EXHIBIT 10.16
The Goldman Sachs Defined Contribution Plan
Preamble
This Plan shall be known as The Goldman Sachs Defined Contribution Plan
(the "Plan"). The object of the Plan is to provide certain select management
employees of The Goldman Sachs Group, Inc. ("GS Inc.") and its subsidiaries and
affiliates (collectively, the "Firm") with an ownership interest in GS Inc. and
to align the interests of those employees with those of GS Inc.'s shareholders.
The Plan is not intended to be qualified under Section 401(a) of the
Internal Revenue Code, as amended, and is not subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
ARTICLE I
Definitions
Section 1.1 "Account" means a Participant's Stock Account or the
Unallocated Stock Account, or both, as the context requires.
Section 1.2 "Beneficiary" means the person or persons (including a trust
or estate) who are entitled to receive any benefit payable hereunder by reason
of the death of a Participant, as designated pursuant to Section 9.1.
Section 1.3 "Board" means the Board of Directors of GS Inc.
Section 1.4 "Cause" means any of the following: (i) the Participant's
conviction, whether following trial or by plea of guilty or nolo contendere (or
similar plea), in a criminal proceeding (A) on a misdemeanor charge involving
fraud, false statements or misleading omissions, wrongful taking, embezzlement,
bribery, forgery, counterfeiting or extortion, or (B) on a felony charge or (C)
on an equivalent charge to those in clauses (A) and (B) in jurisdictions which
do not use those designations; (ii) the Participant's engaging in any conduct
which constitutes an employment disqualification under applicable law (including
statutory disqualification as defined under the Exchange Act); (iii) the
Participant's willful or grossly negligent failure to perform duties to the
Firm; (iv) the Participant's violation of any securities or commodities laws,
any rules or regulations issued pursuant to such laws, or the rules and
regulations of any securities or commodities exchange or association of which GS
Inc. or any of its subsidiaries or affiliates is a member; (v) the Participant's
violation of any Firm policy concerning hedging or confidential or proprietary
information, or material violation of any other Firm policy as in effect from
time to time; (vi) the Participant's engaging in any act or making any statement
which impairs, impugns, denigrates, disparages or negatively reflects upon the
name, reputation or business interests of the Firm; or (vii) the Participant's
engaging in any conduct detrimental to the Firm. The determination as to whether
"Cause" has occurred shall be made by the Committee. The Committee shall also
have the authority to
waive the consequences under the Plan of the existence or occurrence of any of
the events, acts or omissions constituting "Cause".
Section 1.5 "Change in Control" means the consummation of a merger,
consolidation, statutory share exchange or similar form of corporate transaction
involving GS Inc. (a "Reorganization") or sale or other disposition of all or
substantially all of GS Inc.'s assets to an entity that is not an affiliate of
GS Inc. (a "Sale"), that in each case requires the approval of GS Inc.'s
stockholders under the law of GS Inc.'s jurisdiction of organization, whether
for such Reorganization or Sale (or the issuance of securities of GS Inc. in
such Reorganization or Sale), unless immediately following such Reorganization
or Sale, either: (i) at least 50% of the total voting power (in respect of the
election of directors, or similar officials in the case of an entity other than
a corporation) of (A) the entity resulting from such Reorganization, or the
entity which has acquired all or substantially all of the assets of GS Inc. in a
Sale (in either case, the "Surviving Entity"), or (B) if applicable, the
ultimate parent entity that directly or indirectly has beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, as such Rule is in
effect on the Effective Date) of 50% or more of the total voting power (in
respect of the election of directors, or similar officials in the case of an
entity other than a corporation) of the Surviving Entity (the "Parent Entity"),
is represented by GS Inc.'s securities (the "GS Inc. Securities") that were
outstanding immediately prior to such Reorganization or Sale (or, if applicable,
is represented by shares into which such GS Inc. Securities were converted
pursuant to such Reorganization or Sale) or (ii) at least 50% of the members of
the board of directors (or similar officials in the case of an entity other than
a corporation) of the Parent Entity (or, if there is no Parent Entity, the
Surviving Entity) following the consummation of the Reorganization or Sale were,
at the time of the Board's approval of the execution of the initial agreement
providing for such Reorganization or Sale, individuals (the "Incumbent
Directors") who either (1) were members of the Board on the Effective Date or
(2) became directors subsequent to the Effective Date and whose election or
nomination for election was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board (either by a specific vote or by approval
of GS Inc.'s proxy statement in which such persons are named as a nominee for
director).
