Document:

EX-4.4: GUARANTEE AGREEMENT

 

EXHIBIT 4.4

GUARANTEE AGREEMENT

between

THE GOLDMAN SACHS GROUP, INC.,

as Guarantor,

and

THE BANK OF NEW YORK,

as Guarantee Trustee

GOLDMAN SACHS CAPITAL I

Dated as of February 20, 2004

 

 

GOLDMAN SACHS CAPITAL I

Certain Sections of this Guarantee Agreement relating to

Sections 310 through 318 of the

Trust Indenture Act of 1939:

	 	 	 	 	 
	Section of	 	Section of
	Trust Indenture Act
	 	Guarantee Agreement

	310(a) 
	 	 	 	4.1(a)
	(b)
	 	 	 	4.1(c), 2.8
	(c)
	 	 	 	Inapplicable
	311(a)
	 	 	 	2.2(b)
	(b)
	 	 	 	2.2(b)
	(c)
	 	 	 	Inapplicable
	312(a)
	 	 	 	2.2(a)
	(b)
	 	 	 	2.2(b)
	   313 
	 	 	 	2.3
	314(a) 
	 	 	 	2.4
	(b)
	 	 	 	Inapplicable
	(c)
	 	 	 	2.5
	(d)
	 	 	 	Inapplicable
	(e)
	 	 	 	1.2, 2.5, 3.2
	(f)
	 	 	 	2.1, 3.2
	315(a)
	 	 	 	3.1(d)
	(b)
	 	 	 	2.7
	(c)
	 	 	 	3.1(c)
	(d)
	 	 	 	3.1(d)
	316(a)
	 	 	 	1.1, 2.6, 5.4
	(b)
	 	 	 	5.3, 5.7
	(c)
	 	 	 	8.2
	317(a)
	 	 	 	Inapplicable
	(b)
	 	 	 	Inapplicable
	318(a)
	 	 	 	2.1(b)
	(b)
	 	 	 	2.1
	(c)
	 	 	 	2.1(a)

Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Guarantee Agreement and shall not affect the interpretation
of any of its terms or provisions.

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TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I
	 	 	 	 
	Interpretation and Definitions
	 	 	 	 
	SECTION 1.1. Interpretation
	 	 	2	 
	SECTION 1.2. Definitions
	 	 	2	 
	ARTICLE II
	 	 	 	 
	Trust Indenture Act
	 	 	 	 
	SECTION 2.1. Trust Indenture Act; Application
	 	 	5	 
	SECTION 2.2. List of Holders
	 	 	5	 
	SECTION 2.3. Reports by the Guarantee Trustee
	 	 	6	 
	SECTION 2.4. Periodic Reports to the Guarantee Trustee
	 	 	6	 
	SECTION 2.5. Evidence of Compliance with Conditions Precedent
	 	 	6	 
	SECTION 2.6. Events of Default; Waiver
	 	 	6	 
	SECTION 2.7. Events of Default; Notice
	 	 	6	 
	SECTION 2.8. Conflicting Interests
	 	 	7	 
	ARTICLE III
	 	 	 	 
	Powers, Duties and Rights of the Guarantee Trustee
	 	 	 	 
	SECTION 3.1. Powers and Duties of the Guarantee Trustee
	 	 	7	 
	SECTION 3.2. Certain Rights of Guarantee Trustee
	 	 	9	 
	SECTION 3.3. Compensation; Indemnity; Fees
	 	 	10	 
	ARTICLE IV
	 	 	 	 
	Guarantee Trustee
	 	 	 	 
	SECTION 4.1. Guarantee Trustee; Eligibility
	 	 	11	 
	SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee
	 	 	12	 
	ARTICLE V
	 	 	 	 
	Guarantee
	 	 	 	 
	SECTION 5.1. Guarantee
	 	 	12	 
	SECTION 5.2. Waiver of Notice and Demand
	 	 	13	 
	SECTION 5.3. Obligations Not Affected
	 	 	13	 
	SECTION 5.4. Rights of Holders
	 	 	14	 
	SECTION 5.5. Guarantee of Payment
	 	 	14	 
	SECTION 5.6. Subrogation
	 	 	14	 

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	SECTION 5.7. Independent Obligations
	 	 	14	 
	ARTICLE VI
	 	 	 	 
