EX-10.2  RESTRICTED PARTNER COMPENSATION PLAN



 




Exhibit 10.2





The Goldman Sachs



Restricted Partner Compensation Plan



     
Section 1. Purposes.
The purpose of the Goldman Sachs Restricted Partner Compensation
Plan (the “Plan”) is to attract, retain and
motivate selected employees of The Goldman Sachs Group, Inc.
(“GS Inc.”) and its subsidiaries and affiliates
(together with GS Inc., and their and its successors, the
“Firm”) who are executive officers of
GS Inc. or members of the Firm’s Management Committee
(and any successor or successors thereto) in order to promote
the Firm’s long-term growth and profitability. It is also
intended that all Bonuses (as defined in Section 5(a))
payable under the Plan be considered “performance-based
compensation” within the meaning of
Section 162(m)(4)(C) of the Internal Revenue Code of 1986,
as amended (the “Code”), and the regulations
thereunder, and the Plan shall be interpreted accordingly.



     
Section 2. Administration.


     
(a) Subject to
Section 2(d), the Plan shall be administered by a committee
(the “Committee”) appointed by the Board of
Directors of GS Inc. (the “Board”), whose
members shall serve at the pleasure of the Board. The Committee
at all times shall be composed of at least two directors of
GS Inc., each of whom is an “outside director”
within the meaning of Section 162(m) of the Code and
Treasury Regulation Section 1.162-27(e)(3) and a
“non-employee director” within the meaning of
Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended. Unless otherwise determined by the Board, the
Committee shall be the Compensation Committee of the Board.



     
(b) The
Committee shall have complete control over the administration of
the Plan, and shall have the authority in its sole and absolute
discretion to: (i) exercise all of the powers granted to it
under the Plan; (ii) construe, interpret and implement the
Plan and each Contract Period Schedule (as defined in
Section 4(a)); (iii) prescribe, amend and rescind
rules and regulations relating to the Plan, including rules and
regulations governing its own operations; (iv) make all
determinations necessary or advisable in administering the Plan
(including, without limitation, calculating the size of the
Bonus payable to each Participant (as defined in
Section 4(a))); (v) correct any defect, supply any
omission and reconcile any inconsistency in the Plan and any
Contract Period Schedule; and (vi) amend the Plan and any
Contract Period Schedule to reflect changes in or
interpretations of applicable law, rules or regulations.



     
(c) The
determination of the Committee on all matters relating to the
Plan and any amounts payable thereunder shall be final, binding
and conclusive on all parties.



     
(d) Notwithstanding
anything to the contrary contained herein, the Committee may
allocate among its members and may delegate some or all of its
authority or administrative responsibility to such individual or
individuals who are not members of the Committee as it shall
deem necessary or appropriate; provided, however, the
Committee may not delegate any of its authority or
administrative responsibility hereunder (and no such attempted
delegation shall be effective) if such delegation would cause
any Bonus payable under the Plan not to be considered
performance-based compensation within the meaning of
Section 162(m)(4)(C) of the Code and the regulations
thereunder, and any such attempted delegation shall be void
ab initio.



     
(e) No member
of the Board or the Committee or any employee of the Firm (each
such person a “Covered Person”) shall have any
liability to any person (including, without limitation, any
Participant) for any action taken or omitted to be taken or any
determination made in good faith with respect to the Plan or any
Bonus. Each Covered Person shall be indemnified and held
harmless by GS Inc. against and from any loss, cost,
liability or expense (including attorneys’ fees) that may
be imposed upon or incurred by such Covered Person in connection
with or resulting from any action, suit or proceeding to which
such Covered Person may be a party or in



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which such Covered Person may be involved by
reason of any action taken or omitted to be taken under the Plan
or in connection with any Contract Period Schedule and against
and from any and all amounts paid by such Covered Person, with
GS Inc.’s approval, in settlement thereof, or paid by
such Covered Person in satisfaction of any judgment in any such
action, suit or proceeding against such Covered Person, provided
that GS Inc. shall have the right, at its own expense, to
assume and defend any such action, suit or proceeding and, once
GS Inc. gives notice of its intent to assume the defense,
GS Inc. shall have sole control over such defense with
counsel of GS Inc.’s choice. The foregoing right of
indemnification shall not be available to a Covered Person to
the extent that a court of competent jurisdiction in a final
judgment or other final adjudication, in either case, not
subject to further appeal, determines that the acts or omissions
of such Covered Person giving rise to the indemnification claim
resulted from such Covered Person’s bad faith, fraud or
willful criminal act or omission. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which Covered Persons may be entitled under
GS Inc.’s Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws, as a matter of
law, or otherwise, or any other power that GS Inc. may have
to indemnify such persons or hold them harmless.