Section 1.6 "Code" means the Internal Revenue Code of 1986, as amended,
from time to time.
Section 1.7 "Committee" means the committee appointed by the Board to
administer the Plan pursuant to Section 7.1.
Section 1.8 "Custody Account" means the custody account maintained by a
Participant with The Chase Manhattan Bank or such successor custodian designated
by GS Inc.
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Section 1.9 "Distribution Date" shall include (i) each IPO Distribution
Date and (ii) such other date on which a Participant becomes vested in all or
any portion of his or her Stock Account in accordance with the provisions of
Article V.
Section 1.10 "Effective Date" means May 7, 1999.
Section 1.11 "Employment" means a Participant's performance of services
for the Firm, as determined by the Committee. The terms "employ" and "employed"
shall have their correlative meanings.
Section 1.12 "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the applicable rules and regulations thereunder.
Section 1.13 "Fair Market Value" means, with respect to a share of Stock
on any day, the fair market value as determined in accordance with a valuation
methodology approved by the Committee.
Section 1.14 "Good Reason" means (i) as determined by the Committee, a
materially adverse alteration in the Participant's position or in the nature or
status of such Participant's responsibilities from those in effect immediately
prior to the Change in Control, or (ii) the Firm's requiring such Participant's
principal place of Employment to be located more than seventy-five (75) miles
from the location where such Participant is principally employed at the time of
the Change in Control (except for required travel on the Firm's business to an
extent substantially consistent with the Participant's customary business travel
obligations in the ordinary course of business prior to the Change in Control).
Section 1.15 "IPO Contribution" means the initial 12,555,866 shares of
Stock contributed to the Plan on the date of the consummation of the initial
public offering of GS Inc.'s Stock.
Section 1.16 "IPO Distribution Date" means the first day of each Window
Period that begins on or immediately follows each of the third, fourth and fifth
anniversaries of the date of the consummation of the initial public offering of
GS Inc.'s Stock.
Section 1.17 "Participant" means an employee of the Firm who is designated
as a Participant by the Committee pursuant to Article II.
Section 1.18 "Plan" means The Goldman Sachs Defined Contribution Plan, as
described herein and as hereafter amended from time to time.
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Section 1.19 "Plan Year" means any calendar year or part thereof beginning
on the Effective Date.
Section 1.20 "Qualified Termination" means a Participant's termination of
Employment by the Firm without Cause or by the Participant for Good Reason, but
only in each case if such termination of Employment occurs within 18 months
following a Change in Control.
Section 1.21 "Shareholders' Agreement" means the Shareholders' Agreement,
dated as of ________, 1999, among The Goldman Sachs Group, Inc. and the
individuals listed on Appendix A thereto, as in effect from time to time.
Section 1.22 "Stock" means GS Inc.'s common stock, par value $0.01 per
share.
Section 1.23 "Stock Account" means the separate account established in the
name of each Participant under Section 4.1 to hold Stock that has been allocated
to such Participant and any distributions received with respect to such Stock.
Section 1.24 "Trust" means the legal entity created by the Trust
Agreement.
Section 1.25 "Trust Agreement" means the agreement, dated as of the
Effective Date, by and between GS Inc. and the Trustee, including any amendments
thereto, setting forth the rights and obligations of the parties thereto in
respect of the contributions to and distributions from the Trust, and the
establishment and administration of the Accounts pursuant to the Plan.
Section 1.26 "Trustee" means any corporation, individual or individuals
who shall accept the appointment as trustee to execute the duties of the trustee
pursuant to the Trust Agreement.
Section 1.27 "Unallocated Stock Account" means a separate account
established under Section 4.1 to hold Stock pending the allocation and
reallocation of such Stock to the Stock Accounts of Participants, and any
distributions received with respect to such Stock.
Section 1.28 "Window Period" means a period designated by the Committee
during which employees of the Firm generally are permitted to purchase or sell
shares of Stock.
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ARTICLE II
Eligibility and Participation
Each employee designated by the Committee shall become a Participant in
the Plan on the date he or she is so designated; provided, however, that if such
employee is or becomes a Managing Director, such employee's participation in the
Plan is conditioned upon his or her becoming a party to the Shareholders'
Agreement. A Participant shall remain a Participant until the date he or she
receives a distribution of the entire vested portion of his or her Stock Account
or, if earlier, the date such Participant's interest in his or her Stock Account
is forfeited in accordance with Article V.