	Covenants and Subordination
	 	 	 	 
	SECTION 6.1. Subordination
	 	 	15	 
	SECTION 6.2. Pari Passu Guarantees
	 	 	15	 
	ARTICLE VII
	 	 	 	 
	Termination
	 	 	 	 
	SECTION 7.1. Termination
	 	 	15	 
	ARTICLE VIII
	 	 	 	 
	Miscellaneous
	 	 	 	 
	SECTION 8.1. Successors and Assigns
	 	 	16	 
	SECTION 8.2. Amendments
	 	 	16	 
	SECTION 8.3. Notices
	 	 	16	 
	SECTION 8.4. Benefit
	 	 	17	 
	SECTION 8.5. Governing Law
	 	 	17	 
	SECTION 8.6. Counterparts
	 	 	17	 

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     GUARANTEE AGREEMENT, dated as of February 20, 2004, is executed and
delivered by The Goldman Sachs Group, Inc., a Delaware corporation (the
“Guarantor”), 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 (the “Guarantee Trustee”), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of
Goldman Sachs Capital I, a Delaware statutory trust (the “Issuer Trust”).

Witnesseth:

     Whereas, pursuant to an Amended and Restated Trust Agreement, dated as of
February 20, 2004 (as it may be amended from time to time, the “Trust
Agreement”), among the Guarantor, as Depositor, the Property Trustee, the
Delaware Trustee and the Administrative Trustees named therein and the Holders
from time to time of undivided beneficial interests in the assets of the Issuer
Trust, the Issuer Trust is issuing $2,750,000,000 aggregate Liquidation Amount
(as defined in the Trust Agreement) of its 6.345% Capital Securities,
Liquidation Amount $1,000 per Capital Security (as they may be amended from
time to time, the “Capital Securities”), representing preferred undivided
beneficial interests in the assets of the Issuer Trust and having the terms set
forth in the Trust Agreement;

     Whereas, the Capital Securities will be issued by the Issuer Trust and the
proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust’s Common Securities (as defined below), will be used to purchase the
Junior Subordinated Debentures (as defined in the Trust Agreement) of the
Guarantor which will be deposited with The Bank of New York, as Property
Trustee under the Trust Agreement, as trust assets; and

     Whereas, as an incentive for the Holders to purchase the Capital
Securities, the Guarantor irrevocably and unconditionally agrees, to the extent
set forth herein, to pay to the Holders of the Capital Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms
and conditions set forth herein.

     Now, Therefore, in consideration of the purchase by each Holder of Capital
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement to
provide as follows for the benefit of the Holders from time to time of the
Capital Securities:

 

 

ARTICLE I

Interpretation and Definitions

SECTION 1.1. Interpretation.

In this Guarantee Agreement, unless the context otherwise requires:

     (a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 1.2;

     (b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;

     (c) all references to “the Guarantee Agreement” or “this Guarantee
Agreement” are to this Guarantee Agreement as modified, supplemented or
amended from time to time;

     (d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;

     (e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;

     (f) a reference to the singular includes the plural and vice-versa;
and

     (g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.

SECTION 1.2. Definitions.

     As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings:

     “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; provided, however, that the
Issuer Trust shall not be deemed to be an Affiliate of the Guarantor. 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.

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     “Board of Directors” means either the board of directors of the
Guarantor or any committee of that board duly authorized to act
hereunder.

     “Common Securities” means the securities representing common
undivided beneficial interests in the assets of the Issuer Trust.

     “Event of Default” means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided,
however, that, except with respect to a default in payment of any
Guarantee Payments, the Guarantor shall have received notice of default
and shall not have cured such default within 30 days after receipt of
such notice.

