reference
Amount in effect immediately prior to such adjustment and (b) a fraction, the
numerator of which is the Closing Price of the Stock on the Business Day
immediately preceding the Ex-Dividend Date and the denominator of which is the
amount by which such Closing Price exceeds the Extraordinary Dividend Amount.
The "Extraordinary Dividend Amount" with respect to an Extraordinary Dividend
for the Stock will equal (1) in the case of cash dividends or other
distributions that constitute regular quarterly dividends, the amount per share
of such Extraordinary Dividend minus the amount per share of the immediately
preceding dividend or distribution with respect to the Stock, if any, that is
not an Extraordinary Dividend or (2) in the case of cash dividends or other
distributions that do not constitute regular quarterly dividends, the amount per
share of such Extraordinary Dividend. To the extent an Extraordinary Dividend is
not paid in cash, the value of the non-cash component will be determined by the
Calculation Agent. A distribution on the Stock that constitutes a stock
dividend, an issuance of
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transferable rights or warrants or a Spin-Off Event and also constitutes an
Extraordinary Dividend will result only in an adjustment to the Reference Amount
pursuant to section 8, 10 or 11, as applicable. The Reference Amount will not be
adjusted pursuant to this section 9 on a particular Determination Date, however,
unless the Ex-Dividend Date for the Extraordinary Dividend occurs either (i)
after the Trade Date and on or before the First-Year Determination Date, in the
case of the First-Year Determination Date, or (ii) after the First-Year
Determination Date and on or before the Final Determination Date, in the case of
the Final Determination Date.
10. Transferable Rights and Warrants.
If the Stock Issuer issues transferable rights or warrants to
all holders of the Stock to subscribe for or purchase the Stock at an exercise
price per share less than the Closing Price of the Stock on the Business Day
immediately before the Ex-Dividend Date for such issuance, then the Calculation
Agent will adjust the Reference Amount by multiplying the Reference Amount in
effect immediately prior to such adjustment by a fraction, the numerator of
which is the number of shares of Stock outstanding at the close of business on
the day before such Ex-Dividend Date plus the number of additional shares of
Stock offered for subscription or purchase under such transferable rights or
warrants, and the denominator of which is the number of shares of Stock
outstanding at the close of business on the day before such Ex-Dividend Date
plus the number of additional shares of Stock that the aggregate offering price
of the total number of shares of Stock so offered for subscription or purchase
would purchase at the Closing Price of the Stock on the Business Day immediately
before such Ex-Dividend Date, with such number of additional shares being
determined by multiplying the total number of shares so offered by the exercise
price of such transferable rights or warrants and dividing the resulting product
by the Closing Price of the Stock on the Business Day immediately before such
Ex-Dividend Date. The Reference Amount will not be adjusted pursuant to this
section 10 on a particular Determination Date, however, unless such Ex-Dividend
Date occurs either (i) after the Trade Date and on or before the First-Year
Determination Date, in the case of the First-Year Determination Date, or (ii)
after the First-Year
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<PAGE> 16
Determination Date and on or before the Final Determination Date, in the case of
the Final Determination Date.
11. Reorganization Events.
If (i) any reclassification or other change of the Stock
occurs, (ii) the Stock Issuer has been subject to a merger, combination or
consolidation and is not the surviving entity or it does survive but all the
shares of Stock are exchanged for or converted into Distribution Property, (iii)
any statutory share exchange involving the outstanding Stock and the securities
of another entity occurs (other than in a transaction described in clause (ii)
above), (iv) the Stock Issuer sells or otherwise transfers its property and
assets as an entirety or substantially as an entirety to another entity, (v) the
Stock Issuer issues to all holders of Stock equity securities of an issuer other
than the Stock Issuer (other than in a transaction described in clause (i),
(ii), (iii) or (iv) above) (a "Spin-Off Event"), (vi) an entity other than the
Stock Issuer completes a tender or exchange offer for all the outstanding Stock
or (vii) the Stock Issuer is liquidated, dissolved or wound up or is subject to
a proceeding under any applicable bankruptcy, insolvency or other similar law
(any such event in clauses (i) through (vii), a "Reorganization Event"), then
the Calculation Agent will adjust the Reference Amount so that the Reference
Amount consists of the respective amounts of each type of Distribution Property
deemed, for the purposes of this Security, to be distributed in such
Reorganization Event in respect of the Reference Amount as in effect immediately
prior to such adjustment, taken together.
