dated as of November 28,
2008
THE GOLDMAN SACHS GROUP, INC., AS
PARENT,
EACH SUBSIDIARY OF THE GOLDMAN SACHS GROUP, INC.
THAT IS A SIGNATORY HERETO, AS PLEDGORS
and
EACH OTHER PLEDGOR WHO BECOMES PARTY
TO THIS AGREEMENT FROM TIME TO TIME
COLLATERAL
AGREEMENT , dated as of November 28, 2008 (this “
Agreement ” ), is made between Goldman Sachs
Bank USA , a bank chartered under the Laws of the State of New
York (the “ Bank ” ), and The Goldman
Sachs Group, Inc. , a Delaware corporation (the “
Parent ” ), each Subsidiary of the Parent that is
a signatory hereto and, each other party who becomes a Pledgor
pursuant to this Agreement from time to time (each of the Parent,
each such Subsidiary and each such other pledgor, a “
Pledgor ” ).
WHEREAS ,
in connection with the Parent becoming a bank holding company under
the U.S. Bank Holding Company Act of 1956, as amended, on
September 21, 2008, Goldman Sachs Capital Markets, L.P., a
limited partnership organized under the Laws of the State of New
York, was merged with and into The Goldman Sachs Trust Company, a
limited-purpose trust chartered under the Laws of the State of New
York ( “ GS Trust ” ), then Goldman Sachs
Capital Markets L.L.C., a Delaware limited liability company, was
merged with and into GS Trust, and then Goldman Sachs Bank USA, an
industrial bank chartered under the Laws of the State of Utah, was
merged with and into GS Trust, in each case with GS Trust as the
surviving entity (collectively, the “ Merger
” );
WHEREAS,
upon consummation of the Merger, GS Trust changed its name to
Goldman Sachs Bank USA and received approval to become a member
bank of the Federal Reserve System (the “ Federal
Reserve System ” ) and to expand its banking
powers;
WHEREAS ,
the Bank is a wholly owned Subsidiary of the Parent;
WHEREAS,
in connection with the restructuring described above, the Board of
Governors of the Federal Reserve System (the “ Federal
Reserve Board ” ) has provided guidance to the Bank
via teleconference and in a written summary, issued
October 10, 2008, that sets forth the principal terms of the
exemption it has granted the Bank from the provisions of
Section 23A of the Federal Reserve Act, as amended (the
“ Section 23A Exemption ” ), to
permit the Parent or another Affiliate to transfer certain assets
to the Bank without complying with the provisions of
Regulation W that would otherwise apply to such transfers
(such assets, the “ Transferred Assets ”
), and has indicated that it will provide to the Bank a formal
written statement of all the terms of the Section 23A
Exemption in due course;
WHEREAS,
as a condition to granting the Section 23A Exemption, the
Federal Reserve Board has imposed the requirement that the Parent
provide certain guarantees in respect of the Transferred Assets,
and the Parent has agreed to provide such guarantees (collectively,
the “ Guarantee ” ), pursuant to the
Guarantee Agreement, dated as of November 28, 2008 (the
“ Guarantee Agreement ” ), between the
Parent and the Bank;
WHEREAS ,
as a further condition to granting the Section 23A Exemption,
the Federal Reserve Board has required that the Parent pledge or
cause its subsidiaries to pledge certain Collateral to the Bank to
secure the obligations of the Parent pursuant to the Guarantee
Agreement;
WHEREAS,
this Agreement is intended to satisfy such condition;
and
WHEREAS,
upon receipt by the Bank of the final written statement of the
terms of the Section 23A Exemption, the parties hereto intend to
amend this Agreement and the Guarantee Agreement, as necessary to
reflect the terms of such Section 23A Exemption;
NOW ,
THEREFORE , in consideration of the foregoing premises, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parent, the Bank
and each other Pledgor from time to time, intending to be legally
bound, hereby agree as follows:
SECTION 1.
DEFINITIONS; INTERPRETATION
1.1
General Definitions. For purposes of this Agreement, the
following terms have the following meanings:
“
Affiliate ” means any “affiliate” of
the Bank as defined in Regulation W.
“
Agreement ” has the meaning specified in the
Preamble.
“
Bank ” has the meaning specified in the
Preamble.
“
Business Day ” means any day that (x) is not
a Saturday, a Sunday or other day on which commercial banks in The
City of New York, State of New York, are required or authorized by
Law to be closed and (y) is a day on which the New York Stock
Exchange, Inc. is open for trading during its regular trading
session (notwithstanding its closing prior to its scheduled closing
time).