ARTICLE III
Contributions
On the Effective Date, GS Inc. shall establish the Trust and irrevocably
contribute the IPO Contribution to the Trust. GS Inc. may contribute additional
shares of Stock or cash to the Trust from time to time at its sole discretion.
ARTICLE IV
Allocation of Contributions
Section 4.1 Establishment of Accounts. There shall be established a Stock
Account in the name of each Participant and a separate account (the Unallocated
Stock Account) to which any forfeitures occurring hereunder shall be credited
pending allocation to Participants. The Accounts shall also hold any
distributions with respect to any shares of Stock held therein until such
distributions are payable pursuant to the Plan.
Section 4.2 Allocations to Participants' Accounts. The Committee shall in
its sole discretion designate the number of shares of Stock allocable to the
Stock Account of each Participant with respect to the IPO Contribution. With
respect to each contribution other than the IPO Contribution, the Committee
shall designate the number of shares of Stock (or the amount of cash) allocable
to the Stock Account of each Participant on a formulaic basis as determined by
the Committee in its sole discretion. Any Stock and
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distributions in respect of Stock in the Unallocated Stock Account as of the
last day of each Plan Year shall be allocated among the Stock Accounts of each
Participant who is an employee on the last day of such Plan Year in the
proportion that each such Participant's allocation in respect of GS Inc.'s
contributions for such Plan Year bears to the allocations of such contributions
for all Participants who are employees on the last day of such Plan Year, or on
such other formulaic basis as determined by the Committee in its sole
discretion.
Section 4.3 Voting of Stock; Tender or Exchange Offers. With respect to
Stock allocated to Participants' Stock Accounts, each Participant shall be
entitled to instruct the Trustee, on a confidential basis (a) as to the manner
in which the Trustee's voting rights will be exercised with respect to any
matter which involves the voting of such Stock allocated to the Participant's
Stock Account, and (b) in the event of a tender or exchange offer for all or
substantially all of the Stock of GS Inc., whether such Stock shall be tendered
or exchanged by the Trustee. Notwithstanding the foregoing, all Stock allocated
to the Stock Accounts of Participants who are subject to the Shareholders'
Agreement shall be voted by the Trustee solely in accordance with the terms of
the Shareholders' Agreement, and may be tendered or exchanged only if so
permitted under the terms of the Shareholders' Agreement. Without limiting the
foregoing, the Trust Agreement shall provide that the Trustee shall have no
discretion and shall be required to vote, tender or exchange shares of Stock
held by the Trust as follows: (i) shares of Stock allocated to a Participant's
Stock Account shall be voted, tendered or exchanged, as applicable, in
accordance with any instructions received from such Participant or such
Participant's authorized representative pursuant to a duly executed power of
attorney or similar instrument, (ii) shares of Stock held in a Participant's
Stock Account with respect to which the Trustee does not receive instructions
shall not be voted, tendered or exchanged, as applicable, and (iii) shares of
Stock held in the Unallocated Stock Account shall be voted, tendered or
exchanged, as applicable, in the same proportion as the shares of Stock
allocated to Participants' Stock Accounts with respect to which instructions are
received by the Trustee are voted, tendered or exchanged.
ARTICLE V
Vesting
Section 5.1 Vesting of IPO Contribution. Except as otherwise provided in
this Article V, a Participant shall vest on each IPO Distribution Date in
one-third of his or her Stock Account attributable to the IPO Contribution
(subject to rounding in the discretion of the Committee to avoid the vesting of
fractional shares of Stock).
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Section 5.2 Special Rule for IPO Contribution. Notwithstanding any other
provision of this Plan, provided that a Participant's Stock Account has not
previously been forfeited, such Participant shall be 100% vested in the portion
of his or her Stock Account attributable to the IPO Contribution upon (i) the
death of such Participant or (ii) such Participant's Qualified Termination.