     “Guarantee Payments” means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the
extent not paid or made by or on behalf of the Issuer Trust: (i) any
accumulated and unpaid Distributions (including any Additional Amounts
and Other Amounts) (as such capitalized terms are defined in the Trust
Agreement) required to be paid on the Capital Securities, to the extent
the Issuer Trust shall have funds on hand available therefor at such
time, (ii) the redemption price, including all accumulated and unpaid
Distributions (including any Additional Amounts and Other Amounts) to the
date of redemption (the “Redemption Price”), with respect to any Capital
Securities called for redemption by the Issuer Trust, to the extent the
Issuer Trust shall have funds on hand available therefor at such time,
and (iii) upon a voluntary or involuntary termination, winding up or
liquidation of the Issuer Trust, unless Junior Subordinated Debentures
are distributed to the Holders, the lesser of (a) the aggregate of the
Liquidation Amount of $1,000 per Capital Security plus accumulated and
unpaid Distributions (including any Additional Amounts and Other Amounts)
on the Capital Securities to the date of payment to the extent that the
Issuer Trust shall have funds available therefor at such time and (b) the
amount of assets of the Issuer Trust remaining available for distribution
to Holders in liquidation of the Issuer Trust (in either case, the
“Liquidation Distribution”).

     “Guarantee Trustee” means The Bank of New York, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement, and thereafter means
each such Successor Guarantee Trustee.

     “Holder” means any holder, as registered on the books and records of
the Issuer Trust, of any Capital Securities; provided, however, that in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder,
“Holder” shall not include the Guarantor, the Guarantee Trustee, any
other obligor hereunder or any Affiliate of the Guarantor, the Guarantee
Trustee or any such other obligor.

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     “Indenture” means the Subordinated Debt Indenture, dated as of
February 20, 2004, as supplemented and amended by the Supplemental
Indenture, dated as of February 20, 2004, between the Guarantor and The
Bank of New York, as trustee, as it may be amended or supplemented from
time to time.

     “List of Holders” has the meaning specified in Section 2.2(a).

     “Majority in Liquidation Amount of the Capital Securities” means,
except as provided by the Trust Indenture Act, a vote by the Holder(s),
voting separately as a class, of more than 50% of the Liquidation Amount
of all then outstanding Capital Securities issued by the Issuer Trust.

     “Officers’ Certificate” means, with respect to any Person, a
certificate signed by the Chairman or a Vice Chairman of the Board of
Directors of such Person or the President or a Vice President of such
Person, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of such Person, and delivered to the Guarantee
Trustee. Any Officers’ Certificate delivered with respect to compliance
with a condition or covenant provided for in this Guarantee Agreement
shall include:

     (a) a statement that each officer signing the Officers’
Certificate has read the covenant or condition and the definitions
relating thereto;

     (b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers’ Certificate;

     (c) a statement that each officer has made such examination
or investigation as, in such officer’s opinion, is necessary to
enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and

     (d) a statement as to whether, in the opinion of each
officer, such condition or covenant has been complied with.

     “Person” means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.

     “Responsible Officer” means, with respect to the Guarantee Trustee,
any Managing Director, any Director, any Vice President, any Assistant
Vice President, any Assistant Secretary, any Assistant Treasurer, any
trust officer or assistant trust officer or any other officer of the
corporate trust department of the Guarantee Trustee and also means, with
respect to a particular corporate trust

4

 

matter, any other officer to whom such matter is referred because of
that officer’s knowledge of and familiarity with the particular subject.

     “Senior Debt”, “Senior Indebtedness” and “Senior Subordinated
Indebtedness” have the meanings set forth in the Indenture as it applies
with respect to the Junior Subordinated Debentures.

     “Successor Guarantee Trustee” means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section
4.1.

     “Trust Indenture Act” means the Trust Indenture Act of 1939, as
amended.

Capitalized or otherwise defined terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust Agreement.

ARTICLE II

Trust Indenture Act

     SECTION 2.1. Trust Indenture Act; Application.

     (a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.

     (b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act through the operation of Section 318(c)
thereof, such imposed duties shall control. If any provision of this Guarantee
Agreement 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 Guarantee Agreement as so modified or to be excluded, as the case may
be.

     SECTION 2.2. List of Holders.

     (a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (a) semiannually, on or before June 30 and December 31 of each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the
names and addresses of the Holders (the “List of Holders”) as of a date not
more than 15 days prior to the delivery thereof, and (b) at such other times as
the Guarantee Trustee may request in writing, within 30 days after the receipt
by the Guarantor of any such request, a List of Holders as of a date not more
than 15 days prior to the time such list is furnished, in each case to the
extent such information is in the possession or control of the Guarantor and is
not identical to a previously supplied list of Holders or has not otherwise
been received by

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the Guarantee Trustee in its capacity as such. The Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.