     
Section 3. Contract
Period. The Plan shall operate for
successive periods (each a “Contract Period”).
The first Contract Period shall commence on November 30,
2002 and shall terminate on November 28, 2003. Thereafter,
each Contract Period shall be one full fiscal year and/or
portions of fiscal years to the extent consistent with Treasury
Regulation Section 1.162-27(e)(2), as determined by
the Committee.



     
Section 4. Participation;
Contract Period Schedule.


     
(a) Prior to
the earlier of (i) the last day of GS Inc.’s
first fiscal quarter in a Contract Period or (ii) the 90th
day after the beginning of the Contract Period, or otherwise in
a manner not inconsistent with Treasury
Regulation Section 1.162-27(e)(2) (the
“Establishment Date”), the Committee shall
designate those individuals who shall participate in the Plan
for each Contract Period (the “Participants”).
The names of the Participants shall be set forth on a schedule
(the “Contract Period Schedule”). No individual
who is a Participant shall, at the same time, be a participant
in The Goldman Sachs Partner Compensation Plan.



     
(b) Unless
otherwise provided in the Contract Period Schedule and except as
provided below, the Committee shall have the authority at any
time (i) during the Contract Period to remove Participants
from the Plan for that Contract Period and (ii) prior to
the Establishment Date to add Participants to the Plan for a
particular Contract Period. The Committee shall amend the
Contract Period Schedule to reflect an individual’s
addition to, or removal from, the Plan.



     
Section 5. Bonus
Amounts.


     
(a) Each
Participant shall be paid a bonus amount equal to 1% of the
Firm’s “Pre-Tax Pre-PCP Earnings” (as
defined in Section 5(c)) with respect to each Contract
Period, provided, however, in no event shall such bonus
amount for any Participant in any Contract Period exceed
$35 million. Notwithstanding anything to the contrary in
this Plan, the Committee may, in its sole discretion, reduce the
bonus amount for any Participant for a particular Contract
Period at any time prior to the payment of bonuses to
Participants pursuant to Section 6 (a Participant’s
bonus amount for each Contract Period, as so reduced, the
“Bonus”).



     
(b) If a
Participant’s employment with the Firm terminates for any
reason before the end of a Contract Period, unless otherwise
provided in the Contract Period Schedule, the Committee shall
have the discretion to determine whether (i) such
Participant shall be entitled to any Bonus at all,
(ii) such Participant’s Bonus shall be reduced on a
pro-rata basis to reflect the portion of such Contract
Period the Participant was employed by the Firm or (iii) to
make such other arrangements as the Committee deems appropriate
in connection with the termination of such Participant’s
employment.



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(c) For
purposes of this Section 5, “Pre-Tax Pre-PCP
Earnings” shall mean the Firm’s operating income
before taxes as reported in its audited consolidated financial
statements for the relevant fiscal year, adjusted to eliminate,
with respect to such fiscal year: (i) amounts expensed
(A) under each of the Goldman Sachs Partner Compensation
Plan and this Plan (and any successor or predecessor plan) or
(B) as a result of the amortization of equity-based awards
granted to any individual at any time while a participant in the
Goldman Sachs Partner Compensation Plan or this Plan (or any
successor or predecessor plan), if and to the extent such
equity-based awards were determined by reference to a bonus
under either such plan; (ii) amounts expensed as a result
of the amortization of grants of equity-based awards granted
(A) in connection with GS Inc.’s initial public
offering or (B) in connection with any acquisition;
(iii) losses related to the impairment of goodwill and
other intangible assets; (iv) restructuring expenses;
(v) gains or losses on disposal of assets or segments of
the previously separate companies of a business combination
within two years of the date of such combination;
(vi) gains or losses on the extinguishment of debt;
(vii) gains on the restructuring of debt or other
liabilities; (viii) gains or losses that are the direct
result of a major casualty or natural disaster; (ix) losses
resulting from any newly-enacted law, regulation or judicial
order; and (x) other expenses, losses, income or gains that
are separately disclosed and are unusual in nature or infrequent
in occurrence. The above adjustments to Pre-Tax Pre-PCP Earnings
shall be computed in accordance with GAAP. Following the
completion of each Contract Period, the Committee shall certify
in writing the Firm’s Pre-Tax Pre-PCP Earnings for such
Contract Period.