Section 5.3 Forfeiture and Reallocation of IPO Contribution. Unless the
Committee determines otherwise, and except under the circumstances specified in
Section 5.2(ii), a Participant's unvested Stock in his or her Stock Account
attributable to the IPO Contribution shall be forfeited and such Stock shall not
be distributable to such Participant if:
(i) prior to the relevant IPO Distribution Date:
(A) such Participant's Employment with the Firm is terminated for
any reason, or such Participant is no longer actively employed with the
Firm (except as provided in Section 5.2(i)); or
(B) with respect to such Participant, any of the events that
constitute Cause has occurred; or
(C) such Participant attempts to have any dispute under this Plan
resolved in any manner that is not provided for by Sections 9.5 and 9.6;
or
(ii) such Participant fails to certify to GS Inc., in accordance
with procedures established by the Committee, with respect to any relevant
IPO Distribution Date that such Participant has complied, or the Committee
determines that such Participant in fact as of such date has not complied,
with all the terms and conditions of the Plan. By accepting the
distribution of Stock (or cash) under the Plan, such Participant shall be
deemed to have represented and certified at such time that he or she has
complied with all the terms and conditions of the Plan.
In the event that Stock in a Participant's Stock Account attributable to the IPO
Contribution is forfeited by reason of this Section 5.3, such forfeited Stock
shall be reallocated to other Participants' Stock Accounts in accordance with
Section 4.2, and the Committee shall specify the terms and conditions (including
timing) under which each such Participant shall vest in such reallocated
amounts.
Section 5.4 Vesting of Ongoing Contributions. With respect to each Plan
contribution (other than the IPO Contribution), the Committee shall specify the
terms and conditions (including timing) under which a Participant shall vest in
any or all of his or her
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Account attributable to such contributions (or forfeitures of such contributions
reallocated to such Participant).
ARTICLE VI
Distributions
Section 6.1 General. (a) Except as provided below and in Section 9.10, all
amounts and all shares of Stock credited to the Stock Account in which a
Participant has vested under Article V shall be promptly distributable to such
Participant (or, if applicable, his or her Beneficiary), and shall be subject to
the provisions of Sections 9.8 and 9.9. Unless otherwise determined by the
Committee, or as otherwise provided in the Plan, the distribution of shares of
Stock shall be effected by book-entry credit to such Participant's Custody
Account. No distribution of shares of Stock shall be made to any Participant
unless such Participant has timely established a Custody Account. A Participant
shall be the beneficial owner of any shares of Stock properly credited to the
Custody Account.
(b) Any cash dividends on shares of Stock allocated to a
Participant's Stock Account on the record date for such dividend shall be
distributed to such Participant as soon as practicable following the end of the
calendar quarter in which such dividend is received without regard to whether
such Participant is vested in the Stock in respect of which such dividend is
received. No interest shall be payable on any dividends allocated to a
Participant's Stock Account but not yet distributed.
ARTICLE VII
Organization of Plan Committee;
Administration of Plan
Section 7.1 The Committee. Subject to Section 7.3, the Plan shall be
administered by a committee appointed by the Board whose members shall serve at
the pleasure of the Board. To the extent required for transactions under the
Plan to qualify for the exemptions available under Rule 16b-3 promulgated under
the Exchange Act, all actions relating to Participants who are subject to
Section 16 of the Exchange Act may be taken by the Board or a committee or
subcommittee of the Board composed of two or more members, each of whom is a
"non-employee director" within the meaning of Exchange Act Rule 16b-3.
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Section 7.2 Plan Administered by Committee. The Committee shall have
complete control over the administration of the Plan and shall have the
authority in its sole discretion to (a) exercise all of the powers granted to it
under the Plan, (b) construe, interpret and implement the Plan, (c) prescribe,
amend and rescind rules and regulations relating to the Plan, including rules
governing its own operations, (d) make all determina tions necessary or
advisable in administering the Plan, and (e) correct any defect, supply any
omission and reconcile any inconsistency in the Plan. Action by the Committee
may be taken by the vote of a majority of its members. Any action may be taken
by a written instrument signed by a majority of the members of the Committee and
action so taken shall be fully as effective as if it had been taken by a vote at
a meeting. The determinations of the Committee on all matters relating to the
Plan shall be final, binding and conclusive.