“
Cash Collateral Account ” means any deposit
accounts at the Bank identified on Schedule 1 from time
to time, including any successor or replacement accounts acquired
after the date of this Agreement.
“
Certificated Security ” has the meaning specified
in Article 8 of the UCC.
“
Collateral ” has the meaning specified in
Section 2(a).
“
Commodities Accounts ” has the meaning specified
in Article 9 of the UCC.
“
Federal Reserve Board ” has the meaning specified
in the Recitals.
“
Federal Reserve System ” has the meaning specified
in the Recitals.
“
Fund ” means any investment vehicle created in the
ordinary course of the private equity, mezzanine lending or hedge
fund business of the Parent or any of its Subsidiaries and in which
equity interests are sold to third parties.
“
General Intangibles ” has the meaning specified in
Article 9 of the UCC.
“
Governmental Authority ” means any domestic or
foreign governmental or regulatory authority, agency, commission,
body, court or other legislative, executive or judicial
governmental entity.
“ GS
Trust ” has the meaning specified in the
Recitals.
“
Guarantee ” has the meaning specified in the
Recitals.
“
Guarantee Agreement ” has the meaning specified in
the Recitals.
“
Haircut ” means, with respect to any Security,
Pledged Equity Interest, General Intangible or Instrument, the
percentage specified with respect to such Security in
Schedule 1 from time to time.
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“
Instruments ” has the meaning specified in
Article 9 of the UCC.
“
Investment Property ” has the meaning specified in
Article 9 of the UCC.
“
Law ” means any federal, state, local or foreign
law, statute or ordinance, or any rule, regulation, standard or
agency requirement, of any Governmental Authority.
“
Lien ” means any mortgage, deed of trust, pledge,
hypothecation, security interest, encumbrance, claim, lien or
charge of any kind.
“
Merger ” has the meaning specified in the
Recitals.
“
Original Transfer Value ” has the meaning
specified in the Guarantee Agreement.
“
Outstanding Aggregate Transfer Value ” means, on
any date, the aggregate Original Transfer Value of all the
Transferred Assets with respect to which the Termination Date has
not occurred on or prior to that date.
“
Parent ” has the meaning specified in the
Preamble.
“
Permitted Filings ” means any financing statements
or other instruments similar in effect, whether already filed or
filed hereafter, in connection with Permitted Liens.
“
Permitted Liens ” means any Liens, whether now
existing or hereafter arising, granted by any Pledgor with respect
to Pledged Equity Interests owned by such Pledgor, to secure the
performance of the obligations of such Pledgor or any other Person
under any agreement entered into by such Pledgor in connection with
its acquisition of or ownership of such Pledged Equity
Interests.
“
Person ” means an individual, corporation,
association, partnership, trust, joint venture, business trust or
incorporated organization or other entity or organization, or a
Governmental Authority.
“
Pledged Equity Interests ” has the meaning
specified in Section 2(a)(iii).
“
Pledgor ” has the meaning specified in the
Preamble.
“
Proceeds ” means: (i) all “
proceeds ” as defined in Article 9 of the UCC
and (ii) whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.
“
Record ” has the meaning specified in
Article 9 of the UCC.
“
Regulation W ” means Regulation W of the
Federal Reserve Board, 12 C.F.R. Part 223.
“
Section 23A Exemption ” has the meaning
specified in the Recitals.
“
Secured Obligations ” has the meaning specified in
Section 3.
“
Securities ” has the meaning specified in
Section 2(a)(ii).
“
Securities Account ” has the meaning specified in
Article 8 of the UCC.
“
Subsidiary ” has the meaning given to that term in
Regulation W.
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“
Termination Date ” has the meaning specified in
the Guarantee Agreement.
“
Transferred Assets ” has the meaning specified in
the Recitals.
“
UCC ” means at any time the Uniform Commercial
Code as in effect in the State of New York; provided,
however, that if, by reason of mandatory provisions of Law, the
validity or perfection of the Bank’s security interest in any
item of Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than New York, “ UCC
” means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating
to such validity or perfection.
“
Uncertificated Securities ” has the meaning
specified in Article 8 of the UCC.
“
Value ” has the meaning specified in
Section 5.
“
Valuation Date ” means the last Business Day in
each calendar quarter beginning with the last such Business Day in
December 2008, for so long as this Agreement shall be in
effect.