     
Section 6. Payment of Bonus
Amount; Voluntary Deferral. 
Unless otherwise provided in the Contract Period Schedule, each
Participant’s Bonus shall be payable by such
Participant’s Participating Employer (as defined in
Section 7(k)), or in the case of a Participant employed by
more than one Participating Employer, by each such employer as
determined by the Committee. The Bonus shall be payable in the
discretion of the Committee in cash and/or an equity-based award
of equivalent value (provided that in determining the number of
GS Inc. restricted stock units, restricted shares of
GS Inc. common stock or unrestricted shares of GS Inc.
common stock that is equivalent to a dollar amount, that dollar
amount shall be divided by the average of the closing prices of
GS Inc. common stock over the last 10 trading days in the
applicable fiscal year (with fractional shares being rounded to
the nearest whole share). The cash portion of the Bonus shall be
paid at such time as bonuses are generally paid by the
Participating Employer(s) for the relevant fiscal year in
U.S. dollars or, if the Participant is located outside the
United States, in U.S. dollars or local currency (as
determined by the Committee) based upon such conversion rates as
the Committee determines are appropriate (and the payments made
under this Plan may, at the Committee’s discretion, be
subject to tax equalization or similar policies). Subject to
approval by the Committee and to any requirements imposed by the
Committee in connection with such approval, each Participant may
be entitled to defer receipt, under the terms and conditions of
any applicable deferred compensation plan of the Firm, of part
or all of any payments otherwise due under this Plan. Any
equity-based award shall be subject to such terms and conditions
(including vesting requirements) as the Committee and the
administrative committee of the plan under which such
equity-based Award is granted may determine.



     
Section 7. General
Provisions.


     
(a) Amendment, Termination,
etc. Unless otherwise provided in
the Contract Period Schedule, (i) the Board reserves the
right at any time and from time to time to modify, alter, amend,
suspend, discontinue or terminate the Plan and any Contract
Period Schedule in any respect whatsoever, including in any
manner that adversely affects the rights of Participants, and
(ii) the Committee may amend the Contract Period Schedule
in any manner it determines. No Participant shall have any
rights to payment of any amounts under this Plan unless and
until the Committee determines the amount of such
Participant’s Bonus, that such Bonus shall be paid and the
method and timing of its payment. If and to the extent the Board
determines that the Bonuses under the Plan should constitute
performance-based compensation within the meaning



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of Section 162(m)(4)(C) of the Code, no
amendment that would require stockholder approval in order for
Bonuses paid pursuant to the Plan to constitute
performance-based compensation within the meaning of
Section 162(m)(4)(C) of the Code shall be effective without
the approval of the stockholders of GS Inc. as required by
Section 162(m) of the Code and the regulations thereunder.




     
(b) Nonassignability.
No rights of any Participant (or of any beneficiary pursuant to
this Section 7(b)) under the Plan may be sold, exchanged,
transferred, assigned, pledged, hypothecated or otherwise
disposed of (including through the use of any cash-settled
instrument), either voluntarily or involuntarily by operation of
law, other than by will or by the laws of descent and
distribution. Any sale, exchange, transfer, assignment, pledge,
hypothecation or other disposition in violation of the
provisions of this Section 7(b) shall be void. In the event
of a Participant’s death, any amounts payable under the
Plan shall be paid in accordance with the Plan and the Contract
Period Schedule to a Participant’s estate. A
Participant’s estate shall have no rights under the Plan or
any Contract Period Schedule other than the right, subject to
the immediately preceding sentence, to receive such amounts, if
any, as may be payable under this Section 7(b), and all of
the terms of this Plan and the Contract Period Schedule shall be
binding upon any such Participant’s estate.