     (b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.

     SECTION 2.3. Reports by the Guarantee Trustee.

     Not later than July 1 of each year, commencing July 1, 2004, the Guarantee
Trustee shall provide to the Holders such reports as are required by Section
313 of the Trust Indenture Act, if any, in the form and in the manner provided
by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act. The
Guarantor will notify the Guarantee Trustee if and when any Capital Securities
are listed on any stock exchange and of any delisting thereof.

     SECTION 2.4. Periodic Reports to the Guarantee Trustee.

     The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act, in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.

     SECTION 2.5. Evidence of Compliance with Conditions Precedent.

     The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer of the Guarantor pursuant to Section 314(c)(1) may be given
in the form of an Officers’ Certificate.

     SECTION 2.6. Events of Default; Waiver.

     The Holders of a Majority in Liquidation Amount of the Capital Securities
may, by vote, on behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.

     SECTION 2.7. Events of Default; Notice.

     (a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all

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Events of Default known to the Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, that, except in the
case of a default in the payment of a Guarantee Payment, the Guarantee Trustee
shall be protected in withholding such notice if and so long as the Board of
Directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.

     (b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of this
Guarantee Agreement shall have obtained written notice, of such Event of
Default.

     SECTION 2.8. Conflicting Interests.

     The Trust Agreement and the Indenture shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.

ARTICLE III

Powers, Duties and Rights of the Guarantee Trustee

     SECTION 3.1. Powers and Duties of the Guarantee Trustee.

     (a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance
by such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.

     (b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.

     (c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6), the
Guarantee Trustee shall exercise such of the rights and

7

 

powers vested in it by this Guarantee Agreement, and use the same degree
of care and skill in its exercise thereof, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.

     (d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:

     (i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:

     (A) the duties and obligations of the Guarantee Trustee shall
be determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement; and

     (B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Guarantee Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust Indenture
Act are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;

     (ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;

     (iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
Liquidation Amount of the Capital Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and

     (iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to

8

 

it under the terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to it.

SECTION 3.2. Certain Rights of Guarantee Trustee.

(a) Subject to the provisions of Section 3.1:

     (i) The Guarantee Trustee may rely and shall be fully 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 reasonably believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.

     (ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers’
Certificate unless otherwise prescribed herein.

     (iii) Whenever, in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers’ Certificate which, upon receipt of
such request from the Guarantee Trustee, shall be promptly delivered by
the Guarantor.

     (iv) The Guarantee Trustee may consult with legal counsel of its
selection, and the advice or opinion of such legal counsel with respect
to legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.

     (v) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such adequate security and indemnity as
would satisfy a reasonable person in the position of the Guarantee
Trustee, against the costs, expenses (including attorneys’ fees and
expenses) and liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided that, nothing contained in
this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee,
upon the

9

 

occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee Agreement.

     (vi) The Guarantee 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 Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.

     (vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.

     (viii) Whenever in the administration of this Guarantee Agreement
the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and (C) shall be
protected in acting in accordance with such instructions.

     (b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.

     SECTION 3.3. Compensation; Indemnity; Fees.

     The Guarantor agrees:

     (a) to pay to the Guarantee Trustee from time to time such compensation as
shall be agreed in writing between the Guarantor and the Guarantee Trustee for
all services rendered by it hereunder (which compensation shall not be limited
by any provisions of law in regard to the compensation of a trustee of an
express trust);

     (b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by the Guarantee Trustee in accordance with any
provision of this Guarantee Agreement (including the reasonable compensation
and the expenses and disbursements

10

 

of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and

     (c) to indemnify the Guarantee Trustee and its directors, officers, agents
and employees for, and to hold it harmless against, any loss, liability or
expense (including reasonable out-of-pocket legal fees and expenses) incurred
without negligence or bad faith on the part of the Guarantee Trustee, arising
out of or in connection with the acceptance or administration of this Guarantee
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The Guarantee Trustee will not claim or exact any
lien or charge on any Guarantee Payments as a result of any amount due to it
under this Guarantee Agreement.

     The provisions of this Section 3.3 shall survive the termination of this
Guarantee Agreement or the earlier resignation or removal of the Guarantee
Trustee.