Section 7.3 Power of Delegation; Indemnification. Notwithstanding anything
to the contrary contained herein: (a) until the Board shall appoint the members
of the Committee, the Plan shall be administered by the Board and (b) the Board
may, in its sole discretion, at any time and from time to time, determine
allocations of contributions or otherwise administer the Plan. In either of the
foregoing events, the Board shall have all of the authority and responsibility
granted to the Committee herein. The Committee may allocate among its members or
delegate to any person who is not a member of the Committee any administrative
responsibility which the Committee has hereunder. No member of the Board or the
Committee or any employee of the Firm shall be liable for any action or
determination made in good faith with respect to the Plan. Each such person
shall be indemnified and held harmless by GS Inc. against and from any loss,
cost, liability, or expense that may be imposed upon or incurred by such person
in connection with or resulting from any action, suit or proceeding to which
such person may be a party or in which such person may be involved by reason of
any action taken or failure to act under the Plan and against and from any and
all amounts paid by such person, with GS Inc.'s approval, in settlement thereof,
or paid by such person in satisfaction of any judgment in any such action, suit
or proceeding against such person, provided that GS Inc. shall have the right,
at its own expense, to assume and defend the same. The foregoing right of
indemnification shall not be available to a person to the extent that a final
judgment or other final adjudication binding upon such person establishes that
the acts or omissions of such person giving rise to the indemnification claim
resulted from such 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 such persons may be entitled under GS
Inc.'s Certificate of Incorporation or 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. The responsibility of the Committee with respect to the management or
control of the assets of the Trust may be delegated or allocated to the Trustee.
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Section 7.4 Communication by Committee. Decisions and directions of the
Committee may be communicated to the Trustee, a Participant, a Beneficiary, GS
Inc. or any other person who is to receive such decision or direction by a
document signed by any one or more members of the Committee (or persons other
than members) so authorized, and such decision or direction of the Committee may
be relied upon by the recipient as being the decision of the Committee. The
Committee may authorize one or more of its members, or a designee who is not a
member, to sign on behalf of the entire Committee.
ARTICLE VIII
Amendment, Termination, etc..
The Board reserves the right at any time and from time to time to modify,
alter, amend, suspend, discontinue and terminate the Plan or the Trust
Agreement; provided that, no such modification, alteration, amendment,
suspension, discontinuance or termination shall materially adversely affect,
without their consent, the rights of Participants under this Plan with respect
to contributions previously made except that the Board reserves the right to (a)
accelerate the vesting of Participants' Stock Accounts and in its discretion
provide that Stock distributed from such Stock Accounts may not be transferable
until the Distribution Dates as of which such Stock would have otherwise become
vested (and that in respect of such Stock the Participants may remain subject to
the repayment obligations of Section 9.11 in the circumstances under which the
Stock would not have been distributed pursuant to Section 5.3) and (b) make
distributions to Participants upon the termination of the Plan. Notwithstanding
the foregoing, no modification, alteration, amendment or termination of the Plan
may be made which would cause or permit any part of the assets of the Trust to
be used for, or diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries, or which would cause any part of the assets
of the Trust to revert to or become the property of the Firm. Any modification,
alteration or amendment to the Plan shall be in writing signed by the Chief
Executive Officer of GS Inc. or his designee.
ARTICLE IX
Miscellaneous
Section 9.1 Designation of Beneficiaries. A Participant may designate, in
accordance with procedures established by the Committee, a Beneficiary or
Beneficiaries to receive all or part of the amounts payable hereunder in the
event of such Participant's
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death. A designation of a Beneficiary may be replaced by a new designation or
may be revoked by a Participant at any time in accordance with procedures
established by the Committee. In the event of a Participant's death, the amounts
payable hereunder with respect to which a designation of Beneficiary has been
made shall be paid in accordance with the Plan to such designated Beneficiary or
Beneficiaries. Any amounts payable upon death and not subject to such
designation shall be distributed to the Participant's estate. If there is any
question as to the legal right of any Beneficiary to receive payment of amounts
hereunder, the amounts in question may be paid to the Participant's estate, in
which event the Firm shall have no further liability to anyone with respect to
such amounts. A Beneficiary shall have no rights under the Plan other than the
right, subject to the immediately preceding sentence, to receive such amounts,
if any, as may be payable under this Section 9.1.
Section 9.2 Nonassignability. No rights granted to any Participant or any
Beneficiary under the Plan (including any interest in the Accounts) may be sold,
exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of
(including through the use of any cash-settled instrument), whether voluntarily
or involuntarily, other than by will or by the laws of descent and distribution.
Any assignment in violation of the provisions of this Section 9.2 shall be void.