If the Calculation Agent determines that the Distribution
Property so distributed consists of more than one type of property, the
Calculation Agent will determine the respective amounts of such types that will
comprise the adjusted Reference Amount so that the value of each such amount
bears the same relationship to the total value of all such amounts as the value
of the corresponding component type of Distribution Property so distributed
bears to the total value of all Distribution Property so distributed. The
Calculation Agent will determine the value of each component type of
Distribution Property, using the Closing Price for any such type consisting of
securities and such other method as it considers reasonable for any other type.
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If a holder of the Stock may elect to receive different types or combinations of
types of Distribution Property in the Reorganization Event, the Distribution
Property will be deemed to include the types and amounts thereof distributed to
a holder that makes no election. If a Reorganization Event occurs and as a
result the Reference Amount is adjusted to consist of Distribution Property, the
Calculation Agent will make further adjustments for subsequent events that
affect such Distribution Property or any component type thereof, to the same
extent that it would make adjustments if the Stock were outstanding and were
affected by the same kinds of events. The First-Year Stock Price or Final Stock
Price used to calculate the First-Year Capped Return, Second-Year Capped Return
or Two-Year Capped Return, as applicable, will be the total value, as determined
by the Calculation Agent on the relevant Determination Date, of all components
of the Reference Amount as in effect on the relevant Determination Date, with
each component having been adjusted on a sequential and cumulative basis for all
events requiring adjustment on or before the relevant Determination Date. If a
Reorganization Event occurs and the Reference Amount consists of property other
than Stock, then the property to be delivered in respect of this Security
pursuant to clause (i) of "Principal Amount" above will be determined by
dividing the Payment Amount by the total value of the adjusted Reference Amount,
as in effect on the Final Determination Date, with the resulting number being
the number of such adjusted Reference Amounts to be delivered in respect to this
Security. The Calculation Agent will determine the value of each component of
the adjusted Reference Amount as provided in this paragraph.
If at any time another Person becomes the successor to the
Stock Issuer, as determined by the Calculation Agent, such successor Person
shall thereupon be deemed to be the Stock Issuer for all purposes of this
Security. If at any time the Reference Amount consists of Distribution Property,
as determined by the Calculation Agent, then all references in this Security to
the "Stock" shall thereupon be deemed to mean such Distribution Property and all
references in this Security to a "share of Stock" shall thereupon be deemed to
mean a comparable unit of each type of property comprising such Distribution
Property, as determined by the Calculation Agent.
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Notwithstanding the foregoing, however, the Calculation Agent
will not make any adjustment for a Reorganization Event on a particular
Determination Date unless the event becomes effective -- or, if the event is a
Spin-Off Event, unless the Ex-Dividend Date for the Spin-Off Event occurs --
either (i) after the Trade Date and on or before the First-Year Determination
Date, in the case of the First-Year Determination Date, or (ii) after the
First-Year Determination Date and on or before the Final Determination Date, in
the case of the Final Determination Date.
12. Minimum Adjustments.
Notwithstanding the foregoing, no adjustment will be required
in respect of any event specified in sections 6 through 11 unless such
adjustment would result in a change of at least 0.1% in the Reference Amount.
The Reference Amount resulting from any adjustment shall be rounded up or down,
as appropriate, to the nearest ten-thousandth, with five hundred-thousandths
being rounded upward -- e.g., 0.12344 will be rounded down to 0.1234 and 0.12345
will be rounded up to 0.1235.