ARTICLE IV

Guarantee Trustee

     SECTION 4.1. Guarantee Trustee; Eligibility.

     (a) There shall at all times be a Guarantee Trustee which shall:

     (i) not be an Affiliate of the Guarantor; and

     (ii) be a Person that is eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of
Section 310(a) of the Trust Indenture Act. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority, then, for the
purposes of this Section 4.1 and to the extent permitted by the Trust
Indenture Act, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.

     (b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).

     (c) If the Guarantee Trustee has or shall acquire any “conflicting
interest” within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.

11

 

     SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.

     (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor. If the instrument of
acceptance by the Successor Guarantee Trustee required by Section 4.2(b) shall
not have been delivered to the Guarantee Trustee within 60 days after the
giving of such notice of resignation, the Guarantee Trustee may petition, at
the expense of the Issuer Trust, any court of competent jurisdiction for the
appointment of a Successor Guarantee Trustee.

     (b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor.

     (c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.

     (d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.

ARTICLE V

Guarantee

     SECTION 5.1. Guarantee.

     The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by or on behalf of the Issuer Trust), as and when due, regardless of any
defense, which the Issuer Trust may have or assert, except the defense of
payment. The Guarantor’s obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer Trust to pay such amounts to the Holders.

12

 

     SECTION 5.2. Waiver of Notice and Demand.

     The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.

     SECTION 5.3. Obligations Not Affected.

     The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:

     (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Capital Securities
to be performed or observed by the Issuer Trust;

     (b) the extension of time for the payment by the Issuer Trust of all
or any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Junior Subordinated Debentures as provided in the
Indenture), Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Capital Securities or the extension of
time for the performance of any other obligation under, arising out of,
or in connection with, the Capital Securities;

     (c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer Trust granting
indulgence or extension of any kind;

     (d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer Trust or any of the assets of the Issuer Trust;

     (e) any invalidity of, or defect or deficiency in, the Capital
Securities;

     (f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or

     (g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor
(other than payment of the underlying obligation), it being the intent of
this Section 5.3 that the obligations

13

 

of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the
foregoing.

     SECTION 5.4. Rights of Holders.

     The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Guarantee Trustee, the
Issuer Trust or any other Person.

     SECTION 5.5. Guarantee of Payment.

     This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Issuer Trust) or upon distribution of Junior Subordinated
Debentures to Holders as provided in the Trust Agreement.

     SECTION 5.6. Subrogation.

     The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer Trust pursuant to Section 5.1; provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Guarantee Agreement, if, at the time of
any such payment, any amounts are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

     SECTION 5.7. Independent Obligations.

     The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer Trust with respect to the Capital Securities
and that the Guarantor shall be liable as principal and as debtor hereunder to
make Guarantee

14

 

Payments pursuant to the terms of this Guarantee Agreement notwithstanding
the occurrence of any event referred to in subsections (a) through (g),
inclusive, of Section 5.3 hereof.

ARTICLE VI

Covenants and Subordination

     SECTION 6.1. Subordination.

     The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Debt of the Guarantor to the extent
and in the manner set forth in the Indenture with respect to the Junior
Subordinated Debentures, and the provisions of Article XIV of the Indenture
will apply, mutatis mutandis, to the obligations of the Guarantor hereunder.
The obligations of the Guarantor under this Guarantee Agreement do not
constitute Senior Indebtedness, Senior Debt or Senior Subordinated
Indebtedness.

     SECTION 6.2. Pari Passu Guarantees.

     The obligations of the Guarantor under this Guarantee Agreement shall rank
pari passu with the obligations of the Guarantor under any similar guarantee
agreements issued by the Guarantor on behalf of the holders of preferred or
capital securities issued by any business trust.

ARTICLE VII

Termination

     SECTION 7.1. Termination.

     This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Capital Securities,
(ii) the distribution of Junior Subordinated Debentures to the Holders in
exchange for all of the Capital Securities or (iii) full payment of the amounts
payable in accordance with the Trust Agreement upon liquidation of the Issuer
Trust. Notwithstanding the foregoing, this Guarantee Agreement will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid with respect to Capital Securities
or this Guarantee Agreement in connection with a bankruptcy, insolvency or
other similar proceeding.