All the terms of this Plan shall be binding upon such permitted successors and
assigns.
Section 9.3 Plan Creates No Employment Rights. Nothing in the Plan shall
confer upon any Participant the right to continue in the employ of the Firm or
affect any right which the Firm may have to terminate such Employment.
Section 9.4 Limit on Liability. No person shall have any right or interest
in the Plan and/or the Trust other than as provided herein. The Trust assets
shall under no circumstances be available to the creditors of the Firm. All
distributions under the Plan shall be paid or provided solely from the Trust
assets, and the Firm shall have no responsibility or liability to any
Participant or Beneficiary relating to the Stock or other assets contributed to
the Trust. Any final distribution to any Participant or Beneficiary in
accordance with the provisions of the Plan shall be in full satisfaction of all
claims against the Trust, the Trustee, the Committee, the Board, GS Inc., the
Firm and its employees with respect to the Plan or Trust.
Section 9.5 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 the Trust 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. (the "NYSE") or, if the NYSE declines to arbitrate
the matter, the American Arbitration Association (the "AAA") in accordance with
the commercial arbitration rules of the AAA. Prior to arbitration, all claims
maintained by any Participant must first be submitted to the
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Committee in accordance with claim procedures determined by the Committee in its
sole discretion. This Section is subject to the provisions of Section 9.6.
Section 9.6 Choice of Forum. (a) 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 THAT IS NOT OTHERWISE ARBITRATED OR RESOLVED
ACCORDING TO THE PROVISIONS OF SECTION 9.5. 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 9.6(a) has a
reasonable relation to the Plan, 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 9.5 and 9.6.
(b) 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 9.6(a), (iii) undertake not to
commence any action arising out of or relating to or concerning the Plan in any
forum other than the forum described in this Section 9.6 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.
(c) 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 or proceeding arising out of or relating to or concerning the Plan which
is not arbitrated pursuant to the provisions of Section 9.5, who shall promptly
advise such Participant of any such service of process.
(d) Each Participant hereby agrees, as a condition to such
Participant's participation in the Plan, to keep confidential the existence of,
and any information concerning, a dispute described in Section 9.5 or 9.6,
except that a Participant may disclose information concerning such dispute to
the arbitrator or court that is considering such dispute or to such
Participant's legal counsel (provided that such counsel agrees not
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to disclose any such information other than as necessary to the prosecution or
defense of the dispute).
(e) Each Participant recognizes and agrees that prior to being
selected by the Committee to participate in the Plan such Participant has no
right to any benefits 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 contribution to the Plan, the
terms of the Plan, any determination, action or omission hereunder by the
Committee, GS Inc. or the Board, or any amendment to the Plan (other than an
amendment to which such Participant's consent is expressly required by Article
VIII).
Section 9.7 Governing Law. ALL RIGHTS AND OBLIGATIONS UNDER THE PLAN 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.
Section 9.8 Taxes and Withholding. (a) Upon a Participant's vesting in all
or any portion of his or her Stock Account, or in connection with any
distribution or other event that gives rise to a federal or other governmental
tax withholding obligation relating to the Plan (including, without limitation,
FICA tax), the Trustee shall be entitled to require that the Participant remit
cash in an amount sufficient in the opinion of the Trustee and the Committee to
satisfy such withholding obligation. Alternatively, if the event giving rise to
the withholding obligation involves a transfer of shares of Stock, then, at the
discretion of the Committee, the Participant may elect to satisfy the
withholding obligation described above by (i) remitting cash, (ii) instructing
the Trustee to withhold shares of Stock or tendering previously owned shares of
Stock (in each case having a Fair Market Value equal to the amount of tax to be
withheld) or (iii) any other mechanism as may be required or appropriate to
conform with local tax and other rules. For this purpose, Fair Market Value
shall be determined as of the date on which the amount of tax to be withheld is
determined (and any fractional share amount may be settled in cash). If the
Participant does not satisfy the withholding obligation in accordance with any
of the methods described above in this Section 9.8(a), the Trustee may cause
such withholding taxes to be deducted or withheld from the vested portion of the
Participant's Stock Account or any payment or distribution to the Participant
pursuant to the Plan, and the Firm may deduct or withhold (or cause to be
deducted or withheld) such taxes from any other payment or distribution by the
Firm to the Participant.