13. Role of Calculation Agent.
The Calculation Agent will be solely responsible for all
determinations and calculations regarding the Default Amount; whether a Market
Disruption Event has occurred and whether, and if so the date to which, the
First-Year Determination Date, Final Determination Date and/or Stated Maturity
Date are to be postponed; adjustment of the Reference Amount, including whether
any event has occurred for which adjustment is required and as to the amounts,
types and values of property comprising any Distribution Property and the
Reference Amount; the First-Year Stock Price, Final Stock Price, First-Year
Capped Return and Second-Year Capped Return or Two-Year Capped Return, as
applicable; the Closing Price or other value of the Stock or any other property;
as to the Payment Amount and the amounts and types of property deliverable or
payable in exchange for this Security on the Stated Maturity Date; and all such
other matters as may be specified elsewhere herein as matters to be determined
by the Calculation Agent. The Calculation Agent shall make all such
determinations and calculations in its sole discretion, and absent manifest
error all determinations and calculations made by the
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<PAGE> 19
Calculation Agent shall be final and binding on the Company, the Holder and all
other Persons having an interest in this Security, without liability on the part
of the Calculation Agent.
The Company shall take such action as shall be necessary to
ensure that there is at all relevant times a financial institution serving as
the Calculation Agent hereunder. The Company may, in its sole discretion at any
time and from time to time, upon written notice to the Trustee, but without
notice to the Holder of this Security, terminate the appointment of any Person
serving as the Calculation Agent and appoint another Person (including any
Affiliate of the Company) to serve as such agent. Insofar as this Security
provides for the Calculation Agent to obtain prices or other information from
any institution or other source, the Calculation Agent may do so from any source
or sources of the kind contemplated or otherwise permitted hereby
notwithstanding that any one or more of such sources are such agent, Affiliates
of such agent or Affiliates of the Company.
If a Market Disruption Event occurs or is continuing on a Determination
Date, the Calculation Agent will nevertheless determine the Closing Price of the
Stock on such Determination Date. If the Calculation Agent determines that the
Closing Price is not available on such Determination Date, either because of a
Market Disruption Event or for any other reason, the Calculation Agent will
determine the Closing Price based on its assessment, made in its sole
discretion, of the market value of the Stock on such Determination Date and will
use the Closing Price, as so determined, in determining the First-Year Capped
Return, Second-Year Capped Return, Two-Year Capped Return and the amount of
Stock to be delivered on the Stated Maturity Date, as the case may be.
14. Payment and Delivery.
Payment of any amount payable on this Security in cash will be
made 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. Payment or
delivery of any cash, Stock or other property payable or deliverable on this
Security will be made to an account designated by the Holder (in writing to the
Company and the
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<PAGE> 20
Trustee on or before the Final Determination Date) and acceptable to the Company
or, if no such account is designated and acceptable as aforesaid, at the office
or agency of the Company maintained for that purpose in The City of New York;
provided, however, that, at the option of the Company, payment of any interest
may be made by check mailed to the address of the Holder as such address shall
appear in the Security Register; and provided, further, that payment or delivery
at Maturity shall be made only upon surrender of this Security at such office or
agency (unless the Company waives surrender). Notwithstanding the foregoing, if
this Security is a Global Security, any payment or delivery may be made pursuant
to the Applicable Procedures of the Depositary as permitted in said Indenture.
15. Holidays.
Notwithstanding any provision of this Security or of the
Indenture, if any delivery or payment of principal or interest would otherwise
be due on this Security on a day (the "Specified Day") that is not a Business
Day, such delivery or payment may be made (or such principal or interest may be
made available for delivery or payment) on the next succeeding Business Day with
the same force and effect as if such delivery or payment were made on the
Specified Day. The provisions of this section shall apply to this Security in
lieu of the provisions of Section 113 of the Indenture.
16. Reverse of this Security.
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.
17. Certificate of Authentication.
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.
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IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated: October __, 2000
THE GOLDMAN SACHS GROUP, INC.
By____________________________
Name:
Title:
Dated: October __, 2000
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____________________________
Authorized Signatory
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(Reverse of Security)
Reverse
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, the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. Insofar as
the provisions of the Indenture may conflict with the provisions set forth on
the face of this Security, the latter shall control for purposes of this
Security.
This Security is one of the series designated on the face
hereof, limited to an aggregate initial offering price not to exceed
$25,000,000,000 (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 designated on
the face hereof.
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
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<PAGE> 23
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
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 any
interest on this Security as herein provided.
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
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<PAGE> 24
principal of 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. Thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate Face Amount, will be issued to the designated transferee or
transferees.
This Security, and any other Securities of this series and of
like tenor, are issuable only in registered form without coupons in Authorized
Denominations. 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 AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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