In interpreting
this Agreement:
(a) words
in the singular shall include the plural and vice versa, and words
of one gender shall include the other gender as the context
requires;
(b) references
to Articles, Sections, paragraphs, Exhibits, Annexes and Schedules
are references to the Articles, Sections and paragraphs of, and
Exhibits, Annexes and Schedules to, this Agreement unless otherwise
specified;
(c) references
to “ $ ” shall mean U.S.
dollars;
(d) the
words “ includes ” and “
including ” and words of similar import shall be
deemed to be followed by the words “ without
limitation ” unless otherwise specified;
(e) the
word “ or ” shall not be
exclusive;
(f) the
words “ herein ” , “
hereof ” or “ hereunder
” , and similar terms, are to be deemed to refer to this
Agreement as a whole and not to any specific section;
(g) the
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement;
(h) this
Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted;
(i) if
a word or phrase is defined, the other grammatical forms of such
word or phrase have a corresponding meaning;
(j) references
to any statute, listing rule, rule, standard, regulation or other
law (i) include a reference to the corresponding rules and
regulations and
-4-
(ii) include a reference to each of them as
amended, modified, supplemented, consolidated, replaced or
rewritten from time to time;
(k) references
to any section of any statute, listing rule, rule, standard,
regulation or other law include any successor to such section;
and
(l) all
references herein to provisions of the UCC shall include all
successor provisions under any subsequent version or amendment to
any Article of the UCC.
SECTION 2.
GRANT OF SECURITY INTEREST
(a) Each
Pledgor hereby grants to the Bank, for the Bank’s benefit, a
security interest in and continuing lien on all of such
Pledgor’s right, title and interest in, to and under all of
the following types of collateral listed in Schedule 1
with respect to such Pledgor from time to time, in each case
whether now owned or existing or hereafter acquired or arising and
wherever located (all of which are collectively referred to as the
“ Collateral ” ):
(i) all Cash
Collateral Accounts and all deposits credited to the Cash
Collateral Accounts;
(ii) all
Securities Accounts and all stocks, bonds, security entitlements,
financial assets or other securities, financial assets or
investment property (as such terms are defined in the UCC) now or
hereafter in the possession, custody or control of the Bank,
including any of the foregoing from time to time deposited in or
credited to such Securities Accounts (the “
Securities ”);
(iii) interests in
general or limited partnerships, limited liability companies and
shares or other equity interests in companies or business trusts
(collectively, “ Pledged Equity Interests
”);
(iv) all General
Intangibles;
(vi) all Proceeds,
products, accessions and profits of or in respect of the
foregoing.
(b) All
the Collateral shall be subject to review and approval by the
Federal Reserve Board.
(c) For
the avoidance of doubt, the parties agree that in the case of
Pledged Equity Interests, the Collateral includes any obligations
associated with such Pledged Equity Interests.
SECTION 3.
SECURITY FOR GUARANTEE
This Agreement
shall secure, and the Collateral shall be collateral security for,
the prompt and complete payment and performance when due of all of
the Parent’s obligations under the Guarantee Agreement (the
“ Secured Obligations ”).
-5-
SECTION 4.
COLLATERAL REQUIREMENT; SUBSTITUTIONS
(a) The
Parent shall, at all times prior to the termination of the
Guarantee Agreement, cause Collateral to be maintained subject to a
fully perfected security interest under this Agreement with an
aggregate Value not less than five percent (5%) of the Outstanding
Aggregate Transfer Value.
(b) If
the aggregate Value of the Collateral on any Valuation Date, as
determined pursuant to Section 5, is less than five percent
(5%) of the Outstanding Aggregate Transfer Value as of that date,
then not later than five (5) Business Days following such
determination the Parent shall pledge or cause one or more of its
Subsidiaries to pledge additional Collateral to the Bank in an
amount that will restore the total Value of the Collateral to not
less than five percent (5%) of such Outstanding Aggregate Transfer
Value as determined on such Valuation Date.
(c) If
the aggregate Value of the Collateral on any Valuation Date, as
determined pursuant to Section 5, is greater than five percent
(5%) of the Outstanding Aggregate Transfer Value, then the Bank
shall, without unreasonable delay, take such measures as may be
necessary to release the Lien of the Bank on those portions of the
Collateral designated by the Parent and having a Value as of such
Valuation Date not greater than the amount of the excess;
provided, however, that if the aggregate Value of the
Collateral immediately after giving effect to the release of the
Collateral so designated would be less than the amount required
pursuant to Sections 4(a) and 4(b), then the Bank will have no
obligation to release any Collateral pursuant to this
Section 4(c).