(b) The Trustee may transfer to the Firm any amounts (cash or shares
of Stock) withheld or received from the Participant pursuant to Section 9.8(a).
Any deduction of shares of Stock from the Participant's Stock Account by the
Trustee pursuant to this Section 9.8 shall be treated as a distribution from the
Trust to such Participant and
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an election by the Participant to have such shares of Stock applied to satisfy
the withholding obligation.
(c) No Participant may make an election pursuant to section 83(b) of
the Code with respect to his or her interest in the Trust, any shares of Stock
or any other property held by the Trust.
Section 9.9 Right of Offset. The Committee shall have the right to direct
the Trustee to withhold distribution of the vested portion of a Participant's
Stock Account until the Participant settles 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.
Section 9.10 Consents and Legends. The vesting and distribution to a
Participant of any shares of Stock may be conditioned on the receipt to the full
satisfaction of the Committee of (a) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or under any
federal, state or local law, or law, rule or regulation of a jurisdiction
outside the United States, (b) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, (c) any and all other consents,
clearances and approvals in respect of a plan action by any governmental or
other regulatory body or any stock exchange or self-regulatory agency that the
Committee may determine to be necessary or advisable and (d) any and all
consents or authorizations required to comply with, or required to be obtained
under, applicable local law or otherwise required by the Committee. Nothing
herein shall require GS Inc. to list, register or qualify the shares of Stock on
any securities exchange. GS Inc. may affix to any stock certificate (or other
document or evidence of ownership) representing shares of Stock distributed
under the Plan any legend that the Committee determines in its sole discretion
to be necessary or advisable (including to reflect any restrictions to which a
Participant may be subject under a separate agreement with GS Inc.). GS Inc. may
advise the transfer agent to place a stop order against any legended shares of
Stock.
Section 9.11 Forfeiture and Repayment after Erroneous Vesting. If,
following any date on which a Participant becomes vested in all or any portion
of his or her Stock Account (the "erroneously vested portion"), the Committee
determines that all terms and conditions of the Plan were not satisfied on the
relevant vesting date, such Participant or former Participant shall cease to be
vested in, and shall forfeit, such erroneously vested portion, and the Trust
shall be entitled to receive, and such Participant or former Participant shall
be obligated to pay the Trust immediately upon demand therefor the Fair
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Market Value of any Shares (determined as of the date of vesting) and the amount
of any cash delivered in respect of any distribution of the erroneously vested
portion, without reduction for any Shares (or cash) applied to satisfy
withholding tax or other obligations in respect of such erroneous vesting event.
Section 9.12 Severability; Entire Agreement. If any of the provisions of
this Plan 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; provided, that if any of the
provisions of this Plan is finally held to be invalid, illegal, or unenforceable
because it exceeds the maximum scope determined to be acceptable to permit such
provision to be enforceable, such provision shall be deemed to be modified to
the minimum extent necessary to modify such scope in order to make such
provision enforceable hereunder. The Plan contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
and warranties between them, whether written or oral with respect to the subject
matter hereof.
Section 9.13 Expenses. All expenses incurred by the Committee and the
Trustee in connection with administering this Plan and the Trust shall be paid
by GS Inc. to the extent not paid from the cash dividends held in the
Unallocated Stock Account. All taxes imposed on the Trust related to income
credited to or attributable to Trust assets shall be paid from such assets and
charged against the Stock Account to which the income is allocated as though it
were payable directly to the Participant.
Section 9.14 No Third Party Beneficiaries. Except as expressly provided
herein, the Plan shall not confer on any person other than the Firm and any
Participant any rights or remedies thereunder.
Section 9.15 Participating Employers. Each subsidiary or affiliate of GS
Inc. which employs a Participant shall adopt this Plan by executing Schedule A.
Section 9.16 Successors and Assigns. The terms of this Plan shall be
binding upon and inure to the benefit of GS Inc., each of its subsidiaries and
affiliates that adopts the Plan and its and their successors and assigns.
Section 9.17 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.
Section 9.18 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.
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IN WITNESS WHEREOF, and as evidence of the adoption of this Plan effective
as of May 7, 1999 by GS Inc., it has caused the same to be signed by its
duly authorized officer this 7th day of May, 1999.
THE GOLDMAN SACHS GROUP, INC.
By: /s/ Robert J. Katz
---------------------------------
Name: Robert J. Katz
Title: Executive Vice President
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