15

 

ARTICLE VIII

Miscellaneous

     SECTION 8.1. Successors and Assigns.

     All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture, and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor’s obligations hereunder, the Guarantor shall not assign
its obligations hereunder.

     SECTION 8.2. Amendments.

     Except with respect to any changes which do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with
the prior approval of the Holders of not less than a Majority in Liquidation
Amount of the Capital Securities. The provisions of Article VI of the Trust
Agreement concerning meetings of the Holders shall apply to the giving of such
approval.

     The Property Trustee shall be entitled to receive an Opinion of Counsel
and an Officers’ Certificate stating that any amendment to this Guarantee
Agreement is in compliance with this Guarantee Agreement.

     SECTION 8.3. Notices.

     Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:

     (a) if given to the Guarantor, to the address set forth below or
such other address, facsimile number or to the attention of such other
Person as the Guarantor may give notice to the Holders:

The Goldman Sachs Group. Inc.

85 Broad Street

New York, New York 10004

Facsimile No.: 212-902-3325

Attention: Corporate Treasury – Debt Administration

     (b) if given to the Issuer Trust, in care of the Guarantee Trustee,
at the Issuer Trust’s (and the Guarantee Trustee’s) address set forth
below or such other

16

 

address as the Guarantee Trustee on behalf of the Issuer Trust may
give notice to the Holders:

Goldman Sachs Capital I

c/o The Goldman Sachs Group, Inc.

85 Broad Street

New York, New York 10004

Facsimile No.: 212-902-3325

Attention: Corporate Treasury – Debt Administration

     with a copy to:

The Bank of New York

101 Barclay Street, Floor 21 West

New York, New York 10286

Facsimile No.: (212) 815-5802

Attention: Corporate Trust Administration

     (c) if given to any Holder, at the address set forth on the books
and records of the Issuer Trust.

     All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

     SECTION 8.4. Benefit.

     This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Capital Securities.

     SECTION 8.5. Governing Law.

     THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

     SECTION 8.6. Counterparts.

     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.

17

 

     In Witness Whereof, the undersigned have executed this Guarantee Agreement
as of the date first above written.

	 	 	 	 	 
	 	 	The Goldman Sachs Group, Inc.
	 
	 	 	 	 
	

	 	By
	 	/s/ Veronica Foo
	

	 	 	 	

	

	 	 	 	Name: Veronica Foo
	

	 	 	 	Title: Assistant Treasurer
	 
	 	 	 	 
	 	 	The Bank of New York,

	 	 	 	 	     
as Guarantee Trustee
	 
	 	 	 	 
	

	 	By
	 	/s/ Thomas E. Tabor
	

	 	 	 	

	

	 	 	 	Name: Thomas E. Tabor
	

	 	 	 	Title: Vice PresidentEX-10.1: LETTER TO LOIS D. JULIBER

 

March 31, 2004

PERSONAL AND CONFIDENTIAL

Lois D. Juliber

Colgate-Palmolive Company

300 Park Avenue

New York, NY 10022-7499

Dear Lois:

     We are all very pleased that our shareholders have elected you as a member
of the Board of Directors of The Goldman Sachs Group, Inc. (“GS Inc.”). I am
writing to set forth the terms of your compensation as a nonmanagement
director. The terms of nonmanagement directors’ compensation are, of course,
subject to future modification by the Corporate Governance and Nominating
Committee and the Board.

     Your term as a director commences today, March 31, 2004, and will run
through the 2007 annual meeting of shareholders of GS Inc.

     As compensation for your services, you will receive:

	 	•	 	$75,000 per year (the “Annual Retainer”), which will be in the form
of fully vested restricted stock units (“RSUs”) until you have
satisfied the nonmanagement director shareholding requirements and,
after that, at your election, the Annual Retainer will be in the form
of fully vested RSUs or cash; and
	 
	 	•	 	an annual grant (the “Annual Grant”), in the form of fully vested
RSUs until you have satisfied the nonmanagement director shareholding
requirements and, after that, at your election, the Annual Grant will
consist of (a) 3,000 fully vested RSUs; (b) fully vested options
(“Options”) to purchase 9,000 shares of GS Inc. common stock; or (c)
1,500 fully vested RSUs and fully vested Options to purchase 4,500 shares of GS Inc. common stock.