     
(c) Plan Creates No Employment
Rights. Nothing in the Plan or any
Contract Period Schedule shall confer upon any Participant the
right to continue in the employ of the Firm for the Contract
Period or thereafter or affect any right which the Firm may have
to terminate such employment.



     
(d) Arbitration.
Any dispute, controversy or claim
between the Firm and any Participant arising out of or relating
to or concerning the provisions of the Plan or any Contract
Period Schedule shall be finally settled by arbitration in New
York City before, and in accordance with, the rules then
obtaining of the New York Stock Exchange, Inc.
(“NYSE”) or, if the NYSE declines to arbitrate
the matter in New York City, the American Arbitration
Association (the “AAA”) in accordance with the
commercial arbitration rules of the AAA. Prior to arbitration,
all disputes, controversies or claims maintained by any
Participant must first be submitted to the Committee in
accordance with claim procedures determined by the Committee in
its sole discretion. This Section is subject to the provisions
of Section 7(e).



     
(e) Choice of Forum.


     
(1) The Firm and each Participant, as a
condition to such Participant’s participation in the Plan,
hereby irrevocably submit to the exclusive jurisdiction of any
state or federal court located in the City of New York over any
suit, action or proceeding arising out of or relating to or
concerning the Plan or any Contract Period Schedule that is not
otherwise arbitrated or resolved according to the provisions of
Section 7(d). This includes any suit, action or
proceeding to compel arbitration or to enforce an arbitration
award. The Firm and each Participant, as a condition to such
Participant’s participation in the Plan, acknowledge that
the forum designated by this Section 7(e) has a reasonable
relation to the Plan, the Contract Period Schedule and to the
relationship between such Participant and the Firm.
Notwithstanding the foregoing, nothing herein shall preclude the
Firm from bringing any action or proceeding in any other court
for the purpose of enforcing the provisions of
Sections 7(d) and 7(e).



     
(2) The agreement by the Firm and each
Participant as to forum is independent of the law that may be
applied in the action, and the Firm and each Participant, as a
condition to such Participant’s participation in the Plan
(i) agree to such forum even if the forum may under
applicable law choose to apply non-forum law, (ii) hereby
waive, to the fullest extent permitted by applicable law, any
objection which the Firm or such Participant now or hereafter
may have to personal jurisdiction or to the laying of venue of
any such suit, action or proceeding in any court referred to in
Section 7(e)(1), (iii) undertake not to commence any
action arising out of or relating to or concerning this Plan or
any Contract Period Schedule in any forum other than the



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forum described in this Section 7(e) and
(iv) agree that, to the fullest extent permitted by
applicable law, a final and non-appealable judgment in any such
suit, action or proceeding in any such court shall be conclusive
and binding upon the Firm and each Participant.




     
(3) Each Participant, as a condition to such
Participant’s participation in the Plan, hereby irrevocably
appoints the General Counsel of GS Inc. as such
Participant’s agent for service of process in connection
with any action, suit or proceeding arising out of or relating
to or concerning the Plan or any Contract Period Schedule which
is not arbitrated pursuant to the provisions of
Section 7(d), who shall promptly advise such Participant of
any such service of process.



     
(4) Each Participant, as a condition to such
Participant’s participation in the Plan, agrees to keep
confidential the existence of, and any information concerning, a
dispute, controversy or claim described in Sections 7(d) or
7(e), except that a Participant may disclose information
concerning such dispute, controversy or claim to the arbitrator
or court that is considering such dispute, controversy or claim
or to such Participant’s legal counsel (provided that such
counsel agrees not to disclose any such information other than
as necessary to the prosecution or defense of the dispute,
controversy or claim).



     
(5) Each Participant recognizes and agrees
that prior to being selected by the Committee to participate in
the Plan such Participant has no rights hereunder. Accordingly,
in consideration of a Participant’s selection to
participate in the Plan, each Participant expressly waives any
right to contest the amount of any Bonus payable hereunder, the
terms of the Plan or any Contract Period Schedule, any
determination, action or omission hereunder by the Committee,
GS Inc. or the Board, or any amendment to the Plan or
Contract Period Schedule. By accepting the payment of any Bonus,
each Participant agrees to be bound by the terms of this Plan
and any Contract Period Schedule.



     
(f) Governing Law. All rights and
obligations under the Plan and any Contract Period Schedule
shall be governed by and construed in accordance with the laws
of the State of New York, without regard to principles of
conflict of Laws.