(d) If
any Pledgor wishes to obtain the release of any Collateral that has
been pledged by it pursuant hereto, then it may provide or cause
another Pledgor to provide replacement Collateral to the Bank with
a Value at the time of such substitution, as determined pursuant to
Section 5, not less than the Value of the Collateral that is
to be released. Upon the delivery of such replacement Collateral to
the Bank and/or the completion of all measures necessary to provide
to the Bank a fully perfected security interest in such replacement
Collateral, the Bank shall, without unreasonable delay, take such
measures as may be necessary to release the Lien of the Bank on the
Collateral to be released; provided, however, that if the
aggregate Value of the Collateral immediately after giving effect
to the delivery of such replacement Collateral and the release of
the Collateral to be released would be less than the amount
required pursuant to Sections 4(a) and 4(b), then the Bank will
have no obligation to release any Collateral pursuant to this
Section 4(d).
(a) For
purposes of this Agreement, the “ Value ”
of each type of Collateral on any date shall be determined by the
Bank as follows:
(i) the “
Value ” of any Cash Collateral Accounts or deposit
credited to any Cash Collateral Account shall be the balance
thereof as of the close of business on the Business Day immediately
preceding the relevant date; and
(ii) the
“ Value ” of any other Collateral shall
be (i) if the asset is recorded in the books and records on
which the consolidated audited financial statements of the Parent
are based, the valuation assigned to such Collateral as of the
close of business on the most recent regular valuation date prior
to the relevant date on which The Goldman Sachs Group Inc. has
determined such valuation for purposes
-6-
of maintaining
its books and records or applying its market and risk management
systems to such asset, and (ii) if such asset is not so
recorded, the valuation assigned to such asset by the Bank in the
exercise of its reasonable discretion, multiplied by, in
either case, 1 minus the applicable Haircut;
provided,
however, that if any
Collateral is subject to any Permitted Lien and the Valuation of
such Collateral has not already been reduced to reflect such
Permitted Lien, the Bank may reduce the Value allocated to such
Collateral as it deems appropriate to reflect the prior obligation
secured by such Permitted Lien.
(b) The
Bank shall determine the aggregate Value of the Collateral as of
the close of business on each Valuation Date and provide notice of
such aggregate Value to the Parent not later than 11:00 a.m.,
New York time, on the next Business Day.
SECTION 6.
REPRESENTATIONS, WARRANTIES AND COVENANTS
(a)
Representations and Warranties. Each Pledgor represents and
warrants that:
(i) it owns the
Collateral purported to be owned by it and otherwise has the rights
it purports to have in each item of Collateral pledged by it and,
as to all such Collateral whether now existing or hereafter
acquired, will continue to own or have such rights in each item of
such Collateral, in each case free and clear of any and all Liens,
rights or claims of all other Persons, except for the
(i) security interest created by or in connection with this
Agreement, including liens arising as a result of such Pledgor
becoming bound (as a result of merger or otherwise) as debtor under
a security agreement entered into by another Person and
(ii) Permitted Liens;
(ii) other than
any financing statements filed in favor of the Bank pursuant to or
in connection with this Agreement, no effective UCC financing
statement, fixture filing or other Instrument similar in effect
under any applicable Law covering all or any part of the Collateral
is on file in any filing or recording office except for Permitted
Filings;
(iii) except for
those that have been obtained or made, no authorization, approval
or other action by, and no notice to or filing with, any
Governmental Authority or Person is required for either
(x) the pledge or grant by it of the Liens purported to be
created in favor of the Bank hereunder or (y) except as set
forth in Schedule 1 or as referred to in
Section 8.4 from time to time with respect to any item of
Collateral, the exercise by the Bank of any rights or remedies in
respect of any Collateral (whether specifically granted or created
hereunder or created or provided for by applicable Law);
(iv) except with
regard to cash and cash equivalents, the pledge of and grant of a
security interest in the Collateral pursuant to this Agreement
together with the delivery of the relevant certificates to the
Bank, the filing of the appropriate UCC financing statements in the
jurisdictions agreed with the Bank, the entry into appropriate
control agreements, compliance with requirements under the laws in
which the issuers of any Pledged Equity Interests are formed and
compliance with any other requirements set forth in this
Section 6.1, will constitute all actions and consents
necessary to create and perfect security interests in all of the
Collateral,
-7-
and all actions
and consents necessary to create and perfect the security interests
in all of the Collateral granted under this Agreement have been
made or obtained or will, at or prior to the time at which any
substitute or additional Collateral is pledged hereunder, be made
or obtained,
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