     The Annual Retainer is paid annually in arrears. The Annual Grant is paid
annually in advance of the fiscal year to which it pertains.

 

 

     For fiscal 2004, you will receive each of the Annual Retainer and Annual
Grant prorated from the date of your appointment and paid entirely in the form
of fully vested RSUs due to the Corporation’s nonmanagement director
shareholding requirement. In general, this policy requires nonmanagement
directors to beneficially own at least 5,000 shares of Common Stock or fully
vested RSUs within two years of becoming a director. The Annual Retainer and
Annual Grant will be paid entirely in the form of fully vested RSUs until this
requirement has been met, at which point you be able to make elections with
respect to the Annual Retainer and Annual Grant as described more fully above.

     Your prorated fiscal 2004 Annual Grant (to be granted in April 2004) and
prorated fiscal 2004 Annual Retainer (to be granted at the end of fiscal 2004)
are as follows:

	 	 	 
	Fiscal 2004 Annual Grant:

	 	2,000 RSUs
	Fiscal 2004 Annual Retainer:

	 	$50,000 (to be converted into RSUs)1

     Future RSUs or Options granted to you for the Annual Grant will be granted
on the same date as the prior fiscal year’s year-end equity awards are granted
to employees of GS Inc. and its affiliates who are subject to Section 16 of the
Securities Exchange Act (“Section 16 Persons”) or, if no such awards are
granted, on the last business day of December in the fiscal year to which the
Annual Grant pertains.

     Any future RSUs granted to you for the Annual Retainer will be in such
number as is determined using the same manner for determining grants to
employees for year-end RSUs for that fiscal year or, if no such RSUs are
granted, using a grant price equal to the average closing price of GS Inc.’s
common stock on the New York Stock Exchange over the 10-trading-day period up
to and including the last day of the fiscal year. Such RSUs will be granted to
you on the same date as fiscal year-end equity awards for such fiscal year are
granted to Section 16 Persons or, if no such awards are granted, on the last
business day in December immediately following the end of such fiscal year. All
RSUs granted as nonmanagement director compensation provide for delivery of
shares of GS Inc. common stock on the last business day of May in the year
following the year in which you cease to be a director of GS Inc.

     Any Options granted to you for the Annual Grant:

	 	(i)	 	first become exercisable on the earlier of (a) the
same date that year-end options granted to Section 16 Persons
for the prior fiscal year become exercisable or, if no such
options are granted, on the first trading day in

	 	1	This dollar amount will be converted into RSUs on the same basis as the
conversion of dollar amounts into RSUs for the year-end RSUs granted generally
to employees of GS Inc. or its affiliates for fiscal 2004 or, if no such RSUs
are granted, on the basis of a grant price equal to the average closing price
of GS Inc. common stock on the New York Stock Exchange over the 10 trading-day
period up to and including November 26, 2004.

 

 

	 	 	 	January three
years after the date of grant unless that date is not during an
“access person window period” (“Window Period”) under GS Inc.’s
trading policy, in which case the first trading day of the
first Window Period that begins thereafter, and (b) the date on
which you cease to be a director of GS Inc.;
	 
	 	(ii)	 	have an exercise price equal to the exercise price
of any year-end options granted to Section 16 Persons for the
prior fiscal year or, if no such options are granted, the
closing price of GS Inc.’s common stock on the New York Stock
Exchange on the date of grant of the Annual Grant; and
	 
	 	(iii)	 	will expire ten years after the date of grant.

     All Options and RSUs will be subject to the terms and conditions of The
Goldman Sachs Amended and Restated Stock Incentive Plan and the relevant award
agreements.

     I have enclosed various documents in connection with these arrangements.
Please complete them as necessary, sign where indicated and return them in the
enclosed envelope. The remaining copies are for your records.

	 	 	 
	

	 	Very truly yours,
	 
	 	 
	

	 	
	

	 	Henry M. Paulson, Jr.

	 	 	 
	Enclosures:

	 	The Goldman Sachs Amended and Restated Stock Incentive Plan
	

	 	Fiscal 2004 Annual Grant RSU Award Agreement
	

	 	Custody Agreement
	

	 	Signature Card
	

	 	Form W-9

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