     
(g) Tax
Withholding. In connection with
any payments to a Participant or other event under the Plan that
gives rise to a federal, state, local or other tax withholding
obligation relating to the Plan (including, without limitation,
FICA tax), (i) the Firm may deduct or withhold (or cause to
be deducted or withheld) from any payment or distribution to
such Participant whether or not pursuant to the Plan or
(ii) the Committee shall be entitled to require that such
Participant remit cash (through payroll deduction or otherwise),
in each case in an amount sufficient in the opinion of the Firm
to satisfy such withholding obligation.



     
(h) Right of
Offset. The Firm shall have the
right to offset against the obligation to pay a Bonus to any
Participant, any outstanding amounts (including, without
limitation, travel and entertainment or advance account
balances, loans or amounts repayable to the Firm pursuant to tax
equalization, housing, automobile or other employee programs)
such Participant then owes to the Firm and any amounts the
Committee otherwise deems appropriate pursuant to any tax
equalization policy or agreement.



     
(i) Severability; Entire
Agreement. If any of the
provisions of this Plan or any Contract Period Schedule is
finally held to be invalid, illegal or unenforceable (whether in
whole or in part), such provision shall be deemed modified to
the extent, but only to the extent, of such invalidity,
illegality or unenforceability and the remaining provisions
shall not be affected thereby. Neither this Plan nor any
Contract Period Schedule shall supersede any other agreement,
written or oral, pertaining to the matters covered herein,
except to the extent of any inconsistency between this Plan (or
a Contract Period Schedule) and any prior agreement, in which
case this Plan (and the Contract Period Schedule) shall prevail.



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(j) No Third Party
Beneficiaries. Neither the Plan
nor any Contract Period Schedule shall confer on any person
other than the Firm and any Participant any rights or remedies
hereunder.



     
(k) Participating
Employers. Each subsidiary or
affiliate of GS Inc. that employs a Participant shall adopt
this Plan by executing Schedule A (a “Participating
Employer”). Except for purposes of determining the
amount of each Participant’s Bonus, this Plan shall be
treated as a separate plan maintained by each Participating
Employer and the obligation to pay the Bonus to each Participant
shall be the sole liability of the Participating Employer(s) by
which the Participant is employed, and neither GS Inc. nor
any other Participating Employer shall have any liability with
respect to such amounts.



     
(l) Successors and
Assigns. The terms of this Plan
and each Contract Period Schedule shall be binding upon and
inure to the benefit of GS Inc., each Participating
Employer and their successors and assigns and each permitted
successor or assign of each Participant as provided in
Section 7(b).



     
(m) Plan
Headings. The headings in this
Plan are for the purpose of convenience only and are not
intended to define or limit the construction of the provisions
hereof.



     
(n) Construction.
In the construction of this Plan, the singular shall include the
plural, and vice versa, in all cases where such meanings would
be appropriate.



     
(o) Plan Subject to Stockholder
Approval. The Plan is adopted
subject to the approval of the stockholders of GS Inc. at
GS Inc.’s 2003 Annual Meeting in accordance with
Section 162(m)(4)(C) of the Code and Treasury Regulation
Section 1.162-27(e)(4), and no Bonus shall be payable
hereunder absent such stockholder approval.



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     IN
WITNESS WHEREOF, and as evidence of the
adoption of this Plan effective as of November 30, 2002, by GS
Inc., it has caused the same to be signed by its duly authorized
officer this 16th day of January, 2003.


	 	 	 	 	 	 
	 	THE GOLDMAN SACHS GROUP, INC.
	 
		By:	 	/s/ Esta E. Stecher
	 	 	 	

				Name:		Esta E. Stecher
				Title:		Executive Vice President and General Counsel




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Schedule A


     As evidenced by the duly authorized
signature below, the undersigned entity hereby adopts and elects to
participate in The Goldman Sachs Restricted Partner Compensation Plan,
as such Plan may be amended from time to time, and appoints The
Goldman Sachs Group, Inc. as its agent to do all things necessary to
effect such participation.


	 	 	 	 	 	 
	 	[Name of Entity]
	 
		By:	 	 
	 	 	 	

				Name:		 
				Title:		 



Date:               
                  

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